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Atkins 'always looking' at acquisitions but firm stays quiet on Parsons Brinckerhoff

Atkins’ UK and Europe chief has said it is “always looking” at acquisition opportunities after the engineering giant was linked with a bid for Parsons Brinckerhoff, which Balfour Beatty is considering selling.

In its preliminary results for the year released on Thursday, Atkins referred to its partnership with Parsons Brinckerhoff on the electrification of the Great Western mainline between London and South Wales.

Asked about analyst tips that Atkins would consider a bid for the professional services firm, David Tonkin said: “We have a very active [acquisition] team and have done for three years, who do all sorts of reviews of opportunities that come up.

“Some we go for, some we don’t. I don’t comment on individual acquisitions or speculation about them, just to say we are always active, looking at opportunities that will deliver good shareholder value.”

Balfour Beatty announced in May it would “evaluate options for the possible sale of Parsons Brinckerhoff” following a strategic review of the professional services arm it bought in 2009. It is expected to fetch around £600m if it is sold.

Mr Tonkin was speaking to Construction News after the firm posted strong preliminary results for the year to 31 March 2014, with turnover and pre-tax profits up 2.6 per cent and 7.3 per cent excluding disposals respectively.

The engineering consultant sold construction management arm Peter Brown at a loss and its highways services business to Skanska in 2013. The sales contributed to overall pre-tax profit being up 16.5 per cent year on year.

In its results, Atkins hinted at further disposals when it said it had “made good progress with the portfolio optimisation part of our strategy” following the sales of Peter Brown and the highways business.

Mr Tonkin said: “I think any good company constantly looks at its portfolio of businesses. You never say never; a well-managed business constantly looks at its assets and says, ‘Is this asset best placed with us or someone else?’”

At a results presentation on Thursday, analysts asked Atkins group CEO Uwe Krueger whether there was a desire to sell its signalling business, which is involved in Denmark’s national signalling upgrade programme through the European Rail Traffic Management System.

Mr Tonkin said: “We believe that our very high technology capability makes the signalling environment a very interesting one to be involved in and we are heavily involved in the UK and Denmark. We see it as a niche and superb area to be involved in.”

Atkins results at a glance

The firm produced a strong cash performance, with net funds up 31.7 per cent (including disposals) at £188.3m and operating cashflow of £95.5m (up from £82.9m in 2012/13).

Overall revenue was £1.75bn, up almost £45m on the previous year.

Its underlying operating margin (excluding disposals) was 6.7 per cent, up from 6.4 per cent the year before.

Staff numbers decreased by 2.3 per cent to an average of 17,489 people.

Atkins said its global design centres in India helped to boost its performance and increase competitiveness in the UK and Europe.

Asked whether the GDCs were used to promote knowledge-sharing across international client programmes or were simply a way to increase profit by offloading work outside the UK, Mr Tonkin praised the 1,100 staff in Bangalore and Delhi.

“It is definitely not a back-office sweatshop,” he said. “It is not low-end engineering – it’s high-quality, high-capability engineering.

“More than 50 per cent of our signalling design engineers are based in Bangalore. We have about 90 mechanical stress analysis engineers working on the aerospace industry.

“Global design centres provide cost advantage, but also provide very highly capable engineering”

David Tonkin, Atkins UK CEO

“These are full lifecycle engineers from high-end to detailing work. It is both a centre of excellence and helps us take knowledge of different industries and geographies, because, increasingly, that body of people is being asked to work across the Atkins globe.”

Mr Tonkin said around 75 per cent of the work being done in the GDCs was for the UK, with the remainder for the Middle East, but that other Atkins regions were being encouraged to use the GDCs.

“[The engineers based in GDCs] will see international approaches from different angles and hopefully bring some of that experience to bear in the UK. It does provide cost advantage, but it also provides highly capable engineering.”

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