WS Atkins plc ("Atkins" or the "Group"), the design and engineering consultancy group, today provides its Interim Management Statement for the period from 1 April 2012 to date.
Group performance
Our UK region has had a good start to the year. We are mobilising resources in the rail business following the award of two signalling frameworks in January and in highways services we have begun work under our Area 2 Highways Agency contract and successfully secured an extension to our Area 6 contract. The water business is benefiting from increasing volumes within the AMP5 framework and our sector focus areas of defence and aerospace are performing well, with our recent appointment as a tier 1 supplier to EADS affirming our reputation in this market. Finally, the London 2012 Olympic and Paralympic Games are providing an invaluable opportunity for Atkins to showcase its engineering design and planning skills.
Elsewhere in the UK. as previously reported in May, the Group completed the sale of its minority interest in RMPA Holdings Limited (which delivered the Colchester Garrison PFI project) for a net consideration of 14.4 million.
Our consultancy business inNorth Americacontinues to experience weak market conditions, further impacted by a number of project delays as uncertainty increases ahead of the US presidential election in November. We do not expect an improvement in the trading environment during the remainder of this financial year and, as a result, we have taken action to further reduce headcount to reflect anticipated market demand. Despite these current market conditions we continue to believe we are well placed in North America to expand our geographic footprint and further broaden our service offering through leveraging Group resources over the medium term.
The Peter Brown construction management at risk business is now expecting to incur additional costs in the final close out of legacy contracts and it is anticipated that this, together with the volume shortfall in its current backlog previously noted, will lead to an increased loss for this business in the current year.
TheMiddle Easthas seen delays in projects coming to market, constraining our anticipated headcount growth, and reaching client agreement on various contract variations. In addition, we continue to experience more onerous contract payment terms on some of our current government and infrastructure work. Maintaining our focus on project selection and the close management of ongoing variation orders remains critical to our financial success in the region. We continue to forecast headcount growth across the region during the remainder of the financial year.
The Group's Asia Pacific and Europebusiness has secured good contract wins in the period including projects on the third runway for the Hong Kong airport authority and the Lindingo tram line in Sweden. Performance in the quarter has been in line with expectations and Scandinavia, in particular, currently stands with a strong work in hand position.
Our Energy business is trading well in buoyant markets across all sectors. The continued success of our n.triple.a joint venture is evidenced by recent strategic wins in Saudi Arabia and South Africa. We are securing an increasing volume of multi-disciplinary design work in our oil and gas business as we benefit from the skills acquired with our Pyry acquisition. Headcount has grown in the period and staff vacancy levels are high.
Financial position
The Group's financial position remains strong. In May we successfully completed our debut issue in the US private placement market, the proceeds of which were used to repay drawn funds under our existing banking facility. The normal seasonal working capital outflow has resulted in net funds at the end of June of around 108m.
Outlook
While the Group's geographic and sector diversification continues to provide resilience, the outlook for the Group's overall performance for the full year is slightly below previous expectations.
The Group's half year results will be announced on 15 November 2012.
