Atkins to take £3m hit over Metronet’s missed deadline

Consultant Atkins has admitted that it is set to lose £3m on Metronet, the London Underground consortium in which it has a 20% stake, because of missed targets.

Atkins has made a £3m provision because it expects Metronet to miss its own deadline for completing station improvements. Metronet has made a provision of £14m, £3m of which would be Atkins’ share.

Atkins revealed the charge when it announced its results for the year to 31 March 2005 on Monday.

Keith Clarke, Atkins chief executive, said Metronet could turn the situation around, not least because Andrew Lazala, formerly chief operating officer at Jarvis, took up his new role as chief executive this week.

“Our underlying performance is improving,” said Clarke. “There is less graffiti on the trains and fewer signal failures. We are improving the Tube and we have a new chief executive.”

Clarke will represent Metronet’s five shareholders as non-executive chairman.

Atkins’ best performing division in 2004 was the design and engineering business. It accounted for 30% of turnover and 43% of operating profit.

Group pre-tax profit fell 3% to £60.1m on a turnover of £955m, 1% up on the previous year.

Clarke said Atkins was not “chasing turnover, and we don’t need to be all things to all men”.

He added that although the company wanted to expand in the Middle East and China, it did not want to become a global company.

The figures reflect Atkins’ pension deficit and also take into account exceptionals. Atkins will make annual pension contributions of £3.5m; an additional contribution of £8.6m was made in January. The group said it anticipated making future contributions of £10m a year to make up the deficit.

Atkins also faced an exceptional charge of £1.8m associated with its subsidiary Hanscond, but after that and the pension payments were taken into account, adjusted pre-tax profit rose 31% to £73.6m.

Clarke said the slowdown in rail work would continue in the short term and the firm had cut overheads in response. Rail turnover fell from £410.3m to £394.4m; operating profit tumbled 9% to £21.3m.

Atkins increased its total dividend for the year to 12p, up from 9p.