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WS Atkins plcAnnual Report 2014

Plan Design Enable

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Good results and significantprogress on our strategy.>

WS Atkins plc Annual Report 2014

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Strategic Report 01

StrategicReport

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FinancialStatements


CorporateInformation

Contents

Strategic Report02 Group at a glance04 Results06 Chairmans Statement

08 Chief Executive Officers Statement11 Strategy 12 Our business

14 Our markets 16 Our strategy

Governance60 Board of Directors62 Directors Report66 Corporate Governance Report74 Nomination Committee Report

76 Audit Committee Report81 Remuneration Report106 Independent Auditors Report

Financial Statements112 Consolidated Income Statement113 Consolidated Statement of

Comprehensive Income114 Consolidated and Parent Company

Balance Sheets116 Consolidated and Parent Company

Statements of Cash Flows

18 Business Review 21 United Kingdom and Europe 28 North America

31 Middle East 34 Asia Pacific 37 Energy

41 Financial Performance Review44 Principal risks and uncertainties48 Human Resources Review

54 Corporate Sustainability Review

Corporate Information182 Company secretary and

registered office182 Financial calendar182 Shareholder services

117 Consolidated Statement ofChanges in Equity

118 Parent Company Statement ofChanges in Equity

119 Notes to the Financial Statements179 Five-year Summary

You can help us to reduce

our environmental impact byopting to receive shareholdercommunications online at:

www.atkinsglobal.com/investors

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02 Strategic Report


Group at a glance

From post-war regeneration andthe advent of nuclear engineeringto high speed rail and the integratedsustainable cities of the future,our peoples drive to ask why hasdelivered design, engineering and projectmanagement excellence on some ofthe worlds most complex challenges.>

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Group at a glance continued

Our business segmentsThe Group is managed according to aregional model and this management

structure is reflected in our segmentation.

United Kingdom and EuropeWe deliver engineering and technicallyintegrated design, together withproject and cost management services,to a wide range of clients in the public,regulated and private sectors. Ourareas of operation include aerospace,

defence, education, environment,infrastructure design, transportation andwater. Our European business comprisesoperations in Denmark, Ireland,Norway, Poland, Portugal and Sweden.

Revenue

998.3mEmployees

9,544Find out more on page 21

Our business Find out more about

our business on page 12

Our markets Find out more aboutour markets on page 14

Related sections

Notes1. Full time equivalent staff at 31 March 2014

including agency staff.2. There are an additional 79 staff undertaking

Group functions.

North AmericaWe provide infrastructure planning,engineering, construction management,environmental consulting, urbanplanning and programme managementservices to state and local governmentclients, federal agencies and private

businesses.

Revenue

380.9mEmployees


Middle EastIn the Middle East we provide a fullrange of design, engineering andproject management services forbuildings, transportation and otherinfrastructure programmes from oureight centres across the region.

Revenue

168.4mEmployees


Asia PacificIn Asia Pacific we provide engineering,planning, urban design, architectureand rail design services. In mainlandChina our focus is on urban planning,alongside architecture and landscapearchitecture design. In Hong Kongwe deliver services in urban rail

development and highways/bridgedesign.

Revenue

100.5mEmployees


EnergyOur Energy business operates acrossmultiple geographies with our maincentres in the UK, North America,Australia and the Middle East. Weprovide engineering and projectmanagement services and we areactively increasing our presence and

capabilities in the energy market,including addressing allied issues suchas climate change, sustainability andenergy security.

Revenue

169.6mEmployees


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04 Strategic Report


Results

Dividend increased by 5.5%, reflecting

the Boards confidence in the Groups prospects.>

Notes1. 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 relatesto 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 thedilutive 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.

evenue m

+2.6%

10 11 12 13 14

1,3

87.9

1,5

64.3

1,7

11.1

1,7

05.2

1,7

50.1

n er y ng pro t e ore taxat on m

+7.3%

10 11 12 13R 14

96.5

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+3.8%

10 11 12 13R 14

77.8

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6

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ea count

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10 11 12 13 14

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+0.3pp

10 11 12 13 14

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.7

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Results continued

Atkins proactively positions

itself in a number of markets.>

Aerospace and aviation

5% 1%

Public sector: local government

Public sector: national government

Regulated

Private sector

End market analysis

Defence and security

1%Aerospace and aviation

1%Education

6% 2% 3%

Other

1%Defence and security

Rail

Roads

7% 1%

Other

2% 1%

Roads

Water and environment

1%2% 1% 3%

NorthAmerica

UKandEurope

1% 5%

Water and environment

1% 4% 6%Middle East

1% 5%Asia Pacific

4% 6%Energy

1% 3%

1% 2% 1%

11% 3%4%2%

1%

Our markets Find out more aboutour markets on page 14

Related section

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06 Strategic Report


Chairmans Statement

In our 75th year, we celebratedour worldwide reputation forexcellence in design, engineeringand project management.>

PerformanceI am pleased to report that the Groupdelivered another set of good results.During the year, we have made significantprogress on the delivery of our strategy.

Our operational excellence programmehas been rolled out into our NorthAmerica and Middle East regions. Theportfolio optimisation pillar of our strategyis now almost complete, following thesale of our UK highways services businessto Skanska, the final stage of which wascompleted in early October. The disposalof our construction management at riskbusiness, Peter Brown, was alsocompleted in a similar timeframe. Thediversity, breadth and depth of ourgeographic and sector spread continueto provide the Group with growthopportunities, particularly in our sectorfocus area of Energy and our regional

growth area of Asia Pacific.

We were delighted to welcomeConfluence Project Management Pte. Ltd.,the project and programme managementbusiness headquartered in Singapore, tothe Group in October. The team is alreadyfully integrated with our Faithful+Gouldbusiness across the regions and has addedan attractive client base. Furthermore,we are now reaching the final stages inachieving regulatory approval for theacquisition of Nuclear Safety Associates Inc.,an engineering and technical services firm

based in North America.

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Chairmans Statementcontinued

During the year we also invested in ouremployer brand known as the Atkins Way,which is a celebration of how our peoplebehave and what motivates them. Webelieve that nobody can tell the story ofan organisation as effectively and asgenuinely as the people who work for it,so we are using the Atkins Way as the

foundation of all our communicationswith existing and potential colleagues.

Board of directorsWe welcomed a number of newBoard members this year as Admiral theLord Boyce retired from the Board andJoanne Curin stepped down as she tookup a new position in the Middle East.I would like to thank both for their service,support and commitment to Atkins.Lord Boyce has been highly influentialas our senior independent directorand I have greatly appreciated his wise

counsel. We were pleased to appointFiona Clutterbuck as senior independentdirector in his place and to welcomeAllister Langlands and Thomas Leppert,who joined the Board as independentnon-executive directors during the year.Allister has succeeded Joanne as chairmanof the Audit Committee. Joanne hasmade a great contribution to the Boardand to the leadership of the AuditCommittee over the last five years andfor this we thank her.

Rodney Slater will be retiring from the

Board after our annual general meetingon 30 July 2014. He has served the Boardfor three years and I would like to thankhim for his input during that time.

Alun Griffiths, our Group HR director, willalso be retiring from the Board after ourannual general meeting on 30 July 2014.Alun has been with the Group for 28 yearsand has served on the Board as anexecutive director for the past seven years.I would like to thank Alun for his long-standing dedication to the Group and forhis contribution to the Board. He will be

succeeded as Group HR director by JamesCullens, who joins us from Hays plc andwho will join the Board on 1 July 2014.

DividendThe Board is recommending a finaldividend of 23.25p per ordinary share inrespect of the year ended 31 March 2014,making the total dividend for the year33.75p (2013: 32.0p), an increase of5.5%. If approved at the Companysannual general meeting, the dividendwill be paid on 22 August 2014 toordinary shareholders on the registeron 11 July 2014. Further details regardingdividend payments can be found inInvestor Information (page 182).

OutlookAs we look forward to the new financialyear, we are confident of making furtherprogress towards our strategic goals.While our markets and clients needs areconstantly evolving, we will continuallyseek ways to deliver their requirementseffectively and efficiently. We believe our

exposure to transportation markets acrossthe UK and North America provides uswith a good backlog of business. OurMiddle East region is benefiting from ourmore focused approach and in Asia Pacificwe are investing to diversify beyond ourhistoric Hong Kong base. In Energy wesee an attractive pipeline of opportunities.Overall, we see positive momentum inthe year ahead.

Allan Cook CBEChairman11 June 2014

We welcomedConfluence ProjectManagement Pte. Ltd.to the Group in October.

PeopleI would like to thank our people for theirquiet brilliance in helping us to deliversome of the most time-critical, complexsolutions to our clients this year. We havea highly engaged and aligned team ofpeople who continue to work togetherto make the world just that little bitbetter as a result of the projects theydeliver. I would also like to thank familiesand friends for supporting our peopleas they go about their work for Atkinsin all corners of the world.

Maintaining our focus on bringing moreyoung people into the engineering sector,we welcomed 500 new graduates acrossthe Group and accelerated our apprenticeprogramme to attract school leavers byrecruiting over 90 apprentices in the UK.

This year we worked hard to achieve

our commitment to build a diverseorganisation. We created a womensleadership council to enable the 50most senior women in the business tosupport, mentor and encourage the nextgeneration of Atkins female leaders.Also, womens professional networksaround the world became more activein their work to ensure women feelwell-connected across the Group. Inaddition, the UK business was recognisedby workingmums.co.uk, winning awardsfor Overall Top Employer and Innovationin Flexible Working. I am personally

leading an industry group for the UKsRoyal Academy of Engineering with thepurpose of increasing the number ofwomen engineers in the sector.

Our 75th anniversary celebrations in 2013gave us an excellent opportunity to involveand unite our people around the world.We joined together for celebratoryevents and recognised 89 colleagueswith the Sir William Atkins medal fortheir outstanding achievements.

Human Resources Review Find out more about

our people on page 48

Our Board of Directors Find out more about ourBoard of directors on page 60

Related sections

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08 Strategic Report


Chief Executive Officers Statement

We have achieved a yearof good results witha highly motivated team ofemployees around the world.>

We have achieved a year of goodresults with a highly motivated teamof employees around the world. Basedon strong customer focus and theimplementation of our strategy we havebuilt a good momentum of profitablegrowth. In all areas of our business,commercially as well as technically,

we have encouraged new thinking anddelivered innovative solutions to ourclients. We made significant progressin implementing our three-pillar strategyof operational excellence, portfoliooptimisation and focused growth indefined segments and regions. This hasresulted in tangible progress evidencedby solid growth in profitability andexcellent cash performance.

Business positionOur underlying profit before tax was106.4m, an increase of 7.3% over last

years restated profit of 99.2m, onrevenue that increased by 2.6% to1.75bn. We believe underlying profitis a more representative measure ofperformance, removing the items thatmay give a distorted view of performance.In the current year we have removedprofits on disposals and costs associatedwith disposals of 10.5m (2013: 4.5m),amortisation of acquired intangibleassets of 2.7m (2013: 10.0m), togetherwith one-off pension gains in the 2013comparative figures of 4.3m arisingas we continue to actively manage our

pension liabilities. The unadjustedreported profit before tax was 114.2m(2013 restated1: 98.0m).

The Groups profit after tax for the yearof 96.3m (2013 restated1: 84.3m)is shown in the Consolidated IncomeStatement (page 112).

1 The results for the year to 31 March 2013 havebeen restated to reflect changes to accountingstandards with regards to the treatment ofpension costs (IAS 19 (revised 2011)).

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Chief Executive Officers Statementcontinued

While the markets in which we operatein North America were steady, we haveachieved good progress in our NorthAmerica region, with an increase inoperating profit and margin. This yearwe established a new leadership teamand have focused on improving efficiencyand reducing overheads in the business,

as part of the roll-out of our operationalexcellence programme. We benefitedfrom good new contract wins in thewastewater management, energy,marine and emergency response areasof our business, and were reappointedon significant contracts for the FederalEmergency Management Agency (FEMA).Our transportation business continuedwith its positive performance and wasawarded a number of new contractsincluding commissions to overseetransport solutions for highwaysauthorities in Florida, Texas and Georgia.

In addition, our Faithful+Gould businessin the region had a good year with animprovement in margins and profitability,benefiting from continued economicrecovery in the private sector.

I am pleased to report that ourMiddle East region had an improvedyear, thanks to a particularly good secondhalf which included contract wins forthe Riyadh and Doha Metros. In addition,the infrastructure sector remains buoyantin Qatar and Abu Dhabi with goodopportunities in the Kingdom of Saudi

Arabia. Of particular note was the factthat the property sector is showing earlysigns of an upturn where we are workingon a number of new projects, includingthe Dubai Opera House and the residentialelement of Al Habtoor City, along Dubaismain arterial road. In a market withgood opportunities, we continue to beselective about the projects on whichwe work to ensure we maintain a strongfinancial performance in the region.

Our Faithful+Gould business in the regionperformed well during the year and wasboosted by some 71 new colleagues inthe region as the result of the Confluenceacquisition. As with the UK region, theMiddle East regions use of our GDCs inIndia is improving our performance andcompetitive position.

Our Asia Pacific region had a good year,with strong performance in our coremarkets of Hong Kong and China. Thediversification from our strong historic railbase in Hong Kong continued throughoutthe year and we are now working onopportunities with local design institutesand Chinese contractors. In mainlandChina we continue to benefit fromprojects as a result of rapid urbanisationand look to expand our footprint intoSouth East Asia, focusing on rail projectsin Malaysia and architectural opportunities

in Vietnam. The acquisition of Confluence,through our Faithful+Gould businessin the region, has enabled us to achieveparticular success in Singapore on severalhigh profile projects in more diversesectors.

Good organic growth continues to bedelivered by our Energy business, wherewe are well-positioned in the buoyantmarkets of oil and gas and nuclear andwhere we are seeing a steady increase inour share of the conventional generationand renewable markets. We are continuing

to strengthen our service offering throughpartnerships with companies offeringcomplementary skills. This is helping us tosecure strategic opportunities around theworld, with a recent example being ourselection as preferred bidder on a newcontract with Sellafield Ltd in joint venturewith Areva and Mace. During the yearwe also agreed to purchase Nuclear SafetyAssociates, a 130-people engineering andtechnical services firm, which will enhanceour offering in safety and regulationexperience in US nuclear technology.

Headcount closed the year at 17,489(2013: 17,899), reflecting both the saleof non-core businesses totalling 1,165and underlying headcount growth andthe acquisition of Confluence ProjectManagement Pte. Ltd. (Confluence).

Our United Kingdom and Europe regionperformed well during the year, drivenprimarily by the UK where we experiencedgood momentum in our core markets.The use of our global design centres(GDCs) in India to deliver work for our UKbusiness also enhanced our performanceand increased our competitiveness. Weachieved particularly good volumes in theretained highways consultancy and railbusinesses. In addition we benefited froma contract gain share as a consequenceof the M25 design project exceeding itsdelivery targets, in part offset byoutstanding variation negotiations on

certain rail signalling contracts. The UKwater and environment business had abusy first half with peak volumesassociated with AMP5 and feasibilitystudies on phase one of the HS2 highspeed rail project. We were pleased tosee opportunities re-emerging for ourdesign and engineering business from theUK education market and infrastructurework associated with nuclear new-buildprojects. We remain well positioned inour defence business following thechange in the UK Governments approachto reforming its defence procurement

activities. Our Scandinavian businessesremain stable and the market well-funded,while our Faithful+Gould businessperformed well in a reasonably toughenvironment.

We made significantprogress on ourthree-pillar strategy.

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Chief Executive Officers Statementcontinued

PrioritiesOur drive to become a more responsibleand sustainable organisation remains ofparamount importance. Right at the topof this commitment is health and safety.Our See it, Stop it, Save a life mantraempowers our people to stop workimmediately whenever anything appearsunsafe. Our leaders actively drivea culture of safety and demonstrate theircommitment through the use of safetymoments, taking time out at the startof meetings to remind everyone aboutits importance.

We are demonstrating strong industryleadership in the Middle East throughthe launch of the Atkins minimumrequirements for construction safety,which are enabling us to influence clientsand contractors to raise health and safetystandards on their projects. Our efforts

were recognised at Construction WeekQatars annual awards where we wonHealth and Safety Initiative of the Year.We were also recognised in the UK forthe third consecutive year with the awardof a Gold Award for Occupational Safetyfrom the Royal Society for the Preventionof Accidents.

This year we launched a set of principlesto frame our approach to corporatesustainability. These principles are basedon three pillars: a society for our future;an environment with a future; and

a responsible business of the future.

Our strategy remains clear. We will driveshareholder value by focusing on growth,selectively increasing our geographicfootprint through targeted internationalexpansion while continuing to deliverimproved financial performance in allour markets and geographies. In themedium term, our goal remains to

generate a margin above 8% across allour businesses. We will grow organicallyand through acquisitions.

In 2013, we continued work to deliverour strategy. Following the successfulimplementation of our operationalexcellence programme to optimisefinancial delivery in the UK, this has nowbeen extended to our Middle East andNorth America regions. In the area ofportfolio optimisation, we completedthe sale of our UK highways servicesoperations and the disposal of the Peter

Brown construction management at riskbusiness. In the domain of sector andregional focus, our Energy business hasbenefited from ongoing investment andduring the year we agreed to acquireNuclear Safety Associates. In addition,attractive opportunities for growth exist inour Asia Pacific region as we expand ouractivities from our historic base in HongKong into new countries such as Malaysia,Singapore and Vietnam. Our acquisitionof Confluence during the year was partof this strategy.

ConclusionIt is thanks to our people around theworld that we have achieved these goodresults. Through our 75th anniversarycelebrations, our people havedemonstrated that they are proud towork for Atkins. In turn, we are proudof our people, the Atkins family, for theway they work together, with colleaguesand clients, finding solutions to makethe world just a little bit better, creatinga better future for us all.

We have delivered another year of goodresults and proved that our consistentstrategy is working. Whilst organic growthremains our priority, we will also seekacquisitions that add new skills or expandour regional presence. We wereparticularly pleased with our successesin this area in the year.

We start the new financial year with anattractive pipeline of opportunities acrossthe Group and a strong balance sheet.Our operational excellence programmewill ensure our continued focus onimproving our overall operating margin,towards our 8% goal. Overall we believe2014/15 will be another year of growth.

Prof Dr Uwe KruegerChief Executive Officer11 June 2014

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Strategy

The primary objective of the Group is to create

shareholder value through profitable growth.>

StrategyOver the next few pageswe outline our business, ourmarkets and our strategy.

Our business

Our core business ishelping our clients to plan,design and enable capitalprogrammes that resolvecomplex challenges inthe built environment.

What we do

Plan Design Enable

Infrastructuredevelopment

Our locations

Our capability

Our competitiveadvantage

Find out more on page 12

Our markets

Due to the breadthof activities which theGroup undertakes, Atkinsproactively positions itselfin a number of markets.

Trends

Market size and share

Competitive environment United Kingdom

and Europe North America Middle East Asia Pacific Energy Faithful+Gould

Business focus


Our strategy

Our strategy is to focus ongrowth and, selectively, toincrease our geographicfootprint through targetedinternational expansion.

Group strategy

Pillars and progress Operational excellence Portfolio optimisation Sector and regional focus


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Strategycontinued

Our business

What we doOur core business is helping our clients toplan, design and enable capital programmesthat resolve complex challenges in the builtenvironment. The solutions we providerange from small advisory and designprojects to large programme management

engagements.

Areas ofour business

PlanWe plan every aspect of ourclients projects, from costand risk planning, feasibility

studies and logistics, to impactassessments and stakeholderengagement activity.

EnableOur clients trust uswith the managementof projects, people andissues, ensuring thatdeadlines are met,costs are controlledand success is delivered.

DesignAtkins designs intellectualcapital such asmanagement systemsand business processes.We also design physical

structures such as officebuildings, schools,bridges and highways.

Programmeand

ProjectManagement

Manag

ement

Cons

tructio

n

Design

andE

ngin

eering

Mana

gement

Asset

Strate

gy Planning

Concep

t

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StrategycontinuedOur business

Infrastructure developmentEngineering services are key toinfrastructure development. When clientsare undertaking capital projects theyneed professional support with planning,designing and enabling activities from policy, strategic choices, feasibility,

concept and detailed design throughto project and programme management,implementation and operation. At eachstage, services are sought from designand engineering consultancies.

Large or particularly complex projectsmay only be able to be undertaken byorganisations of scale, where skills mustbe applied in combination to deliverthe project.

Our locationsWe have extensive geographic reachthrough a network of offices in a numberof countries around the world.

With a presence in the UK, Europe,North America, the Middle East and

Asia Pacific, the strength of the Grouplies in its breadth and depth of technicalexpertise.

Many years ago, Atkins had the foresightto establish a team of professionalsin India to help us to respond to thechallenges of finding skilled resources.Through careful development andinvestment, our global design centres(GDCs) in Bangalore and Delhi havebecome a competitive advantage forus, providing capacity, efficiency andprofessional expertise, helping our

clients to achieve their strategic goals.

Our capabilityOur business may be characterisedas follows:

we are a people business sellingspecialist output from our talentedteams

the services we provide demandhigh value added critical thinkingand expert judgement

we operate in many parts of theworld and in many market sectors

we undertake projects of differentsizes but increasingly those of largerscale and complexity.

Our competitive advantageThe nature of our work means thatat first glance there appears to be anumber of firms with similar capabilities.However, our competitive advantageis derived from the quality, depth andbreadth of those capabilities and the

way in which they are marshalled andapplied in our approach to solvingclient problems.

With a worldwide pool of talent onwhich to draw, key strengths of theGroup lie in the engineering focusand technical brilliance of the specialistswe employ. Atkins has a deservedreputation for integrity with reliableexperts not only as key assets of theGroup but defining the culture ofthe organisation.

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Strategycontinued

Our markets

TrendsUrbanisationThe world population is increasinglymoving to urban environments. TheUN estimates that more than half ofthe worlds population now lives incities and that by 2050 this number

will be almost two thirds of a projectednine billion population.

Not all regions of the world have reachedthe 50% level and the urbanisation trendis most marked in growth markets outsidethe developed world. It is anticipatedthat urban growth will be concentratedin Africa and Asia over the next few years.According to the UN, it is expected thathalf of the population of Asia will live inurban areas by 2020, while Africa is likelyto reach a 50% urbanisation rate in 2035.

This overarching driver will createongoing demand for new and improvedinfrastructure in a number of allied sectors.

TechnologyTechnological advances in the designand engineering of projects are havingan impact on the industry. ThroughBuilding Information Modelling (BIM)and other tools, 3D, 4D and 5D (includingtime and cost information) design isbecoming more prevalent. In addition,the application of large data sets andcloud-based applications to analysis

(historic and predictive) is creating newways of looking at projects in the planningand design stage, and is simplifying andspeeding up infrastructure constructionand maintenance efforts.

Business focus

Work deliveryIn more and more situations we aremoving parts of the work we undertakefor our local clients to remote locations.This may be to one of our GDCs or officesin other parts of the world. The drivermay be complexity, where we undertake

the work in our centres of excellencefor a particular discipline, or cost, wherewe utilise our lower cost regions to besteffect. Seamless delivery and robustprocesses are required.

Market size and shareThere are a number of industry surveysthat capture the top firms in regions andsectors by revenue. The calculation oftrue market share remains difficult dueto the large number of very small firms ineach region that do not form part of thesurveys. However, we use the information

available together with our own industryknowledge to infer our own view ofmarket share.

We estimate that the market for our skillsin selected geographies is in excess of100bn p.a. and, such is the fragmentedand extensive nature of the competition,we command an overall share of lessthan 2% of our addressable market.

Market shares vary enormously byindividual sector from around a thirdin UK rail signalling works/structures

down to very small market shares in nicheactivities. By region, we estimate ourmarket share as around 10% from oursignificant position in the UK and,demonstrating the potential for growth,around 2% in the Middle East and lessthan 1% in each of the US, Europe andAsia Pacific.

Competitive environmentDue to the breadth of activities whichthe Group undertakes, competitors aregenerally sector- and service-specific.

Each region of the world is characterisedby a small number of large players,

often with multinational reach,together with a large number of smallercompanies which tend to have veryspecific niche skills. Typically, therefore,competitors at the local level aredivisions of large companies or smallerprivately owned specialists.

Barriers to entry vary across the sectorsin which we operate from very highin areas such as nuclear, where specificdomain knowledge and certificationis required, to much lower in moregeneralist areas of civil infrastructure

design and project management.

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StrategycontinuedOur markets

Context Focus Risks

UnitedKingdomand Europe

Renewed demand for infrastructurecapital expenditure with large projectpipeline including HS2, Crossrail 2,Thames Tunnel, airport expansion

Rail and water markets are well-fundedand the Highways Agency is providing

longer term planningRemediation and regenerationopportunities are increasing and thereis ongoing demand for our capabilities

Primary focus on core UK and Europeansectors, maintaining market leadershippositions

Drive growth in well-funded infrastructureareas

Capitalise on increased levels of project

funding in roads and continue to focuson higher margin work in rail

Continue to develop opportunities inother sectors

Develop security and aerospace offeringsin response to market demand

Key risks revolve around potentialfor continuing and increasedgovernment austerity measuresimpacting investment in publicsector infrastructure

Economic conditions could lead

to reduced levels of private sectorinfrastructure spend

North America There are a number of majorinfrastructure programmes intransportation, energy, federal, stateand city markets

Macroeconomic conditions areimproving with private sector growthdriven by energy sector investment,and interest in transportation and water

Current funded markets robust butproject delays likely to remain dueto federal funding pressures

Focus on major infrastructure programmesin transportation, energy, federal, andstate/local markets

Strengthen ability to compete for, win anddeliver major projects and programmes

Flexible, scalable, technical andprofessional organisation to deliver work

Main risks are in connection withuncertainties around continuedstate, city and private investmentin core infrastructure

Middle East Wide range of large capital investmentprogrammes being sustained

Socio-political drivers in marketaugmenting traditional direct linkbetween infrastructure spend andoil price

Series of metro projects are nowcoming to market and several propertyschemes have emerged

Sector-led focus on major projects andprogrammes in rail, mixed-use infrastructureand property

Geographic focus: activity primarily inthe UAE, the Kingdom of Saudi Arabiaand Qatar

Increased complexity of commercialconditions

Potential for project delays

Regional stability

Asia Pacific Continuing opportunities inHong Kong for major infrastructure

developments based upon governmentspending commitments

The Peoples Republic of China marketfor urban planning and architecturecontinues to grow

Strong regional growth in South EastAsia with opportunities in infrastructure,building design and planning

Diversify away from Hong Kong rail market

Ongoing activity in urban planning in China

Strategic options in Malaysia, Singaporeand Vietnam

Access to work in mainland China

Continuing demand from

Hong Kong

Predictability and deliverability ofprojects coming to market in thewider South East Asian region

Energy Overall low single digit world marketgrowth rate, but substantially higherin specific sectors and locations

Move by oil majors to operationalexpenditure from capital expenditure

Continue with growing oil and gas andinternationalising nuclear, growrenewables from low base

Deliver larger projects such as SellafieldSilos Direct encapsulation Plant (SDP)project, as part of an equal three-way jointventure with Mace and AREVA (a.m.a.)

World energy demand does notseem to be slackening but thereis uncertainty around the potentialimpact of shale oil and gas onthe market

Safety, environmental andreputational issues remain key

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Strategycontinued

Our strategy

Group strategyThe primary objective of the Groupis to derive shareholder value throughprofitable growth.

The main strategy for the Group wasarticulated in 2011. Annual reviews test

progress and the continuing relevanceof each aspect of the strategy.

In 2011 we outlined our primary objectiveof developing the operating margin, whichremains a key target and determinantof quality of business. Our medium-termtarget is to generate a margin above 8%across all our businesses and regions.

Our strategicpillars

Our secondary objective is to adjustthe geographic balance of the Groupsoperations over time and progresstowards our ultimate aim to generatemore than 75% of our revenue fromour non-UK and Energy businesses,resulting in less than 25% of our

revenue being derived from the UK.

We will continue to direct investment intoareas in which we see value as we lookto grow organically and supplement thatgrowth with appropriate acquisitions.Rigorous acquisition criteria are appliedto potential targets to ascertain theappropriateness of the skill-set andcultural fit and to assess whether theseopportunities will usefully accelerateour strategy.

Drive margins >8%Reduce dependence on UK

Grow organically and by acquisition

Profitable growth

Operationalexcellence

Portfoliooptimisation

Sector andregional focus

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StrategycontinuedOur strategy

Pillars and progressOperational excellenceThe fundamental building block of anysuccessful strategy is the performanceof the underlying business. We continueto drive operational performance acrossthe Group with a distinct focus on

optimising financial delivery andwe are successfully implementing ouroperational excellence programme.

This involves a continued focus on staffutilisation and operating margin, togetherwith an increased emphasis on billingand cash collection. Following successfulimplementation in the UK, this programmenow extends to our businesses in theMiddle East and North America.

With this foundation we will be wellplaced for progress in the future towards

our medium-term operating margin targetof 8%.

Portfolio optimisationA second aspect of ensuring we are wellpositioned for the future is an ongoingreview of the businesses in our portfolio,focusing the Group on higher growth,higher margin activities.

We have made excellent progress in thisarea over the last few years with the saleof our UK highways services operationsand the disposal of the Peter Brown

construction management at risk business,together with the sale of our UK assetmanagement business and the disposalof our non-controlling interest in theRMPA (Colchester Garrison) privatefinance initiative.

Sector and regional focusWe organise the Group along regionallines with the addition of Energy as asector addressing global clients. Whilethe form follows the management ofthe Group we also undertake pan-Groupcoordination of key sectors in multiple

jurisdictions.

As we look across our portfolio it is clearthat a number of our existing sectorshave attractive growth prospects. Thisis particularly true of our Energy business,which has for some time benefited fromongoing investment and is reportedseparately in our results. As an exampleof our investment in this sector, during2013 we agreed to acquire NuclearSafety Associates (NSA) in North America.

Other sectors on which we place a

particular focus will evolve over time.Over the last few years we have beeninvesting in aerospace and security.While security issues remain at theforefront of many clients priorities,and despite good growth in activity,the level of client investment has, as yet,not resulted in a business of scale in thisarea. We still see good opportunities inaerospace particularly in North America,where we will focus the Groups efforts,but the aerospace market in Europe islikely to be a challenging environmentin the near future.

The area of particular regional focushas been Asia Pacific. We see excellentopportunities in South East Asia as weexpand our activities from our historicbase into new countries such asMalaysia, Singapore and Vietnam.Our acquisition of Confluence in 2013

was a further step in this regard.

We will continue to redirect and leverageresources and technical capabilities toaddress sectors and regions in whichwe see potential. Acquisitions remainpossible to supplement organic growthas we look to balance our client, sectorand geographic mix.

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Business ReviewOverview of the business and performance in the year

Our businessOur core business is helping our clientsto plan, design and enable capitalprogrammes that resolve complexchallenges in the built environment.We are able to provide our clients withprofessional support to plan, designand enable projects from policy,strategic choices, feasibility conceptand detailed design, through toproject and programme management,implementation and operation.

Atkins structure of five business segmentsreflects how we manage the businessin different geographies and markets.Details of activities and results by businesssegment are shown in the segmentalperformance section which follows.

Key performance indicatorsThe Group uses a range of performance

measures to monitor and manage thebusiness. Those that are particularlyimportant in monitoring our progressin generating shareholder value areconsidered key performance indicators(KPIs).

Our KPIs measure past performance andalso provide information and contextto anticipate future events and, inconjunction with our detailed knowledgeand experience of the segments in whichwe operate, allow us to act early andmanage the business going forward.

We track safety, volume, staff turnover,profitability, efficiency, secured workloadand capacity.

We resolve complex challengesin the built environment.>

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Business Reviewcontinued

Revenue, operating profit and margin,earnings per share (EPS) and operatingcash flow provide indications as to thevolume and quality of work we havedone. They measure both profitabilityand the efficiency with which we haveturned operating profits into cash.

Work in hand measures our securedworkload as a percentage of thebudgeted revenue for the next year. Staffnumbers and staff turnover are measuresof capacity and show us how effectivewe have been in recruiting and retainingour key resource.

Safety in the workplace and on ourproject sites is paramount and formspart of our commitment to quality andreliability and, as such, we track theaccident incident rate (AIR) across theGroup. The AIR is an industry measure

of the number of reportable accidentsper 100,000 staff and is explained inmore detail in the Corporate SustainabilityReview on page 54.

As a people business staff turnover isan important metric for us and showsthe rate at which staff choose to leavethe business.

KPIs for the year ended 31 March 2014are shown (page 20), along with prioryear comparatives.

Review of the yearAs outlined in the Chief Executive OfficersStatement and in more detail in theFinancial Performance Review (page 41),this has been another good year in termsof Atkins financial performance.

Revenue improved by 2.6% to 1.75bn(2013: 1.71bn). Reported profit beforetax was 114.2m (2013 restated1:98.0m). A more representative measureis underlying profit before tax, whichwas 106.4m (2013 restated1: 99.2m).Underlying profit excludes profits ondisposals and costs associated with

disposals of 10.5m (2013: 4.5m),amortisation of acquired intangibleassets of 2.7m (2013: 10.0m), togetherwith one-off pension gains in the 2013comparative figures of 4.3m arising aswe continue to actively manage ourpension liabilities.

Reported operating profit was 113.7m(2013 restated1: 104.0m), at a marginof 6.5% (2013: 6.1%). As we state above,we believe a more representative measureof operating profit adds back amortisationof acquired intangible assets of 2.7m

(2013: 10.0m), together with one-offpension gains in the 2013 comparativefigures of 4.3m. This shows a morerepresentative underlying operating profitof 116.4m (2013 restated1: 109.7m)giving an improved underlying marginof 6.7% (2013: 6.4%).

The aforementioned profit on disposalof 10.5m is explained in more detailin note 8 to the Financial Statements(page 143) and comprises the net profiton sale of our UK highway servicesoperations and the disposal of the

Peter Brown construction managementat risk business in North America, whichfollow on from the sale of our UK assetmanagement business and the disposalof our non-controlling interest in theRMPA (Colchester Garrison) privatefinance initiative in prior years.

Headcount closed the year at 17,489(2013: 17,899), reflecting both the saleof non-core businesses totalling 1,165and underlying headcount growth andthe acquisition of Confluence.

Underlying diluted EPS increased by3.1p per share to 85.7p (2013 restated1:

82.6p), an increase of 3.8%.

The Group pension schemes have a netliability of 324.2m, an increase year onyear of 42.2m following the adoptionand retrospective application of IAS 19(revised 2011). The fair value of planassets has increased to 1,236.3m(2013: 1,209.2m) and the liabilities haveincreased to 1,560.5m (2013 restated:1,491.2m).

Operating cash flow in the year was95.5m (2013: 82.9m), representing

82.0% (2013: 75.5%) of underlyingoperating profit. The Groups liquidityremains strong with closing net fundsof 188.3m (2013: 143.0m).

As at 31 March 2014, the Group hadsecured 51% (2013: 55%) of budgetedrevenue for the coming financial year.This excludes in both periods the futureworkload of the UK highways servicesbusiness, which was sold in the year.

A segmental analysis follows (starting onpage 21) that explains more fully each of

our segments. We outline their financialperformance in the period, their strategyand business model and external factorsdriving their business together withspecific risks relating to the segment.We have also provided information ontheir performance in relation to safety,sustainability and staff-related matters.

1 The results for the year to 31 March 2013 havebeen restated to reflect changes to accountingstandards with regards to the treatment ofpension costs (IAS 19 (revised 2011)).

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Business Reviewcontinued

Key performance indicators Note 2014Restated1

2013 Change

Financial metrics

Revenue 2 1,750.1m 1,705.2m +2.6%

Operating profit 113.7m 104.0m +9.3%

Underlying operating profit 3 116.4m 109.7m +6.1%

Operating margin 6.5% 6.1% +0.4pp

Underlying operating margin 3 6.7% 6.4% +0.3pp

Underlying profit before tax 4 106.4m 99.2m +7.3%

Operating cash flow 95.5m 82.9m +15.2%

Underlying diluted EPS 5 85.7p 82.6p +3.8%

Work in hand 6 51% 55% -4pp

Safety Accident Incident Rate (AIR) 7 130 108 +22

People

Staff numbers 31 March 8 17,489 17,899 -2.3%

Average staff numbers for year 17,565 17,648 -0.5%

Staff turnover 9 11.3% 10.6% +0.7pp

Notes:1. The results for the year to 31 March 2013 have

been restated to reflect changes to accountingstandards with regards to the treatment ofpension costs (IAS 19 (revised 2011)).

2. Revenue excludes the Groups share of revenuefrom joint ventures.

3. Underlying operating profit excludes amortisationof intangibles recognised on acquisitions of 2.7m.In the comparative year, it excludes amortisation

and impairment of intangibles recognised onacquisition of 10.0m along with a pensioncurtailment gain of 4.3m.

4. Underlying profit before tax additionally excludesnet profit on disposal of businesses of 10.5m(2013: 4.5m).

5. Underlying diluted EPS is based on underlyingprofit after tax and allows for the dilutive effectof share options.

6. Work in hand is the value of contracted andcommitted work as at 31 March that is scheduledfor the following financial year, expressed asa percentage of budgeted revenue for the year.The 2013 comparative figure excludes the UKhighways services business, the disposal of whichwas completed in October 2013.

7. Accident incident rate (AIR) tracks the numberof 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 percentageof average staff numbers.

evenue y 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%

evenue y c ent type

Public sector: local government 24%

Public sector: national government 19%

Regulated 19%

Private sector 38%

evenue y segment

UK and Europe 55%

North America 21%

Middle East 9%

Asia Pacific 6%

Energy 9%

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Segmental performance

United Kingdom and Europe

Good growth in our core markets.>

Key performance indicators 2014 2013 Change

Financial metrics

Revenue 998.3m 977.1m +2.2%


Operating margin 6.3% 6.4% -0.1pp

Work in hand1 49.2% 50.9% -1.7pp

Safety Accident Incident Rate 192 191 +1

People

Staff numbers at 31 March 9,544 10,134 -5.8%

Average staff numbers for the year 9,751 9,913 -1.6%

Staff turnover 9.5% 8.8% +0.7pp

1. Work in hand adjusted in 2013 for the removal of highways services for comparability.

evenue m

+2%

1

,053.6

1,

001.5

940.5

977.1

998.3

10 11 12 13 14

perat ng pro t m

+1%

10 11 12 13 14

79.

6

65

.3

53.

2 62.

2

62.

6

verage sta num ers

-2%

10 11 12 13 14

11,

690

10

,896

10,047

9,913

9,7

51

evenue y sector

Rail (including mass transit) 32%

Roads 19%




Education 5%

Urban development 3%

Buildings 3%Other 9%

evenue y c ent type



Regulated 25%

Private sector 32%

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Segmental performancecontinuedUnited Kingdom and Europe

PerformanceOur United Kingdom and Europe businesshas performed well during the year.Headline revenue has increased by 2.2%despite the disposal of our UK highwaysservices business at the half year. On anunderlying basis for continuing activitiesrevenue increased by 15%, drivenprimarily by the UK where we have seengood momentum in our core markets,which continue to be well-funded.

Margins at 6.3% (2013: 6.4%) are slightlylower but have progressed across mostof the business. This years performancewas held back by our conservativeapproach to profit recognition withregards to outstanding contract variationson a number of longer term rail projectsin the UK and a strong European prioryear comparative as a consequence ofa profit release.

We have made good progress with theGroups strategy of portfolio optimisationand were pleased to complete the saleof our UK highways services business toSkanska on 4 October 2013 for an initialcash consideration of 16m, togetherwith a further 2m subject to the futureperformance of the business. The profiton the disposal of this business was13.0m, which is accounted for in theGroups profit before tax but not reportedin the tables above.

Staff numbers at the end of March were9,544, a reduction of 590 on the sametime last year. On an underlying basis,excluding the 1,128 staff who transferredas part of the UK highways services salein the period, headcount was up 6% inthe year.

Business modelWe are primarily focused on the UK andEuropean markets where we plan, designand enable our clients capitalprogrammes and projects in and aroundinfrastructure, as well as providingengineering consultancy services to widermarkets. We are a technical consultancy,providing advice, design and engineeringtogether with project management skillsfor public and private sector clients. Ourmultidisciplinary skills allow us to draw onexpertise across the business to delivercomplex projects in the UK and Europe,and to support our other regionalbusinesses with specialist expertise.

StrategyOur UK and European strategy focuseson maintaining our market leadershippositions and maximising revenueopportunities, taking advantage of

the UK Governments commitmentto stimulate the economy throughinfrastructure investment and fromregulatory spend in rail, utilities andairports. Our defence, security andaerospace markets provide good diversityto our infrastructure exposure.

Operational excellence continues toimprove the underlying processes of thebusiness, ensuring increased time to focuson our clients needs, improving projectdelivery and driving business efficiency.

Our ability to leverage skills and capabilityfrom a variety of industry sectors andprofessional disciplines provides a strongselling proposition to our clients. We seemultiple opportunities for our broadmultidisciplinary offering, providing goodgrowth potential.

Business driversThe economic environment significantlyaffects the opportunities available to ourbusiness and the UK Governmentsrecognition of infrastructure as a coreenabler of growth provides a positivestimulus. Our diversified portfolio providesresilience to market fluctuations, as doesthe fact that a number of our marketsremain well-funded. The Scandinavianmarkets that we face continue to benefitfrom investment in infrastructure fromthe public and private sectors, providingstable, well-funded, market conditions.

Added resilience is brought to our UKbusiness by its ongoing support ofprojects in other regions, together withthe increasing use of our global designcentres in Bangalore and Delhi, whichprovide flexibility of delivery and accessto high-quality, lower cost resources.

Our market leadership position in theUK is underpinned by the technicalexcellence of our people and the qualityof their work. This has been recognisedby a number of awards in the year,including being named the New CivilEngineer/Association for Consultancyand Engineering UK Major Consultantof the Year 2014 and the winner of thebest change management project inthe Management Consultancy Awards,in partnership with Network Rail, for theLevel Crossing Improvement Programme.

PeopleExcluding the staff who transferred fromAtkins with the sale of the UK highwaysservices business, the United Kingdomand Europe business experienced positiveheadcount growth. Staff turnoverincreased slightly to 9.5% from 8.8%.

A combination of improving marketconditions, the need to recruit highlyspecialist skills and a large and diversenumber of competitors for designers,engineers and project managers across

the region resulted in a number ofprogrammes being implemented to assistwith the attraction, engagement andretention of talented people.

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Reputation also plays a vital role inrecruitment and retention and overthe last year Atkins has been recognisedby a number of independent organisationsas a great place to work. In the SundayTimes 25 Best Big Companies to WorkFor we moved from 23rd to 18th andappeared in the top 25 for the eighth time

in 10 years. We continue to be one of thebiggest and most popular recruiters ofnewly graduated engineers and wereagain voted the TARGETjobs most populargraduate recruiter in the construction,civil engineering and surveying sector.

During 2013 more than 400 youngpeople joined the UK business on formaleducation and development programmes.This was one of our largest ever intakesand included more than 90 apprentices.

In 2013, Atkins became a founder

member of the 5% Club. As a memberwe have committed to having a minimumof 5% of our overall UK headcounton a formalised apprentice, sponsoredstudent or graduate programme. As of31 March 2014, we had achieved 12.5%.

We continue to work to increase theproportion of female staff in Atkinsand have developed a range of flexibleworking options to help us both recruitand retain a broader range of staff. Ourefforts were recognised by workingmums.co.uk when it announced Atkins as

winner of its Overall Top Employer andInnovation in Flexible Working awards.

In line with the rest of the Group, wemeasure employee engagement throughour Viewpoint employee engagementsurvey. We have established a regionaltarget of improving our regionalengagement score by two points ona year on year basis and were encouragedthat in the UK our results in 2013showed an increase of five points overthe previous year.

Safety and sustainabilityWorkplace health, safety and wellbeingcontinue to be a high priority. Althoughthe overall accident incident rate remainslargely static, there were encouragingimprovements on the engineering andcontractor indicators. In the UK, we werepleased to be awarded a Royal Society forthe Prevention of Accidents Gold Awardfor Occupational Health and Safety forthe third consecutive year.

As a founding member of theConsultants Health and Safety Forum,during the year we have been involvedin developing an online training packagethat integrates risk assessment earlyin the design process to encouragegood practice.

The ongoing promotion of science,technology, engineering and mathematics

(STEM) careers to young people continuesto be a focus. The UK business createdeight STEM hubs nationwide to enablea more coordinated approach to STEMactivity with schools, colleges andcommunity groups. We currently havemore than 200 STEM ambassadorsactively engaged in this programme.

To encourage our people to contributefurther to the social, environmental andeconomic health of our communities wehave formalised a volunteering policycommitment in the UK. These volunteer

days have mainly been used to supportcharity organisations like RedR andEngineers without Borders.

RiskThe majority of the Groups post-employment benefit liability sits within theUK business and is comprised of definedbenefit pension obligations, the largestof which is within the Atkins Pension Plan,which is closed to the future accrual ofbenefits (see note 32 on page 161).

The pension obligations are recognisedas a risk due to their size and the factthat the ongoing liability is a functionof a number of assumptions, not leastthe life expectancy of members. This riskis mitigated by ongoing cash contributionsto the pension fund, which have beenagreed with the pension trustees, along

with measures to actively manageongoing volatility.

To assist in managing our projectportfolio we continue to cascadea project management competencyframework across the region. Theimplementation of this initiative,including the associated training, willassist in developing project managementcapabilities within the region.

We identify, review and assess risks acrossall of our businesses and the process is

explained in more detail in the PrincipalRisks and Uncertainties section of theGroups Annual Report and Accounts(page 44).

OutlookThe outlook for our UK and Europeanbusiness as a whole is stable despitea slowdown in our aerospace business.In the UK the infrastructure marketspresent opportunities for our broadmultidisciplinary offering as the UKGovernment further stimulates theeconomy with its commitment to

infrastructure spend. Our secured workin hand of 49.9% (2013: 52.3%) ofnext years budgeted revenue gives usconfidence for the year ahead.

The core Scandinavian rail and highwaysmarkets remain well-funded, with a visiblepipeline of new projects, supported bygovernment commitments. Work in handin Europe improved in the year to 42.3%(2013: 38.9%).

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United Kingdom


Financial metrics

Revenue 922.0m 900.3m +2.4%


Operating margin 6.3% 6.3% nm

Work in hand1

49.9% 52.3% -2.4ppPeople




1. Work in hand adjusted in 2013 for the removal of highways services for comparability.

PerformanceThe UK business has grown headlinerevenue by 2.4% despite the sale ofour highways services business partway through the year. On an underlyingcontinuing basis, the business delivered

a strong performance with revenuegrowth of 16.7%, supported byunderlying headcount growth of 6.8%,excluding highways services.

The full year operating margin of 6.3%(2013: 6.3%) held steady, with a contractgain share as a consequence of our M25design project exceeding its deliverytargets on the initial upgraded sections,in part offset by outstanding variationnegotiations on certain longer term railsignalling contracts. Encouragingly, secondhalf margins moved ahead to 7.4%(2013: 6.6%), partly due to the disposalof the lower margin highways servicesbusiness and through the ongoing focuson margin across the business. Excludingthe highways services contribution for theperiod of ownership, the margin for theyear was 7.0%.

OperationsRailOur rail business has had a busy yearwith high levels of utilisation, reflectingthe strong pipeline of projects. Overthe course of the year, headcount has

grown significantly as a number of majorsignalling, station design and electrificationprojects have started. However, theperformance of this business has beenadversely impacted by negotiationsaround contract variations on someof our longer term signalling contracts.

A focus of this financial year has beenon delivering work across a number ofsignalling projects awarded under thetwo major frameworks for the Sussex/Wessex and Kent/Anglia areas, includingFarnham and East Sussex. During theyear, we secured further work throughthese frameworks, including a majorre-signalling project in East Kent. Thisis in addition to ongoing work on ourother non-framework signalling contractsat Cardiff and Wolverhampton.

The UKs electrification programmepresents a substantial opportunity forour rail business. In partnership withParsons Brinckerhoff, we are the leaddesign organisation for the electrificationof the Great Western main line betweenLondon and South Wales.

In partnership with Network Rail, LaingORourke and VolkerRail, we are jointlydelivering the Stafford Area ImprovementProgramme. During the year we have alsocontinued to support the delivery ofa number of other technically challenging

projects for Network Rail, including thetransformation of Birmingham New Streetstation and design work for the East WestRail project, which aims to connectEast Anglia with central, southern andwestern England.

The rail business has been involvedin early stage design for phase one ofHigh Speed 2 (HS2), between Londonand the West Midlands, including civilsdesign and environmental work, andwe believe we are well placed to winfurther opportunities on phase two.

Our rail business won six industry awardsduring 2013, including: Best PracticeAward for the Thameslink BoroughViaduct at the British ConstructionIndustry Awards; Project of the Year forNuneaton North Chord at the Rail FreightGroup Awards; and the Innovation Awardfor East Kent Access Phase Two at theInstitute of Civil Engineers (ICE)Engineering Excellence Awards.

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Our rail business had a strong work inhand position as we entered the newfinancial year, reflecting the continuedstrong pipeline.

Highways and transportationFollowing the disposal of our highwaysservices business, we have refocused the

highways and transportation business onthree core areas: strategic advice, designconsultancy and asset management.In addition, we continue to provideoperational maintenance and design forthe M25, Londons orbital motorway, aspart of our role within the M25 ConnectPlus consortium. During the year, wereceived a contract gain share payment asa consequence of our M25 design projectexceeding its delivery targets on the initialupgraded sections.

We have healthy workloads, supported

by the UK Governments 2013 SpendingReview and Autumn Statement, whichindicate a significant increase ininfrastructure spend through to 2020/21,including major new roads schemes inEngland, Scotland and Wales. We havesecured a number of projects for whichfunding was committed through thisprocess, including work on the M54/M6junction, the A27 Chichester bypass andschemes as part of the Highways AgencysSmart Motorways programme.

The year has seen significant activity in

the Smart Motorways sector, with thecompletion of major schemes on theM62 in Manchester and at the M4/M5interchange near Bristol, as well as therecent opening of the Atkins-designedfirst section of all-lane running on theM25. We have recently secured the M1junction 19 to 16 contract and there isa robust pipeline of further schemes thatwill come to the market in the year ahead.

Our multidisciplinary consultancy servicesteams have continued to deliver well withstrong revenue growth in Wiltshire,supported by further wins in the WestMidlands and more recently in Hampshire.These long-term contracts, coveringa wide range of services from transportplanning and asset management to

engineering design, are also set to benefitfrom additional capital funding over thenext five years.

Looking ahead, the Highways Agencywill undergo a major change as it looksset to become a government-ownedcompany by April 2015. We expect tosee a three-fold increase in its annualexpenditure to more than 3.0bn perannum by 2020 procured through a newcollaborative delivery framework. Wehave prequalified for this key opportunity,with final awards onto the framework

expected to be made in autumn 2014.

Water and environmentOur water and environment businesshas undertaken significant work onkey projects during the year, includingCrossrail and High Speed 2 and the peakof delivery for the water industry in theAsset Management Plan 5 (AMP5)investment cycle.

Our five-year regulatory AMP5 frameworkcontracts with a number of the UKswater companies have continued to

provide good workload volumes ascapital investment programmes progress.It has been encouraging to see the waterindustry developing its delivery modelswell in advance of the start of AMP6 inApril 2015 and we have been successfulin securing key places on the AMP6frameworks with Thames Water andSevern Trent Water. We are bidding forsimilar collaborative opportunities withother water companies which shouldprovide further continuity of workloadbetween future AMP cycles.

Atkins, alongside partners BoskalisWestminster Ltd and VolkerStevin Group(the VBA consortium), is one of six assetdelivery partners to secure a place on theEnvironment Agencys 1bn Water andEnvironment Management (WEM)framework, which will run until late 2017.This will focus on reducing the risk of riverand coastal flooding, as well as securingsocial and environmental improvements.

As a result of our focus on working withinternational funding and developmentorganisations, Atkins has won a contractto lead a pan-European consortium todevelop sustainable energy solutionsfor 24 countries in eastern and southernAfrica, and is a consortium partner inanother contract covering a further26 countries in western and centralAfrica. These two contracts are part ofthe Sustainable Energy for All (SE4ALL)

framework which is a multi-stakeholderpartnership between governments, theprivate sector and civil society.

Faithful+GouldOur UK Faithful+Gould business sawgood growth in the year, with steadyworkloads through the Scape publicsector procurement framework andcontinued growth in the energy sector.We are also seeing signs of improvementin the property sector with London andthe south east leading the way, evidencedby recent wins for Development Securities

and Argent. The market for projectmanagement and commercial servicesremains competitive, although we areoptimistic about improvement as thesector emerges from recession.

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Design and engineeringOur design and engineering businessserves customers across five key segments:education, airports, defence, transportationand mixed use development. All sectorshave strong pipelines of securedworkloads and opportunities.

In the education sector, the PrioritySchools and Academies programmescontinue to gain momentum, andwe are well placed to participate inthese significant opportunities, witha particular focus on buildings andrelated infrastructure.

Our airports team continues to win anddeliver significant programmes of workat both London Gatwick and Heathrow.We have been appointed by GatwickAirport Limited to provide multidisciplinarydesign services as part of a continued

investment programme to transformthe airport. At Heathrow, we have beenappointed as programme designer forthe asset management and replacementprogramme for the Q6 investment period.

In energy, we have secured a number ofkey projects to support initial infrastructurework around nuclear new build in the UK,in addition to significant work to supportnuclear decommissioning projects.

Defence, aerospace andcommunicationsOur defence, aerospace andcommunications business continues toprovide good diversity to our infrastructureexposure, with access to a number ofexciting growth opportunities.

In defence we continue to be activelyengaged in opportunities to assist in thetransformation of Defence Equipmentand Support, which is part of theUK Ministry of Defence.

We have experienced a recent slowdownin our aerospace business as our majorclient, Airbus Group, has moved fromdesign to production on a numberof programmes.

Our communications business continuesto provide expertise to a number of

key clients where our broad-baseddesign and implementation capabilitysits neatly alongside our infrastructurebusiness streams.

Management consultingOur management consulting businessprovides the UK Government andindustry with practical capability torun the full lifecycle of informationtechnology enabled change programmes.We continue to deliver security work forcentral government, as well as supportingHeathrow Airports IT outsourcing

contract in partnership with Capgemini,leveraging our position in aviation.

Our capability in holistic security continuedto grow. This team has secured a rangeof new projects including a significantassignment in cyber security for a highprofile multinational client in theenergy sector.

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Europe


Financial metrics

Revenue 76.3m 76.8m -0.7%

Operating profit 4.5m 5.7m -21.1%

Operating margin 5.9% 7.4% -1.5pp

Work in hand 42.3% 38.9% +3.4ppPeople

Staff numbers at 31 March 734 760 -3.4%

Average staff numbers for the year 734 784 -6.4%


PerformanceOur European business is primarily focusedon the rail and highways infrastructuremarkets in Scandinavia, with smalleroperations in Poland, Ireland and Portugal.Our performance was in line with our

expectations with revenue at 76.3m,which was broadly flat compared with theprior year and with margins down againststrong prior year comparatives, whichwere buoyed by provision releases.This margin reduction is also reflectiveof an increasingly competitive market inScandinavia. Headcount was down slightlyto 734 (2013: 760).

OperationsIn Denmark, we continue to work acrossa number of key rail and road infrastructureprojects, including the new railway line

between Copenhagen and Ringsted andthe European Rail Traffic ManagementSystem signalling programme. We havemaintained a strong order book throughthe year, securing new projects such asthe Hundige-Kge rail renewal projectand bridge design on the Copenhagento Ringsted line. The Danish Governmenthas recently announced a majorprogramme of investment in railinfrastructure and rolling stock, and webelieve we are well-positioned to benefit.

In Sweden, we are working on a numberof significant infrastructure projects, suchas the Liding Tram Line for StockholmCounty Council and the Mlarbanan railsystems project for the state transport

authority, Trafikverket. We have securedfurther projects in the period, including aKil to Laxa rail project. The market outlookand medium-term pipeline remain good.

We continue to work to expand ourposition in the Norwegian infrastructuremarket, which is expected to return togrowth over the next few years, and weare developing a number of opportunitieswithin rail, metro and light rail.

In Poland, we remain focused onthe transportation (road and rail),environmental and energy sectors whereour largest project continues to be ourrole as the owners engineer for thePolish liquefied natural gas plant.Increased market activity is expectedin the future, as EU funding is unlockedfor new capital schemes.

Our operations have stabilised in Irelandand showed some modest growththrough the year with headcountincreasing for the first time since 2008on the back of some good wins in the

water and highways sectors. In Portugal,the continuing difficult economicconditions will curtail any meaningfulgrowth in the medium term.

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28 Strategic Report


Segmental performancecontinued

North America

Margin progression and streamlinedorganisation structure.>


Financial metrics

Revenue 380.9m 389.7m -2.3%


Operating margin 5.0% 3.9% +1.1pp

Work in hand 58.8% 61.0% -2.2pp

Safety Accident Incident Rate 117 89 +28

People




verage sta num ers

-4%

10 11 12 13 14

533 1

,858

3,3

14

3

,091

2

,970

evenue y sector

Roads 41%


Buildings 6%


Urban development 5%


Other 24%

evenue y c ent type



Private sector 35%

evenue m

-2%

55.0

279.

2

421.9

3

89.7

3

80.9

10 11 12 13 14

perat ng pro t m

+25%

10 11 12 13 14

3.4

13.

8

21.

2

15.3

19.1

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Strategic Report 29

StrategicReport

Governance

FinancialStatements



Segmental performancecontinuedNorth America

PerformanceOur North American business has seena 24.8% increase in operating profit overlast year, increasing profit to 19.1m(2013: 15.3m) at an improved marginof 5.0%, up from 3.9% in the prior year.We have made good progress with theportfolio optimisation part of our strategy,with the divestment of the Peter Brownconstruction management at risk businesson 30 August 2013. Excluding the resultsof the Peter Brown business, whichreported a trading loss for the year of3.2m, gives a combined consultancyand Faithful+Gould operating profitof 22.3m (2013: 21.8m), at a marginof 6.0% (2013: 6.0%).

The disposal of Peter Brown resulted ina loss on sale of 3.1m, which is adjustedfor in calculating the Group underlyingprofit before tax and is not reported in

the preceding table (page 28).

Average staff numbers have fallen by121 since last year, partly as a consequenceof the disposal of the Peter Brownbusiness, which accounted for 37 staff,and partly due to restructuring.

Our operational excellence programmehas been rolled out during this financialyear, with an initial focus on increasingmargins through both reductions inour overhead cost base and improvingstaff utilisation.

Business modelOur transportation, infrastructure andenvironmental businesses have beenreorganised to focus on multidisciplinarydesign and engineering consultancyservices in five client-facing areas:transportation, public and private, federal,aviation and strategic ventures, whichincludes areas such as rail, energy,technology and future-proofing cities.In order to compete effectively in thesemarkets we have adopted a newoperating model comprising a technical

professional organisation creatingdiscipline-focused technical resources.

These technical resources will service thenew client-facing business units, whichare supported by dedicated client-focusedbusiness development and sales teams.This simplified operating structure willenable us to focus business developmentand sales on our chosen clients as weprogress to larger, more complex projects.

StrategyOur strategy is to focus on majorinfrastructure programmes in thetransportation, energy, federal, stateand cities markets in North America.

As part of the overall Group strategypillar of portfolio optimisation wedisposed of the Peter Brown businessduring the year, allowing us to focuson our key consultancy and programmemanagement markets.

We are strengthening our capabilityto compete for, win and deliver majorprojects and programmes, leveragingour technology capabilities to createa competitive advantage.

We are shifting our focus to capturingand winning work, and have createda flexible and scalable technicalprofessional organisation to deliverwork more efficiently.

We aim to improve margins bystreamlining our organisation and

removing overhead costs as part ofour operational excellence programme.

Business driversThe majority of North Americas projectsare funded in part or in whole by federalfunds, either through a state or localgovernment agency or directly by federalagencies. Publicly funded projects providegreater stability than privately fundedprojects, which tend to have fundingfluctuations. However, publicly fundedprojects tend to be awarded moreslowly or are delayed due to protracted

negotiations within the agencies and/ordue to political scrutiny.

OperationsOur transportation business has continuedits positive performance. During the yearwe were appointed to three new contractsto oversee transport solutions forhighways authorities in Florida, Georgiaand Texas. Additionally, we were awardedwork by the Colorado Department ofTransportation to provide general tollingadvisory services.

Our public and private portfolio hasbenefited from awards in the wastewatermanagement, energy, marine, andemergency response areas of our business.This includes our appointment to afive-year Texas Multiple Award Schedulecontract which gives us access to morethan 2,000 potential government-relatedclients throughout Texas and builds onmore than 40 years of delivering qualityservices throughout the state.

In aviation, we were awarded a generalservices contract at Hartsfield-JacksonAtlanta International Airport, throughour Absolute joint venture, comprisingAtkins, Southeastern Engineering, Inc.and Brindley Pieters and Associates.

Despite generally slow FederalGovernment business and a governmentshutdown in October, we were stillawarded some notable contracts, thelargest of these being the reappointmentto the Federal Emergency Management

Agency (FEMA) flood risk MAP frameworkcontract and the FEMA NationwideHousing Inspection Services contract(in joint venture with The Louis BergerGroup, Inc. and Tidal Basin GovernmentConsulting, LLC). We also extendedour rapid response contract with theU.S. Army Corps of Engineers.

We continue to provide key planning,design and engineering services forthe United States Military Academy atWest Point.

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30 Strategic Report


Segmental performancecontinuedNorth America

Our Faithful+Gould business had a goodyear with an improvement in marginsand profitability. We benefited fromthe continued economic recovery inthe private sector, most notablymanufacturing. Additionally, in thehospitality and leisure sector we havemade good progress and were successfully

appointed to provide project managementservices on a series of upgrades to theiconic Billie Jean King National TennisCenter in Queens, New York. We continueto see growth in the energy sector,as evidenced by the renewal of ourcommission with Ontario PowerGeneration Inc. for a further three years.

PeopleTo support our operational excellencestrategy we restructured our business,delivering efficiencies and an associatedheadcount reduction of around 6.7%.

Staff turnover increased slightly in theyear, although it still remains in line withthe North America industry average.

We remain focused on the engagementand retention of key staff and measureemployee engagement through ourGroup wide Viewpoint employeeengagement survey. The overall scoreremains in line with the benchmarksfor our industry sector.

We continue to balance the need to offermarket-competitive reward structures

against our financial performance andaffordability. The implementation ofMy Career, our new Group wide onlineperformance management system, isexpected to improve the quality of ourperformance management activitiesand create greater alignment betweenperformance and rewards.

Safety and sustainabilityWe have a strong safety ethos and cultureled from the top of our organisation.Our Faithful+Gould business has promotedphysical health in offices, introducingsome agile workspaces which providean option for employees to work standingup. Spending more time standing has welldocumented ergonomic and cardiovascularbenefits and promotes increased physicalmovement at work. In addition we haveintroduced a comprehensive heat stressindex, supported by controls, which usestemperature and humidity to estimaterisks to workers from environmentalheat sources.

As part of ongoing driver fitnessassessment the driving history of ourpeople has been reviewed andsupplementary driver safety trainingprovided where required.

This years recipients of support fromour Atkins Foundation included a highschool robotics design team, an initiativechallenging middle school students todesign and build table top scale modelsof future cities using recycled materials,and the American Red Cross in itsOklahoma tornado disaster relief efforts.

The current year accident incident ratefigure, although higher than the prioryear, represents three accidents, twominor slips and trips and one road traffic

accident, an increase of one accidentyear on year.

RiskThe assessment of risks across all ourbusinesses is explained in more detailin the Principal Risks and Uncertaintiessection of the Annual Report andAccounts (page 44). There have been nosignificant developments with regard tothe longstanding and previously reportedDepartment of Justice and Securities andExchange Commission enquiries relatingto potential Foreign Corrupt Practices Act

violations by The PBSJ Corporation priorto its acquisition by the Group.

OutlookWe continue to see stable marketconditions in the key states within whichwe operate. Economic conditions incertain states, such as Texas and Colorado,remain positive, and coupled withincreased interest in private investmentsin public infrastructure at state level thereare positive investment signals in themarket. Work in hand at 31 March 2014stands at 58.8% of next years budgetedrevenue (2013: 61.0%).

Moving into the new financial year ourrevised structure and continued focus onour cost base provide a strong platformfor progress.

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