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WS Atkins goes out strong

WS Atkins goes out strong

This should be the final results announcement from WS Atkins (ATK) as the company looks likely to be acquired by Canadian rival SNC-Lavalin on 3 July, subject to shareholder and High Court approval. Inevitably, this overshadowed a good set of results for the engineering consultancy as infrastructure needs piled up on both sides of the Atlantic.

The group has grown well during the year, with underlying operating profit up 16 per cent to £172m. This was driven in large part by improved performance across the UK, Europe and North America, with the latter division delivering 64 per cent increase in operating profit to £33.5m on an increased margin of 7 per cent (FY2016: 5.6 per cent) due to more major projects from the US Department of Transportation and improved productivity in the technical professional organisation.

The UK and Europe saw a 3 per cent decline in revenue to £911m following a slip in sales for the rail signalling business. However, margins improved by 210 basis points to 9.9 per cent due to reduced overheads, and management continued to streamline the portfolio by selling a minority private finance initiative stake in the M25.

Analysts have suspended coverage due to the takeover situation.

WS ATKINS (ATK)
ORD PRICE:2,074pMARKET VALUE:£2.08bn
TOUCH:2074-207612-MONTH HIGH:2,148pLOW: 1194p
DIVIDEND YIELD:0.6%PE RATIO:16
NET ASSET VALUE:419p*NET DEBT:1.5%

Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20131.719887.032.0
20141.7511498.433.8
20151.7610787.836.5
20161.8613110639.5
20172.0814813312.5
% change+12+13+26-68

Ex-div:-

Payment:-

*Includes intangible assets of £568m, or 567p a share

IC VIEW:

Atkins' share price has crept up following the offer announcement towards the offer price of 2,080p a share, as the deadline nears. Proxy voting forms need to be lodged by the morning of 22 June. In our view, this represents a good deal for shareholders and we encourage them to accept.

Last IC view: Hold, 1,950p, 3 Apr 2017

visible-status-Standard story-url-WS Atkins.xml

By Tom Dines,
19 June 2017

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