"I think we would be foolish to deny that the government will be making spending cuts, and we certainly can't predict where the knife will fall," warned Heath Drewett, finance director at WS Atkins, as the design and engineering consultancy reported strong full-year results in turbulent markets.
Despite a modest fall in revenues, operating profit increased 9.6 per cent to £113m after 13 per cent of staff were cut and a number of businesses restructured, including the redeployment of 500 consultants across the group. Cash management was again robust, but slightly marred by an increase in pension liabilities from £299m to £440m. This caused net financing costs to increase and resulted in reduced pre-tax profits.
More than three-quarters of group revenue comes from the UK, with significant public sector exposure, and despite Mr Drewett's caution on government spending, he is confident the group will perform this year. Work in hand accounts for 54 per cent of budgeted revenue, business in the Middle East is recovering, and revenues from China were up 38.8 per cent last year.
Broker WH Ireland forecasts adjusted pre-tax profits of £86.2m and EPS of 69.5p (£92.8m and 74.8p in 2010).
WS Atkins (ATK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 715p | MARKET VALUE: | £716m | |
| TOUCH: | 713-715p | 12-MONTH HIGH: | 747p | LOW:533p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 7 | |
| NET ASSET VALUE: | * | NET CASH: | £303m | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 1.41 | 74.8 | 57.0 | 16.0 |
| 2007 | 1.18 | 70.1 | 54.4 | 20.0 |
| 2008 | 1.31 | 91.9 | 98.9 | 24.0 |
| 2009 | 1.49 | 102.7 | 86.1 | 26.0 |
| 2010 | 1.39 | 96.6 | 105.2 | 27.5 |
| % change | -7 | -6 | +22 | +6 |
Ex-div:18 Aug Payment:24 Sep *Negative shareholder's equity | ||||
