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Segmental performance

The Group is segmented on a regional and sector basis and this is reflected in our management structure.

We delivered a strong set of results this year. We have continued to improve our underlying operating margin along with revenue that rose 11.8% to £2.08bn (2016: £1.86bn) up 4.3% on a constant currency basis. Underlying operating profit increased 15.7% to £171.5m (2016: £148.2m), at an improved underlying operating margin of 8.2% (2016: 8.0%).

UK and Europe

Our UK and Europe business delivered another set of strong results with a 22.5% increase in operating profit to £90.4m (2016: £73.8m). While revenue reduced 3.4% to £911.1m, primarily as a result of a reduction in rail signalling revenue, margin improved to 9.9% (2016: 7.8%), helped by overhead efficiency savings. During the period, as part of our ongoing portfolio optimisation, we were pleased to complete the sale of our minority PFI investment in the M25 motorway to Edge Orbital Holdings 2 Limited, for a cash consideration of £66.3m. This has been adjusted for when arriving at underlying earnings and is not included in the segmental operating profit referred to above.

Revenue UK and Europe: 2017 - £911.1; 2016 - £943.6; 2015 - £903.8Operating margin UK and Europe: 2017 - 9.9%; 2016 - 7.8%; 2015 - 6.7%

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North America

Our North America business delivered significant growth this year. Revenue rose 32.5% (14.0% on a constant currency basis) due to increased major project volume in our department of transportation and intermodal businesses. Operating profit rose 64.2% (43.6% on a constant currency basis) at a much improved margin of 7.0% (2016: 5.6%). In addition, our technical professional organisation is seeing improved productivity and we have been able to utilise the Group’s global design centre capabilities in India on major projects including Purple Line and project NEON.

Revenue North America: 2017 - £480.5; 2016 - £362.6; 2015 - £341.4Operating margin North America: 2017 - 7.0%; 2016 - 5.6%; 2015 - 5.9%

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Middle East and Africa

Despite the overall challenging market environment in the region, our Middle East and Africa business has traded in line with our expectations. Revenue was down 6.5% at £232.2m at an operating margin of 9.4% (2016: 11.9%). The market liquidity situation continues to put pressure on working capital and debt collection, which remains a key focus across the region. The integration of Howard Humphreys is progressing well and already generating opportunities.

Revenue Middle East & Africa: 2017 - £232.2; 2016 - £248.3; 2015 - £ 216.7Operating margin Middle East & Africa: 2017 - 9.4%; 2016 - 11.9%; 2015 - 10.4%

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Asia Pacific

Our Asia Pacific business has traded in line with our expectations this year. Revenue increased 11.4% to £118.2m (2016: £106.1m), a 1.4% reduction on a constant currency basis, at an operating margin of 7.9% (2016: 8.0%). During the year we secured a number of architectural projects including the iconic Cocobay Towers in Danang, Vietnam and we were particularly pleased to be awarded the advance engineering study for a key section of the proposed Cross Island Line in Singapore.

Revenue Asia Pacific: 2017 - £118.2 ; 2016 - £106.1; 2015 - £109.7Operating margin Asia Pacific: 2017 - 7.9%; 2016 - 8.0%; 2015 - 8.9%

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Market conditions for our Energy business improved in the second half, particularly in oil and gas. Nuclear performed well during the year and power and renewables remain in line with our expectations. The challenges in some oil and gas markets reduced in the second half as oil prices stabilised. Revenue and operating profit rose to £327.0m and £30.3m respectively (2016: £201.3m and £16.7m respectively), reflecting the acquisition of PP&T which completed in April 2016 and contributed revenue of £142.8m in the year. Our margin improved to 9.3% (2016: 8.3%). We are making headway into the Chinese renewables market with a recent appointment to design the offshore substation platform for the Binhai South Phase3 offshore windfarm in the Yellow Sea, our first offshore wind project in China.

Revenue Energy: 2017 - £327; 2016 - £201.3; 2015 - £182Operating margin Energy: 2017 - 9.3%; 2016 - 8.3%; 2015 - 11.2%

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