Atkins 2014
Atkins 2014
Atkins 2014
[email protected]
www.atkinsglobal.com
Cautionary statement
This Annual Report has been prepared to provide
information to the members of the Company. The
Company and its directors and the Groups employees
are not responsible for any other purpose of use or
to any other person in relation to this Annual Report.
TT-COC-002228
Strategic Report 01
Strategic Report
18 Business Review
21 United Kingdom and Europe
28 North America
31 Middle East
34 Asia Pacific
37 Energy
41 Financial Performance Review
44 Principal risks and uncertainties
48 Human Resources Review
54
Corporate Sustainability Review
Governance
Group at a glance
Results
Chairmans Statement
Chief Executive Officers Statement
Strategy
12 Our business
14 Our markets
16 Our strategy
Governance
60 Board of Directors
62 Directors Report
66 Corporate Governance Report
74 Nomination Committee Report
76 Audit Committee Report
81 Remuneration Report
106 Independent Auditors Report
Financial Statements
117
Consolidated Statement of
Changes in Equity
118
Parent Company Statement of
Changes in Equity
119 Notes to the Financial Statements
179 Five-year Summary
Corporate Information
Financial Statements
02
04
06
08
11
Strategic Report
Contents
Corporate Information
182 Company secretary and
registered office
182 Financial calendar
182 Shareholder services
02 Strategic Report
Group at a glance
Strategic Report 03
North America
Middle East
Revenue
Revenue
Revenue
998.3m
380.9m
168.4m
Employees
Employees
Employees
Asia Pacific
Energy
Revenue
Revenue
100.5m
169.6m
Employees
Employees
1,498
Find out more on page 34
1,461
Find out more on page 37
2,071
Find out more on page 31
Notes
1. Full time equivalent staff at 31 March 2014
including agency staff.
2. There are an additional 79 staff undertaking
Group functions.
Related sections
Our business
Our markets
Financial Statements
2,836
Corporate Information
9,544
Governance
Strategic Report
04 Strategic Report
Results
Dividend increased by 5.5%, reflecting
the Boards confidence in the Groups prospects.
>
101.6
99.2
106.4
77.8
75.0
79.0
82.6
85.7
11
102.7
10
96.5
+3.8%
1,750.1
+7.3%
1,705.2
+2.6%
1,711.1
1,564.3
1,387.9
Revenue m
12
13
14
10
11
12
13R
14
10
11
12
13R
14
14
10
Notes
1. Revenue excludes the Groups share of revenue from joint ventures.
2. Underlying operating margin is before exceptional items, amortisation and impairment of intangible
assets recognised on acquisition and material transaction costs associated with acquisitions, and relates
to continuing operations.
3. Underlying profit before taxation additionally excludes any profits or losses and costs of disposals.
2013 has been restated for the amendments to IAS 19, Employee benefits.
4. Underlying diluted earnings per share (EPS) is based on underlying profit after tax and allows for the
dilutive effect of share options. 2013 has been restated for the amendments to IAS 19, Employee benefits.
5. Headcount is shown on a full time equivalent basis at the year end, including agency staff.
6. Dividend relating to the year comprises the interim dividend paid in the year and the proposed final dividend.
11
6.7
13
6.4
12
6.5
11
7.6
10
8.1
14
33.75
13
32.00
12
30.50
11
29.00
10
27.50
+0.3pp
17,489
+5.5%
17,899
-2.3%
17,420
17,522
Dividend Pence
15,601
Headcount
12
13
14
Strategic Report 05
Results continued
Strategic Report
3%
1%
Other
2% 1% 1%
Rail
3%
2%
4%
6%
North America
Roads
Water and environment
1%
1%
1%
Other
1%
2%
2%
3%
3%
1%
5%
7%
Roads
1%
2% 1% 1%
1%
Asia Pacific
1%
Energy
11%
Financial Statements
Education
Governance
5% 1%
4%
6%
5%
4%
6%
UK and Europe
Related section
Our markets
06 Strategic Report
Chairmans Statement
Performance
Strategic Report 07
Board of directors
Dividend
Outlook
Governance
Financial Statements
Related sections
Human Resources Review
Find out more about
our people on page 48
Corporate Information
People
Strategic Report
We welcomed
Confluence Project
Management Pte. Ltd.
to the Group in October.
08 Strategic Report
Business position
Strategic Report 09
Governance
Financial Statements
Corporate Information
Strategic Report
We made significant
progress on our
three-pillar strategy.
10 Strategic Report
Priorities
Conclusion
Strategic Report 11
Strategy
Our markets
Our strategy
What we do
Plan
Design
Enable
Trends
Group strategy
Infrastructure
development
Our locations
Our capability
Our competitive
advantage
Competitive environment
United Kingdom
and Europe
North America
Middle East
Asia Pacific
Energy
Faithful+Gould
Business focus
Governance
Our business
Financial Statements
Corporate Information
Strategy
Strategic Report
12 Strategic Report
Strategy continued
Our business
What we do
Areas of
our business
gy
ate
r
t
S
Pla
nn
ing
Plan
Enable
Design
ri n
on
c ti n t
str u e
C o n age m
n
Ma
Concept
A sset
M
a
n
agem e
nt
Pro Prog
je c r a m m
tM
e
ana and
gem e
nt
D e si g
d
n an
En
e
in e
Strategic Report 13
Governance
Our locations
Our capability
Financial Statements
Corporate Information
Infrastructure development
Strategic Report
Strategy continued
Our business
14 Strategic Report
Strategy continued
Our markets
Trends
Urbanisation
The world population is increasingly
moving to urban environments. The
UN estimates that more than half of
the worlds population now lives in
cities and that by 2050 this number
will be almost two thirds of a projected
nine billion population.
Not all regions of the world have reached
the 50% level and the urbanisation trend
is most marked in growth markets outside
the developed world. It is anticipated
that urban growth will be concentrated
in Africa and Asia over the next few years.
According to the UN, it is expected that
half of the population of Asia will live in
urban areas by 2020, while Africa is likely
to reach a 50% urbanisation rate in 2035.
This overarching driver will create
ongoing demand for new and improved
infrastructure in a number of allied sectors.
Technology
Technological advances in the design
and engineering of projects are having
an impact on the industry. Through
Building Information Modelling (BIM)
and other tools, 3D, 4D and 5D (including
time and cost information) design is
becoming more prevalent. In addition,
the application of large data sets and
cloud-based applications to analysis
(historic and predictive) is creating new
ways of looking at projects in the planning
and design stage, and is simplifying and
speeding up infrastructure construction
and maintenance efforts.
Work delivery
In more and more situations we are
moving parts of the work we undertake
for our local clients to remote locations.
This may be to one of our GDCs or offices
in other parts of the world. The driver
may be complexity, where we undertake
the work in our centres of excellence
for a particular discipline, or cost, where
we utilise our lower cost regions to best
effect. Seamless delivery and robust
processes are required.
Competitive environment
Business focus
Strategic Report 15
Focus
Risks
North America
Governance
United
Kingdom
and Europe
Context
Strategic Report
Strategy continued
Our markets
Asia Pacific
Continuing opportunities in
Hong Kong for major infrastructure
developments based upon government
spending commitments
The Peoples Republic of China market
for urban planning and architecture
continues to grow
Energy
Corporate Information
Middle East
Financial Statements
16 Strategic Report
Strategy continued
Our strategy
Group strategy
Profitable growth
Drive margins >8%
Reduce dependence on UK
Grow organically and by acquisition
Operational
excellence
Portfolio
optimisation
Sector and
regional focus
Our strategic
pillars
Strategic Report 17
Governance
Financial Statements
Operational excellence
The fundamental building block of any
successful strategy is the performance
of the underlying business. We continue
to drive operational performance across
the Group with a distinct focus on
optimising financial delivery and
we are successfully implementing our
operational excellence programme.
Corporate Information
Strategic Report
Strategy continued
Our strategy
18 Strategic Report
Business Review
Overview of the business and performance in the year
Our business
Strategic Report 19
Governance
Financial Statements
Corporate Information
Strategic Report
20 Strategic Report
Note
2014
Restated1
2013
Change
2 1,750.1m
1,705.2m
+2.6%
Operating profit
Underlying operating profit
113.7m
116.4m
104.0m
109.7m
+9.3%
+6.1%
Operating margin
Underlying operating margin
6.5%
6.7%
6.1%
6.4%
+0.4pp
+0.3pp
106.4m
95.5m
85.7p
51%
130
99.2m
82.9m
82.6p
55%
108
+7.3%
+15.2%
+3.8%
-4pp
+22
17,489
17,565
11.3%
17,899
17,648
10.6%
-2.3%
-0.5%
+0.7pp
Revenue by sector
Roads 21%
Rail (including mass transit) 20%
Energy 13%
Water and environment 9%
Defence and security 8%
Buildings 6%
Aerospace and aviation 6%
Urban development 6%
Education 3%
Other 8%
4
5
6
7
8
9
Notes:
1. The results for the year to 31 March 2013 have
been restated to reflect changes to accounting
standards with regards to the treatment of
pension costs (IAS 19 (revised 2011)).
2. Revenue excludes the Groups share of revenue
from joint ventures.
3. Underlying operating profit excludes amortisation
of intangibles recognised on acquisitions of 2.7m.
In the comparative year, it excludes amortisation
and impairment of intangibles recognised on
acquisition of 10.0m along with a pension
curtailment gain of 4.3m.
4. Underlying profit before tax additionally excludes
net profit on disposal of businesses of 10.5m
(2013: 4.5m).
5. Underlying diluted EPS is based on underlying
profit after tax and allows for the dilutive effect
of share options.
6. Work in hand is the value of contracted and
committed work as at 31 March that is scheduled
for the following financial year, expressed as
a percentage of budgeted revenue for the year.
The 2013 comparative figure excludes the UK
highways services business, the disposal of which
was completed in October 2013.
7. Accident incident rate (AIR) tracks the number
of reportable accidents per 100,000 staff.
8. Staff numbers are shown on a full time equivalent
basis, including agency staff.
9. Staff turnover is the number of voluntary staff
resignations in the year, expressed as a percentage
of average staff numbers.
Revenue by segment
Strategic Report 21
Segmental performance
2013
Change
998.3m
62.6m
6.3%
49.2%
192
977.1m
62.2m
6.4%
50.9%
191
+2.2%
+0.6%
-0.1pp
-1.7pp
+1
9,544
9,751
9.5%
10,134
9,913
8.8%
-5.8%
-1.6%
+0.7pp
1. Work in hand adjusted in 2013 for the removal of highways services for comparability.
10
11
9,751
14
10,896
13
9,913
12
10,047
11
12
13
14
Corporate Information
Revenue by sector
10
11,690
14
62.6
13
62.2
12
53.2
11
65.3
10
79.6
-2%
998.3
+1%
977.1
+2%
940.5
1,001.5
Operating profit m
1,053.6
Revenue m
Governance
2014
Financial Statements
Strategic Report
22 Strategic Report
Performance
Business model
Strategy
Business drivers
People
Strategic Report 23
Risk
The majority of the Groups postemployment benefit liability sits within the
UK business and is comprised of defined
benefit pension obligations, the largest
of which is within the Atkins Pension Plan,
which is closed to the future accrual of
benefits (see note 32 on page 161).
Outlook
Governance
Financial Statements
Corporate Information
Strategic Report
24 Strategic Report
United Kingdom
Key performance indicators
Financial metrics
Revenue
Operating profit
Operating margin
Work in hand1
People
Staff numbers at 31 March
Average staff numbers for the year
Staff turnover
2014
2013
Change
922.0m
58.1m
6.3%
49.9%
900.3m
56.5m
6.3%
52.3%
+2.4%
+2.8%
nm
-2.4pp
8,810
9,017
9.5%
9,374
9,129
9.0%
-6.0%
-1.2%
+0.5pp
1. Work in hand adjusted in 2013 for the removal of highways services for comparability.
Performance
Operations
Rail
Our rail business has had a busy year
with high levels of utilisation, reflecting
the strong pipeline of projects. Over
the course of the year, headcount has
grown significantly as a number of major
signalling, station design and electrification
projects have started. However, the
performance of this business has been
adversely impacted by negotiations
around contract variations on some
of our longer term signalling contracts.
A focus of this financial year has been
on delivering work across a number of
signalling projects awarded under the
two major frameworks for the Sussex/
Wessex and Kent/Anglia areas, including
Farnham and East Sussex. During the
year, we secured further work through
these frameworks, including a major
re-signalling project in East Kent. This
is in addition to ongoing work on our
other non-framework signalling contracts
at Cardiff and Wolverhampton.
The UKs electrification programme
presents a substantial opportunity for
our rail business. In partnership with
Parsons Brinckerhoff, we are the lead
design organisation for the electrification
of the Great Western main line between
London and South Wales.
Strategic Report 25
Governance
Financial Statements
Corporate Information
Strategic Report
26 Strategic Report
Strategic Report 27
Operations
Change
76.3m
4.5m
5.9%
42.3%
76.8m
5.7m
7.4%
38.9%
-0.7%
-21.1%
-1.5pp
+3.4pp
734
734
9.7%
760
784
6.8%
-3.4%
-6.4%
+2.9pp
Governance
2013
Financial Statements
Performance
2014
Corporate Information
Strategic Report
Europe
28 Strategic Report
North America
Margin progression and streamlined
organisation structure.
>
Key performance indicators
Financial metrics
Revenue
Operating profit
Operating margin
Work in hand
Safety Accident Incident Rate
People
Staff numbers at 31 March
Average staff numbers for the year
Staff turnover
2014
2013
Change
380.9m
19.1m
5.0%
58.8%
117
389.7m
15.3m
3.9%
61.0%
89
-2.3%
+24.8%
+1.1pp
-2.2pp
+28
2,836
2,970
11.5%
3,039
3,091
10.1%
-6.7%
-3.9%
+1.4pp
12
Revenue by sector
Roads 41%
Water and environment 17%
Buildings 6%
Aerospace and aviation 5%
Urban development 5%
Defence and security 2%
Other 24%
10
533
11
12
13
14
10
2,970
11
13
14
1,858
19.1
3.4
13.8
15.3
14
279.2
13
55.0
10
3,091
-4%
3,314
+25%
21.2
-2%
380.9
389.7
Operating profit m
421.9
Revenue m
11
12
Strategic Report 29
Business model
Strategy
Business drivers
Operations
Governance
Financial Statements
Corporate Information
Performance
Strategic Report
30 Strategic Report
People
Risk
Outlook
Strategic Report 31
Change
168.4m
14.4m
8.6%
62.7%
53
162.2m
11.8m
7.3%
80.2%
43
+3.8%
+22.0%
+1.3pp
-17.5pp
+10
2,071
1,985
16.0%
1,979
2,006
13.2%
+4.6%
-1.0%
+2.8pp
Revenue by sector
12
13
14
10
11
1,758
12
1,985
11.8
11
2,006
10
1,629
14
2,154
13
14.4
12
16.8
11
14.0
10
23.8
-1%
168.4
+22%
162.2
+4%
171.4
140.9
Operating profit m
136.6
Revenue m
13
14
Revenue by geography
Qatar 36%
Kingdom of Saudi Arabia 18%
Abu Dhabi 16%
Dubai 12%
Sultanate of Oman 7%
Bahrain 1%
Other 10%
Governance
2013
Financial Statements
2014
Corporate Information
Strategic Report
Middle East
Our focused approach delivers
improved margins.
>
32 Strategic Report
Performance
Business model
Strategy
Business drivers
Operations
Strategic Report 33
People
Outlook
Governance
Risk
Financial Statements
Corporate Information
Strategic Report
34 Strategic Report
Asia Pacific
Good revenue growth as we
diversify through acquisition.
>
Key performance indicators
Financial metrics
Revenue
Operating profit
Operating margin
Work in hand
Safety Accident Incident Rate
People
Staff numbers at 31 March
Average staff numbers for the year
Staff turnover
2014
2013
Change
100.5m
8.0m
8.0%
49.3%
47
88.0m
8.1m
9.2%
49.6%
0
+14.2%
-1.2%
-1.2pp
-0.3pp
+47
1,498
1,357
16.4%
1,295
1,260
10.1%
+15.7%
+7.7%
+6.3pp
8.1
8.0
1,158
1,152
1,206
1,260
13
8.2
12
13
14
10
11
12
13
5.1
11
100.5
10
1,357
+8%
10.3
-1%
88.0
+14%
82.9
80.3
Operating profit m
78.7
Revenue m
14
Revenue by sector
Buildings 21%
Urban development 18%
Water and environment 15%
Rail (including mass transit) 14%
Roads 7%
Other 25%
10
11
12
14
Revenue by geography
Strategic Report 35
Business model
Strategy
Business drivers
Operations
Governance
Financial Statements
Corporate Information
Performance
Strategic Report
36 Strategic Report
People
Risk
Outlook
Strategic Report 37
2013
Change
169.6m
15.1m
8.9%
31.8%
0
151.9m
13.8m
9.1%
33.4%
0
+11.7%
+9.4%
-0.2pp
-1.6pp
n/a
1,461
1,424
11.7%
1,376
1,307
14.3%
+6.2%
+9.0%
-2.6pp
11
12
13
10
12
13
1,424
11
1,307
15.1
14
14
Corporate Information
Revenue by sector
10
805
11.4
14
1,095
13
970
12
8.5
11
8.4
10
13.8
+9%
169.6
+9%
151.9
+12%
128.4
98.6
Operating profit m
82.0
Revenue m
Governance
2014
Financial Statements
Strategic Report
Energy
Strong growth and an attractive pipeline.
>
38 Strategic Report
Performance
Business model
Strategy
Business drivers
Operations
Nuclear
Our position in the UK nuclear new-build
market has strengthened following our
appointment to a major new framework
with Horizon Nuclear Power to provide
engineering and related technical services
for a new generation of nuclear power
stations in the UK.
We remain busy on existing nuclear
generation work through our role as
an EDF Energy UK strategic supply chain
partner. Our recent appointment to
provide design, engineering, infrastructure
and project management services
to URENCOs 540m capital expenditure
programme further builds our relationship
with this key player within the nuclear
fuel supply chain.
Our position in the UKs nuclear
decommissioning market has been
cemented further by our recent
appointment as the preferred bidder
on a new contract with Sellafield Ltd
for its 1.4bn Silos Direct encapsulation
Plant (SDP) project, as part of an equal
three-way joint venture with Areva and
Mace (a.m.a.). The SDP will process
nuclear waste recovered from one of
the largest high hazard nuclear waste
silos on the Sellafield site and is the only
project of its kind in the world. This award
is testament to the success of our strategic
partnerships, which continue to deliver
excellent opportunities for the Group.
We continue to develop an international
nuclear portfolio providing a broad range
of services to Emirates Nuclear Energy
Corporation in the Middle East on the
20bn Barakah Nuclear Programme,
through n.triple.a, our joint venture with
French engineering consultancy Assystem.
We are also acting as architect engineer,
as part of the Engage consortium, on
the 15bn International Thermonuclear
Experimental Reactor (ITER) programme
in the South of France.
Strategic Report 39
Marine renewables
We have expanded our portfolio of work
in the offshore renewables sector with the
addition of engineering design contracts
to support DONG Energys extension of
the Walney and Burbo Bank offshore wind
farms (OWFs) and for the new Race Bank
project. Additional contracts with RWE
for the Galloper OWF and with Statoil for
the Dudgeon OWF further increase our
market share of design consultancy work
in the offshore renewables sector.
Governance
People
Financial Statements
Corporate Information
Strategic Report
40 Strategic Report
Risk
Outlook
Strategic Report 41
Taxation
Pensions
Governance
Financial Statements
Corporate Information
Performance summary
Strategic Report
42 Strategic Report
Charges
The total charge to the income statement
in respect of defined benefit schemes
was 14.3m (2013 restated: 10.5m),
comprising service cost of 2.1m (2013
restated: 2.1m), administrative expenses
of 0.2m (2013 restated: 0.2m),
curtailment and settlement gains of nil
(2013: 4.4m) and a net interest expense
of 12.0m (2013 restated: 12.6m).
The charge relating to defined contribution
schemes increased to 37.9m
(2013: 32.8m).
Cash
127.8
14.7
7.5
112.3
14.6
14.0
150.0
140.9
(32.0)
(9.6)
(21.0)
(27.0)
(0.7)
0.3
(1.8)
(10.4)
95.5
(4.7)
(5.6)
82.9
Capital structure
Strategic Report 43
Goodwill impairment
Governance
Tax
Financial Statements
Contract accounting
Corporate Information
Strategic Report
44 Strategic Report
Strategic Report 45
Where applicable, the table crossreferences principal risks with segmentspecific risks.
Governance
Financial Statements
Corporate Information
Strategic Report
46 Strategic Report
Risk increasing
Strategic
Risk decreasing
Mitigation
Economic outlook
Imposition of government austerity
measures has an impact on our trading
performance as spending on public sector
infrastructure is reduced.
Financial
The deterioration of the Groups financial
position limits our ability to invest in
growth.
Adverse movements in liability
assumptions or asset values result in a
significant increase in the Groups defined
benefit pension obligations, increasing
the cash funding required to repay the
deficit and reducing our ability to invest
in further growth opportunities.
Geo-political
Political instability in the regions within
which we operate has a negative impact
on our ability to deliver contractual
services and/or receive payment and/or
endangers the safety of our staff.
Market
Worsening economic conditions 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.
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/or
reputational damage.
Change
in year
Strategic Report 47
Risk decreasing
Mitigation
Crisis event
A significant one-off event affecting a key
business location, project or employees
could interrupt service delivery, threaten
life and/or cause reputational damage to
our business.
Governance
Change
in year
Strategic Report
Risk increasing
Operational
Technical delivery
Design errors or omissions lead to client
dissatisfaction, financial losses and
damage to our reputation for technical
excellence.
Corporate Information
Projects
Poor management of projects leads to
client dissatisfaction, damage to our
reputation for technical excellence and
a deterioration in the Groups financial
performance.
Financial Statements
48 Strategic Report
Strategic Report 49
Headcount
Governance
Apr 13 May 13
Jun 13
Jul 13
Aug 13 Sep 13
Oct 13
Nov 13 Dec 13
Jan 14
Feb 14
Mar 14
Atkins Group
1. Headcount figures are restated to exclude the UK highways services business disposedof
in the year ended 31 March 2014.
Financial Statements
Corporate Information
Overview
Strategic Report
50 Strategic Report
Engagement
Alignment
Global
norm
59
Involvement
2013
68
2012
66
Global
norm
63
2013
70
Loyalty
2012
69
Global
norm
57
Overall score
2013
70
2012
68
Global
norm
60
2013
69
Our employee engagement score for 2013 can also be measured against the Ipsos Global Sector Norm in other words, how we compare
against the responses given by employees in other organisations in the professional services sector, both globally and regionally.
2012
67
Strategic Report 51
Investment in people
Governance
Reward
Financial Statements
Corporate Information
Strategic Report
52 Strategic Report
Diversity
2013
2013
69
70
Global
norm
57
Strategic Report 53
Gender split
Board membership
Senior management2
13
140
966
Employees
4,659
11,575
Governance
Group senior
leadership team
Strategic Report
Corporate Information
54 Strategic Report
Atkins is shaping a
sustainable future for all.
>
Strategic Report 55
Leadership
Governance
Financial Statements
Corporate Information
Strategic Report
www.atkinsglobal.com/en-GB/corporatesustainability/a-society-for-our-future
56 Strategic Report
09-10
10-11
11-12
12-13
Office actual
Engineering actual
Construction actual
Office benchmark
Engineering benchmark
Construction benchmark
13-14
10-11
11-12
12-13
Office actual
Engineering actual
Construction actual
Office benchmark
Engineering benchmark
Construction benchmark
13-14
Industry leadership
As part of our Group wide approach to
industry safety leadership, we have been
involved in restructuring the Consultants
Health and Safety Forum, ensuring that
it remains fit for the future. A strategic
leadership team will oversee United
Kingdom and Europe and Asia Pacific
safety forums, with new teams focused on
environment and quality. We will continue
to support the Middle East and North
Africa safety executive and strive towards
the establishment of a consultants forum
in North America.
Strategic Report 57
Region
Scope 1
Scope 2
Scope 3
Regional
Total
Liquid
Source
Gas Fuels Refrigerants1 Road2 Electricity Heat
Rail
Air
UK
2,465
51 10,032
7,951
1,177 6,313 27,989
Europe
22
340
804
97
70
267 1,600
Asia Pacific
16
97
2,072
2,168 4,353
Middle
623
1,931
2,136 4,690
East
North
2
8,471
11,293
1,642 21,408
America
Source
2,487
18
51 19,563
24,051
97 1,247 12,526 60,040
Totals
Total 22,119
Total 24,148 Total 13,773
Expressing the emissions using employees as a ratio gives us a figure of 3.4 tonnes
CO2e per employee. This is a reduction on the ratio for the year ended 31 March 2013
of 3.5 tonnes CO2e per employee.
Reducing our emissions
Our first office sustainability programme,
RACE, helped reduce our worldwide
energy consumption. Its successor,
RACE2, retains this focus on energy
efficiency, aiming to facilitate cost and
carbon pollution reductions.
Status
2014/15 priorities
Commence Safe and Secure by Choice programme
Introduce online Atkins Operating Safely (AOS) system to improve safety risk identification and control
Help establish executive consultants safety forum in North America
Carry out programme of behavioural safety and security training for line managers
Governance
Table 1: Total emissions by source, region and scope in tonnes of CO2 for the
year ended 31 March 2014
Financial Statements
Corporate Information
Strategic Report
www.atkinsglobal.com/en-GB/corporatesustainability/an-environment-with-a-future
58 Strategic Report
ww.atkinsglobal.com/en-GB/corporatew
sustainability
Progressing Completed
Status
2014/15 priorities
Undertake global environmental assessment to prioritise risks and opportunities
Develop environmental training and competency package in the UK and global training course
Group wide deployment of RACE2
Strategic Report 59
Strategic Report
Financial Statements
Technical excellence
We continue to plan, design and enable
sustainable value and technical excellence
for our clients, utilising management
standards to develop more collaborative
client relationships. By way of example,
our UK rail business obtained formal
BS1100 business standard accreditation.
To underpin our delivery of high-quality
projects, we are improving management
and coordination of Building Information
Modelling (BIM) activities and
accompanying computer-aided design
standards. New Civil Engineer magazines
prestigious Consultant of the Year Award
confirmed our outstanding performance.
Corporate Information
A responsible business
of the future
ww.atkinsglobal.com/en-GB/corporatew
sustainability/a-responsible-business-ofthe-future
Governance
60 Governance
Board of Directors
Heath Drewett
Alun Griffiths
James Cullens
Heath Drewett is a
graduate in mathematics
from Peterhouse,
Cambridge. He started
his career at Price
Waterhouse (now
PricewaterhouseCoopers
LLP) where he qualified
as a chartered accountant.
A graduate of Cambridge
University, James Cullens
brings significant senior
leadership experience
gained both in the UK
and internationally.
Group HR director
Group HR director
designate
In his management
consultancy career, he
has led a wide range of
projects in the areas of
restructuring, organisational
development and
privatisation in the
UK and worldwide. He is an
economics graduate and a
fellow of the Chartered
Institute of Personnel and
Development.
Date of appointment(s)
Non-executive director,
September 2009
Chairman, February 2010
Executive director,
June 2011
Chief executive officer,
August 2011
Executive director,
June 2009
E xecutive director,
March 20071
Executive director,
July 2014
None
N
on-executive director,
UKRC Community Interest
Company, trading as
WISE (Women in Science
and Engineering)
N
on-executive director,
The McLean Partnership
Limited
N
on-executive director,
Severfield plc
Non-executive director,
Chartered Institute
of Personnel and
Development
Member of the
International Advisory
Board, Open University
Business School
None
None
None
None
External appointments
Chairman, Selex ES Ltd
Chairman, Finmeccanica
UK Limited
Deputy chairman,
Marshall of Cambridge
(Holdings) Limited
Member of the operating
executive board,
J.F. Lehman & Company
(New York, USA)
Chairman, the Sector
Skills Council for Science,
Engineering and
Manufacturing
Technologies Alliance
(SEMTA)
Chairman, the UK
Governments Skills &
Jobs Retention Group
Director, Baker Dearing
Educational Trust
Lead non-executive
director, BIS
Committee membership
Chairman, Nomination
Committee
1. Alun Griffiths, Group HR director, will retire at the conclusion of the annual general meeting on 30 July 2014.
Admiral the Lord Boyce and Joanne Curin stepped down as non-executive directors on 31 July 2013 and 31 January 2014 respectively.
Governance 61
Fiona Clutterbuck
Non-executive director
Allister Langlands
Non-executive director
Thomas Leppert
Dr Raj Rajagopal
Rodney Slater
A lawyer by profession,
Rodney Slater is currently
a partner at law firm
Patton Boggs LLP, where
he is a leader of its
transportation practice,
working on projects
related to transportation
infrastructure.
He was awarded an
honorary doctor of science
degree by Cranfield
University in 2004 and the
Institution of Engineering
and Technologys (IET) IEE
Eric Mensforth International
Gold Medal for outstanding
contribution to
manufacturing technology
and management in 2003.
Non-executive director
Non-executive director
Non-executive director
Governance
Strategic Report
Non-executive director,
September 2013
N
on-executive director,
October 2013
N
on-executive director,
June 2008
N
on-executive director,
September 2011
Non-executive chairman,
Maven Income and
Growth VCT 5 PLC
Non-executive director,
Standard Life UK Smaller
Companies Trust plc
Senior independent
director, Exova Group plc
C
hief executive officer,
Kaplan, Inc.
N
on-executive director,
Bodycote plc
N
on-executive director,
e2v Technologies plc
N
on-executive director,
Spirax-Sarco Engineering plc
N
on-executive director,
Porvair plc
C
hairman, HHV Pumps
Private Ltd (India)
C
hairman, The University
of Manchester I3 Limited
M
ember of the Advisory
Board, Centre for Business
Research of Cambridge
University
Chairman, Audit
Committee
Nomination Committee
Nomination Committee
C
hairman, Remuneration
Committee
Audit Committee
Nomination Committee
Nomination Committee
Remuneration Committee
External appointments
Head of strategy,
corporate development
and communications,
Phoenix Group
Non-executive director,
The Paragon Group of
Companies PLC
Committee membership
Audit Committee
Nomination Committee
Remuneration Committee
Corporate Information
Non-executive director,
March 2007
Senior independent
director, July 2013
Financial Statements
Date of appointment(s)
62 Governance
Directors Report
Directors
Articles of association
Governance 63
Governance
Share capital
As at the date of this report, the
Companys share capital consists of
104,451,799 issued and fully paid ordinary
shares each with a nominal value of 0.5p,
listed on the London Stock Exchange.
Shares may be held in certificated or
uncertificated form. Further details of the
Companys issued share capital, including
changes during the year, can be found
in note 34 to the Financial Statements
(page 171).
Financial Statements
Shares
Corporate Information
Strategic Report
64 Governance
Share purchases
At the AGM held in 2013, the Company
was granted authority by shareholders
to purchase up to 10,011,000 ordinary
shares, representing approximately 10%
of the Companys ordinary share capital
as at 12 June 2013. No ordinary shares
were purchased pursuant to this authority
during the year ended 31 March 2014
or to the date of this Annual Report and
Accounts. This authority will expire at
the forthcoming AGM and the Company
will seek shareholder approval for an
equivalent authority (such authority being
in accordance with current best practice)
at this years AGM.
4,341,000 ordinary shares of 0.5p each,
representing approximately 4.2% of
the Companys issued share capital,
were held in treasury (the treasury
shares) throughout the year and to
the date of this Annual Report and
Accounts following a historic share
buyback programme.
Significant shareholders
As at the year end and the date of this
Annual Report and Accounts, the
Company had been notified of holdings
of 3% or more of the total voting rights
attaching to its issued share capital as
detailed in table 1.
Change of control
Directors statement of
responsibility
Name of holder
Schroders plc
Ameriprise Financial, Inc.
Standard Life
Investments Limited
Newton Investment
Management Limited
BlackRock Inc.
Norges Bank
Royal London Asset
Management Limited
At 11 June 2014
Percentage
Number
of total
of voting
voting
rights1
rights1
10,143,360
10.13%
10,007,713
10.00%
At 31 March 2014
Percentage
Number
of total
of voting
voting
rights1
rights1
10,143,360
10.13%
10,007,713
10.00%
9,118,952
9.11%
9,118,952
9.11%
4,994,396
4,971,580
3,985,209
4.99%
4.97%
3.98%
4,994,396
4,971,580
4,054,698
4.99%
4.97%
4.05%
3,017,193
3.01%
3,017,193
3.01%
1. Number and percentage of voting rights per last notification received by the Company.
Governance 65
Strategic Report
Governance
Independent auditor
Going concern
Corporate Information
66 Governance
Governance 67
Full details of the Groups governance framework are available on the Groups website: www.atkinsglobal.com/investors_governance.
Leadership
The Board is responsible for ensuring the long-term success of the Company. It does so by determining the Companys long-term
direction and strategic aims within a framework of appropriate and robust controls. A key principle of the framework is the
delegation of operational management to the chief executive officer, with a matrix of authorities setting out how this is further
delegated through the organisation. This enables the efficient and effective day to day operation of the Groups different businesses.
Further details on the roles of the chairman, chief executive officer and senior independent director can be found on the Groups
website: www.atkinsglobal.com/investors_leadership. The chief executive officer has established two teams to enable him to
discharge his responsibilities effectively: the senior leadership team (SLT) and the recently established operational leadership team
(OLT). The SLT has a strategic focus while the OLT concentrates on operational matters by providing a forum for the regional chief
executive officers to focus on performance, sharing best practice and knowledge.
The Board has reserved a number of matters for its sole consideration. These include:
consideration and approval of strategy
Governance
The disclosures that follow mirror the five sections of the Code: Leadership, Effectiveness, Accountability, Remuneration and Relations
with Shareholders.
Strategic Report
Throughout the year ended 31 March 2014 the Company complied with the provisions of the UK Corporate Governance Code (the
Code), published by the Financial Reporting Council (the FRC) in 2012, a copy of which is available on the FRCs website: www.frc.org.uk.
Compliance with the Code was required commencing 1 April 2013.
Corporate Information
Financial Statements
68 Governance
The key agenda items discussed by the Board during the year included:
Theme
Agenda items
Financial reporting
Strategy
Operations
The Groups banking facilities including renegotiation of the Groups revolving credit facility
Significant project approvals
Review of Group risk log
Budget
Budget for the Group for the year ending 31 March 2015
Business presentations
Asia Pacific
Energy
Faithful+Gould
Middle East
North America
United Kingdom and Europe
Governance
Governance framework review, including review of risk management and internal controls
Review of the proposed code of conduct
Approval of Group policies and Board committee terms of reference
Directors conflicts of interest and annual review of authorised conflicts
Appointment of the independent auditor and approval of its audit fee
Shareholder
engagement
Updates on the views of shareholders following the announcement of results, investor meetings
and roadshows
Independent feedback from the Groups broker following investor meetings
Reports from the investor relations director
Consideration of market reaction to key announcements
Employees
Board
Outcomes of, and actions arising from, the 2012/13 review of Board effectiveness
2013/14 Board effectiveness review
Appointment of two non-executive directors
Appointment of an executive director
Lord Davies second annual report on women on boards
Approval of non-executive directors fees
Board committee membership
Governance 69
The membership of the Board during the year is shown in table 1 along with a summary of attendance at meetings of the Board
and its committees. Biographies for each of the directors are provided separately (pages 60 and 61).
Table 1: Board membership and Board and committee meeting attendance1
Chairman
Allan Cook (Nomination Committee chairman)
12/12
4/4
Executive directors
Heath Drewett (Group finance director)
Alun Griffiths (Group HR director)
Uwe Krueger (chief executive officer)
12/12
12/12
12/12
5/5
12/12
4/4
3/3
8/8
2/2
4/4
9/104
7/7
4/56
12/12
11/127
3/3
2/2
4/4
8/8
8/8
4/4
1/1
1/1
4/4
4/4
The senior independent director led the appraisal of the chairmans performance. She sought input from all directors before
discussing her findings with the independent non-executive directors. She then provided feedback to the chairman. During the
year, the independent non-executive directors also met regularly with the chairman.
Allan Cooks external commitments changed during the year following his appointment as the lead non-executive director of the
UKs Department for Business, Innovation & Skills. To enable him to carry out his responsibilities as chairman, he continues to spend
at least three days per week with the Company.
Directors conflicts of interest
Each director is required, in accordance with the Companies Act 2006 (the Act), to declare any interests that may give rise to
a conflict of interest with the Company on appointment and subsequently as they arise. Where such a conflict, or potential conflict,
arises the Board is empowered under the Companys articles of association to consider and authorise such conflicts as appropriate.
In addition, the Company undertakes an annual review of all authorised conflicts to ensure such authorisation remains appropriate,
the last such review having taken place in November 2013.
A more detailed statement regarding how the Board operates is available on the Groups website:
www.atkinsglobal.com/investors_leadership.
Strategic Report
Nomination
Committee
Governance
Audit Remuneration
Committee
Committee
Financial Statements
Board
Corporate Information
Director
70 Governance
Effectiveness
Nomination Committee
Details of the work of the Nomination Committee can be found in the Nomination Committee Report (pages 74 to 75).
Performance evaluation
The Board recognises the need to maintain its development and the development of individual directors to ensure its continued
effectiveness and to respond to evolving best practice. This involves an ongoing process of:
reflecting on past performance and the implementation of past actions
consideration of future training, skill and diversity requirements
identification and implementation of new actions to improve performance.
The Board recognises that the process of improving its effectiveness requires continuous attention, particularly in respect of actions
such as ensuring the correct Board balance and diversity (2011/12 and 2012/13), succession planning (2010/11 and 2011/12) and
Board focus (2010/11 and 2012/13).
The Board undertakes a rigorous and formal evaluation of its own performance and that of its committees and directors annually.
The Board believes that an external evaluation every three years brings new insight into its processes and performance. An external
evaluation took place in 2012/13. The 2013/14 evaluation was conducted internally.
The chairman conducted one-to-one sessions with each member of the Board and the company secretary. The following areas of its
role and performance were explored in depth during the evaluation process:
Board role and remit
induction and continuing education
information flows to the Board
diversity of skills, experience, independence and knowledge on the Board, including consideration of gender diversity
any other factors relevant to the Boards effectiveness, such as management of meetings.
The Board received a written report from the chairman, which identified progress made and areas for improvement. This was
debated and discussed in detail and a clear action plan for the year ahead was then developed and approved.
The actions identified in the 2013/14 review build upon the actions identified in previous years and focus on the diversity of the
Board, succession planning, Board focus and interaction between Board members. While many of these themes have arisen in prior
years, the significant changes to the membership of the Board during the year have inevitably contributed to a focus on those areas
particularly affected by its composition. In addition, the increasingly diverse locations of Board members, coupled with the work
undertaken in prior years to provide more timely and detailed management data (2011/12) and enhance the rolling 12-month agenda
(2010/11), have led to adjustments to the frequency of meetings and increased use of technology.
The key findings of the 2013/14 performance review will be implemented in the current financial year and progress will be considered
as part of the next performance evaluation.
Commitment
During the year all directors, including the independent non-executive directors, committed significant time to the Company, in line
with the requirements stated in their letters of appointment and service contracts.
Governance 71
The Board also receives regular updates from the company secretary on legal, regulatory and governance developments, which
highlight any impact they may have on the Board and/or the Group.
On joining the Board, directors take part in a formal induction process. This includes the provision of past Board materials to
provide background information on the Group, information on Board processes and governance, site visits and meetings with key
employees. The induction is tailored to each new directors specific needs. Allister Langlands and Thomas Leppert are participating
in comprehensive induction programmes, which commenced immediately following the announcement of their appointments.
James Cullens will receive a similar introduction to the Group on commencement of his appointment.
Strategic Report
Accountability
Financial reporting
Statements regarding directors responsibilities and the status of the business as a going concern are given in the Directors Report
(pages 64 and 65).
Governance
Internal controls
The Board is responsible for reviewing and approving the Groups governance framework and ensuring its adequacy and
effectiveness, as set out in the FRCs 2005 Internal Control: Revised Guidance for Directors on the Combined Code. Changes
in this area following consultations by the FRC are being monitored by the Board and its committees as applicable.
Work to develop our Group code of conduct continued during the year and this is expected to be launched to all employees in
the current financial year. It sets out what it means to think and behave in the Atkins Way and provides employees with a clear
framework within which to operate.
The Groups governance framework is illustrated in figure 1.
Board
Articles of association
Matters reserved to the Board
Committee terms of reference
Values and ethics
Board
Policy statements
Group
Strategy
Quarterly business reviews
Group authority matrix
Service delivery process
Design principles
Support function manuals (e.g. finance,
human resources, QSE)
Region/business
Local legislation
Industry requirements
Budgets
Systems
Project controls
Assurance
Group controls
Code of
conduct
Business management
system (BMS)
Win work
Deliver
work
Business
operations
People
Corporate Information
Framework
Financial Statements
72 Governance
The governance framework reflects the devolved and decentralised structure of the Group, which is considered a key part of the
Groups ability to deliver services to its clients. Under this structure the Board has delegated operational responsibility to the chief
executive officer, who then delegates authority and control to the regional chief executive officers (who are all members of the
SLT and OLT). Authority is further delegated from them to the managing directors of the principal businesses and then downward
to business and project managers as appropriate. This approach is reflected in the governance framework as follows:
the policy statements approved by the Board, available on our website: www.atkinsglobal.com/corporate-responsibility/
policy-and-governance, set out clearly and succinctly Atkins vision, commitment and arrangements, including: business conduct,
risk management, employment, excellence in delivery, health, safety and security, sustainability and stakeholder communication
Group controls set out mandatory activities and standards that are part of the overall Group processes and apply across the Group
the code of conduct will set out behavioural expectations for everyone who works for and represents Atkins, the purpose being
to reinforce the controls and underpin the ethics and values that apply across the Group, thereby protecting the reputation of our
business and maintaining our professional standing and brand
each BMS (as adopted by each region/business) has been reviewed and updated to ensure it incorporates all Group controls and
any regional and industry-specific controls required to deliver our four key business processes win work, deliver work, people
and business operations with each BMS providing a single source of information for employees, enabling them to understand
their responsibilities and comply with all Atkins requirements.
The following principles are key to the successful operation of the framework:
authority is delegated within clearly prescribed limits (under the Groups authority matrix)
decisions are escalated where either project size or risk profile require a higher level of authority
activity and performance are tracked through monthly and quarterly reports
effectiveness is audited via internal audit and self-assessment reviews.
The governance framework is designed to manage, rather than eliminate, the risk of failure to achieve stated business objectives.
It can only provide reasonable and not absolute assurance against material misstatement or loss.
Joint ventures in which the Company does not have overall control are not covered by the Groups governance framework. For these
joint ventures, systems of internal control are applied as agreed between the joint venture parties but as far as possible we insist on
compliance with our governance requirements as a minimum.
The Board monitored and reviewed the adequacy and effectiveness of the Groups governance framework, including internal controls
and risk management, on a continuous basis throughout the year ended 31 March 2014 and up to the date of approval of the Annual
Report. Support was provided by the Group Risk Committee, the internal audit function and the Companys independent auditor.
Audit Committee
Details of the work of the Audit Committee can be found in the Audit Committee Report (pages 76 to 80).
Remuneration
Details of the directors remuneration and the work of the Remuneration Committee can be found in the Remuneration Report
(pages 81 to 105).
Engagement with our shareholders is a fundamental part of the Groups corporate governance model. To this end we seek to
establish an early and effective dialogue with shareholders regarding significant changes that affect corporate governance, in addition
to ongoing engagement on more routine matters. Communication regarding the delivery of the Groups strategy is integral to this
ongoing dialogue.
The primary means used by the Board for communicating with all Company shareholders are the Annual Report and Accounts,
preliminary statement of annual results, half year results and the AGM. It also recognises the importance of the internet as
a means of communicating widely, quickly and cost-effectively. An investor relations section is provided on the Groups website:
www.atkinsglobal.com/investors to facilitate communications with institutional and private investors. This includes material
shared with fund managers and analysts at Company meetings.
Governance 73
The non-executive directors receive updates on the views of shareholders from the executive directors following investor meetings.
The Groups broker also provides updates to the Board on shareholder opinions and compiles independent feedback from investor
meetings twice a year. The company secretary brings to the attention of the Board any material matters of concern raised by the
Companys shareholders, including private investors.
Retail shareholders have the opportunity to attend our AGM, where all directors are expected to be available to answer questions.
They are also able to submit questions in writing at any time. All of the directors in appointment at the time attended our AGM
in July 2013 and were available to speak to shareholders.
We intend to call a poll for all resolutions to be considered at the 2014 AGM. This ensures the Company continues to follow best
practice and allows all shareholders, present in person or by proxy, to vote on all resolutions in proportion to their shareholding.
Details of the 2014 AGM are set out in the separate Notice of Meeting.
Governance
The chief executive officer and Group finance director present the preliminary statement of annual results and half year results to
institutional investors and analysts. These presentations are also available via webcast and teleconference. Analyst breakfast events
are hosted regularly which include presentations by our regional chief executives and business managing directors. In the last financial
year they have focused on our Asia Pacific business and opportunities in the global rail market. The chief executive officer, Group
finance director and investor relations director also regularly attend conferences and roadshows to give shareholders, and other
potential investors, access to management.
Strategic Report
Our shareholders play a vital role in the Groups governance and their increasingly active engagement is welcomed. The investor
relations director, alongside the chief executive officer, Group finance director and chairman, provides a focal point for
communication with investors and is always keen to engage with, educate and inform potential new investors. The Groups
approach to investor relations enables it to be proactive in its engagement with both shareholders and non-shareholders.
Corporate Information
Financial Statements
Allan Cook
Chairman
11 June 2014
74 Governance
Information regarding the role of the Nomination Committee, including its terms of reference, can be found on the Groups website:
www.atkinsglobal.com/investors_effectiveness.
Committee membership
The independent non-executive directors who served on the Committee during the year are shown in table 1.
Table 1: Members of the Committee
Member
Admiral the Lord Boyce
Allan Cook (chairman)
Fiona Clutterbuck
Joanne Curin
Allister Langlands
Thomas Leppert
Raj Rajagopal
Rodney Slater
From
5 May 2004
10 September 2009
20 June 2007
1 March 2009
4 September 2013
1 October 2013
1 March 2009
9 September 2011
To
31 July 2013
To date
To date
31 January 2014
To date
To date
To date
To date
The key matters discussed by the Committee during the financial year included:
Theme
Agenda items
Succession planning
Board composition
The Boards composition is regularly reviewed and, where necessary, updated to ensure that it is able to respond to the Groups
needs. As the Group continues to grow, and as we move into the new financial year, our refreshed Board is well placed to provide
effective leadership.
Appointment process
Allister Langlands and Thomas Leppert were appointed to the Board as independent non-executive directors during the last financial
year. James Cullens will be joining as an executive director on 1 July 2014 and, after one months handover, will take over as
Group HR director.
At the beginning of each appointment process, the Nomination Committee considered in detail which areas of expertise the Board,
and in turn the Group, would most benefit from and drew up detailed role specifications accordingly. Diversity of thought and
background played a considerable part in the process. Each candidate was assessed against the role specification as well as
undergoing a comprehensive interview process. Gender diversity was an important part of the appointment process. We mandated
that balanced shortlists be presented for these appointments and will do so for future searches for independent non-executive
directors.
The executive search firm Korn/Ferry Whitehead Mann supported the Board on all the appointments during the year. We are pleased
that it has signed up to the Voluntary Code of Conduct for Executive Search Firms, which promotes gender diversity and best practice
for corporate board search processes.
Succession planning
Considerable effort has been put into developing talent below Board level, notably through the introduction of a Group leadership
development programme (GLDP) in the year ended 31 March 2013. Several members of the Board joined attendees during the
GLDP in the summer of 2013. Members of the Committee participated in a comprehensive review of the Groups succession plan
at a meeting of the Board held during the year.
Gender imbalance below Board level is widely recognised as a potential factor in gender imbalance at Board level. The Company
has sought to address this through various initiatives, as set out in the Human Resources Review (page 52). As part of the succession
planning exercise, a number of female employees have been identified as potential future leaders of the Group. It is hoped this
will create a pipeline of senior female talent in both management and technical roles. Furthermore, we have engaged actively with
an initiative promoted by the Department for Business, Innovation & Skills (BIS), to identify female senior employees to become
potential candidates for non-executive director roles in other listed companies.
Governance 75
In particular, the Board remains committed to gender diversity. The topic of womens representation on boards remains high
on the agenda for governments and the public. In March 2014 Lord Davies of Abersoch published his third annual progress report
on this matter. In it he renews his calls for chairmen to set out their aspirational targets for the number of women on their boards
in 2015 or beyond and for companies to invest in the female talent pipeline.
The Board continues to aspire to a membership of at least one third women by 2015, without compromising its focus on diversity
of thought and experience. In the wider Group, we are continuing to work towards our short-term target of increasing female
representation in both the senior management population (the top 1,000 employees in the Group) and the SLT to 15% by
31 March 2015. Details of female representation in the wider Group are provided in the Human Resources Review (page 53).
Strategic Report
The Board attaches significant importance to diversity both within its own membership and within the Group. Atkins benefits
from diversity at Board level in terms of both perspective and experience.
Nationality/citizenship
Defence and aerospace
22.2%
Energy
22.2%
Engineering
44.4%
Finance (accountancy,
private equity and corporate finance)
44.4%
Human resources
11.1%
Legal
22.2%
Management consultancy/
strategic consultancy
44.4%
33.3%
66.6%
Transportation
11.1%
Governance
100%
Financial Statements
Board overall
Corporate Information
76 Governance
Independent auditor
Regulatory and best practice developments regarding the
appointment, role and responsibilities of the independent
auditor remain subject to further discussion and potential
change. We have considered the Code provision that the
independent audit contract be put out to tender every 10
years. However, comprehensive regulatory changes have also
now been proposed by the European Union (EU) and the
UKs Competition Commission, which has since been abolished
and had its powers transferred to the Competition and
Markets Authority (CMA). We therefore believe that our
long-term tender policy should be based on the final outcome
of these developments taken as a whole. These issues are
discussed further later in this report (page 78). In the
meantime the reappointment of the independent auditor
continues to be the subject of rigorous review each year.
Having considered the effectiveness and performance of the
independent auditor, the Committee has recommended the
reappointment of PricewaterhouseCoopers LLP (PwC) as
independent auditor.
Yours faithfully
Allister Langlands
Chairman of the Audit Committee
11 June 2014
Governance 77
The independent non-executive directors who served on the Committee during the year are shown in table 1.
Member
Joanne Curin (chairman 1 July 2009 to 31 January 2014)
Fiona Clutterbuck
Allister Langlands (chairman from 1 February 2014)
Raj Rajagopal
From
1 March 2009
1 April 2007
9 October 2013
8 September 2011
To
31 January 2014
To date
To date
To date
Information regarding the scope of the Committees activities, including its terms of reference, can be found on the Groups
website: www.atkinsglobal.com/investors_accountability.
Strategic Report
Financial reporting
Judgemental issues regarding the results for the year ended 31 March 2013 including a review
of accounting policies and going concern
Independent auditors report in respect of the results for the year ended 31 March 2013
Draft results and associated documentation for the year ended 31 March 2013
Plans for the preparation of the results for the six months ended 30 September 2013
Judgemental issues regarding the results for the six months ended 30 September 2013 including
a review of going concern
Independent auditors report in respect of the results for the six months ended 30 September 2013
Draft half year results and associated documentation for the six months ended 30 September 2013
Plans for the preparation of the full year results for the year ended 31 March 2014
Internal controls
Internal audit
Consideration and approval of the internal audit plan for the year ending 31 March 2015
Regular reviews of internal audit findings
Review of the policy regarding the management of potential conflicts between the Group and
the internal auditor
Review of the Groups Internal Audit Charter
Independent auditor
Independent review plans for the six months to 30 September 2013 and for the year ended
31 March 2014
Review of the policy regarding the management of potential conflicts between the Group and
the independent auditor, including non-audit work undertaken by the independent auditor
Review of audit and non-audit fees paid to the independent auditor and its independence
and effectiveness
Recommendation regarding the reappointment of the independent auditor
Approval in line with policy of non-audit work undertaken by the independent auditor
Reform of the audit market and the proposals from the EU and the UKs Competition Commission
(now the CMA)
Consideration of the Companys approach to tendering the independent audit
Risk
Governance
Financial Statements
Agenda items
Corporate Information
Theme
Governance
Committee activities
The key matters discussed by the Audit Committee during the financial year included:
78 Governance
The Committee discussed the following matters following the conclusion of the financial year ended 31 March 2014 in respect
of that year:
judgemental issues regarding the results for the year ended 31 March 2014 including a review of accounting policies and
going concern
advising the Board, at its request, on whether the Annual Report and Accounts for the year ended 31 March 2014 are fair,
balanced and understandable
independent auditors report in respect of the results for the year ended 31 March 2014
draft results and associated documentation for the year ended 31 March 2014.
Significant issues
The Audit Committee has reviewed the key judgements applied to a number of significant issues in the preparation of the
Consolidated Financial Statements. This review included consideration of the following:
Significant issue
Contract accounting/
revenue recognition
The Group enters into a number of large and complex long-term contracts. Significant judgements
are required to forecast how each contract will perform and potential adjustments that may prove
necessary over the lifetime of a project. These judgements may include, for example, revenue and
profit recognition being determined based on managements estimates of the percentage that has
been completed and the costs that will need to be incurred to complete it, as well as contractual
variations. The Committee has received regular reports from management on a number of higher
risk contracts and has challenged estimates of completion costs, with consequential impacts on
revenue recognition. It has concluded that the approach to revenue recognition is appropriate in
the context of the Groups business model and contract structures.
Goodwill impairment
The Group has significant goodwill relating to Atkins North America (ANA) following the
acquisition of The PBSJ Corporation in 2010. The Committee considered the need to undertake
a goodwill impairment calculation as at 30 September 2013 by reviewing the assumptions used
at 31 March 2013 and the discount rate used in relation to future cash flows and determined that
there were no triggering events. At 31 March 2014 it examined the detailed full impairment review
undertaken by management, which included testing of assumptions and sensitivity analysis. It also
received and considered the independent auditors comments on the key assumptions and detailed
forecasts made. The issue of impairment involves making significant judgements about the future
results of the ANA business and the risks it faces. The Committee agreed with managements
recommendation that no impairment charge should be made but that there remains a risk of
impairment of ANA goodwill in the future and relevant disclosures have therefore been included
in the Annual Report and Accounts (note 16, page 148).
The Committee also considered a number of other judgements made by management, including judgements concerning accounting
for acquisitions and disposals, provisions in the Groups insurance captive, accounting for pension liabilities and taxation.
Fair, balanced and understandable
The Audit Committee examined the Annual Report and Accounts and was asked by the Board to advise it on whether they are fair,
balanced and understandable. To enable it to draw its conclusions in this respect, the Committee:
examined the preparation and review process for the Annual Report and Accounts and considered the level of challenge provided
through that process
considered the accounting policies applied by the Group
assessed the information contained in the Annual Report and Accounts against the Groups strategy and business model to ensure
the information provided was sufficient to enable shareholders to assess the Groups performance.
Governance 79
The Committee has agreed to implement a more formal process of review of the effectiveness of the independent auditor in future.
The Committee will issue a questionnaire to the members of the Committee and senior management, which will be circulated after
the publication of the Annual Report and Accounts for the year ended 31 March 2014. The questionnaire will cover the robustness
of the audit process, quality of deliverables, reporting and the audit team. The responses will be collated ahead of and fed into the
Committees consideration of the audit strategy and approach for the financial year ending 31 March 2015.
The independence of the independent auditor is evidenced through its challenge to management. Its independence and objectivity
are assured through the rotation of the audit partner on a regular basis, the last such rotation having taken place in 2012.
Accordingly, the Committee has not considered it necessary to date to undertake a tender process for the audit work, although
it has considered PwCs tenure and appointment on an annual basis. There are no contractual obligations restricting the Companys
choice of independent auditor.
Audit tender policy
In September 2012 the Financial Reporting Council (FRC) amended the Code to include, among other changes, a requirement for
FTSE 350 companies to put the independent audit contract out to tender at least once every 10 years. The FRC recognised that
the audit market could be disrupted if a large number of companies chose to go out to tender in the first year in which the revised
Code applied and hence proposed transitional arrangements that brought tenders in line with the cycle for rotating the audit partner.
Governance
The independent auditor is currently PwC, which has acted in this capacity since the Company listed on the London Stock Exchange
in 1996. During the year the Committee conducted a review of the relationship with the independent auditor, as well as its
qualification, expertise and resources and the effectiveness and quality of the audit. As part of this review, the Committee considers
audit governance, audit planning and methodology, robustness of challenge to management and the quality of senior members
of the audit team. It does so in consultation with senior management, particularly senior finance personnel. It has concluded that
PwCs appointment continues to meet the Groups needs and therefore recommended to the Board its reappointment as
independent auditor.
Strategic Report
Independent auditor
In addition to the Code and Competition Commission developments, on 27 May 2014 the European Parliament published a directive
and a regulation in the Official Journal of the EU implementing reforms of the audit sector in the EU. EU member states must adopt
the necessary measures to implement the directive by 17 June 2016 while the regulation will apply from 17 June 2016 (other than the
prohibition on contractual clauses limiting the choice of auditor, which will apply from 17 June 2017). The reforms require audit firms
of public interest entities, including all listed companies, to rotate their auditor once every 10 years (with a possible extension for a
further 10 years available where a tender is held) and introduce a range of new rules and measures to strengthen audit quality and
independence across the EU.
Corporate Information
It is not yet clear what impact the EU changes will have on the Competition Commission recommendations and on the Code or how
the various requirements will interact. The Committee will therefore continue to monitor developments and will put in place a formal
audit tender policy when the position has become clearer. In the meantime the reappointment of the independent auditor will
continue to be the subject of rigorous review each year.
Financial Statements
The Competition Commission (now the CMA) issued its final report on its inquiry into the FTSE 350 audit market in October 2013.
Its recommendations, which are yet to be enacted into law, included a mandatory audit tender once every 10 years, among other
proposals intended to encourage competition.
80 Governance
Auditor independence
The Committee understands that certain work of a non-audit nature may be best undertaken by the independent auditor as
a result of its unique position and knowledge of key areas of the Company. Approval is required prior to the independent auditor
commencing non-audit work in accordance with a Group policy, summarised in table 2. This policy is drafted to preserve the
independence and objectivity of the independent auditor and is reviewed and approved annually by the Committee. The impact
on independence, if any, of non-audit work performed by the independent auditor is also considered regularly by the Committee.
The policy sets out safeguards to be considered when engaging the independent auditor for non-audit services. The appointment
of former employees of the independent auditor to positions in the Group is also regulated by the Committee.
Table 2: Policy on non-audit services provided by the independent auditor
Audit-related
services
Examples Regulatory
of types
work
of work
Reporting
accountants
to a share or
bond issue
or other
shareholder
circulars
Auditing
of share
schemes
Independent
review of
the half year
report
Approval
required
Other work
Provision of non-material systems
or project services under the control
of a Group project manager
Secondment of staff other than to
prepare accounting records or financial
statements
Remuneration surveys
Systems recommendation and
implementation
Prohibited
work
Book-keeping
services
Other services
deemed to be
incompatible
with auditor
independence
by professional
or governmental
regulations
Note 5 to the Financial Statements (page 139) sets out the fees paid to the independent auditor for audit and non-audit work.
Approximately 90% of the non-audit fees incurred related to taxation advice and it was therefore considered appropriate, in light of
PwCs detailed understanding of the Group and expertise in this area, to engage its services in this regard. The Committee concluded
that the level of non-audit fees, which represent a value of 66.7% of the audit and audit-related fees for the Group, did not have
any impact upon PwCs independence.
Approved by the Board and signed on its behalf by
Allister Langlands
Chairman of the Audit Committee
11 June 2014
Governance 81
Governance
Responding to change
Since I last reported to shareholders on the work of the
Committee, there has been a significant amount of change to
the regulations concerning directors remuneration disclosure.
Many of you will be aware of the debate and stakeholder
consultation which took place ahead of these changes being
implemented. Members of the Committee followed this
debate closely and we have sought to respond to the new
requirements comprehensively, building on the extensive
remuneration disclosures we have made for the past two
years. We are conscious that best practice will continue to
evolve and the Committee will continue to monitor this,
responding to change as appropriate.
In the past year the Group has delivered another set of good
results. The Group also made significant progress on the
delivery of its strategy. The Groups profit after tax for the
year of 96.3m (2013 restated: 84.3m) exceeded the stretch
target for bonus purposes. Group cash performance was
also strong, with the cash conversion target for the year being
met in full. Accordingly, the Committee has paid the maximum
level of bonus to the executive directors for achieving the
stretching financial targets that were set. The Committee also
considered the performance of each of the executive directors
against their key strategic objectives for the year, full details
of which are contained in the Annual Remuneration Report
on (page 98).
Financial Statements
Corporate Information
Dear Shareholder
Strategic Report
Remuneration Report
Letter from the Remuneration Committee chairman
82 Governance
Committee activities
The Committee uses a schedule of standing items to help structure the agendas for its meetings as well as responding to matters
which arise during the course of the year, such as regulatory changes. The Committees standing agenda items are aligned to
the Groups reward communication programme. Each April employees receive confirmation of their remuneration for the year
ahead. Notification of bonus payments follows the announcement of the Groups financial results in June. The Committee keeps
remuneration policy and market practice under review throughout the year. The key matters discussed during the year are set out
in figure 1.
Figure 1: Key matters discussed during the year
Theme
Agenda items
Best practice
Remuneration policy
Share plans
Reporting
Further details on the Committee can be found in the Annual Remuneration Report (pages 104 and 105).
Governance 83
Remuneration Report
Directors Remuneration Policy
This section of the report summarises the Companys policy on directors remuneration and includes the following parts:
A. an overview of our remuneration policy and its alignment with our business strategy
B. a future policy table detailing key remuneration elements for our executive directors
C. an illustration of the remuneration packages for each executive director under minimum, target and stretch performance scenarios
E. details of the remuneration policy for the chairman and non-executive directors
F. other matters considered when determining remuneration policy for directors.
This policy will be put to shareholders for a binding vote at the Companys AGM to be held on 30 July 2014. This policy is intended
to last for three years and will take effect from the AGM, subject to shareholder approval.
Strategic Report
D. other relevant policies relating to executive directors remuneration, including on recruitment and termination
Our strategy is to deliver long-term shareholder value through a focus on core growth sectors in engineering and design.
As set out in the Strategy section (pages 16 to 17), this strategy has three principal priorities over the medium term:
operational excellence
Governance
portfolio optimisation
sector and regional focus.
The overall objective of our strategy remains to create shareholder value through:
driving margins above 8%
reducing dependence on the UK (with our long-term aspiration being to have more than 75% of our business outside the UK)
growing organically and through acquisition.
Our remuneration policy is directly aligned with the delivery of our strategy. The following key themes provide the basis for the
framework:
the policy must be based on simple principles, aligned with our key performance indicators (page 20), and provide clear line
of sight for participants and alignment with shareholders interests
a significant portion of executive directors remuneration should be performance-related (on both a short- and long-term basis)
and delivered in the form of Atkins shares
Corporate Information
growth in EPS is a key metric for measuring the performance of our business and should be balanced with a focus on long-term
share price growth and delivery of our strategy.
Financial Statements
as a people business, the remuneration policy must enable us to attract, retain and incentivise the best global talent
Related section
Our strategy
84 Governance
Current year
(Y)
Y+1
year
Y+2
years
Salary
100% cash
Pension
100% cash
Benefits
100% cash
Bonus
Performance
assessed
2/3 paid
in cash
LTIP
Award made
Performance period
LGU
Award made
Performance period
Performance period
Performance period
Y+ 3
years
Y+4
years
Y+5
years
Y+6
years
Deferred
shares vest
Award vests
Tranche 1
(1/3) vests
Tranche 2
(1/3) vests
Tranche 3
(1/3) vests
Governance 85
To provide a market-competitive
remuneration package in a cost
effective way.
Operation
Maximum opportunity
Not applicable
Not applicable
Governance
Benefits
To provide a market-competitive
remuneration package that
enables executive directors to
provide for their retirement in
a tax-efficient way.
Financial Statements
Pension
To provide a market-competitive
salary to recruit and retain
individuals with the skills and
experience necessary to deliver
the Companys strategic
objectives.
Corporate Information
Base salary
Purpose and link to our
strategy
Strategic Report
Fixed pay
86 Governance
Variable pay
Operation
Performance
framework
Governance 87
Operation
Strategic Report
Maximum
opportunity
Performance
framework
Not applicable
Financial Statements
Governance
Corporate Information
88 Governance
The following charts illustrate the packages for the chief executive officer, Group finance director and Group HR director,
distinguishing the elements of the package that are performance-related. Three indicative levels of performance are shown:
minimum, target and stretch taking into account an assumed level of vesting, as outlined in table 2.
Table 2: Minimum, target and stretch
Performance level
Definition
Minimum
Fixed pay comprising salary, benefits and pension. No annual bonus or vesting of
long-term incentives.
Target
Fixed pay comprising salary, benefits and pension. Annual bonus payable at 50% of maximum award
(i.e. 62.5% of salary for the chief executive officer and 50% of salary for other executive directors).
50% of LTIP award vests (i.e. 37.5% of salary at grant) and 50% of LGU vests, assuming
it is worth 33% of the face value on vesting (i.e. 8.3% of salary at grant).
Stretch
Fixed pay comprising base salary, benefits and pension. Annual bonus payable at maximum level.
LTIP and LGU payable in full, assuming the LGU is worth 33% of face value on vesting (i.e. 16.7%
of salary at grant).
Salary and pension are based on levels to be implemented in the financial year ending 31 March 2015; benefits are based on the
actual value level delivered in the year ended 31 March 2014. Given the value of the LGU is dependent on share price growth, it has
been valued in a manner consistent with the guidance issued by the GC100 and the Financial Reporting Lab, namely assuming shares
are worth 33% of their initial face value. Dividend equivalents have been excluded.
Governance 89
Uwe Krueger
James Cullens
000
Minimum
100% 775
Target
55%
Stretch
38%
Fixed pay
26%
19% 1,410
36%
Annual bonus
26% 2,044
100% 352
Target
58%
Stretch
41%
Long-term incentives
Fixed pay
22%
Annual bonus
20% 611
31%
28% 869
Long-term incentives
Heath Drewett
Strategic Report
000
Minimum
000
Minimum
100% 449
58%
Stretch
40%
Fixed pay
22%
Annual bonus
20% 781
31%
29% 1,113
Governance
Target
Long-term incentives
The Committee determines the remuneration package for all new executive directors appointed to the Board. Such appointees
may be individuals who are already employed by the Group or from elsewhere.
In determining the appropriate remuneration package for a new executive director the Committee will consider the calibre of the
candidate, the level of their existing remuneration, the jurisdiction the candidate is recruited from and their skills and experience,
data for companies of a similar size and complexity and contextual information regarding remuneration paid to employees elsewhere
in the Group.
The remuneration of a new executive director will include all elements set out in the policy table (table 1), namely salary, benefits,
pension, participation in the EBS and long-term incentive awards under the LTIP and LGU. Depending on the level of salary set on
appointment, the Committee may make larger initial increases to move salary to the desired level during the first three years following
appointment. The maximum opportunity levels in relation to other elements of remuneration outlined in the policy table (table 1)
will apply.
Depending on the timing and circumstances of the appointment, the Committee may vary the weighting of objectives under the
EBS in the first year that the individual serves on the Board.
For an external appointment the offer may include compensation for the forfeiture of awards from a previous employer. In assessing the
level of such a buyout award, the Committee will take into account the type of incentive scheme, performance targets (and whether
they are likely to be achieved) and the performance period of the forfeited award. In so doing the Committee will seek to ensure up to
equivalence in value. To the extent that the Committee determines that it is appropriate, such awards will be share-based with vesting
subject to appropriate performance targets. The Committee reserves the right to rely on exemption 9.4.2 of the Listing Rules to enable
a buyout award to be made. In such circumstances any arrangement put in place will only compensate for remuneration lost and will
take the form of performance-related variable remuneration. For internal promotions, the Committee reserves the right to satisfy
pre-existing executive incentive awards and other obligations which may be in place at the time of appointment.
Corporate Information
Our share ownership guidelines were adopted on 1 April 2012. Executive directors are expected to meet the guideline within
a five-year period from 1 April 2012 or, if later, the date of their appointment to the Board. The Committee may vary the length
of the periods within which the shareholding may be acquired.
Financial Statements
The Companys shareholding guidelines seek to strengthen further the alignment of the executive directors with shareholders.
Executive directors are expected to build up a significant interest in the Companys shares equivalent to one times their individual
salaries, based on the value of such shares at the time of their acquisition or their current market value, whichever is the higher.
Shares that count towards this guideline include those held by the executive directors spouse and/or dependent children plus any
vested shares awarded under a Company share plan.
90 Governance
In circumstances where an executive is employed on an international assignment, their arrangements will be managed in a way that
is consistent with other internationally mobile employees across the Group. International assignment remuneration may incorporate
tax equalisation so that, whilst on assignment, the executive director will not have to pay any more tax than they would have paid
had they remained in their home location. It is also likely to include additional allowances to reflect any cost of living and lifestyle
differences between the assignees home and assignment locations and support to fund accommodation and schooling (if the
executive has dependants of school age).
The service agreements of executive directors who served during the year are summarised in table 3.
Table 3: Executive directors service agreements
James Cullens1
Heath Drewett
Alun Griffiths2
Uwe Krueger
Notice period
(months)
12
12
12
12
Contract date
26 February 2014
17 April 2009
18 April 2007
1 June 2011
Effective date
of contract
1 July 2014
15 June 2009
13 March 2007
14 June 2011
Unexpired term
of contract
Rolling contract
Rolling contract
Contract ends on 30 July 2014
Rolling contract
Copies of each directors service agreement will be available for inspection prior to and during the AGM and are also available
for inspection at the Companys registered office during normal business hours.
In setting its policy on notice periods, the Company takes into account market practice and the need to attract and retain the
best talent.
In line with current market practice, the executive directors have rolling service contracts which are terminable on giving 12 months
notice. On the recruitment of an executive director who previously had a longer notice period (commonly seen outside the UK),
the Committee reserves the right to mirror the notice period with it reducing on a rolling basis to 12 months within two years
of appointment.
No service agreement provides for predetermined amounts of compensation in the event of early termination of service contracts
or a change in control.
The Committee retains its discretion to make a payment in lieu of notice which will be limited to one years base salary, benefits
and pension. The Committee also retains its discretion to make phased payments. The service agreements include a duty for the
executive director to mitigate loss and any payment in lieu of notice may be reduced to take account of such mitigation (for example
if alternative employment is taken up). There is no contractual obligation to pay annual bonus. Depending on the circumstances,
the Committee has the discretion to make a pro rata bonus payment, linked to the original performance conditions and delivered
entirely in cash.
Governance 91
The executive directors entitlements to any bonus and unvested share awards granted in connection with the EBS or under the
terms of the LTIP and LGU will be treated in accordance with the terms of the relevant plan rules, summarised in table 4.
Termination for
gross misconduct
or other grounds
of fair dismissal.
No entitlement.
Termination due
to resignation for
another role.
Corporate event
(e.g. change in control,
reconstruction,
winding-up).
LTIP award
LGU award
Unvested award
pro-rated and
exercisable/transferable
within six months from
the vesting date subject
to satisfaction of
performance condition.
Unvested award
pro-rated and subject
to the normal vesting
schedule and satisfaction
of underpin.
No entitlement if
employment ceases prior
to the completion of
the performance period.
If employment ceases
after the completion of
the performance period
the maximum two-thirds
EBS cash may be paid
subject to performance
conditions being satisfied.
If employment ceases
after the completion of
the performance period
the one-third EBS
deferred share award will
be forfeited.
Unvested award
pro-rated and
exercisable/transferable
on corporate event if
performance condition
has been satisfied.
Unvested award
pro-rated and exercisable
on corporate event
if underpin has been
satisfied.
Governance
The Committee reserves the right to make additional compensatory payments where such payments are made in good faith and
following the receipt of: (i) the discharge of an existing legal obligation (or by way of damages for breach of such an obligation);
and (ii) settlement or compromise of any claim arising in connection with the termination of a directors office or employment.
Payment of the leavers reasonable legal fees will also be permissible.
External directorships
The Board and the Committee recognise the benefit we can obtain if our executive directors serve as non-executive directors of other
companies. Subject to review in each case, the Boards general policy is that each executive director may accept one non-executive
directorship with another FTSE 350 company from which any fees received may be retained. The Board also encourages executive
directors to undertake pro bono appointments with charitable or professional organisations to aid their personal development and
further enhance the profile of the Company.
Financial Statements
Executive Bonus
Scheme deferred
share award
Corporate Information
Agreed termination
(e.g. retirement or
ill health).
Executive Bonus
Scheme cash
award
Strategic Report
92 Governance
Table 5 summarises the remuneration policy for the Companys chairman and non-executive directors.
Table 5: Remuneration policy for the Companys chairman and non-executive directors
Component of
remuneration
Fixed fees
To attract and retain high-calibre individuals by offering market-competitive fixed fees commensurate
with time commitment and responsibilities.
Operation
Fees
All fees are paid in cash in arrears.
The chairman is paid a basic fee. The non-executive directors are paid a basic fee and, if applicable,
additional fees for chairmanship and membership of the Audit and Remuneration Committees.
An additional fee is also paid to the director who serves as the senior independent director.
Reviewed annually by the executive directors with any changes effective from 1 April. A review
does not automatically give rise to an increase in fees.
Benchmarked periodically against published fee data for companies of similar size and complexity
and bespoke comparator groups as appropriate to ensure that fees remain market-competitive.
Considered in light of economic climate, market conditions, Company performance, pay and
conditions across the wider workforce, the non-executive director role, remit and the level of
salary increases made in the rest of the business.
No recovery provisions apply to fees.
Expenses
Fees for the chairman are currently inclusive of normal travel expenses for travelling to and from the
Groups London office. However, the Committee may pay such expenses in the future. Expenses
are payable on all travel and subsistence payments to the non-executive directors and are grossed
up where such expenses are deemed to be a taxable benefit by HM Revenue & Customs (HMRC).
The Company may also meet the cost of compliance with HMRCs individual reporting requirements
where the director is not resident in the UK. The chairman and non-executive directors are not
eligible for a pension, share incentives, annual bonus or any similar payments other than out-ofpocket expenses in connection with the performance of their duties.
Opportunity
Fee increases for non-executive directors will normally not exceed the average salary increases
across the Group. Increases above this level may be made in specific situations, such as significant
additional time commitment from non-executive directors in exceptional or unforeseen
circumstances. The details and reasoning behind such an exceptional increase will be disclosed
in the Annual Remuneration Report.
In aggregate, total fees (basic fees plus additional fees) paid to the chairman and non-executive
directors shall not exceed 600,000 per annum as set out in the Companys articles of association
(as amended with shareholder approval from time to time).
Performance
When determining fee increases the performance and time commitment of the non-executive
directors is considered.
Letters of appointment
The chairman and non-executive directors have letters of appointment stating their annual fee. Their appointment is for an initial
term of three years subject to satisfactory performance and their re-election at forthcoming AGMs. Their appointment may be
terminated with six months written notice at any time. There are no entitlements in respect of loss of office. All directors are subject
to re-election at the Companys AGM.
Governance 93
Table 6 summarises the dates of appointment and most recent re-election dates for the chairman and each of the
non-executive directors.
Name of director
Fiona Clutterbuck
Allan Cook
Allister Langlands
Thomas Leppert
Raj Rajagopal
Rodney Slater
Date of appointment
as a non-executive director
13 March 2007
10 September 2009
4 September 2013
1 October 2013
24 June 2008
9 September 2011
Expiry of current
three-year term
13 March 2016
10 September 2015
4 September 2016
1 October 2016
24 June 2014
9 September 2014
Strategic Report
Table 6: Dates of appointment and most recent re-election dates for the chairman and each of the non-executive
directors
Copies of letters of appointment of the chairman and non-executive directors will be available for inspection prior to and during
the AGM and are also available for inspection at the Companys registered office during normal business hours.
When recruiting a chairman, fees will be set taking into account the calibre of the candidate, the level of existing remuneration,
the jurisdiction the candidate is recruited from and the individuals skill and experience. Any new non-executive directors will be
paid in accordance with fee levels in place at the time of their appointment.
Governance
As a people business our reward and incentive structures are critical to the success of our business. Participation in the success
of the Group, both through bonus arrangements and, for the SLT, through long-term share-based awards, is a cornerstone of
our remuneration framework. The Committee also recognises the importance of having reward structures that create a sense
of ownership and participation in the long-term growth of our shares. All UK employees are eligible to participate in the SIP and,
at the 2013 AGM, we obtained approval for new all-employee share plans in the UK, the US and other major jurisdictions in
which the Group operates.
As many of the Companys UK-based employees are shareholders through the SIP they, like other shareholders, are able to express
their views on directors remuneration at each general meeting via voting on the remuneration resolutions.
Financial Statements
The Committee does not consult formally with employees regarding executive remuneration but regularly reviews the remuneration
of employees throughout the Group to ensure that it is attuned to general pay and conditions when considering the remuneration
of executive directors. For example, in determining salary increases for the executive directors, the Committee looks at salary increases
across the Group.
For example, in determining the new remuneration framework established in 2012/13 the Committee consulted extensively with
shareholders. This highlighted the importance of incorporating a cash flow measure in the annual bonus scheme, as this is a key
indicator by which the Company and its shareholders measure the performance of the business. In response, a cash conversion target
was incorporated in the annual bonus for the executive directors and other senior management from 2013. During 2013 we have
engaged with Institutional Shareholder Services (ISS) to understand better its concerns with respect to the LGU as expressed in its
proxy voting report. These concerns related largely to transparent disclosure of the performance metrics that are taken into account
when determining vesting. In response, the Annual Remuneration Report provides more explicit detail of the criteria by which the
Committee will assess progress against strategy for the awards made in 2013 and, in future years, will give a full explanation of the
Committees decision on whether or not the awards have vested during the year being reported on.
More generally, in developing the policy disclosed in this report we have considered the views of our majority shareholders based
on published guidance and direct feedback from prior conversations.
Corporate Information
The Committee regularly consults with shareholders on matters relating to executive remuneration. When significant changes are
planned to remuneration, the Committee seeks feedback from investors and develops and considers its proposals in light of this
feedback.
94 Governance
Remuneration Report
Annual Remuneration Report
This section of the Directors Remuneration Report sets out the Companys remuneration of its executive and non-executive directors
(including the chairman) during the financial year ended 31 March 2014 and will, together with the annual statement by the
Committee chairman, be proposed for an advisory vote by shareholders at the AGM on 30 July 2014. It has been prepared on the
basis prescribed in the Regulations and also includes the items required to be disclosed under Listing Rule 9.8.8R. Where required,
data has been audited by PricewaterhouseCoopers LLP and this is indicated where appropriate.
Table 7 sets out total employee costs and distributions to shareholders for the years ended 31 March 2013 and 31 March 2014.
Table 7: Relative importance of spend on pay
2012/13
m
891.7
30.0
2013/14
m
924.3
31.7
% change
3.66
5.67
1. Total employee costs represent amounts included in note 6 to the Financial Statements.
2. Distributions to shareholders include the total dividends paid in respect of each financial year.
Percentage change from 2013 to 2014 in remuneration of director undertaking the role of chief executive officer
Table 8 shows the change in remuneration, from 2013 to 2014, of the chief executive officer and a comparator group consisting of all
UK employees.
Table 8: Change in chief executive officer and employee pay from 2013 to 2014
% change
in salary
3.44%
4.74%
% change
in taxable
benefits
-8.44%
4.89%
% change
in annual
bonus
7.06%
2.97%
1. The comparator group consists of all UK-based employees within the Atkins Group excluding the chief executive officer. This comparator group has been chosen for
the purpose of this comparison as the chief executive officer is employed in the UK.
Chief executive officer pay for performance comparison over the last five years
Figure 3 provides a comparison of the Companys total shareholder return (TSR) with that of the FTSE 250 Index, based on an initial
investment of 100 over the five-year period ended 31 March 2014. This index is considered the most appropriate index against which
to measure performance as the Company has been a member of the FTSE 250 for the whole of the five-year period.
Figure 3: Total shareholder return
400
Atkins
320
FTSE 250
240
160
80
2009
2010
2011
2012
2013
2014
Source: Datastream
Related section
Human Resources Review
Governance 95
Table 9 summarises the total remuneration for the chief executive officer over the last five years, and the outcomes of short- and
long-term incentive plans as a percentage of maximum.
Financial year
Chief executive officer
Total remuneration (single figure) 000
Annual bonus (% of maximum)
Long-term variable pay (% of maximum) LTIP
Long-term variable pay (% of maximum) LGU
2009/10
Keith Clarke
1,072.0
100.0
45.7
n/a
2010/11
Keith Clarke
932.4
97.5
n/a
2011/12
2011/12
2012/13
2013/14
Keith Clarke1 Uwe Krueger1 Uwe Krueger Uwe Krueger
289.4
986.8
1,387.8
2,174.52
70.0
71.8
93.0
96.7
68.7
n/a
1. Keith Clarke retired as a director on 31 July 2011 and Uwe Krueger was appointed as a director on 14 June 2011.
2. Total remuneration (single figure) includes 732.8k in respect of the 2011 LTIP award.
Strategic Report
Table 9: Remuneration for the chief executive officer over the last five years
Table 10 sets out in the required form the total remuneration paid to each of our executive directors for the financial year ended
31 March 2014.
Sub-total
Annual bonus3
Total
2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 4 2012/13 2013/14 2012/13 2013/14 2012/13 2013/14 2012/13
000
000
000
000
000
000
000
000
000
000
000
000
000
000
000
000
000
000
Heath
Drewett 335.0 312.0
Alun
Griffiths 235.0 227.0
Uwe
Krueger 566.5 550.0
Total
1,136.5 1,089.0
14.9
15.0
83.8
78.0
433.7
405.0
330.8
308.1
414.9
8.25
753.9
308.1 1,187.6
713.1
14.6
14.8
28.2
27.2
277.8
269.0
235.0
224.2
306.0
7.55
14.95
548.5
239.1
826.3
508.1
44.5
74.0
48.6
78.4
141.6
253.6
137.5
752.6 736.1 684.5 639.4 732.8
242.7 1,464.1 1,410.1 1,250.3 1,171.7 1,453.7
4.66
20.3
12.36 1,421.9
651.7 2,174.5 1,387.8
27.2 2,724.3 1,198.9 4,188.4 2,609.0
Corporate Information
1. Taxable benefits principally comprise medical insurance/healthcare allowance, company car or car allowance and, in respect of Uwe Krueger, an expense allowance
of 15,000 per year.
2. Cash value of defined contribution or cash equivalent.
3. Value of total bonus (two thirds cash and one third shares). Further detail on bonus payments is provided in table 16.
4. LTIP awards are in the form of nil-cost options. The figures above relate to awards made in 2011. The TSR performance condition attached to these awards has
been met in full. The EPS condition has been met in part. The awards vest and are capable of being exercised from 20 June 2014. The disclosed value is based on
the average mid-market quotation of the Companys shares for the three months ended 31 March 2014 and includes the value of dividend equivalents which will
be payable following exercise. The final value of the LTIP will be on the basis of the Companys share price on vesting.
5. Dividend equivalent payment made following the exercise during the year of an award made in connection with an EBS deferral under the terms of the Atkins
Deferred Share Plan.
6. Uwe Krueger receives an aggregate allowance for travel expenses incurred between his home and the UK during the first five years following his appointment of
39,000 (a direct replacement for the rental allowance disclosed in 2011).
Financial Statements
Salary
Governance
96 Governance
Single total figures of remuneration for 2013/14 chairman and non-executive directors (audited)
Table 11 sets out in the required form the total remuneration earned by our chairman and non-executive directors for the financial
year ended 31 March 2014.
Table 11: Total 2013/14 remuneration chairman and non-executive directors
Fees
2013/14
2012/13
000
000
Chairman
Allan Cook
Non-executive directors
Fiona Clutterbuck
Allister Langlands
Raj Rajagopal
Rodney Slater
Thomas Leppert
Former non-executive directors
Admiral the Lord Boyce1
Joanne Curin2
Total
Taxable benefits3
Total
2013/14
2012/13
2013/14
2012/13
000
000
000
000
195.8
190.0
2.1
2.4
197.9
192.4
53.9
26.9
54.0
46.5
21.3
49.2
52.7
45.2
5.3
0.1
2.3
53.9
32.2
54.1
48.8
21.3
49.2
52.7
45.2
17.2
41.7
457.3
50.2
48.7
436.0
9.8
2.4
17.2
41.7
467.1
50.2
48.7
438.4
1. Lord Boyce retired from the Board on 31 July 2013. This remuneration relates to the proportion of the year for which he held office.
2. Joanne Curin retired from the Board on 31 January 2014. This remuneration relates to the proportion of the year for which she held office.
3. Includes business expenses chargeable to income tax.
The total amount of fees paid to the chairman and non-executive directors was 457.3k (2013: 436.0k) which is within the limit
set in the Companys articles of association, which have been previously approved by shareholders.
Salary
The salary of each of the executive directors increased with effect from 1 April 2013 as set out in table 12 (below) in accordance
with the disclosed policy (page 85). Uwe Kruegers and Alun Griffiths salaries increased by 3% and 3.5% respectively, in line with
the average salary increase across the Group of just above 3%.
As disclosed in the 2013 remuneration report, Heath Drewett received a salary increase of 7.4%. This increase, which was above
the average salary increase across the Group, reflected the expanded remit of his role, which encompassed several areas traditionally
carried out by a chief operating officer, delivery of operational improvement programmes and increased involvement in the
development of strategy.
The Committee has increased the salaries of the executive directors with effect from 1 April 2014 as set out in table 12 in accordance
with the disclosed policy (page 85). The average salary increase for Group employees was 3.96%.
Table 12: Executive director salaries
Name
Heath Drewett
Alun Griffiths
Uwe Krueger
Salary from
1 April 2014
347,000
243,000
586,000
Increase
in salary
from prior
year
3.6%
3.4%
3.4%
Salary from
1 April 2013
335,000
235,000
566,500
Increase
in salary
from 2012
7.4%
3.5%
3.0%
Governance 97
Pension (audited)
Defined contribution pension contributions or a cash allowance in lieu of pension contribution for the executive directors are shown
in table 13.
The maximum Company contribution to the defined contribution pension of other UK-based staff is 10% of salary, except for those
affected by the removal of the link to final salary, as discussed further below. Heath Drewett and Uwe Krueger receive higher
contributions reflecting their roles as executive directors.
Alun Griffiths retains an entitlement to a defined benefit pension on the same basis as other long-serving UK employees. During 2011
a consultation was held with staff with a defined benefit pension entitlement to remove the link to final salary via an amendment
to their contracts of employment. From 1 February 2012 this final salary link was removed and transitional relief is being paid to all
employees (including Alun Griffiths) affected by the contractual change. The transitional relief is 2% of salary until 2015 and a further
3% from 2015 to 2018. This is in addition to the maximum Company contribution of 10% of salary.
Table 14 gives details of pensions or, where applicable, taxable allowance in lieu of pension provided to executive directors for the
year ended 31 March 2014.
Table 14: Pension payments
Name
Heath Drewett
Alun Griffiths
Uwe Krueger
Employer
contribution
2013/14
37,487
Cash in lieu
of pension
2013/14
46,264
28,200
141,625
Accrued
defined
benefit
pension as
Employer
at 31 March contributions
2014
2012/13
49,920
82,394
Cash in lieu
of pension
2012/13
28,080
27,240
137,500
Normal
retirement
age1
n/a
60
n/a
Corporate Information
1. Normal retirement age is the earliest age at which a director can elect to draw their pension under the rules of the scheme.
Governance
Financial Statements
Name
Heath Drewett
Alun Griffiths
Uwe Krueger
Strategic Report
98 Governance
Overview of performance
The Group has delivered another set of good results in an international market that continues
to experience a range of operating challenges.
The reported profit after tax was 96.3m (2013 restated: 84.3m). The Committee adjusted actual
performance downwards to remove the impact of significant one-off items to ensure that payment
reflected underlying performance. The adjusted profit after tax result was 86.2m (2013 restated:
81.0m), exceeding the stretch target of 83.4m for the year (2013 restated: 80.9m). This resulted
in full payment of this component of bonus. The Committee considered quality, safety and
environmental performance when making the bonus awards and determined that no adjustment
was necessary.
Cash conversion
(25%)
The cash conversion target measured operating cash flow as a percentage of budgeted profit.
The Groups cash performance was good, with operating cash flow increasing to 95.5m
(2013: 82.9m).
The half year and full year stretch cash conversion targets were 40% and 85% respectively. The
half year cash conversion result was 43% and the full year result was 85% leading to full payment
for this component of the bonus.
Personal objectives
(25%)
Heath Drewett
Payment of 95% achieved for:
the successful conclusion of repayment plan negotiations with the trustee of the Atkins Pension
Plan following the conclusion of the 2013 triennial valuation
successfully driving improvements to operational and financial performance with specific
reference to project performance
implementing changes to improve the budget structure and associated processes.
Alun Griffiths
Payment of 100% achieved for:
successfully strengthening regional management teams and developing a more robust talent
pipeline
progress in embedding the Groups leadership capability model in development, assessment,
promotion and succession processes
internationalisation of the Groups recruitment process to provide access to a broader talent pool.
Uwe Krueger
Payment of 86.7% achieved for:
successfully executing the Groups strategy and improving operational performance
continuing focus and initiatives to increase the Companys influence and standing in its
chosen markets
successfully implementing robust internal succession initiatives.
Annual bonuses payable to the executive directors for the financial year ended 31 March 2014 are shown in table 16. Two thirds
will be payable in cash and one third will be deferred into shares for three years subject to continued employment.
Table 16: Annual bonuses
2013/14 bonus
Name
Cash Deferred
Total
Heath Drewett 220,542 110,271 330,813
235,000
Alun Griffiths1 235,000
Uwe Krueger 456,347 228,174 684,521
1. Alun Griffiths retires from the Company on 30 July 2014.
% of
salary
98.8
100.0
120.8
Increase/
(decrease)
in annualised
bonus from
prior year
Cash
7.4% 205,400
4.8% 149,442
7.1% 426,250
2012/13 bonus
Deferred
Total
102,700 308,100
74,721 224,163
213,125 639,375
% of
salary
98.8
98.8
116.3
Increase/
(decrease)
in annualised
bonus from
prior year
35.3%
37.2%
29.5%
Governance 99
Strategic Report
Heath Drewett
Pension deficit
Financial and major project reporting
Opportunities to accelerate EPS growth
Alun Griffiths
Uwe Krueger
Leadership development
Succession planning
Opportunities to accelerate EPS growth
Governance
Name1
1. Strategic areas for James Cullens, who has been appointed with effect from 1 July 2014, will be determined once he joins the Company.
Corporate Information
50% of the award was subject to a TSR condition. This performance measure has been met in full. The remaining 50% was subject
to an EPS condition. In order to ensure that the performance of this element was determined on a consistent basis with the calculation
of EPS at award, the Committee adjusted for the impact of the material IAS 19 accounting change introduced during the final year
of the performance period. This adjustment resulted in an increase from the reported EPS of 88.1p to an adjusted EPS of 95.3p.
Accordingly, 37.4% of the shares subject to this element of the award will vest.
Financial Statements
100 Governance
EPS
Delivery mechanism
LTIP
LGU
3 years
4, 5 and 6 years
Vesting period
Executive directors received a LTIP award of 75% of salary. The vesting of these awards is subject to the EPS targets described
in table 19.
Table 19: LTIP performance measure for awards made in 2013
Atkins EPS growth
12% or greater per annum
Between 5% and 12% per annum
5% per annum
Below 5% per annum
The Committee believes that these EPS targets are appropriate and stretching in the current environment. Performance against
these targets will be measured from 1 April 2013 to 31 March 2016.
Executive directors also received a LGU award of 50% of salary. The vesting of each tranche of this award is subject to the
Committees assessment of the Groups progress against its strategy. This will include:
driving margins over the longer term above 8%
reducing dependence on the UK (with our long-term aspiration being to have more than 75% of our business outside the UK)
growing organically and through acquisition.
LTIP and LGU awards made during the year are set out in table 20.
Table 20: LTIP and LGU awards made during the year (audited)
Heath Drewett
Date
Face value
Plan of award (% of basic salary)
LTIP 24/06/13
75%
LGU 24/06/13
50%
Face value1
()
251,112
167,497
Target performance
(% of face value)
25%
8.3%
Alun Griffiths
LTIP 24/06/13
LGU 24/06/13
75%
50%
176,152
117,495
25%
8.3%
Uwe Krueger
LTIP 24/06/13
LGU 24/06/13
75%
50%
424,656
283,244
25%
8.3%
Stretch performance
End of
(% of face value) performance period
100%
31/03/16
16.7%
31/03/17
31/03/18
31/03/19
100%
31/03/16
16.7%
31/03/17
31/03/18
31/03/19
100%
31/03/16
16.7%
31/03/17
31/03/18
31/03/19
1. Face value for the LTIP awards has been calculated using the middle market quotation for an Atkins ordinary share on the date of grant, which was 9.73. Face value
for the LGU awards has been calculated using the middle market quotation for an Atkins ordinary share during the six months immediately preceding the date of
grant, which was 8.8249. The stated values exclude any amount attributable to dividend equivalents over the relevant performance periods.
Governance 101
Strategic Report
The following arrangement will apply to Alun as a consequence of his retirement following 28 years of service to the Group:
any bonus due for the financial year ending 31 March 2015 will be paid in July 2015 in cash to the extent to which the relevant
performance conditions have been met
deferred share awards made under the terms of the DSP will vest on 30 July 2014 and be exercisable within six months of
his retirement
outstanding awards made under the Companys LTIP and LGU plans (contained in tables 23 and 24) vest in accordance with the
rules of the relevant plans subject to meeting the requirements of the applicable performance conditions; awards will be time
pro-rated as specified in the relevant plan rules.
Governance
his bonus for the financial year ended 31 March 2014, due in July 2014 as detailed in table 16, will be paid entirely in cash
Fees
The Board, on the recommendation of the executive directors, approved changes to the fees paid to non-executive directors
as set out in table 21.
Table 21: Chairman and non-executive directors fees
Fee description
Chairman fee1
Non-executive director fee
Basic annual fee
Committee chair annual fee1
Committee annual fee1
Senior independent director fee
Fee as at
1 April 2014
202,500
Increase
in fee from
prior year
3.4%
Fee as at
1 April 2013
195,750
Increase
in fee
from 2012
3.0%
44,000
7,500
4,000
5,000
3.5%
42,500
7,500
4,000
5,000
3.2%
The increase to the fees of both the chairman and the non-executive directors were in line with the average increase across the Group
of 3.96% with effect from 1 April 2014 (2013: just above 3%).
Lord Boyce retired from the Board on 31 July 2013. He has continued to provide consultancy services to the Group, chairing the
Groups international advisory Board.
Keith Clarke, who retired from the Board on 31 July 2011, retained a pro-rated entitlement to 16,309 shares granted under the
terms of the Atkins Long-Term Incentive Plan. In accordance with the rules of this plan, 68.7% of his retained award will vest
on 20 June 2014 and be exercisable within six months.
Corporate Information
Financial Statements
Alun will continue to work with the Group on a consultancy basis for the next 12 months. This will cover a number of areas including
advice and support in relation to management development and client relationships. It is anticipated that he will be engaged for
around 30 days during this period.
102 Governance
There were no payments for loss of office made during the year.
Heath Drewett1
Alun Griffiths2
Uwe Krueger1
At 11 June
2014
10,045
37,365
21,196
As a
percentage At 31 March
of salary3
2014
38.4%
10,027
204.0%
37,347
48.0%
21,177
As a
percentage At 31 March
of salary3
2013
41.6%
534
221.1%
36,328
52.0%
20,5164
As a
percentage
of salary3
1.6%
146.2%
34.0%
1. Changes in interests of Heath Drewett and Uwe Krueger between 31 March 2014 and 11 June 2014 relate to shares acquired via the SIP.
2. Changes in interests of Alun Griffiths between 31 March 2014 and 11 June 2014 relate to shares acquired via the SIP and automatic dividend reinvestment within
an ISA.
3. Based on the value of such shares at the time of their acquisition or market value at the stated date, whichever is the higher.
4. The Company was notified on 2 July 2013 of the reinvestment of dividends to purchase a further 309 shares on 7 September 2012, hence the number stated in the
prior years report as at 12 June 2013 and 31 March 2013 was 309 shares lower.
Table 23: Chairman and non-executive directors interests in shares of the Company
Lord Boyce1
Fiona Clutterbuck
Allan Cook
Joanne Curin2
Allister Langlands3
Thomas Leppert4
Raj Rajagopal
Rodney Slater
Total
1. Resigned on 31 July 2013. Lord Boyce held 3,500 shares as at the date of his resignation.
2. Resigned on 31 January 2014. Joanne Curin held 1,000 shares as at the date of her resignation.
3. Appointed on 4 September 2013.
4. Appointed on 1 October 2013.
At 11 June At 31 March
2014
2014
n/a
n/a
4,146
4,146
17,142
17,142
n/a
n/a
5,000
5,000
5,000
5,000
31,288
31,288
At 31 March
2013
3,500
4,146
17,142
1,000
n/a
n/a
15,000
40,788
Governance 103
Tables 24 and 25 set out details of the executive directors interests in relation to share awards made under each of the Companys
share plans.
DSP
Total
Alun Griffiths
LTIP A 3
LTIP B4
DSP
Total
Uwe Krueger
LTIP A 3
LTIP B4
DSP
21/06/10
20/06/11
13/08/12
24/06/13
21/06/10
20/06/11
02/07/12
24/06/13
20/06/11
13/08/12
24/06/13
02/07/12
24/06/13
Total
Aggregate gains on share options 2014
Aggregate gains on share options 2013
Lapsed
46,000
46,000
33,400
33,400
Midmarket
First date
price at
of exercise/
date of Gain on
end of
grant exercise performance
(pence)
()
condition
698.5
21/06/13
760.0
20/06/14
672.0
13/08/15
973.0
24/06/16
698.5
94,951
21/06/13
760.0
20/06/14
688.5
02/07/15
973.0
24/06/16
94,951
698.5
21/06/13
760.0
20/06/14
672.0
13/08/15
973.0
24/06/16
698.5
86,082
21/06/13
760.0
20/06/14
688.5
02/07/15
973.0
24/06/16
86,082
760.0
20/06/14
672.0
13/08/15
973.0
24/06/16
688.5
02/07/15
973.0
24/06/16
181,033
111,810
Date of
lapse/
expiry of
option
21/06/20
20/06/21
13/08/22
24/06/23
21/06/20
20/06/21
02/07/22
24/06/23
21/06/20
20/06/21
13/08/22
24/06/23
21/06/20
20/06/21
02/07/22
24/06/23
20/06/21
13/08/22
24/06/23
02/07/22
24/06/23
Corporate Information
Governance
LTIP B4
Award
date
21/06/10
20/06/11
13/08/12
24/06/13
21/06/10
20/06/11
02/07/12
24/06/13
Number
of shares
Market
under
price on
option at
exercise
31 March
(pence)
20142
40,000
35,082
25,808
1014.0000
11,154
11,002
10,549
133,595
29,500
25,524
18,104
1004.3415
8,310
7,895
7,675
97,008
70,648
61,844
43,644
19,078
21,892
217,106
Financial Statements
Heath Drewett
Plan
name1
LTIP A3
Number
of shares
under
option at
1 April
2013 Granted Exercised
46,0005
40,000
35,082
25,808
9,364
9,364
11,154
11,002
10,549
152,602
36,357
9,364
33,4005
29,500
25,524
18,104
8,571
8,571
8,310
7,895
7,675
113,200
25,779
8,571
70,648
61,844
43,644
19,078
21,892
151,570
65,536
Strategic Report
Table 24: Directors share options and long-term incentives DSP and LTIP (nil-cost options)
104 Governance
Plan
name1
Heath Drewett
LGU2
Award
date
Number
of units
under
option at
1 April
2013 Granted Exercised
13/08/12
24/06/13
21,705
Total
Alun Griffiths
LGU2
13/08/12
24/06/13
Total
Uwe Krueger
LGU2
13/08/12
24/06/13
Total
Aggregate gains on units 2014
Aggregate gains on units 2013
Lapsed
Number
of units
under
option at
31 March
20143
Market
price on
exercise
(pence)
Midmarket
First date
price at
of exercise/
date of Gain on
end of
grant exercise performance
(pence)
()
condition
Date of
lapse/
expiry of
option
18,980
21,705
18,980
672.0
973.0
13/08/16
24/06/17
13/08/22
24/06/23
21,705
15,792
18,980
13,314
40,685
15,792
13,314
672.0
973.0
13/08/16
24/06/17
13/08/22
24/06/23
15,792
38,263
38,263
13,314
32,096
32,096
29,106
38,263
32,096
70,359
672.0
973.0
13/08/16
24/06/17
13/08/22
24/06/23
Other Information
The Remuneration Committee
The Remuneration Committee is a committee of the Board. Its terms of reference are available on the Companys website
www.atkinsglobal.com or on request from the company secretary. The Committee has responsibility for setting remuneration policy
and structure for the Companys chairman and executive directors. The Committee also has oversight of remuneration practices
across the Group. A summary of the Committees activities during the year is shown in figure 1 (page 82).
Committee membership
The independent non-executive directors who served on the Committee during the year are shown in table 26.
Table 26: Members of the Committee during the year
Member
Admiral the Lord Boyce
Fiona Clutterbuck
Raj Rajagopal
Rodney Slater
From
5 May 2004
15 June 2009
1 March 2009
9 September 2011
To
31 July 2013
To date
To date
To date
The Committee met eight times during the year (2013: six). Details of the attendance of members at meetings can be found in the
Corporate Governance Report (page 69).
Committee meetings are attended by the Group HR director, Alun Griffiths. The chairman of the Board and the chief executive officer
also attend meetings at the discretion of the Committee chairman. The company secretary acts as secretary to the Committee.
No director or other attendee, including the company secretary, participates in discussions regarding their own remuneration.
Advisors to the Committee
During the year the Committee undertook a comprehensive tender process for the provision of advisory services. As a result of this
process, the Committee appointed Towers Watson Limited (Towers) as the provider of advice on remuneration policy and structure,
replacing Deloitte LLP (Deloitte). Towers is a member of the Remuneration Consultants Group (RCG) and adheres to its code of
conduct. Table 26 provides a summary of advice received from each advisor to the Committee, fees paid and any other services
provided by the advisor to the Group. The Committee is satisfied that the advice it has received has been objective and independent.
The Committee also consulted the chairman of the Board, the chief executive officer, the Group HR director and the company
secretary regarding remuneration policy.
Governance 105
Fees
10,000
Deloitte
7,500
Ashurst
Tapestry
6,600
832
Strategic Report
Advisor
Towers
DSP share awards can only be satisfied using market purchase shares held in the employee benefit trust (EBT). LTIP and LGU share
awards can be satisfied using new issue shares, shares held in treasury or market purchase shares held in the EBT. The Committee
reviews the hedging and dilution position of the Company at least bi-annually prior to making grants of share awards. Both the
LTIP and LGU operate 5% in 10 years (executive schemes) and 10% in 10 years aggregate dilution limits, in line with best practice.
At 31 March 2014 the EBT held 2,524,663 shares to hedge outstanding awards over 3,925,406 shares and 361,169 units. Using an
approximation of one unit to one share, at this date the EBT held shares to satisfy 64% of all outstanding awards. No new issue
shares have been used to satisfy share awards since 2005 and, to date, no treasury shares have been used.
Governance
Dilution
Uwe Krueger and Alun Griffiths are currently non-executive directors of the companies listed in table 28 and retain the fees payable,
as outlined in respect of these appointments.
Alun Griffiths
Organisation name
ONTEX S.A. (Zele, Belgium)
STR Holdings, Inc. (Connecticut,
USA) to 14 May 2013
Remuneration basis
60,000 per annum
Annual grant of ordinary shares in STR Holdings, Inc. to the
value of US$52,500
Fee of US$2,000 for each scheduled quarterly board and
committee meeting attended
Annual grant of restricted stock to the value of US$45,000,
which will vest on the day immediately preceding the day
of the next annual meeting of stockholders
1% of the companys value relating to three years service
on the board
10,000 per annum
40,000 per annum basic fee
5,000 per annum for serving as chairman of the
Remuneration Committee
The voting results for last years Remuneration Report are set out in table 29.
Table 29: Remuneration Report shareholder voting results
Resolution
Approval of the Remuneration Report
Votes for
(m)
57.3
% For
85
Votes against
(m)
10.1
% Against
15
Total votes
Votes
cast (m) withheld (m)
67.4
1.4
Refer to the letter from the Remuneration Committee chairman for a detailed commentary on the voting results (page 81).
Approved by the Board and signed on its behalf by
Dr Raj Rajagopal
Chairman of the Remuneration Committee
11 June 2014
Corporate Information
Executive director
Uwe Krueger
Financial Statements
106 Governance
the financial statements, defined below, give a true and fair view of the state of the Groups and of the Companys affairs
as at 31 March 2014 and of the Groups profit and of the Groups and Companys cash flows for the year then ended
the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs)
as adopted by the European Union
the Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and
as applied in accordance with the provisions of the Companies Act 2006 (the Act)
the financial statements have been prepared in accordance with the requirements of the Act and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
This opinion is to be read in the context of what we say in the remainder of this report.
What we have audited
The Group financial statements and Company financial statements (the Financial Statements), which are prepared by WS Atkins plc,
comprise:
the consolidated income statement and statement of comprehensive income for the year then ended
the consolidated and Parent Company balance sheets as at 31 March 2014
the consolidated and Parent Company statements of changes in equity and statements of cash flows for the year then ended
the notes to the Financial Statements, which include a summary of significant accounting policies and other explanatory
information.
The financial reporting framework that has been applied in their preparation comprises applicable law and IFRSs as adopted
by the European Union and, as regards the Company, as applied in accordance with the provisions of the Act.
Certain disclosures required by the financial reporting framework have been presented elsewhere in the Annual Report, rather than
in the notes to the Financial Statements. These are cross-referenced from the Financial Statements and are identified as audited.
What an audit of financial statements involves
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (ISAs (UK & Ireland)). An audit
involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable assurance
that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the Groups and Companys circumstances and have been consistently applied
and adequately disclosed
the reasonableness of significant accounting estimates made by the directors
the overall presentation of the Financial Statements.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies
with the audited Financial Statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Overview of our audit approach
Materiality
We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our audit procedures and
to evaluate the effect of misstatements, both individually and on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality for the Group Financial Statements as a whole to be 5.3m,
which is approximately 5% of profit before tax, adjusted for exceptional items because in our view this represents the Groups
underlying performance.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above 0.5m
as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Governance 107
In establishing the overall approach to the Group audit, we determined the type of work that needed to be performed by us, as the
Group engagement team, or component auditors from other PwC network firms operating under our instruction. Where the work
was performed by component auditors, we determined the level of involvement we needed to have in their audit work to be able
to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the Group Financial
Statements as a whole.
Accordingly, the Groups operating businesses subject to an audit of their complete financial information contributed 90% of the
Groups profit before tax adjusted for exceptional items.
Strategic Report
Governance
This, together with additional procedures performed at the Group level (e.g. goodwill impairment testing), gave us the evidence
we needed for our opinion on the Group Financial Statements as a whole.
We evaluated the relevant IT systems and tested the internal controls over the
completeness, accuracy and timing of revenue recognised in the financial statements.
Corporate Information
Area of focus
Financial Statements
We considered the following areas to be those that required particular focus in the current year. This is not a complete list of all risks
or areas of focus identified by our audit. We discussed these areas of focus with the Audit Committee. Its report on those matters
that it considered to be significant issues in relation to the Financial Statements is set out in the Audit Committee Report (page 78).
108 Governance
Area of focus
We evaluated the directors future cash flow forecasts and the process by which they
were drawn up, including comparing them to the latest Board-approved budgets,
and testing the underlying calculations. We challenged:
the directors key assumptions for profit margins and long-term growth rates in the
forecasts, by comparing them to historical results and economic and industry forecasts
the discount rate, by assessing the cost of capital for the North America business and
comparable organisations.
We also performed sensitivity analysis around the key drivers of the cash flow forecasts,
which were the discount rate and the profit margins. Having ascertained the extent of
change in those assumptions that either individually or collectively would be required for
the goodwill to be impaired, we considered the likelihood of such a movement in those
key assumptions arising.
We assessed the overall control environment of the Group, including the arrangements
for staff to whistle-blow inappropriate actions, and interviewed senior management
and the Groups internal audit function.
We examined the significant accounting estimates and judgements relevant to the
Financial Statements for evidence of bias by the directors that may represent a risk of
material misstatement due to fraud (including, but not limited to, revenue recognition).
We also tested journal entries to determine the rationale for manual adjustments.
Going concern
Under the Listing Rules we are required to review the directors statement (page 65) in relation to going concern. We have nothing
to report having performed our review.
As noted in the directors statement, the directors have concluded that it is appropriate to prepare the Groups and Companys
financial statements using the going concern basis of accounting. The going concern basis presumes that the Group and Company
have adequate resources to remain in operation, and that the directors intend them to do so, for at least one year from the date
the Financial Statements are signed. As part of our audit we have concluded that the directors use of the going concern basis
is appropriate.
However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Groups
and the Companys ability to continue as a going concern.
the information given in the Strategic Report (pages 2 to 59) and the Directors Report (pages 62 to 65) for the financial year
for which the Financial Statements are prepared is consistent with the Financial Statements
the part of the Remuneration Report (pages 81 to 105) to be audited has been properly prepared in accordance with the Act
the information given in the Corporate Governance Report (pages 66 to 73) in the Annual Report with respect to internal control
and risk management systems is consistent with the financial statements.
Governance 109
Strategic Report
Directors remuneration
Under the Act we are required to report to you if, in our opinion, certain disclosures of directors remuneration specified by law
have not been made. We have no exceptions to report arising from this responsibility.
the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
We have no exceptions to report arising from this responsibility.
Governance
the statement given by the directors is materially inconsistent with our knowledge of the Group acquired in the course of
performing our audit
Financial Statements
otherwise misleading.
This report, including the opinions, has been prepared for and only for the Companys members as a body in accordance with
Chapter 3 of Part 16 of the Act and for no other purpose. We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Martin Hodgson (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
11 June 2014
Corporate Information
Our responsibility is to audit and express an opinion on the Group and Company Financial Statements in accordance with applicable
law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Boards Ethical Standards for Auditors.
Financial Statements
Page no.
112
113
114
Strategic Report
116
117
118
119
129
135
138
139
140
141
141
Governance
143
145
146
146
147
147
Financial Statements
148
148
150
151
152
152
153
155
155
157
157
157
158
158
159
160
161
161
170
171
171
174
175
175
175
176
176
177
178
178
179
Corporate Information
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Consolidated and Parent Company Balance Sheets
Consolidated and Parent Company Statements
of Cash Flows
Consolidated Statement of Changes in Equity
Parent Company Statement of Changes in Equity
Notes to the Financial Statements
1 Accounting policies
2 Financial risk management
3 Segmental information
4 Joint ventures
5 Operating profit analysis of costs by nature
6 Employee benefit costs
7 Net finance costs
8 Income tax expense
9 Net profit on disposal of businesses/
non-controlling interests
10 Business combinations
11 Assets held for sale
12 Exceptional items
13 Dividends
14 Earnings per share (EPS)
15 Parent Company Income Statement
and Statement of Comprehensive Income
16 Goodwill
17 Other intangible assets
18 Property, plant and equipment
19 Investments in subsidiaries
20 Deferred income tax
21 Financial instruments
22 Available-for-sale financial assets
23 Derivative financial instruments
24 Other receivables
25 Inventories
26 Trade and other receivables
27 Financial assets at fair value through profit or loss
28 Cash and cash equivalents
29 Borrowings
30 Trade and other payables
31 Provisions for other liabilities and charges
32 Post-employment benefit liabilities
33 Other non-current liabilities
34 Ordinary shares
35 Share-based payments
36 Cash generated from continuing operations
37 Analysis of net funds
38 Contingent liabilities
39 Operating lease arrangements
40 Capital and other financial commitments
41 Related party transactions
42 Subsidiary undertakings
43 Joint ventures
44 Prior period amounts
Five-year Summary
Group
Note
Gross revenue (Group and share of joint ventures)
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Comprising
Underlying operating profit
Exceptional items
Amortisation and impairment of acquired intangibles
3, 5
12
17
9
3, 4
7
7
7
12
17
9
14
14
2014
m
1,815.2
Group
Restated
2013
m
1,775.5
1,750.1
(1,065.0)
685.1
1,705.2
(1,088.6)
616.6
(571.4)
113.7
(512.6)
104.0
116.4
(2.7)
113.7
109.7
4.3
(10.0)
104.0
10.5
1.2
2.4
127.8
4.5
3.8
112.3
4.2
(17.8)
(13.6)
3.4
(17.7)
(14.3)
114.2
98.0
106.4
(2.7)
10.5
114.2
99.2
4.3
(10.0)
4.5
98.0
(17.9)
96.3
(13.7)
84.3
96.0
0.3
96.3
84.6
(0.3)
84.3
98.4p
95.8p
86.8p
84.7p
The notes on pages 119 to 178 are an integral part of these Financial Statements.
2014
m
96.3
32
8, 32
(63.5)
6.4
(57.1)
(47.1)
8.7
(38.4)
22
(2.3)
(21.6)
(23.9)
(81.0)
15.3
(1.6)
1.0
9.4
8.8
(29.6)
54.7
Attributable to:
Owners of the parent
15.0
Non-controlling interests
0.3
Total comprehensive income for the year
15.3
Items in the statement above are disclosed net of tax. The income tax relating to each component of other comprehensive income is
disclosed in note 8.
55.0
(0.3)
54.7
Strategic Report
Note
Group
Restated
2013
m
84.3
Governance
Group
Corporate Information
Financial Statements
The notes on pages 119 to 178 are an integral part of these Financial Statements.
Group
Note
Company
Company
2014
m
Group
Restated
2013
m
2014
m
2013
m
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investments in subsidiaries
Investments in joint ventures
Deferred income tax assets
Derivative financial instruments
Other receivables
16
17
18
19
4
20
23
24
204.0
35.4
46.7
4.2
82.7
19.9
392.9
211.4
39.6
50.7
7.1
91.5
0.3
20.0
420.6
201.0
201.0
194.4
194.4
Current assets
Inventories
Trade and other receivables
Financial assets at fair value through profit or loss
Cash and cash equivalents
Derivative financial instruments
25
26
27
28
23
11
418.1
31.5
237.3
0.4
687.3
687.3
0.2
449.2
35.9
201.5
0.5
687.3
5.8
693.1
165.7
165.7
165.7
165.2
0.3
165.5
165.5
Liabilities
Current liabilities
Borrowings
Trade and other payables
Derivative financial instruments
Current income tax liabilities
Provisions for other liabilities and charges
29
30
23
11
(55.3)
(453.1)
(2.7)
(31.6)
(0.8)
(543.5)
(543.5)
143.8
(59.8)
(486.7)
(1.4)
(40.5)
(1.5)
(589.9)
(5.2)
(595.1)
98.0
(57.6)
(77.2)
(134.8)
(134.8)
30.9
(59.8)
(83.1)
(142.9)
(142.9)
22.6
31
Note
Non-current liabilities
Borrowings
Provisions for other liabilities and charges
Post-employment benefit liabilities
Derivative financial instruments
Deferred income tax liabilities
Other non-current liabilities
Net assets
2014
m
Group
Restated
2013
m
Company
Company
2014
m
2013
m
29
31
32
23
20
33
(45.5)
(3.3)
(339.0)
(1.7)
(15.5)
(1.5)
(406.5)
(49.4)
(4.4)
(295.6)
(1.3)
(20.1)
(1.5)
(372.3)
(45.5)
(45.5)
(49.3)
(49.3)
130.2
146.3
186.4
167.7
Corporate Information
Financial Statements
Total equity
130.2
146.3
186.4
167.7
The Financial Statements on pages 112 to 178 were approved by the Board on 11 June 2014 and signed on its behalf by:
Prof Dr Uwe Krueger
Heath Drewett
Director Director
The notes on pages 119 to 178 are an integral part of these Financial Statements.
Governance
Group
Strategic Report
continued
Note
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax paid
36
10
10
9
9
37
37
13
28, 29
The notes on pages 119 to 178 are an integral part of these Financial Statements.
Group
2014
m
Group
2013
m
Company
2014
m
Company
2013
m
95.5
3.6
(5.6)
(10.9)
82.9
2.6
(3.2)
(7.1)
4.7
0.7
(6.0)
13.6
1.8
(2.9)
82.6
75.2
(0.6)
12.5
(1.8)
(9.5)
2.8
(0.4)
5.6
(13.5)
0.9
16.0
(2.6)
1.2
4.2
(4.3)
(1.8)
(18.3)
0.5
15.1
(2.1)
(0.2)
7.5
(6.1)
45.4
0.5
9.6
0.4
(5.4)
45.4
8.3
0.5
(0.6)
(8.4)
(31.7)
47.5
(47.5)
(1.8)
(7.0)
(30.0)
(31.7)
(10.5)
0.1
(5.3)
47.5
(47.5)
(30.0)
(7.0)
5.9
(40.2)
(38.8)
(47.4)
(31.1)
42.8
31.0
(2.6)
(10.3)
201.5
(7.0)
167.0
3.5
0.3
(0.1)
10.6
237.3
201.5
(2.4)
0.3
8.9
8.9
47.5
2.1
49.6
119.3
2.1
121.4
0.1
0.1
119.4
2.1
121.5
84.6
84.6
(0.3)
84.3
(47.1)
8.7
(1.6)
1.0
9.4
(29.6)
(47.1)
8.7
(1.6)
1.0
9.4
(29.6)
(47.1)
8.7
(1.6)
1.0
9.4
(29.6)
55.0
55.0
(0.3)
54.7
(30.0)
6.5
0.6
(7.0)
(29.9)
(30.0)
6.5
0.6
(7.0)
(29.9)
(30.0)
6.5
0.6
(7.0)
(29.9)
0.5
62.4
8.9
74.7
146.5
(0.2)
146.3
96.0
96.0
0.3
96.3
(63.5)
6.4
(2.3)
(21.6)
(81.0)
(63.5)
6.4
(2.3)
(21.6)
(81.0)
15.0
15.0
(31.7)
6.7
1.9
(8.4)
(31.5)
(31.7)
6.7
1.9
(8.4)
(31.5)
0.5
62.4
8.9
58.2
130.0
13
35
13
35
0.3
0.1
0.2
(63.5)
6.4
(2.3)
(21.6)
(81.0)
Strategic Report
62.4
62.4
Governance
0.5
0.5
44
Financial Statements
Group
Balance at 1 April 2012 (as previously reported)
Effect of change in accounting policy1
Balance at 1 April 2012 (restated)
Total
equity
m
15.3
(31.7)
6.7
1.9
(8.4)
(31.5)
0.1
130.2
1. Restated for the impact of IAS 19 (revised), see note 1 and note 44.
The merger reserve relates to the issue of shares in respect of previous acquisitions.
The notes on pages 119 to 178 are an integral part of these Financial Statements.
Corporate Information
Total
equity
m
0.5
62.4
8.9
96.0
167.8
167.8
15
23.4
23.4
23.4
23.4
23.4
23.4
13
35
(30.0)
6.5
(23.5)
(30.0)
6.5
(23.5)
(30.0)
6.5
(23.5)
0.5
62.4
8.9
95.9
167.7
167.7
15
43.7
43.7
43.7
43.7
43.7
43.7
(31.7)
(31.7)
(31.7)
Share-based payments
35
6.7
6.7
6.7
Total contributions by and distributions to owners
(25.0)
(25.0)
(25.0)
of the parent, recognised directly in equity
Balance at 31 March 2014
0.5
62.4
8.9
114.6
186.4
186.4
The merger reserve relates to the issue of shares in respect of previous acquisitions.
The notes on pages 119 to 178 are an integral part of these Financial Statements.
1. Accounting policies
Basis of preparation
The Consolidated Financial Statements of WS Atkins plc have been prepared in accordance with IFRSs as adopted by the European Union
(EU), the Companies Act 2006 that applies to companies reporting under IFRS, and IFRS Interpretations Committee (IFRS IC) applicable
to companies reporting under IFRS. The Consolidated Financial Statements have been prepared under the historical cost convention, as
modified by the revaluation of available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments)
at fair value through profit or loss.
Strategic Report
WS Atkins plc (the Company) is a public limited company, which is listed on the London Stock Exchange and is incorporated and domiciled
in England and Wales. The address of its registered office is Woodcote Grove, Ashley Road, Epsom, Surrey, KT18 5BW, England.
The principal accounting policies applied in the preparation of these Consolidated Financial Statements are set out below. These policies
have been consistently applied to all the years presented, including the application of new International Financial Reporting Standards (IFRSs)
and interpretations, unless otherwise stated.
Governance
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Groups accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements, are disclosed
under critical accounting policies and are incorporated by reference in the Business Review (page 43).
The following standards have been adopted by the Group for the first time for the financial year beginning on 1 April 2013 and does not
have a material impact on the Group:
Amendment to IAS 1, Financial statement presentation regarding other comprehensive income. The main change resulting from this
amendment is a requirement for entities to group items presented in other comprehensive income (OCI) on the basis of whether they are
potentially reclassifiable to profit or loss subsequently (reclassification adjustments). This amendment has been applied retrospectively and
the presentation of items of comprehensive income have been reclassified. There has been no measurement impact on the consolidated
accounts of applying the amendments to IAS 1.
Financial Statements
IAS 19, Employee benefits, was revised in June 2011. The changes on the Groups accounting policies has been as follows: to replace the
interest cost and expected return on plan assets with a net interest charge on the net defined benefit liability; to recognise immediately
in the income statement unvested past service cost and administration costs; this also had a small impact on the Groups defined benefit
liability. For the comparative year ended 31 March 2013, the restated profit after tax is 4.1m lower and other comprehensive expense is
4.5m lower than previously reported. The effect of this resulted in the net defined benefit obligation at 1 April 2012 being restated as
262.5m (previously 265.3m); and 31 March 2013 as 295.6m (previously 298.8m), see note 32. Comparative information has been
restated for the effect of the retrospective application of the amendment to IAS 19 as disclosed in note 44.
IFRS 13, Fair value measurement. The objective of the standard is to define the term fair value and to establish guidance and disclosure
requirements for fair value measurement that should be applied across standards. In the new standard, fair value is defined as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent market participants
at the measurement date. For non-financial assets, the fair value is determined based on the highest and best use of the asset as determined
by a market participant. There has been no measurement impact on the consolidated accounts of applying IFRS 13.
Annual Improvements 2011. These Annual Improvements address six areas, none of which materially impacted the Groups primary
statements.
In addition, following a change in its operational management, the Group has amended its operating segments for reporting purposes to
reflect the United Kingdom and Europe as one segment; previously Europe had been managed and reported with Asia Pacific. The revised
segments are: United Kingdom and Europe, North America, Middle East, Asia Pacific and Energy. The segmental results and assets and
liabilities for the comparative year ended 31 March 2013 have been represented in line with these revised segments.
Corporate Information
Amendment to IFRS 7, Financial instruments: Disclosures, on asset and liability offsetting. This amendment introduces new disclosures
of information about the significance of financial instruments to an entity.
The Group is currently assessing the impact of the new standards, amendments and interpretations that are not yet effective. The Group
does not currently believe adoption of these would have a material impact on the consolidated results or financial position of the Group.
Going concern
The directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence
for the foreseeable future and therefore continue to adopt the going concern basis in preparing the Financial Statements.
Basis of consolidation
The Consolidated Income Statement and Balance Sheet include the accounts of the Company, its subsidiary undertakings and its share of
joint ventures. The results of the subsidiary undertakings acquired during the year are included in the Consolidated Income Statement from
the date of acquisition. The results of subsidiary undertakings disposed of during the year are included in the Consolidated Income Statement
up to the date of disposal.
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from
the date that control ceases.
The Group applies the acquisition method to account for business combinations. Investments in subsidiaries are stated at cost less
impairments. The cost of an acquisition is measured as the fair value of the assets, equity instruments issued and liabilities incurred or
assumed at the date of exchange.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values
at the acquisition date irrespective of any non-controlling interest.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the
fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit
or loss or as a change to other comprehensive income.
The excess of the consideration transferred over the fair value of the identifiable net assets acquired is recorded as goodwill. If the cost of the
acquisition is lower than the fair value of net assets of the subsidiary acquired, the difference is recognised directly in the income statement.
Goodwill is reviewed on finalisation of fair values and any adjustments required to the accounting are recorded within 12 months of the
acquisition date.
Where subsidiaries adopt accounting policies that are different from the Groups, their reported results are restated to comply with the
Groups accounting policies. Where subsidiaries do not adopt accounting periods that are coterminous with the Groups, results and net
assets are based upon unaudited accounts drawn up to the Groups accounting reference date.
Joint ventures
In accordance with IAS 31, Interests in joint ventures, the Group accounts for joint ventures under the equity method of accounting.
The Groups share of a joint ventures profit after tax is included from the date on which the Group acquires joint control. Within the
Consolidated Balance Sheet, the investment is recorded at cost (classified as a non-current asset) and subsequently adjusted to reflect
the Groups share of the movements in the joint ventures net assets post acquisition.
Strategic Report
Intercompany transactions, balances, income and expenses on transactions between Group companies are eliminated.
Financial Statements
Where joint ventures do not adopt accounting periods that are coterminous with the Groups, results and net assets are based upon
unaudited accounts drawn up to the Groups accounting reference date.
Governance
The results, assets and liabilities of joint ventures are stated in accordance with the Groups accounting policies. Where joint ventures adopt
accounting policies that are different from the Groups, their reported results are restated to comply with the Groups accounting policies.
Group companies
The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy) that have a functional
currency different from the Groups presentation currency are translated into the Groups presentation currency as follows:
income and expenses for each income statement are translated at average exchange rates
all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity
and translated at the closing rate. Exchange differences arising are recognised in other comprehensive income.
Corporate Information
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker (CODM).
The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the
chief executive officer and the Group finance director.
The Groups operating segments for management purposes reflect predominantly its key geographical markets. As noted above, the
segments are: United Kingdom and Europe, North America, Middle East, Asia Pacific and Energy. These segments form the basis for
reporting the Groups segment information as they are the main determinants of the Groups risks and returns. The Group considers the
UK to be its country of domicile.
Intersegment transfers and transactions are entered into under the normal commercial terms and conditions that would also be available
to unrelated third parties.
Revenue
Revenue from long term contracts comprises the value of work performed during the period calculated in accordance with the Groups
policy for contract accounting set out below. Revenue from other contract activities represents fee income receivable in respect of services
provided during the period.
Under certain services contracts, the Group manages customer expenditure and is obliged to purchase goods and services from third party
contractors and recharge them to the customer at cost. The amounts charged by contractors and recharged to customers are excluded
from revenue and cost of sales where the Group is acting solely as an agent. Receivables, payables and cash relating to these transactions
are included in the Consolidated Balance Sheet.
Underlying profit
Underlying operating profit is profit before exceptional items, amortisation and impairment of intangible assets recognised on acquisition
and material transaction costs associated with acquisitions, and relates to continuing operations.
Revenue recognition and contract accounting
The value of contract work in progress comprises the costs incurred on contracts plus an appropriate proportion of overheads and
attributable profit. Fees invoiced on account are deducted from the value of work in progress and the balance is separately disclosed in
trade and other receivables as amounts recoverable on contracts, unless such fees exceed the value of the work in progress on any contract
in which case the excess is separately disclosed in trade and other payables as fees invoiced in advance.
Revenue is recognised on the majority of the Groups contracts on a percentage completion basis when the outcome of a contract or project
can be reasonably foreseen. Under the percentage completion method, the percentage of the total forecast revenue reported at any point
in time is calculated based upon the proportion of total costs incurred to date as a percentage of total forecast costs or, in some cases, based
upon the estimated physical per cent complete of the total work to be performed under the contract.
In some cases, a margin provision is then made, depending on how far progressed each project is and the risk profile of the project. Where
contracts span two or more accounting periods, profit is not generally recognised until the contract is 50% complete. In addition, provision
is made in full for estimated losses and, where the outcome of a contract cannot be reasonably foreseen, profit is taken on completion.
Revenue recognition on outsourcing contracts is determined by reference to the proportion of the annual service delivered to date. Where
the costs of obligations in relation to the non-renewal or termination of a contract are higher in the final period of the contract, a proportion
of revenue is deferred each period to meet these anticipated costs. Full provision is made for losses on outsourcing contracts if the forecast
costs of fulfilling the contract throughout the contract period exceed the forecast income receivable. In assessing the amount of the loss to
provide on an outsourcing contract, account is taken of the Groups share of the forecast results from any joint ventures which the contract
is servicing.
Interest income
Interest income is recognised on a time apportionment basis using the effective interest method. When a receivable is impaired, the Group
reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest
rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the
original effective interest rate.
Dividend income
Dividend income is recognised when the right to receive payment is established.
Bid recovery fees are deferred and credited to the income statement over the duration of the contract or, in the case of PPP/PFI concessions,
over the same period as the Groups interest in any SPC credits the equivalent capitalised amounts to the income statement. Where the
Groups interest in any SPC reduces, the deferred bid recovery fees are credited to the income statement in proportion to the reduction
of the Groups interest.
Exceptional items
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of the
financial performance of the Group. They are items of income or expense that have been shown separately due to the significance of their
nature or amount.
Strategic Report
Pre-contract costs
The Group accounts for all pre-contract costs in accordance with IAS 11, Construction contracts. Costs incurred before it becomes probable
that a contract will be obtained are charged to expenses. Directly attributable costs incurred after that point are recognised in the balance
sheet and charged to the income statement over the duration of the contract or, in the case of PPP/PFI concessions, over the same period
as the Groups interest in any special purpose company (SPC) charges the equivalent capitalised amounts to the income statement.
Exceptional items are also summarised by class in the segmental analyses, excluding those that relate to interest and tax.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal
or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating
to employee service in the current and prior periods.
Governance
For the defined benefit plan, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations
being carried out at the end of each annual reporting period. Remeasurement, comprising actuarial gains and losses, the effect of changes
to the asset ceiling (if applicable) and the return on plan assets (excluding interest), is reflected immediately in the Consolidated Balance
Sheet with a charge or credit recognised in other comprehensive income in the period in which it occurs. Remeasurement recognised in
other comprehensive income is reflected immediately in retained earnings and will not be reclassified to profit or loss. Past service cost is
recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning
of the period to the net defined benefit liability or asset. Defined benefit pension costs are categorised as follows:
service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements)
net interest expense or income
remeasurement.
The net retirement benefit liabilities recognised in the Consolidated Balance Sheet represents the actual deficit in the Groups defined
benefit plan.
Financial Statements
A defined benefit plan is a pension plan that typically defines an amount of pension benefit that an employee will receive on retirement,
usually dependent on one or more factors such as age, years of service and compensation.
Share-based payments
The Group operates a number of equity and cash settled share-based compensation plans, under which the entity receives services from
employees as consideration for equity instruments (options) or cash (phantom allocations) of the Group.
In accordance with IFRS 2, Share-based payments, the cost of share-based payments awarded after 7 November 2002 is charged to the
income statement over the performance and vesting periods of the instruments. The cost is based on the fair value of the awards made at
the date of grant adjusted for the number of awards expected to vest. In accordance with the transitional provisions within IFRS 2, no charge
is made in respect of instruments awarded before 7 November 2002. In the case of equity settled awards, the credits associated with the
amounts charged to the income statement are included in retained earnings/accumulated losses until the awards are exercised. In the case of
cash settled awards, the credits associated with the amounts charged to the income statement are held as a liability in the balance sheet until
the awards are transferred, at which point a cash amount (based on the Companys share price at the vesting date) is paid to the employee.
Where awards are settled by the new issue of shares, any proceeds received in respect of share options are credited to share capital and
share premium. Where awards are settled in shares held by the EBTs, any proceeds are credited to retained earnings/accumulated losses.
Corporate Information
For defined contribution plans, the Group pays contributions into a separate entity. The Group has no further payment obligations once
the contributions have been paid. The contributions are recognised as employee benefit expenses when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or reduction in the future payments is available.
Share awards are granted by the Company to employees of its subsidiaries. The Company charges to cost of investment in subsidiaries
an amount equivalent to the equity settled element of the annual IFRS 2 charge, with an equivalent credit to reserves in accordance with
IFRIC 11, Group and treasury share transactions.
Income tax
Current and deferred income tax are recognised in the income statement for the period except where the taxation arises as a result of
a transaction or event that is recognised in other comprehensive income or directly in equity. Income tax arising on transactions or events
recognised in other comprehensive income or directly in equity is charged or credited to other comprehensive income or directly to
equity respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in
the countries where the Company and its subsidiaries operate and generate taxable income.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the Consolidated Financial Statements. However, deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either
the taxable entity or different taxable entities where there is an intention to settle balances on a net basis.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries, branches and joint ventures, except where it is known
that the earnings will be distributed.
Deferred tax assets of 3.7m have not been recognised due to the uncertainty of timing of utilisation.
Intangible assets
Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the fair value of the consideration given for a business over
the Companys interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree.
Goodwill is stated at cost less accumulated impairment. Prior to 1 April 2004, goodwill was amortised over its estimated useful economic
life. Amortisation ceased on 1 April 2004 and the carrying value of existing goodwill was frozen at that date and is subject to impairment
reviews.
For the purpose of impairment testing, goodwill acquired in a business acquisition is allocated to each of the cash generating units (CGUs),
or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill
is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential
impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and fair value less
costs to sell. Any impairment is recognised immediately as an expense and is not subsequently reversed. Gains and losses on the disposal
of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill that arose prior to 1 April 1997 was written off to retained earnings/accumulated losses. Profit or loss on disposal of the underlying
businesses to which this goodwill related will not include goodwill previously recorded as a deduction from equity.
Acquired customer relationships
Acquired customer relationships consist of intangible assets arising on the consolidation of recently acquired businesses, that are separable
from goodwill, in accordance with IFRS 3, Business combinations, and IAS 38, Intangible assets, and do not fall within the Groups other
classes of intangible assets. These comprise principally existing customer relationships which may give rise to future orders (customer
relationships), and existing order books (backlog orders).
Acquired customer relationships are recognised at fair value at the acquisition date and have a finite useful life. Amortisation of customer
relationships is calculated using the straight line method to allocate the cost of customer relationships over their estimated useful lives of
between one and twenty years. Acquired customer relationships are stated at cost less accumulated amortisation and impairment.
Governance
Software licences
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software.
These costs are amortised using the straight line method to allocate the cost of the software licences over their useful lives of between
two and five years. Software licences are stated at cost less accumulated amortisation.
Strategic Report
Backlog orders are recognised at fair value at the acquisition date and amortised over their estimated useful lives of three years. Backlog
orders are stated at cost less accumulated amortisation and impairment.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to the income statement during the financial
period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the straight line method to write off the cost less residual value of
each asset over its estimated useful life, as follows:
Freehold buildings
Short term leasehold property
Plant, machinery and vehicles
10 to 50 years
over the life of the lease
3 to 12 years
Financial Statements
An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within administrative
expenses in the income statement.
Impairment of non-financial assets
Assets that have an indefinite useful life, such as goodwill, are not subject to amortisation and are tested annually for impairment and when
there are indications that the carrying value may not be recoverable. Assets that are subject to amortisation are reviewed for impairment
wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair
value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
largely independent cash flows (CGUs). Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at
each reporting date.
Corporate Information
The assets useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Financial assets
Classification
The Group classifies its financial assets into the following categories: at fair value through profit or loss, loans and receivables, and availablefor-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification
of its financial assets at initial recognition.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired
principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as
hedges. Assets in this category are classified as current assets if expected to be settled within 12 months, otherwise they are classified as
non-current.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is
regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or
regulatory agency and those prices represent actual and regularly occurring market transactions on an arms length basis. The quoted market
price used for financial assets held by the Group is the mid market price. These instruments are included in Level 1, see note 2.
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is included in Level 2, see note 2.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets except where the maturity is greater than 12 months after the balance sheet date, in which case they
are included as non-current assets. The Groups loans and receivables comprise trade and other receivables, cash and cash equivalents,
and other receivables in the balance sheet. Other receivables include loan notes receivable.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other
categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months
of the end of the reporting period.
Recognition and measurement
Regular purchases and sales of financial assets are recognised on the trade date the date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in
the income statement. Financial assets are derecognised when the right to receive cash flows from the investments has expired or has been
transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial
assets at fair value through profit or loss are subsequently carried at fair value.
Trade receivables are recognised at original invoice amount less provision for impairment which, due to their short term nature, approximates
to their fair value. Other receivables include loan notes receivable, which are measured at amortised cost using the effective interest method
less any provision for impairment. This valuation approximates to their fair value.
Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in the income
statement in the period in which they arise.
Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive
income.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included
in the income statement.
Interest on available-for-sale financial assets calculated using the effective interest method is recognised in the income statement as part of
finance income.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
Any impairment is charged to the income statement. Impairment testing for trade receivables is described below in the accounting policy
paragraph relating to trade receivables. For other receivables carried at amortised cost, impairment loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows discounted at the financial assets original
effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the Consolidated Income
Statement.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtors credit rating), the reversal of the previously recognised
impairment loss is recognised in the Consolidated Income Statement.
Assets classified as available-for-sale
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is
impaired. The Group uses the criteria referred to above. If any evidence of impairment exists, the cumulative loss measured as the
difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in
profit or loss is removed from equity and recognised in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified
as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised
in profit or loss, the impairment loss is reversed through the Consolidated Income Statement.
Governance
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default
or delinquency in payments, the probability that they will enter bankruptcy or financial reorganisation, and where observable data indicate
that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate
with defaults.
Strategic Report
Trade receivables are recognised at fair value. A provision for impairment of trade receivables is established when there is objective evidence
that the Group will not be able to collect all amounts due according to the original terms of the receivables.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand deposits and other short term highly liquid investments that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value.
Derivative financial instruments and hedging activities
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair
value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and, if
so, the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognised
asset or liability or a highly probable forecast transaction (cash flow hedge).
The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk
management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge
inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes
in cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes are disclosed in note 23. The full fair value of a hedging derivative
is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset
or liability when the remaining maturity of the hedged item is less than 12 months.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other
comprehensive income. The gain or loss relating to the ineffective portion is recognised immediately in the Consolidated Income Statement.
Corporate Information
Trade receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in
one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented
as non-current assets.
Financial Statements
Inventories
Inventories are stated at cost less impairment. Cost is determined using the first in, first out method.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example,
when the forecast cash flow that is hedged takes place).
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain
or loss existing in equity at that time remains in equity and is recognised when the forecast cash flow is ultimately recognised in the
Consolidated Income Statement. When a forecast cash flow is no longer expected to occur, the cumulative gain or loss that was reported
in equity is immediately transferred to the Consolidated Income Statement.
Lease obligations
Finance leases
Lease arrangements that transfer substantially all the risks and rewards of ownership to the lessee are treated as finance leases. Assets held
under finance leases are capitalised within property, plant and equipment at the leases commencement and depreciated over the shorter
of the lease term and the useful life of the asset. A liability is recognised for the present value of the minimum lease payments within current
and/or non-current liabilities as appropriate. Rental payments are apportioned between capital and interest expense to achieve a constant
rate of interest charge on the outstanding obligation.
Operating leases
Where the Group acts as lessee in an operating lease arrangement, the lease payments are charged as an expense to the income statement
on a straight line basis over the lease term. Lease incentives received are also recognised on a straight line basis over the lease term.
Where the Group acts as lessor in an operating lease arrangement, rental income from operating leases is accounted for on a straight line
basis over the period of the lease. Lease incentives provided are also recognised over the lease term on a straight line basis.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers.
Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business
if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised at fair value.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any
difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Consolidated Income Statement
over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some
or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that
it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised
over the period of the facility to which it relates.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown
in equity as a deduction, net of tax, from the proceeds.
Provisions for other liabilities and charges
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation and the amount has been reliably estimated.
Vacant property provisions are recognised when the Group has committed to a course of action that will result in the property becoming
vacant. The provision is calculated based on projected discounted cash flows to the end of the lease, after making assumptions for void and
rent free periods. The pre-tax rate used reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognised as interest expense.
Dividend distribution
Dividend distribution to the Companys shareholders is recognised as a liability in the Groups Financial Statements in the period in which
the dividends are approved by the Companys shareholders. Interim dividends are recognised when paid.
Disposal groups held for sale
Disposal groups are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and
a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.
Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of directors. Group
Treasury identifies, evaluates and hedges financial risks in close cooperation with the Groups operating units. The Board provides written
principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk,
credit risk, use of derivative financial instruments and investment of excess liquidity.
These policies are further described within the Treasury policies and objectives section of the Business Review (page 42).
Strategic Report
Where individual sensitivities are disclosed below, all other variables are held constant.
Governance
a) Market risk
Financial instruments affected by market risk include borrowings, deposits and derivative financial instruments. The following foreign
exchange risk and interest rate risk analyses, required by IFRS 7, Financial Instruments: Disclosures, are intended to illustrate the sensitivity
to changes in market variables, being primarily the US dollar to sterling and euro to sterling exchange rates and UK interest rates.
changes in the carrying value of other financial instruments not in hedging relationships only affect the Consolidated Income Statement.
Group policy is for each business to undertake commercial transactions in its own functional currency whenever possible. When this is not
possible, the Group manages its foreign exchange risk from future commercial transactions using appropriate derivative contracts arranged
via Group Treasury. Cash flows are reviewed on a monthly basis throughout the duration of projects and the future cover amended as
appropriate.
Trade receivables and payables denominated in currencies other than the local functional currency arise from commercial transactions and
are therefore largely hedged as part of the process described above. Remaining financial assets and liabilities denominated in currencies
other than the local functional currency include bank accounts, loans and intercompany funding balances. These are generally unhedged,
with the exception of balances that are themselves designated as hedging instruments used to hedge the Groups investments in foreign
operations.
Financial Statements
At 31 March 2014, if sterling had strengthened by a reasonably possible change of 10% against the US dollar, post-tax profit for the year
would have been lower by approximately 0.3m (2013: 1.7m) and equity would have been 0.3m lower (2013: 1.7m). If sterling had
weakened by a reasonably possible change of 10% against the US dollar, post-tax profit for the year would have been higher by
approximately 0.4m (2013: 2.1m) and equity would have been 0.4m higher (2013: 2.1m).
At 31 March 2014, if sterling had strengthened by a reasonably possible change of 10% against the euro, post-tax profit for the year would
have been lower by approximately 0.7m (2013: 0.3m) and equity would have been 0.7m lower (2013: 0.3m). If sterling had weakened
by a reasonably possible change of 10% against the euro, post-tax profit for the year would have been higher by approximately 0.8m
(2013: 0.4m) and equity would have been 0.8m higher (2013: 0.4m).
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. A proportion
of the currency exposure arising from the net assets of the Groups foreign operations is managed through borrowings denominated in the
relevant foreign currencies.
Corporate Information
The Groups primary exposure to foreign exchange risk on unhedged financial instruments arises mainly in respect of movements between
the US dollar (including dollar pegged currencies) and sterling and between the euro and sterling.
The table below analyses the Groups non-derivative financial liabilities into relevant maturity groupings based on the remaining period
at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Finance leases
Bank loans1
Private placement debt1
Trade payables
On demand
or within
1 year
m
0.1
55.4
2.2
63.1
Finance leases
Bank loans1
Private placement debt1
Trade payables
On demand
or within
1 year
m
60.0
2.4
74.3
Between
1 and 2 years
m
2.2
Between 2
and 5 years
m
6.7
Over
5 years
m
48.8
Total
m
0.1
55.4
59.9
63.1
Strategic Report
Group
2014
Between 2
and 5 years
m
0.1
6.5
Over
5 years
m
52.5
Total
m
0.1
60.0
63.6
74.3
Company
2014
Bank loans1
Private placement debt1
Intercompany payables
On demand
or within
1 year
m
55.4
2.2
76.2
Bank loans1
Private placement debt1
Intercompany payables
On demand
or within
1 year
m
60.0
2.4
82.0
Between
1 and 2 years
m
2.2
Between 2
and 5 years
m
6.7
Over
5 years
m
48.8
Total
m
55.4
59.9
76.2
2013
Between
1 and 2 years
m
2.2
Between 2
and 5 years
m
6.5
Over
5 years
m
52.5
Total
m
60.0
63.6
82.0
Financial Statements
Between
1 and 2 years
m
2.2
Governance
2013
Corporate Information
1. The contractual cash flows in each year include the borrowings maturing in that year together with forecast contractual interest payments on those borrowings.
Interest is estimated using the prevailing rate at the balance sheet date. Cash flows in foreign currencies are translated at the spot rates at the balance sheet date.
Sterling
US dollar
UAE dirham
China RMB
Euro
Qatari riyal
HK dollar
Saudi Arabian riyal
Australian dollar
Danish krone
Swedish krone
Other
Total
Financial
assets
m
297.7
111.9
28.1
19.6
18.3
17.2
16.8
11.4
10.1
9.1
5.6
32.5
578.3
2014
Financial
liabilities
m
142.2
13.1
2.4
0.4
0.8
1.2
0.1
0.9
0.3
0.9
0.5
1.1
163.9
Financial
assets
m
281.7
118.1
20.8
21.4
11.7
17.6
15.3
7.9
12.4
11.6
7.3
29.5
555.3
2013
Financial
liabilities
m
161.3
16.7
2.2
0.6
1.1
0.8
1.1
0.8
0.9
1.5
1.7
188.7
The carrying value of the financial assets of the Company are denominated in US dollars (103.6m) and sterling (62.1m). The carrying value
of the financial liabilities of the Company are denominated in US dollars (100.7m) and sterling (78.6m).
At 31 March 2013, the carrying value of the financial assets of the Company were denominated in US dollars (109.9m) and sterling
(55.6m). The carrying value of the financial liabilities of the Company at that date were denominated in US dollars (109.1m) and sterling
(82.0m).
Financial assets consist of loan notes; trade receivables (net); intercompany receivables (nil in consolidated accounts); amounts due from joint
ventures; financial assets at fair values through profit or loss; cash and cash equivalents.
Financial liabilities consist of trade payables; intercompany payables (nil in consolidated accounts); and borrowings.
Capital risk management
The Groups objectives when managing capital are to safeguard the Groups ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
The Group maintains or adjusts its capital structure through the payment of dividends to shareholders and through its borrowing facilities.
The Group monitors capital on the basis of the ratio of its net debt plus net defined benefit pension deficit net of total deferred tax to
adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA). This policy is unchanged from the prior year.
12
127.8
14.7
7.5
150.0
150.0
112.3
14.6
14.0
140.9
(4.3)
136.6
0.8
0.9
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011). As a result, profit before interest
and tax, net defined benefit pension deficit and net deferred tax for the year ended 31 March 2013 have been restated accordingly. See
notes 20, 32 and 44 for further details regarding the impact of the adoption of IAS 19 (revised 2011) on the Group.
Governance
The ratios of net debt plus net defined benefit pension deficit net of total deferred tax to adjusted EBITDA at 31 March 2014 and 2013
were as follows:
Group
Restated
2014
2013
Note
m
m
Total borrowings
29
100.8
109.2
Less: cash and cash equivalents
28
(237.3)
(201.5)
Net funds
(136.5)
(92.3)
Net defined benefit pension deficit
32
324.2
282.0
Net deferred tax
20
(67.2)
(71.4)
Net debt plus net defined pension deficit net of total deferred tax
120.5
118.3
Strategic Report
Given the Groups current net funds position, the Board has not formally agreed a target ratio of net debt plus net defined benefit pension
deficit net of total deferred tax to adjusted EBITDA.
inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (Level 2).
The following table presents the Groups assets and liabilities that are measured at fair value at 31 March 2014 and 2013. See note 11 for
disclosures of the disposal group held for sale at 31 March 2013 that was measured at fair value.
Level 2
m
2014
Total
m
Level 1
m
Level 2
m
2013
Total
m
0.4
0.4
0.8
0.8
4.6
6.5
4.7
15.8
13.1
2.6
16.1
13.1
4.6
2.6
6.5
4.7
31.9
8.3
4.4
2.7
15.4
16.7
3.8
21.3
16.7
8.3
3.8
4.4
2.7
36.7
4.4
4.4
4.4
4.4
2.7
2.7
2.7
2.7
Level 1
m
Assets
Derivatives used for hedging
Foreign exchange contracts
Financial assets at fair value through profit or loss
Marketable securities
Certificates of deposit
Fixed interest securities
Life insurance policies
Floating rate notes
UK treasury bills
Total assets
Liabilities
Derivatives used for hedging
Foreign exchange contracts
Total liabilities
There have been no changes to the classification of the Groups financial instruments carried at fair value between Level 1 and Level 2
at 31 March 2014 or 2013.
Corporate Information
quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1)
Financial Statements
Gross
amounts of
recognised
Gross amounts
financial
of recognised
assets/
financial
(liabilities)
assets/
set off the
(liabilities) balance sheet
m
m
0.4
(4.4)
Net amounts
of financial
assets/
(liabilities)
presented
in the
balance
sheet
m
0.4
(4.4)
249.4
(12.1)
233.3
(12.1)
12.1
237.3
233.3
Gross amounts
of recognised
financial
assets/
(liabilities)
m
0.8
(2.7)
Gross
amounts of
recognised
financial
assets/
(liabilities)
set off the
balance sheet
m
Net amounts
of financial
assets/
(liabilities)
presented
in the
balance
sheet
m
0.8
(2.7)
226.0
(24.5)
199.6
(24.5)
24.5
201.5
199.6
Related amounts
not set off in balance sheet
0.1
Net amount
m
0.3
(4.3)
237.3
233.3
Financial
instruments
m
(0.3)
0.3
Cash collateral
received
m
Net amount
m
0.5
(2.4)
201.5
199.6
As at 31 March 2013
Related amounts
not set off in balance sheet
3. Segmental information
Following a change in its operational management, the Group has amended its operating segments for reporting purposes to reflect the
United Kingdom and Europe as one segment; previously Europe had been managed and reported with Asia Pacific. The revised segments
are: United Kingdom and Europe, North America, Middle East, Asia Pacific and Energy. The segmental results and assets for the comparative
year ended 31 March 2013 have been represented in line with these revised segments.
The chief executive officer and the Group finance director assess the performance of the operating segments based on operating profit
before interest and tax. Information provided to the chief executive officer and the Group finance director is measured in a manner
consistent with that in the Financial Statements.
Strategic Report
The CODM has been identified as the chief executive officer and the Group finance director. The chief executive officer and the Group
finance director review the Groups internal reporting to assess performance and allocate resources. Management has determined the
operating segments based on these reports.
(64.6)
(3.0)
1,750.1
Restated
2013
United Kingdom and Europe
North America
Middle East
Asia Pacific
Energy
Total for segments
External
revenue
m
960.9
388.7
168.3
88.1
162.9
1,768.9
Inter
segment
trade
m
16.2
1.0
(6.1)
(0.1)
(11.0)
Group items:
Joint ventures reported above
Unallocated central items
Total for Group
(63.7)
1,705.2
Revenue
m
998.3
380.9
168.4
100.5
169.6
1,817.7
(64.6)
(3.0)
1,750.1
Operating
profit
m
62.6
19.1
14.4
8.0
15.1
119.2
0.2
(5.7)
113.7
Revenue
m
977.1
389.7
162.2
88.0
151.9
1,768.9
Operating
profit
m
62.2
15.3
11.8
8.1
13.8
111.2
(63.7)
1,705.2
(1.5)
(5.7)
104.0
Operating
margin
%
6.3
5.0
8.6
8.0
8.9
6.6
6.5
2.6
2.4
Operating
margin
%
6.4
3.9
7.3
9.2
9.1
6.3
Share of
post-tax
profit from
joint ventures
m
0.9
0.5
0.1
1.5
6.1
2.3
3.8
Unallocated central items comprise a 3.0m provision relating to the previously disposed of Asset Management business and 2.7m of
intangible asset amortisation relating to the acquisitions of The PBSJ Corporation (PBSJ) and Confluence Project Management Pte. Ltd.
(Confluence), see note 17 (2013: 4.3m relating to a pension curtailment gain and 10.0m of intangible asset amortisation and impairment
relating to the acquisition of PBSJ).
Total segment revenue of 1,817.7m (2013: 1,768.9m) excludes the share of joint venture revenue from Diego Garcia of 0.5m
(2013: 6.6m), which is treated as a centrally managed joint venture. Total segment revenue also excludes the 3.0m provision relating
to the previously disposed of Asset Management business, refer above (2013: nil).
Financial Statements
Group items:
Joint ventures reported above
Unallocated central items
Total for Group
Inter
segment
trade
m
21.8
1.9
(9.5)
(0.3)
(13.9)
Corporate Information
2014
United Kingdom and Europe
North America
Middle East
Asia Pacific
Energy
Total for segments
External
revenue
m
976.5
379.0
177.9
100.8
183.5
1,817.7
Share of
post-tax
profit/(loss)
from joint
ventures
m
0.2
0.1
(0.5)
(0.2)
Governance
Reconciliation of segmental analysis to profit for the year attributable to owners of the parent and non-controlling interests:
Operating profit
2014
m
113.7
Restated
2013
m
104.0
10.5
1.2
2.4
127.8
4.5
3.8
112.3
Finance income
Finance costs
Net finance costs
4.2
(17.8)
(13.6)
3.4
(17.7)
(14.3)
114.2
98.0
(17.9)
96.3
(13.7)
84.3
96.0
0.3
96.3
84.6
(0.3)
84.3
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011). As a result, operating profit,
finance costs and income tax expense in the Consolidated Income Statement for the year ended 31 March 2013 have been restated
accordingly. Consequently, the results of the United Kingdom and Europe operating segment have also been restated for that year.
See note 44 for further details regarding the impact of the adoption of IAS 19 (revised 2011) on the Group.
Balance sheet
2014
United Kingdom and Europe
North America
Middle East
Asia Pacific
Energy
Total for segments
Group items:
Unallocated central items
Total for Group
Total
segment
assets
m
544.1
287.7
102.1
59.0
74.4
1,067.3
12.9
1,080.2
Depreciation,
Total
Investments
amortisation
segment Net assets/
in joint
Capital
and
liabilities
(liabilities)
ventures expenditure impairment
m
m
m
m
m
(280.8)
263.3
4.2
12.1
11.4
(71.4)
216.3
0.6
3.4
4.7
(51.2)
50.9
0.7
1.3
(43.1)
15.9
6.6
1.5
(28.1)
46.3
(0.6)
0.7
0.6
(474.6)
592.7
4.2
23.5
19.5
(475.4)
(950.0)
(462.5)
130.2
4.2
23.5
2.7
22.2
Group items:
Unallocated central items
Total for Group
Total
segment
liabilities
m
(315.7)
(91.5)
(57.7)
(44.7)
(30.3)
(539.9)
16.7
1,113.7
(427.5)
(967.4)
Net assets/
(liabilities)
m
240.3
221.6
47.4
4.7
43.1
557.1
Investments
in joint
ventures
m
3.8
0.7
(0.1)
4.4
Capital
expenditure
m
15.1
2.5
2.9
3.6
0.5
24.6
Depreciation,
amortisation
and
impairment
m
10.0
5.1
1.1
1.9
0.5
18.6
(410.8)
146.3
2.7
7.1
24.6
10.0
28.6
As detailed in note 1, during the period the Group adopted and retrospectively applied IAS 19 (revised 2011). As a result, operating profit
for the year ending 31 March 2013 reduced by 0.1m, which impacted the results of the United Kingdom and Europe operating segment.
Consequently, the segmental results for the year ended 31 March 2013 have also been restated. See note 44 for further details regarding
the impact of the adoption of IAS 19 (revised 2011) on the Group.
Assets and liabilities are allocated based on the operations of the segments and the physical location or territory of the asset or liability.
Group cash balances; derivative financial instruments; financial assets at fair value through profit or loss; centrally managed joint ventures;
and corporate assets are not considered to be segment assets as they are managed centrally. Consequently they are shown within
unallocated central items.
Governance
Restated
2013
United Kingdom and Europe
North America
Middle East
Asia Pacific
Energy
Total for segments
Total
segment
assets
m
556.0
313.1
105.1
49.4
73.4
1,097.0
Strategic Report
Similarly, post-employment benefit liabilities; bank loans and private placement debt; derivative financial instruments; central tax provisions;
and corporate liabilities are not considered to be segment liabilities as they are managed centrally. Consequently they are shown within
unallocated central items.
The Group considers the UK to be its country of domicile. Outside the UK, only the Groups business in the United States (US) contributes
more than 10% of the Groups revenue or non-current assets.
UK
US
Other
Total for Group
2014
m
949.4
388.9
411.8
1,750.1
Revenue
2013
m
918.8
399.2
387.2
1,705.2
Non-current assets
2014
2013
m
m
96.3
86.0
175.2
196.1
38.7
46.7
310.2
328.8
Non-current assets exclude deferred tax assets and derivative financial instruments.
c) Major customers
Revenue from the UK Government represents approximately 181.1m (2013: 206.5m) of the Groups total revenue and is included within
the United Kingdom and Europe and Energy operating segments.
Corporate Information
Financial Statements
Capital expenditure includes additions to goodwill, other intangible assets and property, plant and equipment.
4. Joint ventures
Revenue
Operating expenditure
Operating profit
Finance income
Finance costs
Profit before tax
Income tax expense
Share of post-tax profit from joint ventures
2014
m
65.1
(62.5)
2.6
2.6
(0.2)
2.4
Group
2013
m
70.3
(66.1)
4.2
4.2
(0.4)
3.8
2014
m
Group
2013
m
0.1
0.1
9.5
28.7
38.2
12.8
31.9
44.7
(0.9)
(33.0)
(33.9)
(36.4)
(36.4)
(0.2)
(0.2)
(1.2)
(1.2)
4.2
4.2
7.1
7.1
Non-current assets
Other non-current assets
Current assets
Cash and cash equivalents
Other current assets
Current liabilities
Borrowings
Trade and other payables
Non-current liabilities
Other non-current liabilities
Note
Operating profit is arrived at after charging/(crediting):
Employee benefit costs (restated)
Net foreign exchange losses/(gains)
Depreciation of property, plant and equipment
Loss on sale of property, plant and equipment
Loss on sale of intangible assets
Impairment of trade receivables/(reversal of impairment)
increase in provisions
release of provisions
Amortisation and impairment of intangibles
Receipts under operating leases
Payments under operating leases
6
18
26
26
17
2014
m
Group
2013
m
924.3
0.8
14.7
0.4
0.1
891.7
(1.6)
14.6
11.3
(10.0)
7.5
(3.4)
53.2
8.7
(8.7)
14.0
(3.9)
59.4
Strategic Report
0.4
0.7
0.5
0.6
0.1
0.1
1.5
1.5
0.8
0.5
0.1
0.2
0.1
Other
Total other services
0.1
1.0
0.1
0.9
Total
2.5
2.4
The fee for the statutory audit of the Companys annual accounts was 0.1m (2013: 0.1m). No other services were provided to the
Company by the Groups auditor (2013: none).
The total for other non-audit services for the year ended 31 March 2013 was stated to be 0.2m. It has subsequently transpired that some
fees had been incorrectly classified and hence the numbers have been restated. This included approximately 143,000 that was incorrectly
identified as fees paid to the independent auditor and was in fact paid to other third parties so this has been removed from the restated
numbers.
Financial Statements
2014
m
0.3
Group
Restated
2013
m
0.3
Corporate Information
Governance
Company operating profit was arrived at after generating nil of realised profit on disposal of investments (2013: 9.0m).
2014
Number
Average
Restated
2013
Number
2014
Number
Year end
Restated
2013
Number
9,002
2,970
1,982
1,167
1,331
78
16,530
9,208
3,091
2,003
1,015
1,213
70
16,600
8,858
2,836
2,061
1,322
1,365
77
16,519
9,354
3,039
1,978
1,084
1,273
76
16,804
As detailed in note 3, following a change in its operational management, the Group has amended its reporting segments for management
purposes to reflect the United Kingdom and Europe as one segment; previously Europe had been managed and reported with Asia Pacific.
The average and year end number of full time equivalent people (including executive directors) employed by the Group for the comparative
year ended 31 March 2013 for the United Kingdom and Europe and Asia Pacific have been represented in line with these revised segments.
Aggregate employee benefit costs of those people amounted to:
Note
Wages and salaries, including restructuring costs
Social security costs
Defined benefit current service cost
Settlement and curtailment gains
Charge for defined contribution schemes
Other post-employment benefit costs
Share-based payments
32
32
32
32
35
2014
m
804.2
64.6
2.1
37.9
5.3
10.2
924.3
Group
Restated
2013
m
787.2
64.5
2.1
(4.4)
32.8
2.0
7.5
891.7
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011), which reduced the defined
benefit current service cost. The cost for the year ended 31 March 2013 has been restated accordingly from 2.2m to 2.1m. See note 44
for further details regarding the impact of the adoption of IAS 19 (revised 2011) on the Group.
Wages and salaries include 3.5m of restructuring costs (2013: 5.4m) relating to continuing operations.
Details of remuneration (including retirement benefits) and interests for directors are included in the Remuneration Report, which forms part
of these Financial Statements. Details of remuneration for key management are included in note 41.
31
32
2014
m
3.4
0.1
12.6
1.7
17.8
(1.0)
(0.1)
(3.1)
(4.2)
13.6
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011), which increased net finance
costs. Net finance costs on net post-employment benefit liabilities for the year ended 31 March 2013 have been restated accordingly from
8.1m to 13.3m; total net finance costs have been restated from 9.1m to 14.3m. See note 44 for further details regarding the impact
of the adoption of IAS 19 (revised 2011) on the Group.
In the prior year, finance income of 1.4m arising on loan notes receivable from Lambert Smith Hampton Acquisition Limited (LSH) had
been provided against in full within interest receivable on loan notes. See note 24 for further details regarding these loan notes receivable.
Governance
Note
Group
Restated
2013
m
3.2
0.3
0.1
13.3
0.8
17.7
(1.1)
(0.7)
(0.3)
(1.3)
(3.4)
14.3
Strategic Report
2014
m
7.1
(2.0)
15.0
(3.6)
9.7
3.1
17.9
0.9
1.4
13.7
1.5
0.8
20.2
0.4
(1.0)
3.9
17.0
114.2
98.0
(10.5)
2.7
106.4
(4.5)
10.0
(4.3)
99.2
20
15.7%
19.0%
Corporate Information
Note
Group
Restated
2013
m
Financial Statements
14.0%
17.1%
The restatement of the effective income tax rate and the underlying effective income tax rate for the year ended 31 March 2013 is due to the
adoption and retrospective application by the Group of IAS 19 (revised 2011). See note 44 for further details regarding the impact of the
adoption of IAS 19 (revised 2011) on the Group.
2014
%
23.0
0.3
2.5
0.1
(0.9)
(6.0)
(5.5)
2.7
(0.5)
15.7
Group
Restated
2013
%
24.0
0.2
(0.2)
0.4
(1.4)
(5.9)
(3.7)
1.4
(0.8)
14.0
The underlying income tax rate for the year is lower (2013: lower) than the standard rate of corporation tax in the UK of 23% (2013: 24%).
The differences are explained below:
Group
Restated
2014
2013
%
%
UK statutory income tax rate
23.0
24.0
Increase/(decrease) resulting from:
Expenses not deductible for tax purposes
Adjustment in respect of overseas tax rates
Effect of share-based payments
Tax on joint ventures
Research and development tax credits
Losses not previously recognised for tax
Effect of change in tax rates
Other
Underlying effective income tax rate
1.0
3.4
0.1
(1.0)
(6.4)
(3.3)
2.9
(0.7)
19.0
1.7
1.3
0.4
(1.4)
(5.9)
(3.7)
1.4
(0.7)
17.1
As noted in (a) above, the restatement of the effective income tax rate and the underlying effective income tax rate for the year ended
31 March 2013 is due to the adoption and retrospective application by the Group of IAS 19 (revised 2011). See note 44 for further details
regarding the impact of the adoption of IAS 19 (revised 2011) on the Group.
2013
At 1 April
Deferred income tax (restated)
Current income tax
At 31 March
Postemployment
benefit
liability
m
40.8
8.7
49.5
Cash flow
hedges
m
0.2
0.7
0.9
Total
m
49.7
6.4
0.7
56.8
Strategic Report
Group
Group
Cash flow
hedges
m
0.5
(0.3)
0.2
Total
m
41.3
8.7
(0.3)
49.7
Income tax on the post-employment benefit liability for the year ended 31 March 2013 has been restated due to the adoption and
retrospective application by the Group of IAS 19 (revised 2011). See note 44 for further details regarding the impact of the adoption
of IAS 19 (revised 2011) on the Group.
Governance
2014
At 1 April
Deferred income tax
Current income tax
At 31 March
Postemployment
benefit
liability
m
49.5
6.4
55.9
13.0
0.6
(3.1)
(3.8)
0.5
10.5
7.6
0.2
4.5
Financial Statements
2014
m
Corporate Information
Group
Profit/(loss) on disposal of businesses
UK highways services
UK highways services transaction costs released/(incurred)
Transfer of ongoing operations of Peter R. Brown Construction, Inc.
Sodexo Property Solutions Limited (formerly Atkins Facilities Management Limited)
Profit on disposal of non-controlling interests
RMPA Holdings Limited
UK Specialist Hospitals Limited
Net profit on disposal
Group
Net consideration received or receivable at date of disposal
Initial cash consideration
Fair value of deferred consideration
Disposal consideration paid
Assets and liabilities at date of disposal
Property, plant and equipment
Share of joint venture net assets
Inventories
Borrowings
Net assets
Profit on disposal before costs
Disposal costs incurred
Profit on disposal
16.0
16.0
5.1
0.2
1.0
(4.7)
1.6
14.4
(1.4)
13.0
At 31 March 2013, disposal costs of 3.8m were provided for, comprising transaction costs of 2.4m and restructuring costs of 1.4m.
Following the conclusion of this transaction in 2014, 0.6m of the restructuring costs were not required and were subsequently released.
The disposal of the Groups UK highways services business is not reported as a discontinued operation at 31 March 2014 as it did not
represent a major line of business.
Transfer of ongoing operations of Peter R. Brown Construction, Inc.
On 30 August 2013 the transfer of the ongoing operations of Peter R. Brown Construction, Inc. (Peter Brown) to Moss & Associates, LLC
(Moss) was completed. The business was transferred for a cash consideration payable to Moss of $4.0m (2.6m). The loss on disposal before
tax was $4.8m (3.1m) and is shown below.
The disposal of Peter Brown is not reported as a discontinued operation at 31 March 2014 as it did not represent a major line of business.
The Peter Brown business has been reported in the North America operating segment (note 3).
Group
Net consideration paid or payable at date of disposal
Initial cash consideration
Disposal consideration paid
Assets and liabilities at date of disposal
Trade and other receivables
Net assets
Loss on disposal before costs
Disposal costs incurred
Loss on disposal
$m
(4.0)
(4.0)
(2.6)
(2.6)
0.3
0.3
(4.3)
(0.5)
(4.8)
0.2
0.2
(2.8)
(0.3)
(3.1)
2014
m
The disposal of the non-controlling interest was not treated as a discontinued operation at 31 March 2013 as it did not represent a major line
of business.
UK Specialist Hospitals Limited
In the prior year, on 20 February 2013, the sale of the Groups investment in UK Specialist Hospitals Limited to Care UK Clinical Services
Limited was completed. The investment was sold for a cash consideration of 0.2m. The profit on disposal was 0.2m.
Strategic Report
Governance
The goodwill of 5.7m arising from the acquisition was allocated to the Asia Pacific segment. None of the goodwill is expected to be
deductible for income tax purposes. The goodwill of 5.7m is attributable to the extensive complementary skills which enable the Groups
combined operations to provide an enhanced offering to clients in Asia Pacific and the Middle East, which will augment its presence
in the commercial, retail and hospitality sectors in particular.
The following table summarises the consideration paid for Confluence and the fair value of assets acquired and liabilities assumed at the
acquisition date.
Consideration at 4 October 2013
Cash
Additional payment for assets
Total consideration
SGDm
17.0
2.1
19.1
m
8.4
1.1
9.5
Financial Statements
At 31 March 2014 the fair value of acquired assets, liabilities and goodwill for this business combination have been determined on
a provisional basis, pending finalisation of the post-acquisition review of the fair value of the acquired net assets. Under IFRS 3, Business
combinations, adjustments to these provisional values can be made within one year of the date of acquisition relating to facts and
circumstances that existed at the acquisition date. The finalised position will be reflected in the Groups financial statements for the
year ending 31 March 2015.
Intangible assets
Property, plant and equipment
Non-current other receivables
Trade and other receivables
Cash
Trade and other payables
Other post-employment benefit liabilities
Deferred tax liabilities
Total identifiable net assets
Goodwill
Total consideration paid
SGDm
3.0
0.2
0.5
8.0
5.7
(8.6)
(0.9)
(0.4)
7.5
11.6
19.1
m
1.5
0.1
0.2
4.0
2.8
(4.2)
(0.4)
(0.2)
3.8
5.7
9.5
Corporate Information
Fair value amounts recognised as of the acquisition date for each major class of assets and liabilities assumed are as follows:
Acquisition-related costs of 0.6m have been charged to administrative expenses in the Consolidated Income Statement for the year ended
31 March 2014.
There were no contingent liabilities as at the date of acquisition.
The revenue included in the Consolidated Statement of Comprehensive Income since 4 October 2013 contributed by Confluence was 8.7m.
Confluence also contributed profit before tax of 0.8m over the same period.
Had Confluence been consolidated from 1 April 2013, the Consolidated Income Statement would show revenue of 1,759.1m and profit
before tax of 115.1m.
UK highways services
In the year ended 31 March 2013, the Group presented the assets and liabilities relating to the Groups UK highways services business, which
formed part of the UK highways and transportation business, as held for sale following the exchange of contracts on 27 February 2013.
The transaction completed on 4 October 2013 and the profit on disposal is shown in note 9.
Whilst the assets and liabilities of the UK highways services business represent a disposal group, the business was not reported as a
discontinued operation at 31 March 2013 as it did not represent a major line of business.
The UK highways services business has been reported in the United Kingdom and Europe operating segment (note 3).
The major classes of assets and liabilities of this disposal group were as follows:
2013
m
Assets classified as held for sale:
Property, plant and equipment
Inventories
Total assets of the disposal group
Liabilities directly associated with assets classified as held for sale:
Borrowings
Total liabilities of the disposal group
Total net assets of the disposal group
5.0
0.8
5.8
(5.2)
(5.2)
0.6
Exceptional items are disclosed separately on the face of the Consolidated Income Statement and in the notes to the Financial Statements
where it is necessary to do so to provide further understanding of the financial performance of the Group. They are items of income or
expense that have been shown separately due to the significance of their nature or amount.
An analysis of the amount presented as an exceptional item in these Financial Statements is given below:
Note
32
The curtailment gain is included within administrative expenses in the Groups Consolidated Income Statement.
2014
m
Group
2013
m
4.3
Final dividend paid for the year ended 31 March 2013 (2012)
Interim dividend paid for the year ended 31 March 2014 (2013)
Dividends recognised in the year
2014
pence
22.00
10.50
32.50
2013
pence
20.75
10.00
30.75
Interim dividend paid for the year ended 31 March 2014 (2013)
Final dividend proposed for the year ended 31 March 2014 (2013)
Dividends relating to the year
10.50
23.25
33.75
10.00
22.00
32.00
9.7
21.4
31.1
Strategic Report
13. Dividends
The proposed final dividend is subject to approval by shareholders at the annual general meeting and has not been included as a liability
in these Financial Statements.
As at 31 March 2014, 4,341,000 ordinary shares (2013: 4,341,000) were held by the Group as treasury shares on which no dividends are
paid. These shares reduced the dividends paid in year by 1.4m (2013: 1.3m).
Basic EPS 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 EBTs which have not unconditionally vested in the employees and shares held in treasury.
Governance
As at 31 March 2014, one EBT had an agreement in place to waive dividends in excess of 0.01 pence per share on 213,461 ordinary shares
(2013: 213,461). A separate EBT also had an agreement in place as at 31 March 2014 to waive future dividends in their entirety on 2,311,202
ordinary shares (2013: 2,618,276). These arrangements reduced the dividends paid in year by 0.8m (2013: 0.8m).
Diluted EPS is the basic EPS 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.
Number of shares
Weighted average number of shares used in basic and underlying basic EPS
Effect of dilutive securities share options
Weighted average number of shares used in diluted and underlying diluted EPS
Note
Earnings
Profit for the year attributable to owners of the parent
Net profit on disposal of businesses/non-controlling interests (net of tax)
Exceptional pension curtailment gain (net of tax)
Amortisation and impairment of acquired intangibles (net of tax)
Underlying earnings
9
12
97,547
2,704
100,251
97,425
2,412
99,837
Restated
m
96.0
(12.0)
1.9
85.9
84.6
(4.9)
(3.3)
6.1
82.5
pence
98.4
95.8
pence
86.8
84.7
88.1
85.7
84.7
82.6
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011). The profit for the year
attributable to owners of the parent and, consequently, underlying earnings for the year ended 31 March 2013 have been restated
accordingly. See note 44 for further details regarding the impact of the adoption of IAS 19 (revised 2011) on the Group.
Corporate Information
Group
2014
2013
Number (000) Number (000)
Financial Statements
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:
The Company has not presented its own Income Statement or Statement of Comprehensive Income as permitted by Section 408 of the
Companies Act 2006. The profit and total comprehensive income for the year attributable to the owners of the parent was 43.7m
(2013: 23.4m), which included 45.4m (2013: 16.1m) of dividend income from subsidiary companies and no profit on disposal of
a subsidiary undertaking (2013: 0.5m), see note 9.
The Companys individual Income Statement and Statement of Comprehensive Income were approved by the Board on 10 June 2014.
16. Goodwill
Note
Cost at 1 April
Additions
Difference on exchange
Cost at 31 March
Aggregate impairment at 1 April
Difference on exchange
Aggregate impairment at 31 March
Net book value at 31 March
10
2014
m
220.2
5.7
(13.8)
212.1
Group
2013
m
213.4
6.8
220.2
8.8
(0.7)
8.1
8.4
0.4
8.8
204.0
211.4
Energy
22.4
24.1
Total
204.0
211.4
The impairment test involves comparing the carrying value of the CGU or group of CGUs to which goodwill has been allocated to their
recoverable amount. The recoverable amount is based on the higher of fair value less costs to sell and value in use. An impairment loss
is recognised immediately when the carrying value of those assets exceeds their recoverable amount.
Recoverable amount
Fair value less costs to sell is the best estimate of the amount obtainable from the sale of a CGU or group of CGUs in an arms-length
transaction between knowledgeable, willing parties, less the costs of disposal. Value in use is the present value of the future cash flows
expected to be derived from the CGU or group of CGUs.
Fair value is assessed from an external perspective and value in use from a Group-internal perspective. Both are determined using a business
valuation model, taking into account planned future cash flows. If available, third-party valuations are taken as a basis for determining
fair value.
The cash flow projections from that budget are extrapolated for the next four years using an estimated growth rate and projected margin.
Growth rates of between 1.7% and 5.4% are based on the economic environment for the country in which the CGU operates. As required
by IAS 36, cash flows beyond the five year period are extrapolated based on the long term average growth rate for the primary country in
which the CGU operates of between 1.8% and 5.3%. These growth rates are derived from the International Monetary Funds World
Economic Outlook published Gross Domestic Product (GDP) growth rates. Projected margins reflect the historical and budgeted performance
of the CGU. The projections do not include the impact of future restructuring projects to which the Group is not yet committed.
Strategic Report
Assumptions
The growth rate and discount rate assumptions used for the internal value in use calculations are as follows:
Group
2014
2013
1.7% 5.4% 1.5% 3.3%
1.8% 5.3% 1.7% 3.3%
6.7% 17.9% 7.7% 15.2%
Governance
The cash flows have been discounted using the CGUs specific pre-tax discount rates of between 6.7% to 17.9%. The discount rates have
been calculated based on the Groups weighted average cost of capital using the capital asset pricing model to determine the cost of equity
and risks specific to the CGU. The discount rates are revised annually using updated market information.
2013
3.3%
3.3%
12.4%
Given the materiality of goodwill allocated to the North America group of CGUs, together with the relative headroom derived by the
calculations, sensitivity analysis has been performed on the key assumptions used in the value in use calculations. The two assumptions
to which these calculations are most sensitive are the projected profit margin and the discount rate. Specific sensitivity analysis with regard
to these assumptions shows that, with respect to the profit margin, it would need to fall by 180 basis points before any impairment would
be triggered, and similarly the pre-tax discount rate would need to increase from 13.5% to 16.6%.
For the other CGUs, management has considered the level of headroom resulting from the impairment tests. Where appropriate, further
sensitivity analysis has been performed by changing the base case assumptions applicable to each CGU. The analysis has indicated that
no reasonably possible changes in any individual key assumption would cause the carrying amount of the business to exceed its recoverable
amount.
As at 31 March 2014 and 2013, based on these valuations, the recoverable value of goodwill required no impairment.
Corporate Information
2014
2.7%
2.2%
13.5%
Financial Statements
Sensitivities
Goodwill of 131.0m (2013: 141.8m) allocated to the North America operating segment includes 124.1m of goodwill arising on the
acquisition of PBSJ. This goodwill has been allocated to the North America group of CGUs and is considered significant in comparison with
the Groups total carrying amount of goodwill. The recoverable amount of this group of CGUs has been determined using an internal value
in use calculation. The growth rate and discount rate assumptions used for this calculation are as follows:
Acquired
Corporate
Trade
customer information names and
relationships
systems trademarks
Note
m
m
m
43.6
3.0
5.6
(2.8)
1.5
0.2
45.1
0.2
5.8
Group
Software
licences
m
18.1
6.3
(0.3)
1.1
25.2
Total
m
70.3
6.3
(3.1)
2.8
76.3
1.5
(2.0)
(3.8)
40.8
0.2
(4.6)
1.2
4.3
(2.3)
(0.8)
26.4
4.3
1.5
(8.9)
(4.6)
68.6
10.3
2.6
2.6
0.4
15.9
3.0
(2.8)
0.2
0.8
4.8
0.2
5.8
9.9
4.0
(0.2)
1.1
14.8
24.0
6.6
7.4
(3.0)
1.7
36.7
2.7
(2.0)
(1.5)
15.1
0.2
(4.6)
1.2
4.8
(2.2)
(0.7)
16.7
7.5
(8.8)
(2.2)
33.2
25.7
29.2
9.7
10.4
35.4
39.6
10
Included within acquired customer relationships are costs of 4.9m (2013: 5.4m) in respect of backlog orders, arising from the acquisition
of PBSJ on 1 October 2010. At 31 March 2014, the net book value of these backlog orders is nil (2013: 0.1m). The remaining amortisation
life of the other assets included within acquired customer relationships is 15.5 years.
In the prior year, the carrying amounts of acquired customer relationships and trade names and trademarks relating to Peter Brown, a wholly
owned subsidiary of the Group, were reduced to recoverable amounts of nil following an impairment review. Impairment charges of 2.6m
and 4.8m were recognised respectively, as well as 2.6m amortisation on acquired intangibles, as shown above. These impairment charges
were included in administrative expenses in the Consolidated Income Statement. The recoverable amounts of Peter Browns intangible assets
were based on their value in use. The post-tax discount rate used in the value in use calculation was 9.3%. Peter Brown has been reported
within the Groups North America operating segment, note 3. The ongoing operations of this business were disposed of on 30 August 2013.
Further details regarding this disposal are given in note 9.
The amortisation charge for the year of 7.5m (2013: 6.6m) is included in administrative expenses in the Consolidated Income Statement.
Additions
Acquisition of subsidiary undertakings
Disposals
Difference on exchange
Cost at 31 March 2014
Accumulated depreciation at 1 April 2012
Depreciation charge for the year
Disposals
Transferred to disposal group classified as held for sale
Difference on exchange
Accumulated depreciation at 31 March 2013
Depreciation charge for the year
Disposals
Difference on exchange
Accumulated depreciation at 31 March 2014
Net book value at 31 March 2014
Net book value at 31 March 2013
10
Total
m
125.1
18.3
(10.6)
(15.0)
2.7
120.5
(0.3)
(0.5)
20.4
1.7
(1.1)
(1.1)
29.6
11.8
0.1
(6.4)
(3.9)
70.8
13.5
0.1
(7.8)
(5.5)
120.8
7.8
0.4
8.2
18.1
3.3
(2.3)
(0.1)
0.3
19.3
47.7
10.9
(7.9)
(9.9)
1.5
42.3
73.6
14.6
(10.2)
(10.0)
1.8
69.8
0.4
(0.1)
8.5
3.3
(0.7)
(0.6)
21.3
11.0
(6.2)
(2.8)
44.3
14.7
(6.9)
(3.5)
74.1
11.9
13.0
8.3
10.8
26.5
26.9
46.7
50.7
The depreciation charge for the year of 14.7m (2013: 14.6m) is included in administrative expenses in the Consolidated Income Statement.
An independent valuation of the Groups freehold land and buildings was performed by valuers to determine their fair value at 31 March 2014.
The market value of freehold land and buildings is estimated at 18.5m (2013: 17.6m).
Strategic Report
Group
Governance
Short term
Plant,
leasehold
machinery
property and vehicles
m
m
28.9
75.4
3.2
15.1
(2.3)
(8.3)
(0.2)
(14.8)
0.5
1.8
30.1
69.2
Financial Statements
Note
Freehold
land and
buildings
m
20.8
0.4
21.2
Included in plant, machinery and vehicles above are equipment and vehicles held under finance leases and hire purchase contracts as follows:
Cost
Accumulated depreciation
Net book value
2014
m
0.3
(0.2)
0.1
2013
m
12.8
(8.1)
4.7
In the prior year, 4.6m was included in plant, machinery and vehicles transferred to the disposal group classified as held for sale were
equipment and vehicles used by the Groups UK highways services business held under finance leases.
Corporate Information
In the prior year, the net book value of property, plant and equipment transferred to the disposal group classified as held for sale amounted
to 5.0m and related to assets used by the Groups UK highways services business, which formed part of the United Kingdom and Europe
operating segment.
Company
Total
m
186.9
8.3
195.2
Additions
Cost at 31 March 2014
6.6
201.8
0.8
Disposals
Impairment at 31 March 2014
0.8
201.0
194.4
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and there is a legally
enforceable right to settle tax assets and liabilities on a net basis. The offset amounts are as follows:
Group
Restated
2014
2013
m
m
Deferred tax assets:
deferred tax assets to be recovered after more than 12 months
81.2
91.0
deferred tax assets to be recovered within 12 months
1.5
0.5
82.7
91.5
Deferred tax liabilities:
deferred tax liabilities to be settled after more than 12 months
deferred tax liabilities to be settled within 12 months
Deferred tax assets (net)
(12.1)
(3.4)
(15.5)
67.2
(16.2)
(3.9)
(20.1)
71.4
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which
the temporary differences can be utilised.
a) Net deferred tax assets/(liabilities)
Accelerated depreciation
Share-based payments
Goodwill
Intangible assets
Deferred tax asset on post-employment benefit liabilities
Deferred income
Amortisation of acquired intangibles
Other temporary differences
Total deferred income tax
2014
m
7.3
4.5
(3.2)
65.8
(7.9)
(10.9)
11.6
67.2
Group
Restated
2013
m
10.9
3.7
(1.8)
2.3
65.5
(8.1)
(12.5)
11.4
71.4
Note
Deferred tax assets at 1 April
Transfers between current and deferred tax
Deferred tax charged to the income statement
Deferred tax on acquisitions
Deferred tax credited to equity
Foreign exchange difference on deferred tax
Deferred tax assets at 31 March
8
10
2014
m
71.4
0.9
(12.8)
(0.2)
7.5
0.4
67.2
Group
Restated
2013
m
64.7
(2.3)
9.1
(0.1)
71.4
Strategic Report
Finance Act 2013 enacted a reduction to the main rate of UK corporation tax to 21% from 1 April 2014 and 20% from 1 April 2015. As the
Finance Act 2013 had been enacted as at the balance sheet date, the impact of these reductions have been reflected in the movements in
deferred tax as at 31 March 2014. No further reductions to the UK corporation tax rate are currently proposed.
Group
2014
Derivatives
used for
hedging
m
Total
m
31.5
31.5
0.4
0.4
0.4
19.9
401.7
31.5
237.3
690.8
Other
Liabilities
financial at fair value
liabilities at
through
amortised
profit
cost
and loss
m
m
Derivatives
used for
hedging
m
Total
m
19.9
401.7
237.3
658.9
(100.7)
(0.1)
(254.7)
(355.5)
(4.4)
(4.4)
(100.7)
(0.1)
(4.4)
(254.7)
(359.9)
Financial Statements
Assets
at fair value
through
Loans and
profit
receivables
and loss
m
m
Corporate Information
Governance
Loans and
receivables
m
Derivatives
used for
hedging
m
20.0
432.0
201.5
653.5
35.9
35.9
0.8
0.8
0.8
20.0
432.0
35.9
201.5
690.2
Other
financial
liabilities at
amortised
cost
m
Liabilities
at fair value
through
profit
and loss
m
Derivatives
used for
hedging
m
Total
m
(109.1)
(0.1)
(274.9)
(384.1)
(2.7)
(2.7)
Loans and
receivables
m
Assets as per balance sheet
Trade and other receivables excluding prepayments
Cash and cash equivalents
Total
Group
2013
Assets
at fair value
through
profit
and loss
m
Total
m
(109.1)
(0.1)
(2.7)
(274.9)
(386.8)
Company
2014
Total
m
165.7
165.7
165.7
165.7
Other
financial
liabilities at
amortised
cost
m
Total
m
(100.7)
(2.4)
(76.2)
(179.3)
(100.7)
(2.4)
(76.2)
(179.3)
Other
financial
liabilities at
amortised
cost
m
Total
m
(109.1)
(82.0)
(191.1)
(109.1)
(82.0)
(191.1)
2014
m
Group
2013
m
6.1
(4.5)
(1.6)
22. Available-for-sale financial assets
At 1 April
Disposals
Net gains transferred from other comprehensive income
At 31 March
Available-for-sale financial assets comprised unlisted corporate bonds with a fixed annual return of 10% and maturity date of 25 August
2016. The bonds were denominated in UAE dirham and were disposed of in the prior year. In addition to the net gain of 1.6m transferred
from other comprehensive income to the Consolidated Income Statement in the prior year, a gain on disposal of 0.8m was included within
administrative expenses in the Consolidated Income Statement in that year in relation to this disposal.
The table below shows the fair value of forward currency contracts at the year end, based on their market value:
Group
2014
2013
Assets
Liabilities
Assets
Liabilities
m
m
m
m
Current
0.4
(2.7)
0.5
(1.4)
Later than one year and no later than two years
Later than two years and no later than five years
Non-current
Total
(0.7)
(1.0)
(1.7)
0.3
0.3
(1.3)
(1.3)
0.4
(4.4)
0.8
(2.7)
Strategic Report
165.2
0.3
165.5
Governance
165.2
0.3
165.5
Financial Statements
Total
m
Corporate Information
Loans and
receivables
m
Company
2013
The notional principal amounts of the outstanding foreign exchange contracts at 31 March 2014 and 2013 are as follows:
Sell
m
1.0
7.0
1.9
33.0
13.5
2014
Buy
m
(1.0)
(7.1)
(1.9)
(31.4)
(14.5)
Sell
m
12.7
5.6
4.6
28.8
Group
2013
Buy
m
(13.1)
(5.4)
(4.7)
(29.0)
The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next
12 months. Gains and losses recognised in the hedging reserve in equity on forward foreign exchange contracts as at 31 March 2014 are
recognised in the Consolidated Income Statement in the period or periods during which the hedged forecast transaction affects the
Consolidated Income Statement. This is within 12 months of the end of the reporting period.
Derivatives are classified as a current asset or liability. The full fair value of a hedging derivative is classified as a non-current asset or liability
if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged item
is less than 12 months.
The amounts disclosed in the table below are the contractual undiscounted cash flows of forward currency contracts at the year end:
Inflow
m
31.2
Outflow
m
(32.1)
Group
2013
Net
m
(0.9)
Inflow
m
26.7
Outflow
m
(29.1)
2014
Net
m
(2.4)
11.5
14.2
25.7
(12.1)
(15.1)
(27.2)
(0.6)
(0.9)
(1.5)
18.9
0.2
19.1
(19.9)
(0.2)
(20.1)
(1.0)
(1.0)
Total
52.4
(56.3)
(3.9)
50.3
(52.2)
(1.9)
Current
The Group used derivative instruments to hedge foreign currency receipts and payments on current contracts, as described in note 2.
All of the Groups financial instruments are classified as Level 2 under amendments to IFRS 7, Financial instruments: disclosures. A definition
of Level 2 financial instruments is included in note 2. The fair value of derivative financial instruments is calculated based on quoted forward
currency rates at the balance sheet date.
The Group has reviewed all contracts for embedded derivatives and does not have any such instruments that are closely related to the
hostcontract.
Non-current assets:
Loan notes receivable
Impairment of loan notes receivable
Group
2014
m
Group
2013
m
Company
2014
m
Company
2013
m
19.9
19.9
29.6
(9.6)
20.0
9.6
(9.6)
During the year the Group reduced interest-bearing loan notes by 0.1m in Connect Plus (M25) Intermediate Limited (2013: increased by
1.8m), a company in which the Group has a 10% shareholding. Under the terms of the Connect Plus M25 finance agreement, the Group
is required to lend Connect Plus (M25) Intermediate Limited 20m over a period from May 2009 to October 2012. This funding is lent on by
Connect Plus (M25) Intermediate Limited to Connect Plus (M25) Limited, the main trading entity for the Connect Plus M25 project and the
company which holds the 30 year PFI contract with the Highways Agency to design, build, fund and then operate and maintain the M25.
One of the subcontractors used by Connect Plus (M25) Limited to deliver its main obligations under this project is Connect Plus Services.
The Groups interest in Connect Plus Services is disclosed in note 41 and Connect Plus (M25) Intermediate Limited is considered a related
party of the Group.
Governance
At 31 March 2014 the Group held 19.9m of interest-bearing loan notes in Connect Plus (M25) Intermediate Limited (2013: 20.0m).
These loan notes mature in 2039, and has a nominal interest rate of 12% per annum.
Strategic Report
25. Inventories
2014
m
Group
2013
m
0.2
Note
Current assets:
Trade receivables
Less: Provision for impairment of receivables
Trade receivables net
Amounts recoverable on contracts
Amounts due from subsidiary undertakings
Amounts due from joint ventures
Other receivables
Prepayments and accrued income
41
41
Group
2014
m
305.8
(23.9)
281.9
93.2
7.7
18.9
16.4
418.1
Group
2013
m
Company
2014
m
Company
2013
m
314.9
(24.3)
290.6
106.5
7.3
27.6
17.2
449.2
164.2
1.5
165.7
165.2
165.2
The directors consider that the carrying amounts of trade and other receivables approximate their fair value.
At 31 March 2014, 156.8m (2013: 172.1m) of Group trade receivables were within normal payment terms and considered to be fully
performing.
Corporate Information
Financial Statements
The directors consider that the carrying amount of inventories approximates their fair value. There were no amounts of inventories written
off during the year (2013: nil). In the prior year, inventories of 0.8m relating to the Groups UK highways services business were reclassified
from inventories at 31 March 2013 and classified as an asset held for sale.
At 31 March 2014, 96.3m (2013: 100.1m) of Group trade receivables were past due and aged up to six months from invoice date and
carried a provision for impairment of 0.3m (2013: 0.4m). The remaining Group trade receivables of 96.0m (2013: 99.7m) which were
past due and aged up to six months from invoice date but not impaired relate to a number of independent customers for whom there
is no recent history of default.
Group trade receivables aged beyond six months of invoice date totalled 52.7m (2013: 42.7m) and carried a provision for impairment
of 23.6m (2013: 23.9m).
Movements in the Group provision for impairment of trade receivables were as follows:
Group
2013
m
(24.6)
(8.7)
8.7
1.2
(0.9)
(24.3)
2014
m
(24.3)
(11.3)
10.0
0.1
1.6
(23.9)
None of the financial assets that are fully performing were renegotiated during the year. The other classes within trade and other receivables
do not contain impaired assets.
At 31 March 2014, 0.5m of the Companys amounts due from subsidiary undertakings were fully provided against (2013: 0.5m), with
an in year release of provisions of nil (2013: 9.0m), see note 41.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group does
not hold any collateral as security.
In accordance with IFRS 7, disclosure is required for financial instruments that are measured in the Consolidated Balance Sheet at fair value.
This requires disclosure of fair value measurements by level.
The Groups financial assets that are measured and recognised at fair value through profit or loss include certificates of deposit, fixed interest
securities, life insurance policies, floating rate notes and UK treasury bills. The Groups financial liabilities that are measured and recognised
at fair value include derivative financial instruments.
The fair value of the Groups derivative financial instruments are disclosed in note 23.
The following table presents the Groups financial assets measured at fair value through profit or loss.
Certificates of deposit
Floating rate notes
Fixed interest securities
UK treasury bills
Life insurance policies
Marketable securities
Level 1
m
6.5
4.6
4.7
15.8
Level 2
m
13.1
2.6
15.7
2014
Total
m
13.1
6.5
4.6
4.7
2.6
31.5
Level 1
m
4.4
8.3
2.7
15.4
Group
2013
Total
m
16.7
4.4
8.3
2.7
3.8
35.9
Level 2
m
16.7
3.8
20.5
A definition of Level 1 and Level 2 financial instruments is included in note 2. There have been no changes to the classification of financial
assets between Level 1 and Level 2 financial instruments at 31 March 2014 or 2013.
Changes in fair values of financial assets at fair value through profit or loss include fair value loss of 0.1m (2013: 0.3m gain).
Group
2014
m
187.0
50.3
237.3
Group
2013
m
153.5
48.0
201.5
Company
2014
m
Company
2013
m
0.3
0.3
The effective interest rate on cash and cash equivalents was 0.5% (2013: 0.7%). Included within cash at bank and in hand is 2.2m
(2013: 0.1m) held by the Companys EBTs.
Current
Bank loans
Bank overdraft
Finance leases
Non-current
Private placement debt
Finance leases
Total
Group
2014
m
Group
2013
m
Company
2014
m
Company
2013
m
55.2
0.1
55.3
59.8
59.8
55.2
2.4
57.6
59.8
59.8
45.5
45.5
49.3
0.1
49.4
45.5
45.5
49.3
49.3
100.8
109.2
103.1
109.1
2014
m
Group
2013
m
45.5
45.5
0.1
49.3
49.4
Strategic Report
29. Borrowings
The maturity profile of the carrying amount of the non-current borrowings was as follows:
Repayable:
Later than one year and no later than two years
Later than two years and no later than five years
Later than five years
Governance
The directors consider that the carrying amount of current borrowings approximates their fair value.
Group
2013
2014
Sterling
US dollar
Bank loans
and private
placement
debt
m
100.7
100.7
Finance
leases
m
0.1
0.1
Total
m
100.8
100.8
Bank loans
and private
placement
debt
m
109.1
109.1
Finance
leases
m
0.1
0.1
Total
m
109.2
109.2
2014
m
0.1
0.1
0.1
Group
2013
m
0.1
0.1
0.1
Financial Statements
Finance leases are on a fixed repayment basis, with interest rates fixed at the contract date. The average effective borrowing rate for all
finance leases was 7.7% (2013: 6.2% including those classified as held for sale) over a weighted average remaining period of 26 months
(2013: 52 months).
Corporate Information
The total present value of minimum lease payments under finance leases fall due as follows:
Borrowing facilities
The Group has the following undrawn committed borrowing facilities available at 31 March expiring as follows:
2014
m
141.5
Group
2013
m
113.3
All of the Groups undrawn committed borrowing facilities will be subject to floating rates of interest.
On 10 October 2013 the Group entered into a new five year revolving credit facility (RCF). This facility matures in October 2018. The new
arrangement provides the Group with an enlarged committed credit facility of 200m, and replaced the Groups previous 150m RCF and
30m bilateral facility. This larger facility provides the Group with increased and longer term financial capacity to support its strategy. The
total letters of credit in issue under the committed facility at 31 March 2014 were 3.3m (31 March 2013: 6.9m).
The new facility includes four of the Groups existing lenders, Banc of America Securities Limited, Barclays Bank plc, HSBC Bank plc and
National Westminster Bank plc, together with three new banks, The National Bank of Abu Dhabi, Abbey National Treasury Services plc and
United Overseas Bank Limited.
The Groups borrowing facilities include a number of undertakings and financial covenants. Compliance with these covenants is monitored.
As at 31 March 2014, and since, there have been no breaches (2013: none).
In the prior year, the Group raised $75m through the successful execution of its debut issue in the US private placement market. The
proceeds were used to repay drawn funds under the Groups existing banking facilities. The private placement is due for repayment on
31 May 2019 and carries a nominal interest rate of 4.38%.
41
2014
m
Group
2013
m
2014
m
Company
2013
m
63.1
155.5
41.8
156.6
36.1
453.1
74.3
165.9
41.3
0.1
170.5
34.6
486.7
76.2
1.0
77.2
82.0
1.1
83.1
The directors consider that the carrying values of the Groups trade and other payables approximate their fair value.
Group
2013
Vacant
property
m
1.5
1.1
1.8
0.4
3.3
1.5
2.0
0.9
4.4
Total
4.1
5.9
Current
Note
Balance at 1 April 2013
Provisions charged to the income statement
Provisions released to the income statement
Provisions utilised
Unwinding of discount
Balance at 31 March 2014
Group
Vacant
property
m
5.9
1.9
(1.8)
(2.0)
0.1
4.1
Governance
2014
Vacant
property
m
0.8
Strategic Report
The vacant property provision is discounted and is expected to be utilised over the next 12 years (2013: 13 years). No provision has been
released or utilised for any purpose other than that for which it was established.
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011). IAS 19 (revised 2011) and the
related consequential amendments have impacted the accounting for the Groups defined benefit scheme by replacing the interest cost and
expected return on plan assets with a net interest charge on the net defined benefit liability. In addition, the standard requires that unvested
past service cost and administration costs be recognised immediately in the income statement, which has also had a small impact on the
Groups defined benefit liability. The effect of this resulted in the net defined benefit obligation at 1 April 2012 being restated as 262.5m
(previously 265.3m); and 31 March 2013 as 295.6m (previously 298.8m). Comparative information has been restated for the effect of
the retrospective application of the amendment to IAS 19 as disclosed in note 44.
Corporate Information
2014
m
324.2
14.8
339.0
Group
Restated
2013
m
282.0
13.6
295.6
Financial Statements
Members
Deferred pensioners
Pensioners
17,141
15,719
2,285
2,180
3.50%
2.50%
3.40%
2.40%
3.20%
2.50%
2.50%
5.00%
3.10%
2.40%
2.50%
5.00%
5.00%
5.75%
3.50%
2.50%
4.90%
5.65%
3.40%
2.40%
3.50%
2.50%
4.50%
3.40%
2.40%
4.60%
24.1 years
26.3 years
24.0 years
25.9 years
26.3 years
28.6 years
26.2 years
28.2 years
The actuarial tables used to calculate the retirement benefit liabilities for the Plan were the Self-Administered Pension Schemes (SAPS) tables,
with medium cohort improvements from 2002 to 2009 and a scaling factor of 0.85/0.90 for males/females respectively. Future improvements
are based on CMI improvements with a 1.5% per annum improvement trend, 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:
Atkins
Pension
Plan
m
Railways
Pension
Scheme
m
Other
m
Total
m
0.1
0.1
2.0
0.2
2.2
2.1
0.2
2.3
9.4
2.5
0.1
12.0
9.5
4.7
0.1
14.3
9.5
4.7
37.9
38.0
37.9
52.2
5.2
(7.7)
(2.5)
(0.8)
(3.3)
0.6
(1.2)
(0.6)
0.1
(0.5)
(20.1)
(43.4)
(63.5)
6.4
(57.1)
2014
Cost of sales
Current service cost
Administrative expenses
Total charge
Note
20
(25.9)
(34.5)
(60.4)
7.1
(53.3)
Governance
2013
Financial Statements
2014
Corporate Information
Price inflation
RPI
CPI
Rate of increase of pensions in payment
Limited Price Indexation (RPI-based)
Limited Price Indexation (CPI-based)
Limited Price Indexation to 2.5%
Fixed
Rate of increase in salaries
Atkins Pension Plan
Railways Pension Scheme (uncapped)
Railways Pension Scheme (RPI capped)
Railways Pension Scheme (CPI capped)
Rate of increase for deferred pensioners
Atkins Pension Plan
Railways Pension Scheme
Discount rate
Longevity at age 65 for current pensioners
Men
Women
Longevity at age 65 for future pensioners (current age 45)
Men
Women
Strategic Report
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:
Atkins
Pension
Plan
m
Railways
Pension
Scheme
m
Other
m
Total
m
0.2
(0.1)
0.1
1.9
0.2
(4.3)
(2.2)
2.1
0.2
(4.3)
(0.1)
(2.1)
10.5
2.1
12.6
10.6
(0.1)
10.5
10.6
(0.1)
32.8
32.8
32.8
43.3
96.9
(123.8)
(26.9)
5.6
(21.3)
9.1
(24.8)
(15.7)
2.5
(13.2)
0.4
(4.9)
(4.5)
0.6
(3.9)
106.4
(153.5)
(47.1)
8.7
(38.4)
2014
Defined benefit obligation
Fair value of plan assets
Retirement benefit liabilities
Atkins
Pension
Plan
m
(1,302.1)
1,043.5
(258.6)
Railways
Pension
Scheme
m
(245.3)
184.6
(60.7)
Other
m
(13.1)
8.2
(4.9)
Total
m
(1,560.5)
1,236.3
(324.2)
2013
Defined benefit obligation
Fair value of plan assets
Retirement benefit liabilities
Atkins
Pension
Plan
m
(1,248.8)
1,027.9
(220.9)
Railways
Pension
Scheme
m
(230.2)
173.8
(56.4)
Other
m
(12.2)
7.5
(4.7)
Total
m
(1,491.2)
1,209.2
(282.0)
Restated
2013
Cost of sales
Current service cost
Administrative expenses
Curtailment gain
Settlement gain (net)
Total charge/(credit)
Note
20
Other includes the Atkins McCarthy Pension Plan and an unfunded pension obligation in relation to a former director, for 1.0m (2013: 0.9m).
100.0
184.6
2013
Equities
Government bonds
Corporate bonds
Property
Cash
The assets of the schemes do not include any direct holdings of the Groups financial instruments, nor any property occupied by, or other
assets, of the Group.
Governance
2014
Equities
Government bonds
Corporate bonds
Property
Cash
Other
Strategic Report
The major categories of plan assets as a percentage of total plan assets are as follows:
Railways
Pension
Scheme
m
230.2
2.0
0.2
10.4
7.7
1.5
(6.7)
245.3
Other
m
12.2
0.3
1.2
(0.3)
(0.3)
13.1
Total
m
1,491.2
2.1
0.2
67.4
43.4
1.5
(45.0)
(0.3)
1,560.5
2013
Defined benefit obligation at beginning of year
Service cost
Administrative expenses
Curtailment gain
Settlement gain
Interest cost
Remeasurements loss recognised in other comprehensive expense
Employee contributions
Benefit payments
Difference on exchange
Defined benefit obligation at end of year
Atkins
Pension
Plan
m
1,116.5
0.2
(1.4)
57.3
123.8
0.1
(47.7)
1,248.8
Railways
Pension
Scheme
m
203.4
1.9
0.2
(4.3)
10.3
24.8
1.4
(7.5)
230.2
Other
m
7.1
0.4
4.9
(0.2)
12.2
Total
m
1,327.0
2.1
0.2
(4.3)
(1.4)
68.0
153.5
1.5
(55.4)
1,491.2
Corporate Information
2014
Defined benefit obligation at beginning of year
Service cost
Administrative expenses
Interest cost
Remeasurements loss recognised in other comprehensive expense
Employee contributions
Benefit payments
Difference on exchange
Defined benefit obligation at end of year
Atkins
Pension
Plan
m
1,248.8
0.1
56.7
34.5
(38.0)
1,302.1
Financial Statements
Movements in the present value of the defined benefit obligation are as follows:
1.5
1.5
Benefits paid
(38.0)
(6.7)
(0.3)
(45.0)
Remeasurements (loss)/gain recognised in other comprehensive expense
(25.9)
5.2
0.6
(20.1)
Difference on exchange
(0.2)
(0.2)
Fair value of plan assets at end of year
1,043.5
184.6
8.2
1,236.3
Atkins
Pension
Plan
m
911.9
46.8
(1.3)
21.2
0.1
(47.7)
96.9
1,027.9
Railways
Pension
Scheme
m
160.2
8.2
2.4
1.4
(7.5)
9.1
173.8
Other
m
6.6
0.3
0.3
(0.2)
0.4
0.1
7.5
Total
m
1,078.7
55.3
(1.3)
23.9
1.5
(55.4)
106.4
0.1
1,209.2
2014
Net retirement benefit liabilities at beginning of year (restated)
Service cost
Administrative expenses
Net finance costs
Contributions
Remeasurements gain recognised in other comprehensive expense
Difference on exchange
Net retirement benefit liabilities at end of year
Atkins
Pension
Plan
m
(220.9)
(0.1)
(9.4)
32.2
(60.4)
(258.6)
Railways
Pension
Scheme
m
(56.4)
(2.0)
(0.2)
(2.5)
2.9
(2.5)
(60.7)
Other
m
(4.7)
(0.1)
0.4
(0.6)
0.1
(4.9)
Total
m
(282.0)
(2.1)
(0.2)
(12.0)
35.5
(63.5)
0.1
(324.2)
2013
Net retirement benefit liabilities at beginning of year (restated)
Service cost
Administrative expenses
Net finance costs
Curtailment gain
Settlement gain
Contributions
Remeasurements loss recognised in other comprehensive expense
Net retirement benefit liabilities at end of year (restated)
Atkins
Pension
Plan
m
(204.6)
(0.2)
(10.5)
0.1
21.2
(26.9)
(220.9)
Railways
Pension
Scheme
m
(43.2)
(1.9)
(0.2)
(2.1)
4.3
2.4
(15.7)
(56.4)
Other
m
(0.5)
0.3
(4.5)
(4.7)
Total
m
(248.3)
(2.1)
(0.2)
(12.6)
4.3
0.1
23.9
(47.1)
(282.0)
2013
Fair value of plan assets at beginning of year
Interest return on plan assets
Settlement loss
Employer contributions
Employee contributions
Benefits paid
Remeasurements gain recognised in other comprehensive expense
Difference on exchange
Fair value of plan assets at end of year
Movements in the net retirement benefit liabilities are as follows:
2013
Losses at the beginning of year (restated)
Net remeasurement losses recognised in the year:
Railways
Pension
Scheme
m
(34.2)
(2.5)
Other
m
(11.2)
(0.6)
Total
m
(239.5)
(63.5)
(41.2)
6.7
(34.5)
(25.9)
(7.2)
(0.5)
(7.7)
5.2
(1.2)
(1.2)
0.6
(49.6)
6.2
(43.4)
(20.1)
(254.5)
(36.7)
(11.8)
(303.0)
Atkins
Pension
Plan
m
(167.2)
(26.9)
Railways
Pension
Scheme
m
(18.5)
(15.7)
Other
m
(6.7)
(4.5)
Total
m
(192.4)
(47.1)
(123.8)
(123.8)
96.9
(22.9)
(1.9)
(24.8)
9.1
(4.9)
(4.9)
0.4
(151.6)
(1.9)
(153.5)
106.4
(194.1)
(34.2)
(11.2)
(239.5)
Atkins
Pension
Plan
m
47.3
(25.9)
21.4
Railways
Pension
Scheme
m
7.9
5.2
13.1
Other
m
0.2
0.6
0.8
Total
m
55.4
(20.1)
35.3
Atkins
Pension
Plan
m
46.8
96.9
143.7
Railways
Pension
Scheme
m
8.2
9.1
17.3
Other
m
0.3
0.4
0.7
Total
m
55.3
106.4
161.7
Governance
2014
Losses at the beginning of year
Net remeasurement losses recognised in the year:
Atkins
Pension
Plan
m
(194.1)
(60.4)
Strategic Report
2013
Expected return on plan assets
Experience gain on plan assets
Actual return on plan assets
Corporate Information
2014
Expected return on plan assets
Experience (loss)/gain on plan assets
Actual return on plan assets
Financial Statements
2014
Total
(20.1)m
(1.6)%
Restated
2013
Total
106.4m
8.8%
2012
Total
83.8m
7.8%
2011
Total
(2.5)m
(0.3)%
2010
Total
125.2m
14.2%
6.2m
(0.4)%
(1.9)m
0.1%
4.4m
(0.3)%
43.8m
(3.4)%
(0.3)m
(1,560.5)m
1,236.3m
(324.2)m
(1,491.2)m
1,209.2m
(282.0)m
(1,329.8)m
1,078.7m
(251.1)m
(1,282.1)m
944.3m
(337.8)m
(1,322.7)m
882.7m
(440.0)m
The Group completed its last triennial valuation as at 31 March 2013 and is therefore due to complete its next triennial valuation as at
31 March 2016. The Group considers that the contribution rates set at the recent valuation date are sufficient to eliminate the deficit over
the agreed period.
The nature of the funding regime in the UK creates uncertainty around the size and timing of cash that the Company will be required
to pay to the pension schemes.
The Group has agreed that it will proceed with a new repayment plan that ends in March 2025, with one-off payments of 32m for each
of the two years ending 31 March 2015, which escalate thereafter at 2.5% per annum.
The Group expects employer contributions to be paid during the financial year to 31 March 2015 to be around 34.9m, of which 32m
is in relation to the funding of the actuarial deficit, and employee contributions paid to be around 1.5m. Expected benefit payments made
directly by the Group to pensioners in the financial year to 31 March 2015 are nil.
The approximate effect on the liabilities from changes in the main assumptions used to value the liabilities are as follows:
Change in assumption
Discount rate
Inflation
Real rate of increase in salaries
Longevity
increase/decrease 0.5%
increase/decrease 0.5%
increase/decrease 0.5%
increase 1 year
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this
is unlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit
obligation to significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the
projected unit credit method at the end of the reporting period) has been applied as when calculating the pension liability recognised
within the Consolidated Balance Sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to the previous period.
The effect of the change in inflation on liabilities assumes a corresponding change in salary increases and inflation-related pension increases.
b) Other post-employment benefit liabilities
The Group operates unfunded schemes within certain of its non-UK businesses, including gratuity schemes, Key Employee Supplemental
Option Plans (KESOP) and post-retirement medical benefit schemes.
Members of the gratuity schemes are entitled to receive a cash gratuity on leaving the business which is dependent on their length of
employment and final salary. Valuation of the gratuity obligation is carried out in line with the principles of IAS 19, Employee benefits.
The Group operates a KESOP providing some key officers and employees in its North American business (the business) with post-retirement
benefits, known as the Supplemental Income Program (SIP). The SIP is an unfunded plan that provides participants with retirement income
for a specified period of between 5 and 15 years upon retirement, death or disability. The plan fixes a minimum level for retirement benefits
to be paid to participants based on the participants position in the business, their age and length of service at retirement. Additionally,
certain executive agreements have been amended to provide post-retirement medical benefits to those employees and their spouses, at
a level substantially similar to those medical and hospitalisation benefits paid and provided to senior executives currently employed by the
business. The insurance benefits will be provided without any further or additional services from the employee to the business and they
will be paid for and provided for as long as the employee and their spouse shall live.
Note
Other post-employment obligations at beginning of year
Acquisition of subsidiary undertakings
Current service cost and other comprehensive income
Past service cost and other comprehensive income
Interest cost
Net measurement loss recognised in the year
Benefit payments
Difference on exchange
Other post-employment obligations at end of year
10
2014
m
13.6
0.4
3.8
1.5
0.6
0.1
(3.8)
(1.4)
14.8
Group
2013
m
14.2
2.0
0.7
0.2
(4.2)
0.7
13.6
2014
2013
5.00%
3.00%
2 years
5.00%
3.00%
2 years
1.05%
1.05%
4.00%
7.50%
5.00%
2022
3.75%
7.50%
5.00%
2021
Strategic Report
Gratuity scheme
Discount rate
Salary inflation
Average remaining service period
KESOP scheme
Discount rate
Medical plan
Discount rate
Healthcare cost trend rate for next year
Rate of decline of cost trend rate
Year that rate reaches ultimate trend rate
Governance
The main assumptions used for the IAS 19 valuation of other post-employment benefits are listed in the table below:
Life expectancy
The majority of the plans obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an
increase in the plans liabilities. This is particularly significant in the UK and Irish plans, where inflationary increases result in higher sensitivity
to changes in life expectancy. The Atkins Pension Plan has had interest and inflation rate hedging in place for some time, but due to the
relative immaturity of the longevity hedging market, to date the Group has held off implementing a longevity hedging programme.
As a consequence, the Plan remains fully exposed to any future improvements in mortality beyond those already assumed by the Actuary.
Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the
plans bond holdings.
Corporate Information
Asset volatility
The Retirement benefit plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan assets
underperform this yield, this will create a deficit. Both the UK and Irish plans hold a significant proportion of equities, which are expected
to outperform corporate bonds in the long-term while exposing the Group to greater volatility and valuation risk in the short-term. The
government bonds represent investments in UK Government securities only.
Financial Statements
Inflation risk
Some of the Group pension obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most cases,
caps on the level of inflationary increases are in place to protect the plan against extreme inflation). The majority of the plans assets are
either unaffected by fixed interest bonds or loosely correlated with equities inflation, meaning that an increase in inflation will also increase
the deficit.
The Group does not use derivatives or hedging, other than interest and inflation rate hedging, to manage its risk. Investments are well
diversified, such that the failure of any single investment would not have a material impact on the overall level of assets. A large portion of
assets in 2014 consists of equities and bonds, although the Group also invests in property, cash and investment (hedge) funds. The Group
believes that equities offer the best returns over the long term with an acceptable level of risk. The majority of equities are in a globally
diversified portfolio of international blue chip entities. A breakdown of the major categories of plan assets as a percentage of total plan
assets for the two UK schemes is detailed above.
Expected maturity analysis of other post-employment benefit liabilities are as follows:
At 31 March 2014
KESOP ($m)
Post-retirement medical benefit schemes ($m)
Less than
a year
0.4
0.1
Between
1-2 years
0.3
0.1
Between
2-5 years
0.4
0.3
Over
5 years
0.4
Total
1.1
0.9
An approximate analysis of the maturity of the obligations for the two main defined benefit schemes is given in the table below:
The weighted average duration of the defined benefit obligation is 20 years (2013: 20 years) for the Atkins Pension Plan, 16 years (2013:
16 years) for the Railways Pension Scheme and between 25 and 30 years (2013: between 25 and 30 years) for the McCarthy Pension Plan.
Expected future benefit payments from the Atkins Pension Plan (the Plan) are mostly in respect of pension payments that are either linked
to price inflation or receive fixed pension increases. These projected benefit payments are expected to be made from the Plan over the next
80 or so years. The payments are expected to rise over the next 30 years, when they will peak, before beginning to decline.
The Group expects pension benefits to be paid by the schemes during the financial year to 31 March 2015 to be approximately 46.7m.
33.
2014
m
Group
2013
m
0.1
0.2
1.2
1.5
0.1
0.2
1.2
1.5
0.5
0.5
At the 2013 annual general meeting (AGM), shareholder authority was obtained for the Company to purchase up to a maximum of
10,011,000 of its own ordinary shares (representing approximately 10% of the issued share capital of the Company on 12 June 2013) for
a period ending on the earlier of the next AGM or 31 October 2014, provided that certain conditions (relating to the purchase price) are met.
The notice of meeting for the AGM to be held at 1100 hours on Wednesday 30 July 2014 proposes that shareholders approve a resolution
updating and renewing this authority. Shares in the Company may also be purchased by Atkins EBTs.
Strategic Report
2014
m
As at the date of this report there were 4,341,000 ordinary shares of 0.5 pence each (nominal value 21,705) held as treasury shares.
No shares were purchased during the year ended 31 March 2014 (2013: nil). The 4,341,000 treasury shares, which represent approximately
4.2% (2013: 4.2%) of the total of the called up share capital as at the date of this report, have not been cancelled and represent a deduction
from shareholders equity.
Governance
WS Atkins plc Long Term Incentive Plan (LTIP) August 2012 onwards
A share plan for senior executives used to grant awards that are settled in equity or, in limited circumstances, in cash. Subject to the
Companys real growth in absolute EPS over the performance period. The growth target requires the increase to be more than 12% per
annum in the three-year performance period to allow full vesting. If the increase is less than 5% per annum, there will be no vesting. If the
increase is 5% per annum, vesting will be at 25%, and a sliding scale operates between 5% and 12% per annum.
As a general rule, awards granted to participants who leave employment prior to vesting will be forfeited. In the event a participant leaves
as a result of a qualifying reason, they receive a pro rata entitlement.
Financial Statements
As a general rule, awards granted to participants who leave employment prior to vesting will be forfeited. In the event a participant leaves
as a result of a qualifying reason, they receive a pro rata entitlement.
Atkins Long Term Incentive Plan (LTIP) September 2006 to July 2012
A share plan for senior executives and key employees used to grant awards to employees that are settled in equity or, in limited
circumstances, in cash. There are different performance targets for different categories of management. Grants made to executive directors
and senior employees have 50% of the grant subject to the Companys total shareholder return (TSR) performance relative to the
constituents of the FTSE 250 Index (excluding investment trusts) at the start of the performance period. Full vesting of this portion of the
grant will take place if the Company is ranked in the upper quartile and 30% vesting will be achieved with a median ranking, with pro rata
vesting for intermediate performance. No vesting will occur for a ranking below median.
The remaining 50% of the grant made to executive directors and senior employees is subject to the Companys real growth in underlying
EPS over the performance period. For the 2006 and subsequent grants, the growth target requires the increase to be more than 10% per
annum above the UK RPI in the three-year performance period to allow full vesting. If the increase is less than 4% per annum above the UK
RPI, then there will be no vesting. If the increase is 4% per annum above the UK RPI, vesting will be at 30%, and a sliding scale operates
between 4% and 10% above the UK RPI.
Awards granted to other participants are subject solely to the EPS condition. As a general rule, awards granted to participants who leave
employment prior to vesting will be forfeited. In the event a participant leaves as a result of a qualifying reason, they receive a pro rata
entitlement.
Subject to vesting, participants are entitled to receive the benefit of dividends declared following grant without interest.
Corporate Information
Subject to vesting, participants are entitled to receive the benefit of dividends declared following grant, without interest.
Atkins Long Term Incentive Plan (LTIP) September 2003 to August 2006
A share plan for senior executives and key employees used to grant awards to employees that are settled in equity or, in limited
circumstances, in cash. The performance condition was TSR with an EPS growth underpin measured over three financial years starting with
the financial year beginning immediately after the award was granted. Full vesting of any award took place for a TSR performance where
the Company ranked in the top 20% in a group of up to 16 comparator companies, 30% vesting for median ranking and no vesting if
TSR fell below the median. The EPS underpin was the UK RPI plus 2% per annum. As a general rule, awards granted to participants who
left employment prior to vesting were forfeited. In the event a participant left as a result of a qualifying reason, they received a pro rata
entitlement. All awards have now vested.
Deferred Share Plans
Atkins Deferred Bonus Plan (DBP)
A share plan for senior executives and key employees used to grant awards to employees that are settled in equity or, in limited
circumstances, in cash. There is no performance condition but awards are restricted for at least three years from the date of grant.
As a general rule, awards granted to participants who leave employment prior to vesting will be forfeited. In the event a participant leaves
as a result of a qualifying reason, they will receive their award in full. Subject to vesting, participants are entitled to receive the benefit of
dividends declared following grant without interest. All awards have now vested.
Atkins Deferred Share Plan (DSP)
A share plan for senior executives and key employees used to grant awards to employees that are settled in equity or in cash. There is no
performance condition but awards are restricted for a set period from the date of grant, fixed by the Remuneration Committee at grant.
As a general rule, awards granted to participants who leave employment prior to vesting will be forfeited. In the event a participant leaves
as a result of a qualifying reason, they will receive their award in full. Subject to vesting, participants are entitled to receive the benefit of
dividends declared following grant without interest. Awards granted to executive directors in relation to the executive bonus scheme are
restricted for three years from the date of grant.
The Groups share-based payments charge for the year of 10.2m (2013: 7.5m) has been included in administrative expenses in the
Consolidated Income Statement.
The effect of the share-based payment transactions on the Groups results and financial position is as follows:
No.
745,567
284,215
(61,226)
(250,221)
718,335
192,512
(52,614)
(187,911)
(33,901)
636,421
LGU
Weighted
average
exercise/
transfer
price
No.
209,768
209,768
162,880
(11,479)
361,169
Weighted
average
exercise/
transfer
price
207.19 p
207.19 p
294.22 p
253.02 p
2014
m
6.7
3.5
10.2
Group
2013
m
6.5
1.0
7.5
4.7
2.5
DBP/DSP
Weighted
average
exercise/
transfer
No.
price
2,986,816
1,215,077
(753,101)
(4,000)
(112,390)
3,332,402
1,222,668
(1,107,703)
(3,270)
(155,112)
3,288,985
The weighted average exercise price of LGU awards is calculated by reference to both non-US awards, where the increase in value is delivered
in the form of a nil cost option, and US awards, where the awards take the form of market value options.
The weighted average share price at the date of exercise was 1,100.14 pence (2013: 743.93 pence).
DBP
DSP
Maximum
term
0.0p
667.0p
to 973.5p
4 to 6 years
10 years
8.77 years
246,783
4 to 6 years
10 years
8.75 years
114,386
0.0p
3 years
3 to 10 years
7.62 years
442,826
0.0p
3 years
3 to 10 years
7.19 years
158,057
1,600
0.0p
3 years
3 to 10 years
3.03 years
33,588
33,588
0.0p
3 to 4 years
10 years
0.24 years
1,950
1,950
0.0p
3 years
10 years
2.24 years
37,670
37,670
0.0p
1 to 3 years
1 to 10 years
7.12 years
3,251,315
316,124
Exercise price
13/08/2012
to 26/06/2013
13/08/2012
to 26/06/2013
13/08/2012
to 24/06/2013
03/08/2007
to 20/06/2011
11/09/2006
to 30/11/2007
17/09/2003
to 25/06/2004
25/06/2004
to 30/11/2007
29/06/2007
to 19/11/2012
Strategic Report
Scheme
maturity
Award date
Governance
Scheme
LGUs
LGU (August 2012
onwards non-US)
LGU (August 2012
onwards US)
LTIPs
LTIP (August 2012
onwards)
LTIP (September 2006
to July 2012 TSR/EPS)
LTIP (September 2006
to July 2012 EPS)
LTIP (September 2003
to August 2006)
DSPs
Weighted
average
Awards
Awards
remaining outstanding exercisable
contractual at 31 March at 31 March
life
2014
2014
On 24 June 2013 the Company issued awards over 1,097,236 shares to employees under the DSP, 192,512 shares to employees under LTIP
and 162,880 units to employees under the LGU.
On 21 November 2013 the Company issued awards over 109,251 shares to employees under the DSP.
The weighted average fair value of awards granted during the year was 936.34 pence (2013: 689.36 pence).
The total fair value of awards granted during the year was 14.8m (2013: 10.3m).
Fair value of awards with market performance conditions
WS Atkins plc Long Term Growth Unit plan August 2012 onwards
The Black Scholes Model was used for the purposes of valuing LGU awards granted in the current year. The model calculated the fair value
of awards granted, upon which the share-based payments charge is based. The assumptions used in the model are as follows:
866.51p
1.143%
34.0%
973.00p
866.51p
866.51p
1.626%
34.0%
973.00p
866.51p
LGU
2014
866.51p
1.718%
34.0%
973.00p
866.51p
4 years
5 years
6 years
Corporate Information
At 31 March 2014 the Companys EBTs held a beneficial interest in 2,524,663 shares (2013: 2,831,737 shares) at a nominal value of 0.0m
(2013: 0.0m) and market value of 35.1m (2013: 25.8m).
Financial Statements
On 5 December 2013 the Company issued awards over 16,181 shares to employees under the DSP.
718.32p
0.330%
35.0%
670.00p
718.32p
718.32p
0.537%
35.0%
670.00p
718.32p
LGU
2013
718.32p
0.711%
35.0%
670.00p
718.32p
4 years
5 years
6 years
36. Cash generated from continuing operations
Group
Note
Profit for the year
Adjustments for:
Income tax
Finance income
Finance costs
Income from other investments
Share of post-tax profit from joint ventures
Other non-cash (income)/costs
Depreciation charges
Net profit on disposal of businesses/non-controlling interests
Profit on disposal of loan notes
Amortisation and impairment of intangible assets
Release of deferred income
Share-based payment charge
Pensions settlement and curtailment gain
Loss on disposal of property, plant and equipment
Loss on disposal of intangible assets
Gain on disposal of available-for-sale financial assets
Dividends received
Movement in provisions
Movement in inventories
Movement in trade and other receivables
Movement in payables
Movement in non-current payables
Pension deficit funding
Cash generated from continuing operations
8
7
7
4
18
9
17
30
35
32
22
31
25
26
30
32
2014
m
96.3
17.9
(4.2)
17.8
(1.2)
(2.4)
(3.5)
14.7
(10.5)
7.5
6.7
0.4
0.1
(1.8)
0.2
20.1
(29.9)
(0.7)
(32.0)
95.5
Group
Restated
2013
m
84.3
13.7
(3.4)
17.7
(3.8)
4.5
14.6
(4.5)
14.0
(3.1)
6.5
(4.4)
(0.8)
(4.7)
0.1
4.4
(31.5)
0.3
(21.0)
82.9
Company
Company
2014
m
43.7
2013
m
23.4
(2.6)
5.2
(0.6)
(45.4)
(5.2)
9.6
4.7
(2.2)
4.4
(0.5)
(16.1)
(5.7)
10.3
13.6
As detailed in note 1, during the year the Group adopted and retrospectively applied IAS 19 (revised 2011). The Consolidated Income
Statement for the year ended 31 March 2013 and, consequently, the analysis of cash generated from continuing operations shown above has
been restated accordingly. See note 44 for further details regarding the impact of the adoption of IAS 19 (revised 2011) on the Group.
1 April
2013
m
201.5
20.0
35.9
(59.8)
(49.3)
(5.3)
143.0
Cash
flow
m
42.8
(0.1)
(4.2)
0.6
39.1
Other noncash
changes
m
0.4
(0.2)
4.6
4.8
Exchange
movement
m
(7.0)
4.6
3.8
1.4
At
31 March
2014
m
237.3
20.3
31.5
(55.2)
(45.5)
(0.1)
188.3
Strategic Report
Included within loan notes receivable is 0.4m relating to amounts receivable within less than 12 months from a joint venture entity.
38. Contingent liabilities
During the year ended 31 March 2011, the Group acquired PBSJ. Prior to the acquisition, the Audit Committee of the Board of directors
of PBSJ undertook an internal investigation to determine whether any laws, including the Foreign Corrupt Practices Act (FCPA), had been
violated in connection with certain projects undertaken by PBS&J International, Inc. (one of PBSJs subsidiary undertakings). The investigation
suggested that FCPA violations may have occurred but did not extend beyond the international operation and that none of PBSJs executive
management were involved in criminal conduct. PBSJ voluntarily disclosed this matter to the Department of Justice and to the Securities
and Exchange Commission and is cooperating fully with their review. The FCPA provides for penalties, criminal and civil sanctions and other
remedies. Neither at the date of acquisition nor at subsequent year ends has management been able to estimate the potential penalties that
may be imposed and therefore no provision has been made. It is not considered possible to determine an accurate estimate of the fines and
penalties that may be imposed as they are not formula driven or in any way the result of a predefined calculation. The Group does not have
an estimate of when this will be resolved but it is considered possible to be within the next financial year.
Governance
The Group has given indemnities in respect of performance and contractual related bonds, as well as letters of credit issued on its behalf.
The amount outstanding at 31 March 2014 includes 3.3m letters of credit issued as a result of the acquisition of PBSJ.
The Group leases various offices under operating lease arrangements. The leases have various terms, escalation clauses and renewal rights.
The Group also leases vehicles, plant and equipment under operating lease arrangements.
At the end of the reporting period, the future aggregate minimum lease payments under non-cancellable operating leases are payable
as follows:
2014
2013
Vehicles,
Vehicles,
plant and
plant and
Property equipment
Property
equipment
Group
m
m
m
m
No later than one year
39.8
6.8
44.1
8.9
Later than one year and no later than five years
90.5
7.7
94.9
12.6
Later than five years
25.5
38.3
155.8
14.5
177.3
21.5
In the prior year, vehicles, plant and equipment included future aggregate minimum lease payments under non-cancellable operating leases
of 0.3m and 0.1m expiring no later than one year and later than one year but no later than five years respectively, relating to the Groups
UK highways services business. This business was disclosed as an asset held for sale at 31 March 2013.
Corporate Information
Financial Statements
Group companies are from time to time involved in claims and litigation. The Group carries Professional Indemnity insurance cover for
such claims.
At the end of the reporting period, the future minimum lease payments under non-cancellable operating leases are receivable as follows:
Group
No later than one year
Later than one year and no later than five years
Later than five years
2014
Property
m
1.8
3.9
0.1
5.8
2013
Property
m
2.5
4.3
0.5
7.3
2014
m
6.0
Group
2013
m
2.9
The Company had no operating lease receivables as at 31 March 2014 (2013: none).
Capital expenditure contracted for but not incurred property, plant and equipment
2014
m
61.9
Group
2013
m
40.0
b) Group year end balances arising from sales/purchases of goods and services to/from joint ventures and loans
provided to joint ventures
Note
26
2014
m
7.7
Group
2013
m
7.3
2014
m
19.9
Group
2013
m
20.0
Receivables from joint ventures are shown net of contract-related provisions of nil (2013: nil).
Payables to joint ventures
c) Group year end balances arising from loans provided to other related parties
Note
24
Payables to subsidiaries
Note
26
Company
2013
m
165.2
30
76.2
82.0
Receivables from subsidiaries are shown net of impairment of 0.5m (2013: 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.
2014
m
6.7
0.2
2.6
9.5
Group
2013
m
6.3
0.1
1.8
8.2
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.
Governance
2014
m
164.2
Strategic Report
Class and
percentage
of shares held
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
Faithful+Gould Limited1
PRBC, Inc.1
The Atkins North America Holdings Corporation1
WS Atkins & Partners Overseas1
WS Atkins (India) Private Limited1
WS Atkins, Inc1
WS Atkins Insurance (Guernsey) Limited1
WS Atkins International Limited1
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
100% ordinary
Nature of business
Consulting engineers
Investment holding company
Consulting engineers
Consulting engineers
Consulting engineers
Investment holding company
Investment holding company
Consulting engineers
Consulting engineers
Project and programme
management consultants
Quantity surveyors and cost estimators
Construction management services
Investment holding company
Consulting engineers
Consulting engineers
Consulting engineers
Insurance
Consulting engineers
The percentage of the issued share capital held by the Group is equivalent to the percentage of voting rights held. The Group holds the
whole of all classes of issued share capital.
All the above operate in the country of registration, except for WS Atkins & Partners Overseas, which operates in the Middle East.
A full list of subsidiary companies will be filed at Companies House with the Companys Annual Return.
Corporate Information
Name
Atkins Australasia Pty Ltd1
Atkins Beta Limited
Atkins China Limited
Atkins Consultants (Shenzen) Co Ltd1
Atkins Danmark A/S1
Atkins Gamma Limited
Atkins Investments UK Limited
Atkins Limited1
Atkins North America, Inc1
Faithful+Gould, Inc1
Country of
registration/
incorporation
Australia
England and Wales
Hong Kong
China
Denmark
England and Wales
England and Wales
England and Wales
USA
USA
Financial Statements
The following companies were the principal subsidiary undertakings as at 31 March 2014:
The following represents the principal joint ventures in which the Group participated during the year:
Name
Connect Plus Services
(unincorporated)1
Engage SNC1
Date of last
Proportion
audited
of shares/
financial
2
Nature of business
interest held statements
Joint venture undertaking operation and maintenance
32.5%
N/A
work on the M25, Londons orbital motorway.
25.0% 31 Dec 2013
A French general partnership providing architect
engineering services for the ITER programme,
a nuclear fusion reactor in France.
50.0% 31 Dec 2013
A French general partnership providing consultancy
and engineering services to the international nuclear
new-build market, operating internationally from
offices in France.
External
auditors
N/A
KPMG S.A.
KPMG S.A.
44. Prior period amounts
During the year the Group adopted IAS 19 (revised 2011) which increased net finance costs in the Consolidated Income Statement with a
corresponding restatement of the actuarial movements in the Consolidated Statement of Comprehensive Income. In addition, unvested past
service cost and administration costs have been recognised immediately in the Consolidated Income Statement, which has also had a small
impact on the Groups defined benefit liabilities. The Consolidated Income Statement, Consolidated Statement of Comprehensive Income,
Consolidated Balance Sheet, Statement of Changes in Equity and notes for the year ended 31 March 2013 have been restated accordingly.
The effects on the Consolidated Income Statement and Consolidated Statement of Comprehensive Income are as follows:
As previously
reported
Effect of
IAS 19
revised
As restated
Year to
31 March
2013
m
Year to
31 March
2013
m
31 March
2013
m
Operating profit
Profit before interest and tax
Net finance costs
Profit before tax
Income tax expense
Profit for the year
104.1
112.4
(9.1)
103.3
(14.9)
88.4
(0.1)
(0.1)
(5.2)
(5.3)
1.2
(4.1)
104.0
112.3
(14.3)
98.0
(13.7)
84.3
91.0p
88.8p
(4.2)p
(4.1)p
86.8p
84.7p
88.4
(4.1)
84.3
(52.8)
9.9
(42.9)
5.7
(1.2)
4.5
(47.1)
8.7
(38.4)
8.8
(34.1)
54.3
4.5
0.4
8.8
(29.6)
54.7
Five-year Summary
2011
m
1,612.0
2010
m
1,418.0
1,750.1
(1,065.0)
685.1
1,705.2
(1,088.6)
616.6
1,711.1
(1,097.1)
614.0
1,564.3
(975.2)
589.1
1,387.9
(854.6)
533.3
(571.4)
113.7
(512.6)
104.0
(476.8)
137.2
(482.1)
107.0
(420.3)
113.0
10.5
1.2
2.4
127.8
4.5
3.8
112.3
7.2
1.9
146.3
(1.9)
105.1
0.1
(1.9)
111.2
Finance income
Finance costs
Net finance costs
Profit before tax
4.2
(17.8)
(13.6)
114.2
3.4
(17.7)
(14.3)
98.0
4.1
(14.9)
(10.8)
135.5
3.9
(18.0)
(14.1)
91.0
3.8
(18.4)
(14.6)
96.6
(17.9)
(13.7)
(28.7)
(18.4)
(19.3)
96.3
84.3
106.8
72.6
77.3
25.0
96.3
84.3
106.8
72.6
102.3
96.0
0.3
96.3
84.6
(0.3)
84.3
106.7
0.1
106.8
72.6
72.6
102.3
102.3
98.4 p
98.4 p
86.8 p
86.8 p
109.0 p
109.0 p
74.3 p
74.3 p
79.5 p
25.7 p
105.2 p
95.8 p
95.8 p
84.7 p
84.7 p
106.6 p
106.6 p
72.7 p
72.7 p
77.9 p
25.2 p
103.1 p
1. The 2013 figures have been restated for the amendments to IAS 19, Employee Benefits. None of the years prior to 2012 have been restated.
Governance
2012
m
1,769.8
Financial Statements
Restated1
2013
m
1,775.5
Corporate Information
2014
m
1,815.2
Strategic Report
Five-year Summary
continued
Restated1
2013
m
2012
m
2011
m
2010
m
204.0
35.4
46.7
4.2
82.7
19.9
392.9
211.4
39.6
50.7
7.1
91.5
0.3
20.0
420.6
205.0
46.3
51.5
3.5
84.2
0.3
18.2
409.0
192.0
50.3
52.8
1.5
115.3
0.2
20.1
432.2
62.1
4.7
38.9
1.8
151.0
0.9
21.2
280.6
418.1
31.5
237.3
0.4
687.3
687.3
0.2
449.2
35.9
201.5
0.5
687.3
5.8
693.1
1.1
445.3
35.0
6.1
167.0
0.4
654.9
6.9
661.8
0.8
433.6
34.7
121.5
0.2
590.8
590.8
0.9
300.7
32.4
260.3
2.3
596.6
596.6
(55.3)
(453.1)
(2.7)
(31.6)
(0.8)
(543.5)
(543.5)
143.8
(59.8)
(486.7)
(1.4)
(40.5)
(1.5)
(589.9)
(5.2)
(595.1)
98.0
(105.7)
(506.1)
(1.7)
(34.3)
(3.6)
(651.4)
(0.1)
(651.5)
10.3
(48.4)
(521.4)
(0.5)
(36.2)
(6.4)
(612.9)
(612.9)
(22.1)
(4.4)
(434.3)
(1.0)
(34.6)
(5.6)
(479.9)
(479.9)
116.7
(45.5)
(3.3)
(339.0)
(1.7)
(15.5)
(1.5)
(406.5)
(49.4)
(4.4)
(295.6)
(1.3)
(20.1)
(1.5)
(372.3)
(4.9)
(6.8)
(265.3)
(2.5)
(18.8)
(1.6)
(299.9)
(4.6)
(12.7)
(350.3)
(0.6)
(20.3)
(5.3)
(393.8)
(7.0)
(17.0)
(450.5)
(0.3)
(1.6)
(5.8)
(482.2)
Net assets/(liabilities)
130.2
146.3
119.4
16.3
(84.9)
0.5
62.4
8.9
58.2
130.0
0.2
130.2
0.5
62.4
8.9
74.7
146.5
(0.2)
146.3
0.5
62.4
8.9
47.5
119.3
0.1
119.4
0.5
62.4
8.9
(55.5)
16.3
16.3
0.5
62.4
8.9
(156.7)
(84.9)
(84.9)
Current assets
Inventories
Trade and other receivables
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Cash and cash equivalents
Derivative financial instruments
Assets of disposal group classified as held for sale
Liabilities
Current liabilities
Borrowings
Trade and other payables
Derivative financial instruments
Current income tax liabilities
Provisions for other liabilities and charges
Liabilities of disposal group classified as held for sale
Net current assets/(liabilities)
Non-current liabilities
Borrowings
Provisions for other liabilities and charges
Post-employment benefit liabilities
Derivative financial instruments
Deferred income tax liabilities
Other non-current liabilities
1. The 2013 figures have been restated for the amendments to IAS 19, Employee Benefits. None of the years prior to 2012 have been restated.
Five-year Summary
continued
2010
m
96.3
84.3
106.8
72.6
77.3
17.9
(4.2)
17.8
(1.2)
(2.4)
(3.5)
14.7
13.7
(3.4)
17.7
(3.8)
4.5
14.6
28.7
(4.1)
14.9
(1.9)
(2.9)
17.1
18.4
(3.9)
18.0
1.9
5.1
15.9
19.3
(3.8)
18.4
1.9
0.1
15.3
(10.5)
7.5
6.7
0.4
0.1
(1.8)
(10.3)
(32.0)
95.5
(4.5)
14.0
(3.1)
6.5
(4.4)
(0.8)
(4.7)
(26.7)
(21.0)
82.9
(7.2)
9.5
(0.2)
6.4
(33.3)
0.5
(5.7)
(34.0)
(26.0)
68.6
8.3
(0.3)
5.7
0.2
(3.8)
(37.7)
(31.9)
68.5
(0.1)
7.5
(0.2)
6.8
(6.7)
1.4
(5.9)
31.5
(36.3)
126.5
95.5
3.6
(5.6)
(10.9)
82.6
82.9
2.6
(3.2)
(7.1)
75.2
68.6
3.9
(2.5)
(11.0)
59.0
68.5
3.1
(2.4)
(12.3)
56.9
126.5
3.4
(1.1)
(18.0)
110.8
0.4
(5.4)
(35.9)
(196.5)
(21.1)
(40.2)
(38.8)
22.5
7.3
(40.5)
42.8
31.0
45.6
(132.3)
49.2
201.5
167.0
121.5
260.3
209.7
3.5
(0.1)
(6.5)
1.4
(7.0)
237.3
201.5
167.0
121.5
260.3
31.5
20.3
(55.2)
(45.5)
(0.1)
188.3
35.9
20.0
(59.8)
(49.3)
(5.3)
143.0
35.0
25.1
6.1
(104.0)
(6.6)
122.6
34.7
20.1
(46.3)
(6.7)
123.3
32.4
21.2
(0.7)
(10.7)
302.5
1. The 2013 figures have been restated for the amendments to IAS 19, Employee Benefits. None of the years prior to 2012 have been restated.
Governance
2011
m
Financial Statements
2012
m
Corporate Information
2014
m
Restated1
2013
m
Strategic Report
Investor Information
WS Atkins plc
Registered in England
Company no. 1885586
Company secretary
and registered office
Richard Webster
WS Atkins plc
Woodcote Grove
Ashley Road
Epsom
Surrey KT18 5BW
England
Financial calendar
Ex-dividend date
Record date
Last day to elect for DRIP
Annual General Meeting
Final dividend
payment date
9 July 2014
11 July 2014
23 July 2014
30 July 2014
22 August 2014
Shareholder services
Registrar
Enquiries and notifications concerning
dividends, share certificates, transfers and
address changes should be sent to the
registrar, whose address is:
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4ZF
UK
Telephone: 0871 664 0300 if calling from
the UK (calls cost 10p per minute plus
any additional network charges) or
+44 (0)20 8639 3399 if calling from
outside the UK; lines are open 0900 to 1730
Monday to Friday.
Share portal: www.myatkinsshares.com
Other shareholder enquiries should be
addressed to Atkins company secretary at
the registered office.
Investor Information
continued
Strategic Report
Governance
Financial Statements
Identity theft
Identity theft is on the increase. Criminals
may steal your personal information,
putting your Atkins shareholding at risk.
Warning to shareholders
Share fraud includes scams where investors
are called out of the blue and offered shares
that often turn out to be worthless or
non-existent, or an inflated price for shares
that they own. These calls often require you
to make a quick decision and come from
fraudsters operating in boiler rooms that
are mostly based abroad. High pressure sales
tactics can also come by email, post, word
of mouth or at a seminar. Sometimes scams
are also advertised in newspapers,
magazines or online and appear as if they
are genuine investment opportunities.
Corporate Information
Investor Information
continued
Corporate Sustainability
Find out more about our
Corporate Sustainability strategy
and performance by visiting
this section of our website.
Alerts
Receive automated
announcements and news by
signing up to our alerting service.
Latest financial news
Access our latest financial
press releases here.
Share price
Charts showing share
price activity.
Cautionary statement
This Annual Report has been prepared to provide
information to the members of the Company. The
Company and its directors and the Groups employees
are not responsible for any other purpose of use or
to any other person in relation to this Annual Report.
TT-COC-002228
WS Atkins plc
Annual Report 2014
[email protected]
www.atkinsglobal.com