annual report and accounts 2006 - halcrow pensioners
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Halcrow Holdings LimitedAnnual reportand accounts 2006
Contents
Highlights 2
Chairman’sstatement 4
Chiefexecutive’sreport 6
Directors’report 14
Statementofdirectors’responsibilities 19
Independentauditors’reporttothemembersofHalcrowHoldingsLimited 20
Consolidatedprofitandlossaccount 21
Consolidatedbalancesheet 22
Companybalancesheet 23
Consolidatedcashflowstatement 24
Consolidatedstatementoftotalrecognisedgainsandlosses 25
Notestothefinancialstatements 26
Officesandcontacts 53
Picture captionspage8:GrandMosque,AbuDhabi,UAEpage10:LiverpoolSouthParkway,UKPage12:ClydeArcbridge,Glasgow,UK
Halcrow Holdings LimitedAnnual report and accounts 2006
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Strongperformancesacrossallofourbusinessgroupsmeanthatbothturnoverandprofitbeforetaxfor2006areup,deliveringimprovementsforthefifthyearinsuccession.Ourcontinuingprogresshassecuredusatop50placeintheUK’sSunday TimesProfitTrack100,whichidentifiesthetop100privateBritishfirmswiththefastestgrowingprofit.
Importantly,wehaveseenanotableperformanceinNorthAmerica.Employeenumbersareuptonearly450;wenowhave13permanentoffices–withtwomoreontheway;andweachievednetearningsof£24.3million–21percentaheadofbudget.
Lookingtothefuture,wehavestrengthenedourgroupboardwiththreenewappointments.TonyPryorjoinedusasnon-executivechairmandesignate,andwillbetakingoverfromTonyAllumattheendofJune2007;AlanSafferjoinedasgroupfinancedirector;andJohnTheakstonjoinedusasanon-executivedirector.
Businesshighlights
Tony Allum–chairmanFREngEurIngFICEFCIWEM
Tony Pryor–non-executivechairmandesignateBAPEng
Peter Gammie–chiefexecutiveBAFCA
Les Buck–groupboarddirectorBScCEngFICEFIHTPE
Chris Fleming–groupboarddirectorFREngFICEEurIngPhDBSc
Neil Holt–groupboarddirectorFCIB
Alan Saffer–groupfinancedirectorBAFCACPA
David Kerr–groupboarddirectorBScCEngFICEMIHT
John Theakston–non-executivedirectorBScCEngFICEMIHT
Ken Mair–companysecretaryFCISACII
Group board
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Groupturnover £330.4m
Grossprofitpercentage 39%
Operatingprofit £11.3m
Pre-taxprofit £12.0m
Financialhighlights
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Wesawanotherstrongperformancein2006whichresultedinthebusinessexceedingbothturnoverandprofitexpectationsfortheyear.Throughout2006Ihaveseendeepeningcommitmenttothewiderissuessurroundingefficiencyandeffectivenessinallareasofthebusiness.Wehavemadeanexcellentstartto2007:wehaveastrongforwardorderbookandwesignificantlyimprovedonbudgetaryexpectationsforthefirstquarteroftheyear.IfeelconfidentthatHalcrowwillgofromstrengthtostrength.
Weplantostreamlineourinternalbusinessimprovementprojectssowecanmeasurethebenefitstheyproduceagainstfixedtargets.Wewillusevaluestreamanalysisandtheprinciplesof‘lean’todeliverservicesandproductsthatcreatevalueforclientswiththeminimumamountofwasteandthemaximumdegreeofquality.
Act now!–ourculturechangeprogramme–wasdevelopedfurtherandhastakenonthethemeofoperationalexcellencewithapilotprojectthatwillseetheExeter,CrawleyandBristolofficeseachsecuresignificantsavingsfor2007.
WewillalsofocusonmaximisingtaxcreditsforourUKresearchanddevelopment(R&D)activities.ThankstocreditsalreadyreceivedfromtheUKgovernment,Halcrowlaunchedaninnovationfundearlyin2007tosupportR&Dprojects,addingtoourcurrentinvestmentprogramme.In2006wespent£1.3millionontheseprojects,forgingnewwaysandmethodsofdoingwhatwedobest.
Ourstatedgoal–‘tobecomerecognisedastheconsultantthatclientsandpartnersnaturallyseekoutwhenfacedwiththeirgreatestchallenges’–isalreadyreapingdividendsasourlatestclientsurveystestify.Feedbackrevealsthatweareperceivedbyclientstobesignificantlybetterthantherestofthemarketinunderstandingtheirneedsanddeliveringtodeadlineandtobudget.
Ourbidimprovementandprojectexcellenceprogrammeshelpedustofurtherunderstandandserviceourclients’needs,creatingadifferentiatorbetweenusandourcompetitors.Bystrivingfor–andachieving–excellence,wehavebeenrecognisedbyKPMG,theglobalauditingfirm,whichselectedHalcrowasoneoftheworld’s15mostadmiredcompaniesin2006.It’savaluableendorsementofthefocusandenergyofthecompanyanditspeople.
OurpushintotheUKnuclearsectorcontinuestothrivewiththelaunchofourrefreshednuclearbusiness‘NuclearFocus’.Themultidisciplinaryteamhasalonghistoryofprovidingservicesandskillstothenuclearindustry.Aswellasundertakingdecommissioningwork,theteamisalsostrategicallypositionedtoplayakeyroleinanynewbuildnucleardevelopmentsintheUK.Mysuccessor,TonyPryor,willalsobringtobearhisconsiderableexperienceandknowledgewithinthiscoresector.
Importantly,wehaveseenfurtherchangestothemainboardinadditiontothearrivalofTonyPryorasnon-executivechairman.Aswellassayinggoodbyetoourtwonon-executivedirectors,SirMichaelAngusandRogerFlanagan,wemadetwonewappointments.AlanSafferjoinedusinJanuary2007asgroupfinancedirectorandbringsextensiveandwide-rangingexpertisetotheboard,amovewhichrecognisesthecriticalrolethatfinancenowplayswithinthebusiness.JohnTheakston,whojoinedusasanon-executivedirectorinAugust2006,alsobringsnewexperienceandexpertisetoourboard.Together,thesethreenewappointmentsstandusingoodsteadforthefuture.
Halcrowcontinuestoofferemployeesthechancetotakeatangiblestakeintheircompanyandmateriallybenefitfromitsongoingsuccess.Bytheendof2006,24.1percentofshareswereownedbyemployees,boostedbytheintroductionofadividendreinvestmentplanin2006.
Thisismylastchairman’sstatementasIwillbesteppingdownattheendofJune2007.Farfromdepartingwithsadness,though,Ileaveknowingthatmysuccessor,TonyPryor,inheritsasoundandhealthycompany.
Chairman’sstatement
Chairman’s statement
Thenumberofemployeeshareholdersissettogrowevenfurtherin2007withthelaunchofthecompany’sshareincentiveplan,offeringataxefficientwaytoinvestinthecompany.Ourgoalistoensurethatby2010,35percentofemployeesareshareholdersinourfuture.
TheHalcrowFoundation–setupasadirectresponsetotheIndianOceantsunamiofDecember2004–sawgrowthanddevelopmentin2006,mostnotably,gainingcharitablestatusintheUK.Atthesametime,itexpandeditsportfolioofprojectstoAfricaandtheUK.AswellassupportinggrassrootssocialcareinitiativesintheUKforfamiliesinSwindon,itisfundingmedicalequipmentforachildren’shospiceinYork.AndinAfrica,thefoundationisbuildinganablutionblockintheKiberasluminNairobi,Kenya,andbringingcleanwaterto6,000Malawianvillagers.
Insummary2006wasanotherchallenging,yethighlyrewarding,year.Anditisdowntoourmostvaluableasset–ourpeople–thatwecontinuetobuildonsuchsolidfoundationsandlookforwardtotheopportunitiesthatlieaheadin2007.
Iwouldliketothankeveryonefortheirsupportoverthefiveyearsofmychairmanship.IhavenotonlyenjoyedthetimeIhaveservedbutfeelveryprivilegedtohavedoneso.IlookforwardtohearingaboutthegreatersuccessIknowwillcomeinfutureyears.Thankyou.
Tony Allum CBEChairman
Tony Allum leaves the business after nine years on group board, nearly five of which were as chairman. During this time, and in his earlier career with Halcrow in the mid 1990s, he has contributed extensively to the group’s focus on developing markets outside the UK, including North America, India and the Middle East.
Over many years Tony has worked closely with various industry bodies on behalf of the group. He was chairman of the UK’s Iraq Industry Working Group. He is chairman of UK Trade and Industry’s Water Sector Advisory Group and he sits on the boards of British Expertise and the University of Bath in Swindon. Internationally, he has represented Halcrow at the World Economic Forum. In the recent past he has also headed up government sponsored trade delegations to India and China. In 2005 he was awarded a CBE for services to the industry and became a Fellow of the Royal Academy of Engineering.
Chairman’sstatement
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Chiefexecutive’sreport
Turnoverroseby17percentandgrossmarginsimprovedby1.5percent,significantlycontributingtotheincreaseinunderlyingprofitability.Improvementstoourprocessescontinuedtobeakeyfocusintheyearandoperationalefficiencywillbeakeythemefor2007.
WecontinuedtomakeprogresstowardsourstrategicgoalofhavingmorethanhalfofourbusinessoutsidetheUK.In200644percentofturnoverwasoutsidetheUKcomparedto40percentin2005.Workwonintheyearwas47percent,indicatingfurtherprogresstowardsthegoal.Wealsosignificantlyincreasedourworldwidebacklogofwork,up64percentcomparedtothebeginningoftheyear.
Globalisationcontinuedin2006withseveralstrategicacquisitions,includingthatofVancouver-basedtransportationplanningconsultancy,TransysInternationalConsultants.HalcrowalsotookfullownershipofHalcrowWaterServices,thejointventurecompanywithMidKentWater.
Overall,2006demonstratedasolidperformanceinwhatwasachallenging,butultimatelyrewarding,year.
Our business groups
ConsultingConsultingbusinessgroupmaintainedastronggrowthtrendthroughouttheyear,withprofit*andtotalearningsincreasingby12percenton2005.Itdelivereda£2.22millionprofit*–some£0.14millionaheadofbudget.
ItsinternationalbusinessgrewsignificantlythanksinparttosomemajorUSpublicprivatepartnership(PPP)contractsandanumberofimportantenvironmentalprojectsinRomania.ItsMiddleEastoperationalsogrewonthebackofanumberofmajorplanningcommissions.
IntheUKtheOxfordshireCountyCounciltransportplanningframeworkwassecuredforasecondfive-yeartermandnewtechnicalservicesframeworkswerewonwithMoray,NorthSomerset,andPerthandKinrosslocalauthorities,aswellasHighlandRegionalCouncil.
TheenvironmentteamcontinuedtoplayacrucialroleinresearchandplanningcommissionsfortheUK’sHighwaysAgencyandEnvironmentAgency.
RelationshipswithEnglishPartnershipsstrengthenedwithanumberofadditionalengineering,environmentalandlanddevelopmentframeworks.
TheinternationalmasterplanningandurbandesignbusinesssecuredseveralvaluablecommissionsinShanghaithroughajointventurewithShanghaiInternationalConsultingCompany,aswellaswinningprojectsinthePhilippines,IndiaandtheCaribbean.
MaritimeMaritimebusinessgroupputinasterlingperformancebyturninga£1millionloss*in2005intoaprofitof£0.89millionin2006.Nowinitssecondyearthebusinessgrouphasstreamlineditsoperationstoimproveefficiency,reducingthenumberofsectorsitworksin.Itsthreecoreareas–containers,coastalandenergy–accountfortwothirdsofitsfeeincome.
Amongthebiggerprojectssecuredin2006werealiquidnaturalgasterminalatRasLaffanPortinQatarandconsultancyworkattheKhalifaPortinAbuDhabi,UAE.
AsignificantinvestmentinflooddefenceworkinNorthAmericaafterhurricaneKatrinasecuredacommissionworkingfortheLouisianaDepartmentofNaturalResources.InNorthAfrica,a£260milliondeep-waterport–Tangier-
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Iampleasedtoreportprofitbeforetaxof£12.0millionfortheyear,comparedto£10.4millionin2005.Operatingprofitasreportedfellfrom£12.8millionto£11.3million.However,iftheimpactofforeigncurrencymovementsistakenintoaccount,underlyingoperatingprofitrosefrom£10.0millionto£15.7million,anincreaseof58percent.
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Mediterranean–iswellunderway,asisanewportdevelopment–SungaiLiang–inBrunei.AndinBelizethemaritimesecurityteamishelpingtobeefupsecurityandprotectthecountry’ssixportfacilities,crucialtoitsexpandingtourismsector.
Property 2006heraldedthefifthanniversaryofHalcrow’spropertybusiness.NowbrandedHalcrowYolles,itrecordedaprofit*of£2.53millionin2006–some£1millionabovebudget.ItisnowontracktoexceedHalcrow’s2010targetof6percentreturnongrosssales,withseveralstellarperformancesfromindividualteamsalreadyexceedingthatfigure.ToallowittoproperlybuildonthisithasadoptedastrategyfocusingonprojectsintheUK,NorthAmericaandtheMiddleEast.
IntheUKthegroupwonanumberofsignificantprojectssuchasthelandmark36-storeyLondontower,20FenchurchStreet,andBeethamGroup’sprestigiousHiltonprojectinLiverpool.TheHalcrowYollesteaminScotlandiscontributingtoGlasgow’sheritage,bothpastandfuture,withitsworkonthemuch-lovedKelvingroveArtGalleryandMuseum.Itisalsosupportingthecity’sbidtohostthe2014CommonwealthGamesthroughtheprovisionofcivilandstructuralengineeringservicestotheshowcaseNationalIndoorSportsArenaandtheNationalVelodromeandCyclingComplex.
IntheMiddleEastHalcrowYollescontinueditsworkontheiconicAbuDhabiGrandMosqueandbeganworkonseveralkeycommissionssuchastheNewDohaInternationalAirportoperationsbuildingandthe30-storeyOberoiHotel,apartmentsandcommercialtowerinDubai.
InNorthAmericaseverallandmarkprojectswerecompleted,includingtheLeslieL.DanPharmacyBuildingattheUniversityofTorontowithitsinnovative‘floatingpod’
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lecturehalls,theworldclassFourSeasonsCentreforthePerformingArtswithitsfeatureglassstaircase–celebratedasthelargestunsupportedglassstaircaseeverbuilt–andtheManitobaHydrocommercialtower–oneoftheworld’smostsustainablecommercialbuildings.WorkcontinuesonanumberofsignificantprojectssuchastheMGMProjectCityCenter,BlockC,LasVegas,Nevada,currentlythelargestprivately-fundeddevelopmentintheUS.Workalsocontinuesonthe£2billionredevelopmentschemeatTorontoPearsonInternationalAirport,Canada’sbusiestairport.Thegroup’srelationshipswithworldclassarchitectscontinueswithnewcommissionssuchasTheBow,EnCana’scorporateheadquartersinCalgarydesignedbyFosterandPartners.
In2007HalcrowYolleswillcontinuetomakeprogresstowarditsobjectivetobeatrulyglobalbusinessasitopensofficesinCalgaryandtheCaymanIslands.
Transportation Thetransportationbusinessgrouprecordedaprofit*of£7.77millionin2006,some£1.14millionaheadofbudget.
IntheUKtheteamsecuredanewfour-yearnationalframeworkcontracttodeliverabroadspectrumofservicestotheHighwaysAgency.TheDocklandsLightRailwayLondonCityAirportExtension,whichwasdesignedbyHalcrow,wasnotonlysuccessfullydeliveredin2006,butopenedwellaheadofschedule.
Aswellaswinninganever-expandingclutchofawards,theHalcrow-designedM60Manchesterwideningprojectwasdeliveredsixmonthsearlyand,thankstotheteam’singenuity,savedaround£2millionfortheHighwaysAgency.AnotherkeywinwastheBarnstaplebypassinDevon.Whencompletedin2007,the2.7kmroadwillremove70percentoftrafficfromthepicturesqueEnglishtown,providingmuchneededcongestionrelief.
ThelifeofLiverpool’stravellingpublicwasalsotransformedwiththecompletionoftheaward-winning,£32millionLiverpoolSouthParkwayInterchange.Notonlydoesitinterconnectwithbus,railandairservices,butitprovidesacentralfocusfortheregenerationofthatpartoftheportcity.
LastyearHalcrowwasappointedbytheHighwaysAgencyinasix-yearconsultancysupportrolecoveringthe£5billionprojecttowiden100kmofoneoftheworld’sbusiestroads
–theM25orbitalmotorway–Europe’slargestprivatelyfinancedhighwaysproject.
OutsidetheUKtheRewabridge–thelongestsuchstructureinFiji–wassuccessfullycompletedandopenedtohugepublicacclaimbythePacificisland’spresidentinAugust.Theuseoftheincrementalcastandpush-launchmethodtobuildthebridgewasthefirsttimethetechniquehadbeenusedintheSouthPacific.
HalcrowalsocontinuestohelpChinarealiseitsunprecedentedtransportinfrastructureambitions,suchasthe188kmGuangxihighwayproject,whichincludes81bridges,dueforcompletionin2008.
WiththePPPmarketintheUSstillinitsinfancy,manypotentialclientsarelookingtoharnesstheexperienceofcompanieslikeHalcrowtobenefitfromthisEuropeanfinancingphenomenon.Onthebackofthis,theteamwonaten-yearprocurementengineeringcontractwiththeTexasDepartmentofTransportationforthesecondTrans-TexasCorridorproject.
Water and power In2006waterandpowerbusinessgrouprecordedabove-targetprofit*of£2.06million.
Asglobalenergydemandsincreaseandpoliticiansembracetheneedtoreduceourcarbonfootprint,Halcrowispositioningitselftomeetthesechallengesheadon.Aspartofthis,thecompanyre-brandeditswaterandutilitiesbusinessgroupaswaterandpoweron1January2007.
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Halcrow’sfuturestrategyforthepowersideofthebusinessisbasedonhelpingclientsreducecarbonemissions.Thisincludesplayingamajorroleinnucleardecommissioningandpotentialnew-buildnuclearfacilities,aswellasinvestingevenmoreinitsrenewableenergybusinesses.
Alongsideitsaimtoincreaseitsshareofthepowermarketto£30millionby2010,Halcrowplanstomaintainitsmarket-leadingpositioninUKflooddefenceengineering.
Regionally,2006sawheavyinvestmentinUSbusinessdevelopment,whileinChinaandRomaniaitislookingtoexpanditsportfoliooffloodmanagementandfloodmodellingwork.InIndiathebusinessaimstomaintainitsmomentuminthebuoyanthydropowermarket.IntheUKthebusinessgroupisalsomaintainingitspositionasoneoftheEnvironmentAgency’skeysuppliers.KeywinsintheyearincludedbeingappointedasLaingO’Rourke’sdesigneronthe£35millionupgradeofKnostropwastewatertreatmentworksservingLeeds.InRomaniaHalcrow,togetherwithpartners,SwecoandSogreah,isprovidingprojectmanagementtechnicalassistanceservicesforGlinawastewatertreatmentworks–theprimaryfacilityforBucharest,treatingwastewaterfor2.5millionresidents.AndinSharjah,UAE,theteamcompletedthedesignoftheseventhandlatestphaseoftheemirate’ssewagetreatmentworks,increasingcapacityby50percent.
*Profit/lossbeingunderlyingoperatingprofit/losswhichexcludestheimpactofforeignexchangemovements.
Our regions
Americas Halcrow’sacquisitionsofUSmaritimeconsultancyHan-PadronAssociatesandCanadianstructuralengineerYollesformedpartofapolicytotakethecompanyintothenotoriouslydifficultNorthAmericanmarket.Theplanwastobuildastronglocalbasethroughstrategicacquisitionsandusethemasaspringboardfortherestofthebusiness.
Today,Halcrowhas13permanentofficesacrossNorthAmericaandisnowopeninganotherbaseinVirginiatohelpsecurefutureworkwiththeUSNavy.Bytheendof2006,employeenumbershit445,whilenetearnings(turnovernetofdirectexpenses)rocketedby21percentaheadofbudgetto£24.3million.
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Consultingmaintainedastronggrowthtrend–12percentupon2005–deliveringa£2.22millionprofit–£0.14millionaheadofbudget
Maritimeturneda2005lossof£1millionintoaprofitof£0.89millionin2006
Propertyrecordedaprofitof£2.53million,some£1millionabovebudget
Transportationpulledaheadofits2006targetandrecordedaprofitof£7.77million,some£1.14millionaheadofbudget
Waterandpowerrecordedabove-targetprofitof£2.06million
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Themaritimebusinessisnowthriving.Keyprojectwinsin2006includedconsultancyworkfortheDamesPointMarineTerminalinFlorida,thedevelopmentofadrydockattheNorfolkNavalBaseinVirginiaandtheGoldenPassliquidnaturalgasterminalinTexas.
TheNewYorkofficeisthemaincentreformaritimeworkintheregion,co-ordinatingtechnicalcontributionstoprojectsacrosstheworld.TheHoustonoffice–establishedin2006–ismakingsolidinroadsintotheTexanoilandgassector.
HalcrowYollescontinuedtomakeastrongcontributiontothecompany’sprofilelastyearthroughitsinvolvementinanumberoficonicstructuresandawardwinningprojects.Oneexample,thenewNationalBalletSchoolinToronto,forwhichtheteamprovidedfullstructuralengineeringservices,hasscoopedaclutchoftop-levelarchitecturalanddesignawards.The£44millionProjectGrandJetéhasnowwonfiveawards,includingtheprestigious2007InstituteHonorAwardforArchitecturefromtheAmericanInstituteofArchitecture.
InLatinAmericaweincreasedourvolumeofworkby20percent,inlinewiththerobustgrowthofmostoftheeconomiesintheregion.WeconsolidatedourpresenceinChilebyexpandingourclientbasetomanyoftheprivatewatercompanies.AndinMexico,PanamaandArgentinawemadeconsiderableprogressintheincreasinglydemandingenergymarket,winningcommissionsforstudiesfornewrefineries,liquefiednaturalgasprojectsandhydroelectricpowerschemes.Newmaritime-relatedworkwasalsopickedupinmanycountriesintheregion.
NotablecommissionssecuredincludetheIntegratedBaselineStudyofthePilcomayoRiverbasin,aprojectwhichconfirmsourleadingworldwidepositioninlargecatchmentstudies.Thestudylooksatoneofthemostcomplexcatchmentareasonthecontinentandinvolvesinstitutionalfundingarrangementsfromthreecountries.WearealsoworkingwithdifferentinternationalpartnersonfiveprojectsforWaterandSanitationfortheUrbanPoor(www.wsup.com).
Asia and Australia Ourbusinessinthisregionperformedwellin2006,hittingitstarget,withHongKonginparticularexceedingexpectationsinadifficultmarket.
TheAustralianmarketenjoyedsignificantgrowthinallareasthroughouttheyearandboosteditsworkforceby38percentto80employeestomeetitsorderbookcommitments.Establishedsectors,suchasrailandtunnels,continuedtoflourish,whilethenewerbusinessesofwaterandtransportationplanningstrengthenedtheirmarketpositions.
Australia’sboomingeconomybringsopportunitiesaswellaschallengesforthelocalteam.Amongtheplethoraofprospectsfor2007isaPPProllingstockprocurementproject,theNorthWestRailLinkinSydneyandBrisbane’sairportlinktunnel.
TheChinaoperationsmadegoodprogressin2006.Witha60-strongworkforce,itmovedtonewheadofficesinShanghai’scentralbusinessdistrict.Importantly,wealsoestablishedawholly-ownedforeignenterpriseinthecountry.TheShenzhenofficecontinuestosupportHongKongasacosteffectivedesigncentre,whiletheBeijingofficemaintainsitsfunctionasashopwindowandprojectofficeinthecapital.
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Keyprojectsin2006includedtheEasternOceanCrossingandtheYangshanDeepwaterHarbour,aswellasanumberofhighwayandurbanplanningprojectsforinternationalfinancialinstitutions.Tohelpwithfuturedevelopment,theregionalsoidentifiednewstrategiclocalpartners–essentialforthedeliveryofthewiderChinastrategy–andwilltargetothernewjointventurepartnersin2007.
Intheothereconomicpowerhouseoftheregion,India,weareseeingconsiderableactivity.Thecountry’seconomygrewby8.5percentin2005/2006andisexpectedtobecomethethirdlargesteconomyintheworldby2050.Wehavebeencarefullypositioningourselvestotakeadvantageofthesemarketdynamics.Halcrowemployed25peopletherethreeyearsago,butaneardoublinginsizeeveryyearsincethen,meanswenowemploy170people.Weplantodoublethisnumberagaininlessthanthreeyears.
Todatewehaveconcentratedontransportplanninganddesigningroads,bridges,portsandhydropowersystems.Wesuccessfullyaddedproperty-relatedworktothisafterwinningtwocontractswithoneofthelargesthotelchains,TajHotels.IntransportationourprojectsincludetheKunleMunesarPalwal,a130kmsix-laneringroadaroundthewesternsideofDelhi.AndinmaritimethecompanyisdrawingupafeasibilitystudyforaportinPondicherryonthesoutheastcoastofIndia.
Europe (outside UK) Inkeepingwithotherregions,Europehasexperiencedstronggrowth.OurRomanianbusinessisdevelopingtoplanandachievedaturnoverof£3million.Withthecountry’saccessiontotheEuropeanUnionon1January2007,theofficeissetforanevenmoreimpressiveperformanceinthefuture.
Theenvironmentalteammadeanoutstandingcontributionandisnowrecognisedastheconsultantofchoicefordealingwithpollutionwithinthecountry’soilindustry.Petrom,thelargestoilandgasproviderinthecountry,commissionedHalcrowtoprovideequipmentassettaggingservices,valuedat£2million,aswellasseveralenvironmentalimpactassessmentlandfillandbio-remediationprojects.
TheyeardrewtoaclosewithtwonotablesuccessesinLatviaandPoland.InLatviatheteamwonaroaddesigncommissioninJurmala,thefirstdesignprojectforits
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WecontinuedtomakeprogresstowardsourgoalofhavingmorethanhalfourbusinessoutsidetheUK–thefigureswereup4percentin2006,takingusto44percent
InNorthAmericaweachievednetearningsof£24.31million,21percentaheadofbudget
InLatinAmericawegrewby20percent,inlinewithmostoftheeconomiesintheregion
TheMiddleEastsawturnoverincreasebynearly34percentto£59.79million
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expandinghighwaysteam.AndinPolandHalcrowsecuredanimportanturbanwatercommissioninLodz.
InIrelandtheteamexceededitsprofittargetby40percentthankstoarobustperformanceinthehighwaysectorandincreasingdiversificationintoothermarkets,includingfloodstudiesandmarineworks.
HalcrowBarry,jointlyownedbyHalcrowandJohnBBarryandPartnersofDublin,isalreadyoneofIreland’sleadinghighwaydesignconsultantsandisnowactivelybiddingforlargerailwayinfrastructureprojects.
With80percentofthecompany’slocalworkcarriedoutundertheHalcrowBarryumbrella,theofficehaswonseveralnewcommissionsincludingmajordesignandbuildprojectsalongthebusyN9andN4roads.
In2006theteamcompletedtheN7Naasroad-wideningscheme,an£85milliondesignandbuildprojecttowidenanexistingdualcarriagewayfromtwotothreelanesovera14kmstretch.TheprojectdovetailedseamlesslywithHalcrow’sroleinsuccessfullystagingSeptember’sRyderCupinIreland.
OtherdesignandbuildprojectslastyearincludedtheN2FinglastoAshbourneRoadscheme,openedfourmonthsaheadofscheduleandwithinbudget.
Middle East FortheMiddleEastregion2006provedtobeanothersolidyearofgrowthwithallkeyfinancialtargetsbeingmet.
However,theyearwasnotwithoutitschallenges,oneoftheprincipalonesbeingtheintensecompetitionforresourcesinthefaceofanacceleratingrateofdevelopment.Despitethis,employeenumbersroseto1,283peoplebytheendof2006.
AlongsidebuoyantgrowthinSharjah’shighwayandurbanwatersectors,thewaterandpowerbusinessgrouprecordedsignificantwinsinSaudiArabia.ThetransportationbusinessgrouphasalsotakentheleadonanumberofmajorprimaryinfrastructureprojectsinRasAlKhaima.
Themaritimebusinessgroupremainedstoicallybusy,particularlyinitsinfrastructuredevelopmentworkfortheRasLaffanIndustrialCity.OthermajorwinsincludeLusailin
Qatar,YasIslandinAbuDhabiandcommissionsforEmaarinPakistanandSaudiArabia.
Keyprojectsin2006includetheworld’slargestman-madeisland–PalmJumeirahinDubai–thenewAlGarhoudbridge,whichwillhelpalleviatetrafficcongestionbetweenSharjahandDubai,andPakistan’stallestbuilding–theimposing190m-highITtowerinKarachi.
UKTheUKcontinuestobethelargestmarket,althoughitsshareofthegroup’srevenuehasdeclinedfrom60percentin2005to56percentin2006,inlinewithourstrategicplan.
Anumberofprestigiousprojectshavewonaplethoraofindustryplaudits,raisingthecompany’sprofilestillfurtherandcementingitsreputationasasignificantforceacrossallourmarkets.
InthenorthofthecountryHalcrow’stenofficeshaveseenemployeenumbersgrowto1,100.TheyearbeganwithInvernessstaffmovingtonew,largerpremisesanditendedwiththeGlasgowofficerelocatingfromTheOctagontotheflagshipCityParkpremises.2007willalsoseeamuch-neededexpansionoftheHandforthoffice.
Wesawanumberofflagshipprojectscometofruition.AdesignandbuildprojectforcontractorNuttallproducedtheClydeArcbridgeinGlasgow,whereHalcrowYollesalso
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celebratedcompletingtherefurbishmentofKelvingroveMuseumandArtGallery.
GoodwinsintheyearincludedKnostropwastewatertreatmentworksforLaingO’RourkeinLeeds,EdinburghAirportRailLink,EnglishPartnershipframeworks,ScottishWaterSolutionsframework,andatwo-yearextensiontotheA-onemaintenancecontractinnorth-eastEnglandfortheHighwaysAgency.
ThePerformanceAuditGroupteam,basedinEdinburgh,successfullycompletedthedeliveryof£0.5billionworthofcontractsforTransportScotland.Thetwo-yearprojectinvolvedprocurementoffourterm-maintenancecontractscoveringthe4,400kmScottishtrunkroadnetwork.
ThesuccessofA-one–Halcrow’sjointarrangementwithColastooperate,maintainandimprovemotorwaysandtrunkroadsinthenortheastofEnglandfortheHighwaysAgency–wasrecognisedin2006whenitwasawardedathree-yearcontractextension.WiththeadditionofCostain,theteamhasalsobeenshort-listedtomanagetheroadnetworkinthenorth-westofEngland.
Drivenbybuoyantmarkets,Halcrow’soperationinthesouthofthecountrycontinuedtoseesustainedgrowthinemployeenumbersandworkwonacrossmostsectors.Theregionaccountsfor66percentofHalcrow’sUKturnover.
In2006Halcrowmobilisedamulti-disciplinarydesignteamfortheCrossrailproject–oneofLondon’skeyinfrastructureprojects–whichwillboostLondon’seconomicgrowth,helpingsecureitsfutureasaworldcity.TheworkstartedtocometofruitionasourinvolvementontheChannelTunnelRailLink(CTRL)approachedcompletion.
Duetostartoperationsin2007,CTRLhasbeenoneofEurope’smostoutstandinginfrastructureprojects.Overthepastdecade,HalcrowhasplayedamajorroleindeliveringthissuccessaspartoftheRailLinkEngineeringconsortium.
TheregionalsowelcomedcolleaguesfromtheSnodlandofficewhenHalcrowacquiredMidKentWater’sshareoftheHalcrowWaterServicesjointventure.TheirskillsformakeypartofHalcrow’sstrategicregionalfocusintheThamesGatewayandsoutheastofEngland.
Into 2007
Halcrowbegan2007withimpressiveresults.Inthefirstquarterofoperationitdeliveredearningsandprofitsinexcessofbudgetandsignificantlyaheadofthesameperiodin2006.
Thecompanywilllooktobuildon–andexceed–itsbudgeted2007profit.Notonlyaremostofitsmarketsrobust,ithasastrongorderbookanditisonthevergeofclinchingseveralimportantcontracts.
Itsbusinessimprovementprogrammesaresettodeliverevenbetterresultsin2007astargetsareestablishedtoimproveefficiencyandeffectiveness.
Earlybusinesswinsin2007looksettoensurethatthiswillbeanotherexcitingyearasthecompanybuildsonrecentprogress.Theboardishopefulofdeliveringanotherrecord-breakingyear.
Peter GammieChiefexecutive
Chiefexecutive’sreport
Chief executive’s report
Halcrowbegan2007withimpressiveresults...mostofitsmarketsarerobust,ithasastrongorderbookanditisonthevergeofclinchingseveralimportantcontracts.
1� | Halcrow Holdings Limited | Annualreportandaccounts2006
Directors’reportThedirectorspresenttheirreportandtheauditedfinancialstatementsfortheyearended31December2006.
1 Principal activity
HalcrowHoldingsLimitedistheholdingcompanyfortheHalcrowgroupofcompanies.Theprincipalactivityofthegroupistheprovisionofservicesasinternationalconsultingengineers.
2 Group results and transfer to reserves
Thegroupmadeaprofitonordinaryactivitiesaftertaxationof£7,922,000(2005(restated):£6,398,000).
3 Dividend
Thedirectorsrecommendafinaldividendpaymentof10.0p(2005:11.3p)perordinarysharepayabletothosemembersontheregisteratthecloseofbusinesson28June2007.This,togetherwiththeinterimdividendpaidinJanuary2007of12.25p(2005:11.0p)perordinaryshare,givesatotaldividendfortheyearof22.25pcomparedwith22.3pfortheyearended31December2005.
Approvalofthepaymentofthedividendwillbeputtotheshareholdersattheannualgeneralmeetingofthecompanytobeheldon28June2007.TheHalcrowTrusthaswaiveditsentitlementtoboththisdividendandtothedividendonitsholdingofpreferencesharesin2006and2005.
UnderFRS21“Eventsafterthebalancesheetdate”thefinancialstatementsdonotreflectthisdividendpayable,whichwillbeaccountedforinshareholders’equityasanappropriationofretainedearningsintheyearended31December2007.
4 Business review, future developments and principal risks and uncertainties
ThereviewofthebusinessisincludedintheChairman’sStatementonpagesfourandfiveandintheChiefExecutive’sReportonpagessixto13.
Theprincipalrisksanduncertaintiesfacingthebusinessincludeforeignexchangeriskandriskresultingfromthediversegeographicalspreadofthebusiness.
5 Share capital
Theordinarysharecapitalofthecompanyat31December2006washeldbeneficiallyasfollows:
TheHalcrowTrust: 14,321,688ordinaryshares(75.9%) Directorsandstaff: 4,550,325ordinaryshares(24.1%)
Theordinarysharecapitalat30April2007washeldbeneficiallyasfollows:
TheHalcrowTrust: 14,408,087ordinaryshares(75.5%)Directorsandstaff: 4,683,169ordinaryshares(24.5%)
The10,000preferencesharesof£1eachwereheldbeneficiallybyTheHalcrowTrustateachof31December2005,31December2006and30April2007.
Directors’ report | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | 1�
6 Directors
Thefollowingservedontheboardofdirectorsduringtheperiodunderreviewandtothecurrentdate(exceptasnotedbelow):
AKAllum,ChairmanPGGammie,ChiefExecutive LGBuck CAFlemingNHoltDJKerrProfessorRFlanagan,non-executivedirector(retired31December2006) JATheakston,non-executivedirector(appointed1August2006)ASaffer(appointed15January2007)AFPryor(appointed19March2007)
7 Directors’ interests in shares of the company
Theinterestsofpersonswhoweredirectorsat31December2006inthesharesofthecompanywereasfollows:
Ordinary shares of £1
30April2007
Number
31 December 2006
Number
31December2005
Number
A K Allum 60,224 60,224 51,466
P G Gammie 97,632 97,047 84,704
L G Buck 37,608 37,023 27,343
C A Fleming 79,133 78,548 69,511
N Holt 61,408 58,061 51,870
D J Kerr 27,871 27,342 21,660
R Flanagan - 4,564 4,564
J A Theakston - - -
Directors’ report | fortheyearended31December2006
1� | Halcrow Holdings Limited | Annualreportandaccounts2006
7 Directors’ interests in shares of the company (continued)
Share options Ordinary shares of £1
30April2007
Number
31 December 2006
Number
31December2005
Number
A K Allum 15,873 15,873 20,006
P G Gammie 18,220 6,502 23,764
L G Buck 23,035 23,035 23,712
C A Fleming 942 942 3,496
N Holt 16,434 4,716 8,207
D J Kerr 15,844 4,655 19,999
Shareoptionsmaybeexercisedasfollows:
Number Optionprice Exercisable
A K Allum 15,873 189p 10Sept2005to10Sept2012
P G Gammie 6,502 195p 1Dec2008to31May2009
L G Buck
5,523
15,873
1,639
189p
189p
220p
1Oct2007to31Mar2008
10Sept2005to10Sept2012
1Dec2010to31May2011
C A Fleming 942 205p 1Dec2007to31May2008
N Holt
4,063
653
189p
195p
1Oct2007to31Mar2008
1Dec2010to31May2011
D J Kerr
4,126
529
189p
189p
1Oct2007to31Mar2008
10Sept2005to10Sept2012
LGBuckandCAFlemingastrusteesandPGGammiebyvirtueofhisdirectorshipofHalcrowStaffandServices,whichistrusteetotheTheHalcrowTrust,havenon-beneficialinterestsinthesharecapitalofthecompanyasfollows:
30April2007
31 December 2006
31December2005
Ordinarysharesof£1 14,408,087 14,321,688 15,291,481
Preferencesharesof£1 10,000 10,000 10,000
EachofthedirectorsalsohasaninterestasapotentialbeneficiaryofTheHalcrowTrust.TheTrust’sobjectivesincludetheprovisionofbenefitstodirectorsandstaffofthecompanyanditssubsidiaryundertakings.
Directors’ report | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | 1�
8 Close company status
ThecompanyisaclosecompanywithintheprovisionsoftheIncomeandCorporationTaxesAct1988.
9 Annual general meeting
Thenoticeconveningtheannualgeneralmeeting,tobeheldatVineyardHouse,44BrookGreen,London,W67BYon28June2007,iscontainedinacircularsenttotheshareholderswiththisreport.
10 Charitable contributions
Contributionsmadebythegroupduringtheyearforcharitablepurposeswere£66,000(2005:£43,000).
11 Employee involvement
Thepolicyofthegroupisoneofcontinuingtodevelopeffectivemeansofconsultationandcommunicationwithinandbetweenitsoperatingconstituents.
Consultationisachievedthroughmulti-levelledcommunicationchannelsincludingastaffcouncil,whichiselectedbyemployeesandmeetsonaregularbasis.Communicationisachievedthroughtheavailabilitytoemployeesofregularfinancialinformationandin-housemagazinesandthedistributionofinformationrelatingtotheresources,technicaldevelopmentsandachievementsofthegroup.
Thegroupbelievesthatemployeeshareownershipisanimportantfactorinemployeeinvolvementanditoperatesaninternalmarketthroughwhichemployeesmaybuyandsellshares.Italsooperatesasavings-relatedshareoptionschemeandashareincentiveplan(underwhichemployeesmaysaveandacquiresharesinthecompany),aswellasadividendreinvestmentplan.
12 Disabled persons
Thegroup’spolicyistogivefullandfairconsiderationtoapplicationsfromdisabledpersonsforpositionsinwhichtheycaneffectivelyperformthetasksrequired.Thesameopportunitiesfortraining,careeradvancementandpromotionaregiventodisabledpersonsemployedbythegroupastoallotherstaff,wherethisispracticable.Theemploymentofthosewhobecomedisabledwhilstintheemploymentofthegroupiscontinuedwhereverpossible.
13 Employee equity incentive scheme
ThegroupoperatesanemployeeequityincentiveschemeunderwhichdirectorsandcertainsenioremployeesareencouragedtoconvertanybonusintosharesofHalcrowHoldingsLimited.Underthescheme,therecipientofabonusmayelecttosubscribeforsharesatthepriceofferedbytheinternalmarketwithpartorallofthenetbonusaftertax.Sharespurchasedundertheschemeareheldintrustforathree-yearperiodand,whentheyarereleasedattheendoftheretentionperiod,theyarematchedbyanequalnumberofsharesprovidedbythegroup.
Noshareswereissuedundertheemployeeequityincentiveschemeintheyearended31December2006(2005:Nil).
Directors’ report | fortheyearended31December2006
1� | Halcrow Holdings Limited | Annualreportandaccounts2006
14 Disclosure of information to auditors
Eachofthepersonswhoisadirectoratthedateofapprovalofthisreportconfirmsthat:
• sofarasthedirectorisaware,thereisnorelevantauditinformationofwhichthecompany’sauditorsare unaware;and• thedirectorhastakenallthestepsthatheoughttohavetakenasadirectorinordertomakehimselfawareofany relevantauditinformationandtoestablishthatthecompany’sauditorsareawareofthatinformation.
Thisconfirmationisgivenandshouldbeinterpretedinaccordancewiththeprovisionsofs234ZAoftheCompaniesAct1985.
15 Auditors
Deloitte&ToucheLLPhaveexpressedtheirwillingnesstocontinueinofficeandaresolutiontore-appointthemwillbeproposedattheforthcomingannualgeneralmeeting.
Registeredoffice: ByorderoftheboardVineyardHouse 44BrookGreen K MairLondonW67BY Secretary 23May2007
Registerednumber: 1674044
Directors’ report | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | 1�
Statementofdirectors’responsibilities ThedirectorsareresponsibleforpreparingtheAnnualReportincludingthefinancialstatements.Thedirectors
havechosentopreparethefinancialstatementsforthecompanyandthegroupinaccordancewithUnitedKingdomGenerallyAcceptedAccountingPractice(UKGAAP).
Companylawrequiresthedirectorstopreparesuchfinancialstatementsforeachfinancialyearwhichgiveatrueandfairview,inaccordancewithUKGAAP,ofthestateofaffairsofthecompanyandofthegroupandoftheprofitorlossofthegroupforthatperiodandcomplywithUKGAAPandtheCompaniesAct1985.Inpreparingthosefinancialstatements,thedirectorsarerequiredto:
• selectsuitableaccountingpoliciesandthenapplythemconsistently;• makejudgementsandestimatesthatarereasonableandprudent;• statewhetherapplicableaccountingstandardshavebeenfollowed;and • preparethefinancialstatementsonthegoingconcernbasisunlessitisinappropriatetopresumethatthe companywillcontinueinbusiness.
ThedirectorsareresponsibleforkeepingproperaccountingrecordswhichdisclosewithreasonableaccuracyatanytimethefinancialpositionofthecompanyandtoenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct1985.Theyarealsoresponsibleforsafeguardingtheassetsofthecompanyandhencefortakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.
Statement of directors’ responsibilities | fortheyearended31December2006
�0 | Halcrow Holdings Limited | Annualreportandaccounts2006
Wehaveauditedthegroupandparentcompanyfinancialstatements(the‘’financialstatements’’)ofHalcrowHoldingsLimitedfortheyearended31December2006whichcomprisetheconsolidatedprofitandlossaccount,theconsolidatedandcompanybalancesheets,theconsolidatedcashflowstatement,theconsolidatedstatementoftotalrecognisedgainsandlossesandtherelatednotes1to36.Thesefinancialstatementshavebeenpreparedundertheaccountingpoliciessetouttherein.Thisreportismadesolelytothecompany’smembers,asabody,inaccordancewithsection235oftheCompaniesAct1985.Ourauditworkhasbeenundertakensothatwemightstatetothecompany’smembersthosematterswearerequiredtostatetotheminanauditors’reportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthanthecompanyandthecompany’smembersasabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.
Respective responsibilities of directors and auditors
Thedirectors’responsibilitiesforpreparingtheAnnualReportandthefinancialstatementsinaccordancewithapplicablelawandUnitedKingdomAccountingStandards(UnitedKingdomGenerallyAcceptedAccountingPractice)aresetoutintheStatementofDirectors’Responsibilities.OurresponsibilityistoauditthefinancialstatementsinaccordancewithrelevantlegalandregulatoryrequirementsandInternationalStandardsonAuditing(UKandIreland).WereporttoyououropinionastowhetherthefinancialstatementsgiveatrueandfairviewandareproperlypreparedinaccordancewiththeCompaniesAct1985.WealsoreporttoyouwhetherinouropiniontheinformationgivenintheDirectors’Reportisconsistentwiththefinancialstatements.TheinformationgivenintheDirectors’ReportincludesthatspecificinformationpresentedintheChairman’sstatementandChiefExecutive’sstatementthatiscrossreferredfromtheBusinessReviewsectionoftheDirectors’Report.Inadditionwereporttoyouif,inouropinion,thecompanyhasnotkeptproperaccountingrecords,ifwehavenotreceivedalltheinformationandexplanationswerequireforouraudit,orifinformationspecifiedbylawregardingdirectors’remunerationandothertransactionsisnotdisclosed.WereadtheotherinformationcontainedintheAnnualReportasdescribedinthecontentssection,andconsider
whetheritisconsistentwiththeauditedfinancialstatements.Weconsidertheimplicationsforourreportifwebecomeawareofanyapparentmisstatementsormaterialinconsistencieswiththefinancialstatements.OurresponsibilitiesdonotextendtoanyfurtherinformationoutsidetheAnnualReport.
Basis of audit opinion
WeconductedourauditinaccordancewithInternationalStandardsonAuditing(UKandIreland)issuedbytheAuditingPracticesBoard.Anauditincludesexamination,onatestbasis,ofevidencerelevanttotheamountsanddisclosuresinthefinancialstatements.Italsoincludesanassessmentofthesignificantestimatesandjudgmentsmadebythedirectorsinthepreparationofthefinancialstatements,andofwhethertheaccountingpoliciesareappropriatetothegroup’sandcompany’scircumstances,consistentlyappliedandadequatelydisclosed.Weplannedandperformedourauditsoastoobtainalltheinformationandexplanationswhichweconsiderednecessaryinordertoprovideuswithsufficientevidencetogivereasonableassurancethatthefinancialstatementsarefreefrommaterialmisstatement,whethercausedbyfraudorotherirregularityorerror.Informingouropinionwealsoevaluatedtheoveralladequacyofthepresentationofinformationinthefinancialstatements.
Opinion
Inouropinion: • thefinancialstatementsgiveatrueandfairview,in
accordancewithUnitedKingdomGenerallyAcceptedAccountingPractice,ofthestateofthegroup’sandtheparentcompany’saffairsasat31December2006andofthegroup’sprofitfortheyearthenended;
• thefinancialstatementshavebeenproperlypreparedinaccordancewiththeCompaniesAct1985;and
• theinformationgivenintheDirectors’Reportisconsistentwiththefinancialstatements.
Deloitte & Touche LLPCharteredaccountantsandregisteredauditors
Reading23May2007
Independent auditors’ report to the members of Halcrow Holdings Ltd | fortheyearended31December2006
Independentauditors’reporttothemembersofHalcrowHoldingsLimited
Halcrow Holdings Limited | Annualreportandaccounts2006 | �1
Consolidatedprofitandlossaccount
Notes2006 £000
Restated*2005£000
Turnover:groupandshareofjointventuresLessshareofjointventures’turnover
331,416 (1,040)
282,450(1,902)
Group turnover Continuing operations Acquisitions Cost of sales
3
17
330,376 329,175
1,201 (201,497)
280,548280,548
-(175,083)
GrossprofitAdministrativeexpenses
128,879 (117,562)
105,465(92,713)
Operatingprofitbeforeexchange(loss)/gainExchange(loss)/gain
15,694 (4,377)
9,9502,802
Operating profit/(loss) Continuing operations Acquisitions
4
17
11,317 11,450
(133)
12,75212,752
-
Shareofprofit/(loss)ofjointventuresInterestreceivableandsimilarincome Interestpayableandsimilarcharges
56
6 2,071
(1,407)
(8)170
(2,503)
Profit on ordinary activities before taxation Tax on profit on ordinary activities
9
11,987 (4,065)
10,411(4,013)
Profitfortheyearaftertaxation 7,922 6,398
*RestatedfollowingapplicationofFRS20Share-basedpayment(seenote11).
Consolidated profit and loss account | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
ConsolidatedbalancesheetNotes
2006 £000
2005£000
Fixed assets Intangibleassets Goodwill Negativegoodwill Tangibleassets Investmentsinjointventures Shareofgrossassets Shareofgrossliabilities Investmentsinassociatedundertakings Tradeinvestments
12
13
141415
16,550 (7)
16,543 20,461
595
(109) 486 241 166
37,897
19,121-
19,12119,648
1,618(672)
946237166
40,118
Current assets Debtors Cashatbankandinhand
18
132,651 2,691
135,342
109,264
5,870
115,134
Creditors – amounts falling due within one year (includingconvertibledebentures)
19 (109,635) (89,964)
Net current assets 25,707 25,170
Total assets less current liabilities 63,604 65,288
Creditors – amounts falling due after more than one year
20 (11,871) (16,993)
Provisions for liabilities and charges 21 (2,458) (2,143)
Net assets(excludingpensionliability) 49,275 46,152
Net pension liability 33 (65,171) (73,970)
Net liabilities (includingpensionliability) (15,896) (27,818)
Capital and reserves CalledupsharecapitalSharepremiumaccount Profitandlossaccount
222325
18,882
1,788 (36,566)
18,882
1,788(48,488)
Total shareholders’ deficit 26 (15,896) (27,818)
Thefinancialstatementswereapprovedbytheboardofdirectorson23May2007andsignedonitsbehalfby:
P G Gammie A SafferDirector Director
Consolidated balance sheet | asat31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
CompanybalancesheetNotes
2006 £000
2005£000
Fixed assets Investmentsinsubsidiaryundertakings
16
10,208
10,208
Current assets Debtors
18
18,899
19,761
Creditors – amounts falling due within one year (includingconvertibledebentures) 19 (63) (78)
Net current assets 18,836 19,683
Net assets 29,044 29,891
Capital and reserves Called up share capital Sharepremiumaccount Profitandlossaccount
222325
18,882 1,788 8,374
18,8821,7889,221
Total shareholders’ funds 26 29,044 29,891
Thefinancialstatementswereapprovedbytheboardofdirectorson23May2007andsignedonitsbehalfby:
P G Gammie A SafferDirector Director
Company balance sheet | asat31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
ConsolidatedcashflowstatementNotes
2006 £000
2005£000
Net cash inflow from operating activities 27 6,856 7,666
Returns on investment and servicing of finance Interestreceived Interestpaid Interestelementoffinanceleasepayments
Netcashoutflowfromreturnsoninvestmentandservicingoffinance
113
(1,395) (12)
(1,294)
170(1,449)
(2)
(1,281)
Taxation UnitedKingdomcorporationtaxpaid Overseastaxpaid Totaltaxation
(2,091) (1,236)
(3,327)
(2,069)
-
(2,069)
Capital expenditure and financial investment Purchaseoftangiblefixedassets Disposaloftangiblefixedassets Purchaseoffixedassetinvestments
Netcashoutflowforcapitalexpenditureandfinancialinvestment
(5,399)
71 (23)
(5,351)
(6,956)
146(79)
(6,889)
Acquisitions and disposals Subsidiaryundertakingacquired-TransysInternationalConsultants Cashconsiderationincludingexpenses Cashacquired Subsidiaryundertakingacquired-HalcrowWaterServicesLimited Cashconsiderationincludingexpenses Overdraftacquired Subsidiaryundertakingacquired-Yolles Cashconsiderationincludingexpenses Cashacquired Subsidiaryundertakingacquired-PyramidDevelopmentCorporation Cashconsiderationincludingexpenses Cashacquired Subsidiaryundertakingacquired-HanPadronAssociatesLLC Cashconsiderationincludingexpenses CashacquiredDeferredconsiderationpaid-YollesandHanPadron
Netcashoutflowforacquisitionsanddisposals
(331) 7
(100) (8)
- - - - - -
(4,085)
(4,517)
----
(65)-
(81)17
(5,382)
199(1,914)
(7,226)
Dividends paid (832) (618)
Cash outflow before financing (8,465) (10,417)
Financing Newfinanceleases CapitalelementoffinanceleasepaymentsExpensesofloantofinanceacquisitionofHanPadronAssociatesLLCIssueofordinarysharecapital Repaymentofdebentures
Netcash(outflow)/inflowfromfinancing
- (5)
- -
(14)
(19)
22(18)(25)294(14)
259
Decrease in cash in the year 28,29 (8,484) (10,158)
Consolidated cash flow statement | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
Consolidatedstatementoftotalrecognisedgainsandlosses
Notes2006 £000
2005£000
Profitaftertaxation 7,922 6,398
Actuarialgain/(loss)relatingtothepensionscheme 33 6,806 (28,605)
Movementonrelateddeferredtax (2,042) 8,581
Totalrecognisedgainsandlossesrelatingtotheyear 12,686 (13,626)
Prioryearadjustments 11 -
Totalgainsandlossesrecognisedsincelastannualreportandfinancialstatements
12,686
Consolidated statement of total recognised gains and losses | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
Notestothefinancialstatements1 Principal accounting policies
(a) Accounting convention ThefinancialstatementsarepreparedinaccordancewithapplicableUnitedKingdomaccountingstandards.Theparticularaccountingpoliciesadoptedaredescribedbelow.ExceptfortheimplementationofFRS20“Share-basedpayment”(seenote11),theyhaveallbeenappliedconsistentlythroughoutthecurrentandprecedingyear.
(b) Consolidation Theconsolidatedfinancialstatementscomprisethefinancialstatementsofthecompanyandallitssubsidiaryundertakings,jointventuresandassociatedundertakings.Anysubsidiaryundertakingsandjointventuresandassociatessoldoracquiredduringtheyearareincludedupto,orfrom,thedateofsaleoracquisition.
Intra-groupsalesandprofitsareeliminatedfullyonconsolidation.Onacquisitionofabusiness,alloftheassetsandliabilitiesthatexistatthedateofacquisitionarerecordedattheirprovisionalfairvalues,reflectingtheirconditionatthatdate.Allchangestothoseassetsandliabilities,andtheresultinggainsandlosses,thatariseafterthegrouphasgainedcontrolofthebusinessarechargedtothepost-acquisitionprofitandlossaccount.
ThegrouphastakenadvantageoftheexemptionunderFRS8“RelatedPartyDisclosures”nottodisclosetransactionsandbalancesbetweengroupcompanieswhichareeliminatedonconsolidation.
Jointventuresareentitiesinwhichthegroupholdslong-terminterestsandwhicharejointlycontrolledbythegroupandoneormoreotherventuresunderacontractualarrangement.Theresultsofjointventuresareaccountedforusingthegrossequitymethodofaccounting.
Associatedundertakingsareentitiesinwhichthegrouphasaparticipatinginterestandoverwhoseoperatingandfinancialpoliciesitexercisesasignificantinfluence.Theresultsofassociatedundertakingsareaccountedforusingthenetequitymethod.
(c) Turnover Turnoverrepresentsamountsearnedforprofessionalservicesanditemsprocuredforclients,adjusted,wherenecessary,forthestageofcompletiononindividualcontracts.Itexcludesvalueaddedandsimilartaxes.
(d) Recognition of profits Profitoncontractsforthesupplyofprofessionalservicesatpre-determinedratesistakenasandwhentheworkiscarriedout,irrespectiveofthedurationofthecontract.
Profitistakenonfixed-pricecontractswhilethecontractisinprogress,havingregardtotheproportionofthetotalcontractwhichhasbeencompletedatthebalancesheetdate.Provisionismadeforallforeseeablefuturelosses.
(e) Amounts recoverable on contracts Amountsrecoverableoncontractsrepresentturnoverandsupplyofserviceswhichhasnotyetbeeninvoicedtoclients.Suchamountsareseparatelydisclosedwithindebtors.
Thevaluationofamountsrecoverableonfixed-pricecontractsisadjustedtotakeupprofittodateorforeseeablelossesinaccordancewiththeaccountingpolicyforrecognitionofprofits. Costcomprises: • amountsrecoverablevaluedatthecostofsalariesandassociatedpayrollexpensesofemployees engagedonprojects.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
1 Principal accounting policies (continued)
(e) Amounts recoverable on contracts (continued)• unbilledexpensesincurredandequipmentpurchasedforclientsinconnectionwithspecificcontracts.
Whereamountsinvoicedtoclientsexceedthebookvalueofworkdone,theexcessisincludedincreditorsaspaymentsonaccount.
(f) Goodwill Goodwillrepresentsthedifferencebetweenthecostofacquisitionandthefairvalueofidentifiablenetassetsacquired.GoodwillarisingonacquisitionsiscapitalisedinaccordancewithFRS10“GoodwillandIntangibleAssets”.Wheretheseassetsareregardedashavinglimitedusefullives,theyareamortisedonastraightlinebasisovertheselives,whichrangefromfiveto20years.Nogoodwillbalancehaspreviouslybeeneliminatedagainstreservesintheyearofacquisition.
Goodwillwhichisheldinforeigncurrenciesisretranslatedtotheclosingexchangerate.
Negativegoodwillissimilarlyincludedinthebalancesheetandiscreditedtotheprofitandlossaccountintheperiodsinwhichtheacquirednon-monetaryassetsarerecoveredthroughdepreciationorsale.Negativegoodwillinexcessofthefairvaluesofthenon-monetaryassetsacquirediscreditedtotheprofitandlossaccountintheperiodsexpectedtobenefit.
Impairmentprovisionsaredeterminedbycomparingthecarryingvalueoftheassetwithitsrecoverableamount.
(g) Fixed assets Fixedassetsarestatedatcostlessdepreciationandimpairmentprovisions.Impairmentprovisionsaredeterminedbycomparingthecarryingvalueoftheassetwithitsrecoverableamount.Therecoverableamountisthehigheroftheamountthatcanbeobtainedfromsellingtheassetorthevalueofexpecteddiscountedcashflowsarisingfromowningtheasset.
(h) Depreciation of tangible fixed assets Depreciationoftangiblefixedassetsisbyequalannualinstalmentscalculatedtowriteoffthecostlessanyresidualvalueofeachassetoveritsanticipatedusefullife.
Theannualrateofdepreciationappliedtoeachclassoftangiblefixedassetisasfollows: Shortleaseholdproperty PeriodofleaseFreeholdland Nil Freeholdproperty 1% Motorvehicles 25%Furnitureandequipment: Computers 33% Others 20%
(i) Finance costs Interestiswrittenofftotheprofitandlossaccountasincurredbyallsubsidiariesinthegroup.
(j) Investments Fixedassetinvestmentsarestatedatcostlessprovisionforimpairment.Impairmentprovisionsaredeterminedbycomparingthecarryingvalueoftheinvestmentwithitsrecoverableamount.Therecoverableamountisthehigheroftheamountthatcanbeobtainedfromsellingtheinvestmentorthevalueofexpecteddiscountedcashflowsarisingfromowningtheinvestment.
(k) Foreign exchangeTransactionsinforeigncurrenciesareconvertedintosterlingusingtheexchangerateapplicableatthedate
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
1 Principal accounting policies (continued)
(k) Foreign exchange (continued) ofthetransactionor,ifhedgedforward,attherateofexchangeundertherelatedforwardcurrencycontract.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintosterlingatyear-endexchangeratesor,ifappropriate,ataforwardcontractrate.Allexchangedifferencesaredealtwiththroughtheprofitandlossaccount.
Allotherexchangeadjustmentsareincludedintheprofitandlossaccount.Theseincludethosearisingfromthetranslationoftheopeningnetinvestmentinthegroup’sforeignsubsidiaries,asareexchangeadjustmentsarisingonthetranslationofforeigncurrencyborrowingsusedtofundtheacquisitionofforeignsubsidiaries,totheextentthattheycanbematchedwithexchangeadjustmentsintherelevantnetequityinvestment.
(l) Taxation UKcorporationtaxisprovidedatamountsexpectedtobepaid(orrecovered)usingthetaxratesandlawsthathavebeenenactedorsubstantiallyenactedbythebalancesheetdate.
Deferredtaxisprovidedinfullontimingdifferenceswhichresultinanobligationatthebalancesheetdatetopaymoretax,orarighttopaylesstax,atafuturedate,atratesexpectedtoapplywhentheycrystallise,basedoncurrenttaxratesandlaw.Deferredtaxismeasuredonanon-discountedbasis.Timingdifferencesarisefromtheinclusionofitemsinincomeandexpenditureintaxationcomputationsinperiodsdifferentfromthoseinwhichtheyareincludedinfinancialstatements.Deferredtaxassetsarerecognisedtotheextentthatitisregardedasmorelikelythannotthattheywillberecovered.
(m) Pensions Benefitsarefundedbypaymentstoadministeredfunds.
ThemainschemeistheHalcrowPensionScheme,whichprovidesbenefitscalculatedinrelationtofinalsalary.
Fordefinedbenefitschemestheamountschargedtooperatingprofitarethecurrentservicecostsandgainsandlossesonsettlementsandcurtailments.Theyareincludedaspartofstaffcosts.Pastservicecostsarerecognisedimmediatelyintheprofitandlossaccountifthebenefitshavevested.Ifthebenefitshavenotvestedimmediately,thecostsarerecognisedovertheperioduntilvestingoccurs.Theinterestcostandtheexpectedreturnonassetsareshownasanetamountofotherfinancecostsorcreditsadjacenttointerest.Actuarialgainsandlossesarerecognisedimmediatelyinthestatementoftotalrecognisedgainsandlosses.
Definedbenefitschemesarefunded,withtheassetsoftheschemeheldseparatelyfromthoseofthegroup,inseparatetrusteeadministeredfunds.Pensionschemeassetsaremeasuredatfairvalueandliabilitiesaremeasuredonanactuarialbasisusingtheprojectedunitmethodanddiscountedatarateequivalenttothecurrentrateofreturnonahighqualitycorporatebondofequivalentcurrencyandtermtotheschemeliabilities.Theactuarialvaluationsareobtainedatleasttrienniallyandareupdatedateachbalancesheetdate.Theresultingdefinedbenefitassetorliability,netoftherelateddeferredtax,ispresentedseparatelyafterothernetassetsonthefaceofthebalancesheet.
Fordefinedcontributionschemestheamountchargedtotheprofitandlossaccountinrespectofpensioncostsandotherpost-retirementbenefitsisthecontributionspayableintheyear.Differencesbetweencontributionspayableintheyearandcontributionsactuallypaidareshownaseitheraccrualsorprepaymentsinthebalancesheet.
(n) Leases Paymentsunderoperatingleasesarechargedtotheprofitandlossaccountonanaccrualsbasis.Assetsfundedbyfinanceleasesareincludedintangiblefixedassetsattheirprovisionalfairvalue.Theexcessofleasepaymentsovertherecordedleaseobligationsistreatedasafinancechargewhichisamortisedoverthetermofeachleasetogiveaconstantrateofchargeonthebalanceofcapitalrepaymentsoutstandingintheprofitandlossaccountovertheremainingperiodoftheobligations.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
1 Principal accounting policies (continued)
(o) Accounting for derivative financial instruments and hedging activities Derivativesareinitiallyaccountedandmeasuredatprovisionalfairvalueonthedateaderivativecontractisenteredintoandsubsequentlymeasuredatprovisionalfairvalue.Thegainorlossonre-measurementistakentotheprofitandlossaccountexceptwherethederivativeisadesignatedcashflowhedginginstrument.
(p) Changes in accounting policies DuringtheyearthegrouphasimplementedFRS20“Share-basedPayment”andthe2005accountshavebeenrestatedaccordingly.Detailsoftheprioryearadjustmentsareshowninnote11.
2 Profit of parent company
InaccordancewiththeexemptionallowedbyS230oftheCompaniesAct1985,theprofitandlossoftheparenthasnotbeenpresented.Oftheprofitfortheperiodattributabletotheshareholders,alossof£15,000(2005:loss£16,000)hasbeendealtwithintheaccountsoftheparent.Thislossisbeforedividendspaidof£832,000(2005:£616,000).
3 Segmental information
Thedirectorsconsidertheretobeoneclassofbusinessbeingtheprovisionofservicesasinternationalconsultingengineers.Geographicalanalysesofturnover,profitonordinaryactivitiesbeforetaxationandnetassetsaresetoutbelow:
Turnover2006 £000
2005£000
UnitedKingdomEastAsia NorthAmerica CentralandSouthAmerica MiddleEast Europe(excludingUnitedKingdom) SouthAsia Africa Australia
184,398 14,032 32,711 12,417 59,796 14,045
4,776 2,381 5,820
330,376
167,61914,10425,927
9,38339,56913,2013,0242,8064,915
280,548
Geographicalsegmentationofturnoverbydestinationisnotmateriallydifferentfromturnoverbyorigin.
Notes to the financial statements | fortheyearended31December2006
�0 | Halcrow Holdings Limited | Annualreportandaccounts2006
3 Segmental information (continued)
Profit/(loss) on ordinary activities before taxation 2006 £000
Restated2005£000
UnitedKingdomEastAsia NorthAmericaCentralandSouthAmerica MiddleEast Europe(excludingUnitedKingdom) SouthAsia Africa Australia
Netinterestexcludingexchangegain/(loss)onforeigncurrencyborrowings
9,820 (522)
2,454 (224)
(1,426) 206
(134) 604 545
11,323 664
11,987
9,179(306)
94(410)2,193
75117160591
11,693(1,282)
10,411
Net assets/(liabilities) 2006 £000
2005£000
UnitedKingdomEastAsia NorthAmericaCentralandSouthAmerica MiddleEast Europe(excludingUnitedKingdom) SouthAsia Africa Australia
(721) (1,467) (5,726)
178 (6,487)
(402) (632)
(48) (591)
(15,896)
(4,583)(3,221)
(10,069)2,347
(9,329)(644)
(1,094)(471)(754)
(27,818)
4 Operating profit
Operating profit is stated after charging/(crediting): 2006 £000
2005£000
Auditors’remunerationforaudit -group Auditors’remunerationforotherservices -groupDepreciationoftangiblefixedassets -owned -leased
AmortisationofgoodwillBaddebtexpense Profitonsaleoftangiblefixedassets Exchangelosses/(gains) Operatingleases: Plantandmachinery Other
169 338
5,163 36
789 1,940
(6) 4,378
889
4,889
159176
5,17913
1,2351,626
(36)(2,802)
879
4,862
Thegroupauditfeeincludes£10,000(2005:£10,000)inrespectofthecompany.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | �1
4 Operating profit (continued)
Thegroup’sgainsincludedintheprofitandlossaccountinrelationtofinancialinstrumentsheldatfairvalueanalysedbyfinancialinstrumentcategoryareasfollows:
2006 £000
2005£000
ForeignexchangederivativesInterestratederivatives
- 101
101
-97
97
5 Interest receivable and similar income
Interest receivable on: 2006 £000
2005£000
ShorttermbankdepositsNetinterestcreditonpensionschemesExchangegainonforeigncurrencyborrowings
113 859
1,099
2,071
170--
170
6 Interest payable and similar charges
Interest payable on : 2006 £000
2005£000
BankloansandoverdraftspayablewithinfiveyearsBankloansandoverdraftspayablegreaterthanfiveyearsFinanceleases Debentures Netinterestchargeonpensionschemes AllotherloansExchangelossonforeigncurrencyborrowings
796 595
12 4 - - -
1,407
342543
26
52534
1,051
2,503
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
7 Employee information
(a) The average number of persons, including directors, employed by the group during the year was:
2006 Number
2005Number
Professionalandtechnical Administrative
4,020 793
4,813
3,575716
4,291
(b) Staff costs during the year including directors were:2006 £000
2005£000
Wagesandsalaries Socialsecuritycosts Otherpensioncosts
166,867 10,039
9,137
186,043
144,8219,0417,100
160,962
8 Directors’ emoluments
Staff costs include the following emoluments of directors of Halcrow Holdings Limited:
2006 £000
2005£000
Aggregateemoluments Contributionstomoney-purchasepensionarrangement
1,159 16
1,175
1,03616
1,052
RetirementbenefitswereaccruingtoallsixexecutivedirectorsattheyearendundertheHalcrowPensionScheme,adefinedbenefitscheme,inrespectofqualifyingservices.
Aggregate emoluments include amounts paid to: 2006 £000
2005£000
Thehighest-paiddirectorEmoluments
255
225
Thehighest-paiddirectorhadbenefitsundertheHalcrowPensionSchemeasfollows:
2006 £000
2005£000
Accruedannualpensionatendofyear
48 45
Fivedirectorsexercisedshareoptionsduringtheyear(2005:three)
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
9 Tax on profit on ordinary activities
2006 £000
2005£000
UnitedKingdomcorporationtaxat30%Currentyear Adjustmenttoprior-yearprovision
1,509 (201)
2,391(473)
Lessdoubletaxationrelief
1,308 (15)
1,293
1,918(55)
1,863
Overseastaxation Shareofjointventures’taxcredit
Total current tax
974 (5)
2,262
729(5)
2,587Deferredtaxation,originationandreversaloftimingdifferencesDeferredtaxation,pensionliability
74 1,729
(55)1,481
Tax on profit on ordinary activities 4,065 4,013
Thestandardrateoftaxfortheyear,basedontheUKstandardrateofcorporationtax,is30%.Theactualtaxchargeforthecurrentandthepreviousyearvariesfromthestandardrateforthereasonssetoutinthefollowingreconciliation.
2006 £000
Restated2005£000
Profit on ordinary activities before tax
Taxonprofitonordinaryactivitiesatstandardrate Factorsaffectingchargefortheperiod: Expensesnotdeductiblefortaxpurposes PensionprovisionCapitalallowances(greater)/lessthandepreciation Othertimingdifferences Goodwillamortisation ForeigntaxchargedathigherratesthanUKstandardrate Adjustmentstotaxchargeinrespectofpriorperiods
11,987
3,596
262 (1,729)
(72) 116 77
213 (201)
10,411
3,123
3133540
(688)75
162(473)
Total current tax 2,262 2,587
10 Ordinary dividends
2006 £000
2005£000
Interimpaid:11.0p(2005:10.0p)perordinaryshare Finalpaid:11.3p(2005:10.0p)perordinaryshare
393 439
832
284332
616
TheHalcrowTrustwaiveditsrightstodividendspayableonitsholdingsofbothordinaryandpreferencesharesinrespectofboththeyearended31December2006andtheyearended31December2005.
Thedirectorsrecommendafinaldividendpaymentof10.0p(2005:11.3p)perordinarysharepayabletothosemembersontheregisteratthecloseofbusinesson28June2007.This,togetherwiththeinterimdividendpaidinJanuary2007of12.25p(2005:11.0p)perordinaryshare,givesatotaldividendfortheyearof22.25pcomparedwith22.3pfortheyearended31December2005.
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
11 Changes to accounting policies
FRS20“Share-basedPayment”hasbeenadoptedinthecurrentyear.The2005comparativeshavebeenrestatedandtheeffectonthe2005resultswastoincreaseadministrativeexpensesby£51,000.Thecumulativeadjustmenttotheprofitandlossreservewasachargeof£83,000withacorrespondingcreditentrydirecttoreservesandaccordinglytherewasthereforenooveralleffectonshareholders’funds.
In2006theadoptionofFRS20hasresultedinanincreaseinadministrativeexpensesof£68,000.
12 Intangible assets – goodwill
Group Goodwill
£000Negativegoodwill
£000
Cost At1January2006 Exchangemovements Acquisitions(seenote17)
24,779(2,104)
587
--
(375)
At31December2006 23,262 (375)
Amortisation At1January2006 Exchangemovements Charge/(credit)fortheyear
5,658(103)1,157
--
(368)
At31December2006 6,712 (368)
Net book value At31December2006 16,550 (7)
At31December2005 19,121 -
The goodwill arises on the purchase of: TransysInternationalConsultantsLimited Han-PadronAssociatesLLC PyramidDevelopmentInternationalCorpLimited YollesPartnershipIncorporated YollesPartnershipLimited HalcrowFoxandAssociatesLimited TransportationSystemsandMarketResearchLimited CrouchHoggWatermanLimited HalcrowPacificPtyLimited MechanicalandElectricalDesignAssociates ThewaterengineeringdesignandsurveybusinessofSouthernWaterplc CertainassetsofTMETorpyLimited,TMENorthernLimitedandTMEEngineersLimited
Goodwillisbeingamortisedonastraight-linebasisoverperiodsofbetweenfiveand20years.Thesearetheperiodsoverwhichthedirectorsestimatethatthevaluesoftheunderlyingbusinessesacquiredareexpectedtoexceedthevalueoftheunderlyingassets.
Thenegativegoodwillarisesonthepurchaseof:HalcrowWaterServicesLimited
Theremainingnegativegoodwillisbeingamortisedoverthreeyears.
Company Thecompanyhasnointangibleassets.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
13 Tangible fixed assets
Group
Land
Freehold£000
andbuildings
Shortlease£000
Motor
vehicles£000
Furnitureand
equipment£000
Total £000
Cost At1January2006 Additions Acquisitionofsubsidiaryundertaking Disposals
8,208---
3,759
670-
(93)
611139
10(93)
31,4105,123
867(3,457)
43,988
5,932 877
(3,643)
At 31 December 2006 8,208 4,336 667 33,943 47,154
Depreciation At1January2006 Acquisitionofsubsidiaryundertaking Chargefortheyear Disposals
1,044
-163
-
2,126
-439(74)
490
335
(65)
20,680
7294,562
(3,439)
24,340
732 5,199
(3,578)
At 31 December 2006 1,207 2,491 463 22,532 26,693
Net book value At 31 December 2006
7,001
1,845
204
11,411
20,461
At 31 December 2005 7,164 1,633 121 10,730 19,648
Tangiblefixedassetsshownaboveincludefixedassetsheldunderfinanceleasesasfollows:
Net book value at end of year 2006 £000
2005£000
Furnitureandequipment 599 -
Depreciation charge for the year 2006 £000
2005£000
Furnitureandequipment 36 13
Freehold property Thegroup’sfreeholdpropertyatBurderopPark,Swindon,Wiltshire,isincludedinthebalancesheetatitspurchasepriceplusthecostofadditions.ItspurchasepricewasequaltoavaluationbyKemp&Hawley,charteredsurveyors,onanopen-marketbasisasat30April1990.ThelatestvaluationcarriedoutbyStrutt&Parkerasat31December2004gaveavalueof£6,250,000.
Company Thecompanyhasnotangiblefixedassets.
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
14 Investments in joint ventures and associated undertakings
Group £000
Joint ventures Cost plus share of retained profit At1January2006 Additions Disposal Shareofretainedprofitsintheyear
946 23
(487) 4
At �1 December �00� 486
On31July2006thegrouppurchasedtheremaining51percentoftheissuedsharecapitalofHalcrowWaterServicesLimitedforaconsiderationof£100,000andtheentitybecameasubsidiarycompany.Theentitywastransferredfromjointventurestosubsidiaryundertakings(seenote17).
Associated undertakings £000
Cost plus share of retained profit At1January2006 Shareofretainedprofitsintheyear
237
4
At �1 December �00� 241
15 Trade investments
Group £000
Cost At1Januaryand31December2006
166
Noneoftheinvestmentsincludedintheaboveamountsislistedonarecognisedinvestmentexchange.Thedirectorsconsiderthemarketvalueofthetradeinvestmentsat31December2006tobenotlessthantheircarryingvalue.
16 Investments in subsidiary undertakings
Company Shares in subsidiary undertakings £000
Cost At1Januaryand31December2006
11,327
Provisions At1Januaryand31December2006
1,119
Net book value At31December2006
10,208
At31December2005 10,208
Noneoftheinvestmentsincludedintheaboveamountsislistedonarecognisedinvestmentexchange.Theprincipalsubsidiaryundertakingsarelistedinnote36ofthefinancialstatements.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
17 Acquisition of business
On31January2006thegrouppurchased100%ofthesharecapitalofTransysInternationalConsultantsLimited,aconsultancybasedinCanada,foraconsiderationofCA$1,210,637,includingadeferredpaymentofCA$497,250andacquisitioncostsofCA$65,857.
Theprovisionalfairvalueofthenetassetsacquiredwasasfollows:
£000
TangiblefixedassetsCurrentassets Cash Currentliabilities
Net assets acquired
24 104
7 (17)
118
Consideration Cashpaid Deferredpayment Interestondeferredpayment Acquisitioncosts
299 244
20 32
595
Goodwill capitalised (note12) 477
Theprovisionalassessmentofgoodwillarisingontheacquisitionisbeingamortisedover20years,asthisistheperiodoverwhichthedirectorsestimatethattheunderlyingbusinessacquiredisexpectedtoexceedthevalueoftheunderlyingassets.Achargehasbeenmadetotheprofitandlossaccountof£20,000for2006.
Therewasnodifferencebetweentheprovisionalfairvalueandnetbookvaluesoftheassetsandliabilitiesacquired.
AsummarisedprofitandlossaccountofTransysInternationalConsultantsLimitedfortheyearended31January2006isshownbelow:
£000
Turnover Expenses
Otherincome
Profitbeforetaxation Taxation
453 (377)
76 4
80 (14)
Retained profit for the period 66
Profitaftertaxfortheyearended31January2005was£60,000
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
17 Acquisition of business (continued)
On31July2006thegrouppurchasedtheremaining51%oftheissuedsharecapitalofHalcrowWaterServicesLimitedforaconsiderationof£100,000.
Theprovsionalfairvalueofthenetassetsacquiredwasasfollows:
£000
TangiblefixedassetsCurrentassets BankOverdraft Currentliabilities
Net assets acquired
Consideration:Cashpaid
NetassetsacquiredlessconsiderationTransferfromjointventures(note14)
Negative goodwill capitalised(note12)
121 1,575
(8) (726)
962
100
(862) 487
(375)
Negativegoodwillfornon-monetaryassetswillbecreditedtotheprofitandlossaccountovertheperiodinwhichthoseassetswillbedepreciated.Thisperiodisthreeyears.Negativegoodwillformonetaryassetshasbeencreditedtotheprofitandlossaccountin2006.
Therewasnodifferencebetweentheprovisionalfairvalueandnetbookvaluesoftheassetsandliabilitiesacquired.
Asummarisedprofitandlossaccountforthe4monthsto31July2006isshownbelow:
£000
Turnover Costofsales
Grossprofit AdministrativeexpensesNetinterestreceivable
Retained loss for the period
1,217 (836)
381 (445)
1
(63)
ThegoodwillrelatingtotheacquisitionoftheYollesgroupwasadjustedin2006asfollows:
£000
Goodwill capitalised as at 1 January 2006 Additional interest on deferred consideration accrued in 2006
Goodwill capitalised as at �1 December �00�
9,830 67
9,897
ThegoodwillrelatingtotheacquisitionofHan-PadronAssociatesLLPwasadjustedin2006asfollows:
£000
Goodwill capitalised as at 1 January 2006 Adjustment to work in progress acquired
Goodwill capitalised as at �1 December �00�
6,455 43
6,498
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
18 Debtors
Group Company
Amounts falling due within one year 2006 £000
2005£000
2006 £000
2005£000
Tradedebtors Amountsrecoverableoncontracts AmountsowedbysubsidiaryundertakingsOtherdebtors Prepaymentsandaccruedincome
75,769 45,497
- 6,127 4,811
132,204
60,43041,104
-3,4833,726
108,743
- -
18,891 8 -
18,899
--
19,7538-
19,761
Amounts falling due in more than one year
Deferredtaxation: Depreciationinexcessofcapitalallowances 447 521 - -
132,651 109,264 18,899 19,761
Deferred taxation Themovementinthetotaldeferredtaxassetduringtheyearreconcilesasfollows:
£000
Balanceat1January2006Chargetoprofitandlossaccount
Balance at �1 December �00�
521 (74)
447
Adeferredtaxassethasnotbeenrecognisedinrespectoftimingdifferencesrelatingtotaxlossesasthereisinsufficientevidencethatthelosseswillbeutilisedintheforeseeablefuture.Theamountoftheassetnotrecognisedis£1,600,000(2005:£1,200,000).Theassetwouldberecoveredifsufficientfuturetaxableprofitsaremadeintheappropriatejuristications.
19 Creditors – amounts falling due within one year
Group Company
2006 £000
2005£000
2006 £000
2005£000
Bankloansandoverdrafts–securedPaymentsonaccount Tradecreditors Obligationsunderfinanceleases AmountsowedtoassociatedundertakingsUnitedKingdomcorporationtax Othertaxationandsocialsecurity Debentures–unsecured Deferredconsideration Othercreditors Accrualsanddeferredincome
11,331 50,159 11,127
145 184 971
8,076 62
2,778 13,530 11,272
109,635
6,02640,108
9,12522
192805
6,94976
3,24013,910
9,511
89,964
- - - - - - -
62 - 1 -
63
-------
76-2-
78
Bankloansandoverdraftsaresecuredbyfixedandfloatingchargesoverthegroup’sassets.
Notes to the financial statements | fortheyearended31December2006
�0 | Halcrow Holdings Limited | Annualreportandaccounts2006
19 Creditors – amounts falling due within one year (continued)
Debentures ThedebentureswereissuedtothevendorsofCrouchHoggWatermanLimitedaspartofthepurchaseconsideration.Theybearinterestat7%perannumandarerepayableinhalf-yearlyinstalmentstoeachholderafterheceasestobeemployedbythegroup.
£16,506ofthedebenturesmaybeconvertedtoordinarysharesattheoptionoftheholdersatanytime.Thepriceofanordinarysharetobeusedasthebasisforcalculatingthenumberofordinarysharestobeallottedwillbeequaltonetassetspersharecalculatedfromthefigureforshareholders’fundsdisclosedinthecompany’sfinancialstatementsatthedateofconversion.
Groupandcompany
The movements on debentures were as follows2006 £000
2005 £000
BalanceatbeginningoftheyearRedemptions
Balance at end of the year
76 (14)
62
90 (14)
76
20 Creditors – amounts falling due after more than one year
Group Company
2006 £000
2005£000
2006 £000
2005£000
Bank loans Repayablebetweentwoandfiveyears RepayableaftermorethanfiveyearsObligationsunderfinanceleases DeferredconsiderationAccrualsanddeferredincome
9,789 -
405 1,611
66
11,871
6,5004,388
-6,057
48
16,993
- - - - -
-
-----
-
Bank loansThebankloansarerepayableunderfixedinstalments.Interestischargedat1.25%abovebaserateandtheloansaresecuredbyfixedandfloatingchargesoverthegroup’sassets.
Obligations under finance leasesAmountsshownaboveasobligationsunderfinanceleasesfallingdueaftermorethanoneyearareduebetweenthesecondandfifthyearsinclusiveandaresecuredontherelatedleasedassets.
Maturity of financial liabilities
Group Company
2006 £000
2005£000
2006 £000
2005£000
Lessthanoneyear Betweentwoandfiveyears Morethanfiveyears
11,476 10,194
-
21,670
6,0486,5004,388
16,936
- - -
-
---
-
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | �1
21 Provisions for liabilities and charges
Group At 1 January 2006
£000
Charged/(credited)toprofitandloss
£000Paid in year
£000
At31December2006£000
PropertydilapidationExcessesoninsuredclaims Contractlosses
1,350 765 28
449(122)
25
(37) - -
1,762643
53
2,143 352 (37) 2,458
Details of group provisions are as follows:
Property dilapidation Provisionismadefortheexpectedamountofpaymentstobemadetolandlordsofpropertiesleasedbythegroupattheirtermination.Therelevantleasesexpirebetween2007and2015.
Excesses on insured claims Whenclaimshavebeenmadeagainstthegroup,provisionismadefortheamountthatfallswithintheexcessofthegroup’sprofessionalindemnityinsurancepolicy.Theprovisionwillbeutilisedovertheperiodoftherelatedclaim.
Contract losses ProvisionismadeinaccordancewithSSAP9forcontractswhoseexpectedcontributiondoesnotincludeareasonableallocationofoverheads.Theprovisionwillbeutilisedovertheperiodoftherelatedcontracts.
Company Thecompanyhasnoprovisions.
22 Share capital
Group and company 2006 £000
2005£000
Authorised 25,000,000ordinarysharesof£1each 10,000non-redeemablepreferencesharesof£1each
25,000 10
25,010
25,00010
25,010
Allotted and fully paid2006 £000
2005£000
18,872,013(2005:18,872,013)ordinarysharesof£1each 10,000non-redeemablepreferencesharesof£1each
18,872 10
18,882
18,87210
18,882
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
22 Share capital (continued)
Thepreferencesharesof£1eacharenon-redeemable.Theholdershavenovotingrightsbuthavetheright,asaclass,toappointtwodirectors.Theyhaveanon-cumulativerighttoreceiveadividendof1ppersharepriortoanydistributiontoholdersoftheordinaryshares.Intheeventofawindingup,theyhavetherighttoareturnofassetstothevalueof£1persharebeforeanypaymenttotheholdersofordinaryshares.
23 Share premium account
Group and company 2006 £000
2005£000
AtthebeginningoftheyearOnsharesissuedduringtheyear
Attheendoftheyear
1,788 -
1,788
1,69791
1,788
24 Options
Optionsinrespectof2,030,551ordinarysharesof£1eachwereoutstandingat31December2006(2005:2,435,462)underthegroup’ssavings-relatedshareoptionscheme.Thesemaybeexercisedasfollows:
Optionprice Exercisable2006
Number2005
Number
177p189p189p195p195p195p205p205p205p220p220p220p
200620052007200620082010
200720092011200820102012
20,966 -
457,817 29,399
386,165 190,228 146,290 253,413 115,170 142,188 193,705
95,210
2,030,551
146,36117,385
486,578153,141425,951196,765159,998270,014117,960157,131208,19195,987
2,435,462
Insomecircumstances,includingtheredundancyordeathoftheholder,optionsmaybeexercisedatearlierdatesthanthoseshownabove.
Theweightedaveragesharepriceduringtheyearwas238.6p.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
24 Options (continued)
Theweightedaveragelifeoftheoptionsoutstandingat31December2006was887days.
Nooptionsweregrantedduring2006andthegroup’sshare-basedpaymentschargefor2006is£68,000.InadoptingFRS20“Share-basedpayment”,aprioryearadjustmentof£83,000hasbeenmaderepresentingthefairvalueofoptionsawardedintheperiod7November2002to31December2005(seenote11).Thefairvaluesweredeterminedusingavaluationmodelwhichincludedthefollowingsignificantinputs:
Risk-freeinterestrate 5% Dividendyield 10%Expectedsharepricevolatility 26%
ThesharepricevolatilityisbasedonsimilarUKbusinessesoperatinginsimilarsectors.
25 Profit and loss account
Group Company
2006£000
2006£000
Atthebeginningoftheyear Retainedprofit/(loss)fortheyear Ordinarydividends Actuarialgainonpensionscheme(netofdeferredtaxation)Sharebasedpayments
(48,488)7,922(832)4,764
68
9,221(15)
(832)--
At the end of the year (36,566) 8,374
26 Total shareholders’ funds
Group Company
2006£000
Restated2005£000
2006£000
2005£000
Atthebeginningoftheyear Profit/(loss)fortheyearaftertaxationOrdinarydividends AllotmentofordinarysharesActuarialgain/(loss)onpensionschemenetofdeferredtaxationSharebasedpayments
(27,818)7,922(832)
-
4,76468
(13,921)6,398(616)294
(20,024)
51
29,891(15)
(832)---
30,229(16)
(616)294
--
At the end of the year (15,896) (27,818) 29,044 29,891
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
27 Net cash inflow from operating activities
2006 £000
Restated2005£000
Operatingprofit Depreciationoftangiblefixedassets Amortisationofgoodwill Profitonsaleoftangiblefixedassets Increaseindebtors Increaseincreditors Increaseinprovisions Adjustmentforpensionfunding AdjustmentforforeignexchangedifferencesAdjustmentforsharebasedpayments
11,317 5,199
789 (6)
(21,825) 15,057
315 (4,905)
847 68
6,856
12,7525,1921,235
(36)(15,719)
9,952223
(4,933)(1,051)
51
7,666
28 Reconciliation of cashflow to movement in net debt
2006 £000
2005£000
Decreaseincashintheyear ExpensesofloantofinanceacquisitionofHanPadronAssociatesLLCCapitalelementoffinanceleasepayments Repaymentofdebentureloans
Movementinnetdebtresultingfromcashflows NewfinanceleasesExchangemovementonlong-termloans
Net(debt)/fundsatthebeginningoftheyear
Netdebtattheendoftheyear
(8,484) - 5
14
(8,465) (533) 1,099
(7,899) (11,142)
(19,041)
(10,158)251814
(10,101)(22)
(1,051)
(11,174)32
(11,142)
29 Analysis of net debt
2005£000 Cashflow
Othernon-cashchanges
2006 £000
Cash at bank and in hand Bank loans and overdrafts Amountsfallingduewithinoneyear
Bank loans and overdrafts Amountsfallingdueafteroneyear
5,870
(6,026)
(156)
(10,888)
(3,179)
(5,305)
(8,484)-
--
-
1,099
2,691
(11,331)
(8,640)
(9,789)
Obligations under finance leases Amountsfallingduewithinoneyear Amountsfallingdueaftermorethanoneyear
(22)-
5-
(128)(405)
(145) (405)
Debentures Amountsfallingduewithinoneyear (76) 14 - (62)
(11,142) (8,465) 566 (19,041)
Thenon-cashmovementresultsfromtheretranslationofloansdenominatedinforeigncurrenciesatclosingexchangerateandnewfinanceleasesintheyear.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
30 Capital commitments
Group Company
2006 £000
2005£000
2006 £000
2005£000
Contractedbutnotprovidedforinthefinancialstatements
124
178
-
-
31 Contingent liabilities
Group Company
2006 £000
2005£000
2006 £000
2005£000
Performanceandadvancepaymentbondsprovidedbybanks
Borrowingsofsubsidiaryundertakingsforwhichguaranteeshavebeengiven
9,852
-
9,852
12,932
-
12,932
-
4,396
4,396
-
4,396
4,396
Wherecontractvaluesaredenominatedinforeigncurrencies,thegroupinsomecasesentersintoforwardexchangecontractstoprotectthesterlingvalueofitsfutureearnings.
Thecompanyhasalsoprovidedguaranteesonbehalfofsubsidiaryundertakingsinrespectofpropertyleasesenteredintointheordinarycourseofbusinessandhasagreedtocontinuetosupportcertainofitssubsidiaryundertakings.
32 Lease commitments
At31December2006thegroupwascommittedtomakingthefollowingpaymentsduringthenextyearinrespectofoperatingleases:
Group
Land and buildings 2006 £000
2005£000
Leases which expire Withinoneyear Insecondtofifthyears Aftermorethanfiveyears
278
1,864 2,827
4,969
171 740
3,689
4,600
Other
Leases which expire Withinoneyear Insecondtofifthyears Aftermorethanfiveyears
83 962
-
1,045
82
627 1
710
Thecompanyhadnooperatingleasecommitments.
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
33 Pension commitments
Thegroupoperatesvariouspensionschemesforeligibleemployees.Theassetsofallschemesareheldseparatelyfromthoseofthegroupandareinvestedbyindependentinvestmentmanagers.
ThemainschemeistheHalcrowPensionSchemewhichprovidesbenefitscalculatedinrelationtofinalpensionablesalary.ThegroupalsosponsorsthePension&LifeAssurancePlanofHalcrowFox&AssociatesLimitedandcontributestotheHalcrowRailsectionoftheRailwaysPensionsScheme,bothofwhicharealsodefinedbenefitarrangements.Contributionsarepaidtotheschemesasagreedwiththetrusteesofthoseschemes.Alldefinedbenefitschemesareclosedtonewmembers.
Overtheyearto31December2006,contributionsbythegroupof£9,705,000weremadetothemainscheme(2005:£9,133,000).Thegroupiscurrentlypayingcontributionstothemainschemesothattotalcontributionspayablebyboththemembersandtheemployerare36.5percentofpensionablesalaries.Aformalactuarialvaluationiscurrentlyinprogress,andthegrouphasbeendiscussingfuturecontributionswiththescheme’strustees.Atthisstagediscussionsremainongoing.Contributionsof£641,000(2005:£581,000)weremadetotheHalcrowFoxscheme.Contributionsof£480,000(2005:£500,000)weremadetotheRailwayScheme.Furthercontributionsweremadetoothersmallerarrangements.
Thegroupcontributed£2,463,000(2005:£1,970,000)totheHalcrowMoneyPurchasePlan,whichisadefinedcontributionarrangement.
ThefollowingtablesetsoutthekeyFRS17assumptionsusedfortheschemes.Thetablesbelowalsosetout,asat31December2004,31December2005and31December2006,thefairvalueofassets,abreakdownoftheassetsintothemainassetclasses,thepresentvalueofFRS17liabilitiesandthedeficit/surplusofassetsbelow/abovetheFRS17liabilites.
Assumptions
2006 2005 2004
PriceinflationDiscountrate Pensionincreases(fixed) Pensionincreases(5%limitedpriceindexation)Salarygrowth(onaverage)
3.00%pa5.15%pa5.00%pa3.00%pa4.00%pa
2.70%pa4.85%pa5.00%pa2.70%pa3.70%pa
2.60%pa5.50%pa5.00%pa2.50%pa3.60%pa
Onthebasisoftheassumptionsusedforlifeexpectancy,amalepensionercurrentlyaged60wouldbeexpectedtoliveforafurther23.5years(2005:23.4years).Allowanceismadeforfutureimprovementsinlifeexpectancy,soapensionerreachingtheageof60in2026wouldbeexpectedtoliveforafurther24.8years.
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
33 Pension commitments (continued)
Asset distribution and expected return
�1 December �00�
Expectedreturn
Fairvalue(schemesindeficit)
£000
Fairvalue(scheme
insurplus)£000
Total£000
ComponentsEquities Bonds Property Other
8.0%pa5.1%pa6.3%pa5.2%pa
210,71170,97818,400
2,401
29,5005,8003,900
-
240,21176,77822,300
2,401
Balance sheetTotalfairvalueofassets Presentvalueofliabilities
302,490(396,391)
39,200(38,400)
341,690(434,791)
(Deficit)/surplusintheschemesRelateddeferredtax
(93,901)28,170
800(240)
(93,101)27,930
Net pension (liabilities)/assets (65,731) 560 (65,171)
�1 December �00�
Expectedreturn
Fairvalue(schemesindeficit)
£000
ComponentsEquities Bonds Property Other
7.8%p.a.4.2%p.a.6.0%p.a.4.2%p.a.
218,01469,97319,4001,582
Balance sheetTotalfairvalueofassets Presentvalueofliabilities
308,969(414,640)
Deficitintheschemes Relateddeferredtax
(105,671)31,701
Net pension liabilities (73,970)
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
33 Pension commitments (continued)
�1 December �00�
Expectedreturn
Fairvalue(schemesindeficit)
£000
ComponentsEquities Bonds Property Other
8.0%p.a.4.7%p.a.6.3%p.a.4.7%p.a.
171,55752,55416,90014,300
Balance sheetTotalfairvalueofassets Presentvalueofliabilities
255,311(337,310)
Deficitintheschemes Relateddeferredtax
(81,999)24,600
Net pension liabilities (57,399)
UnderFRS17,theschemesarerepresentedonthebalancesheetasnetpensionliabilitiesof£65,171,000(2005:£73,690,000).
Thepost-retirementdeficitunderFRS17movedovertheperiodasfollows:
2006 £000
2005£000
Post-retirementdeficitatthebeginningoftheyear Currentservicecost
(105,671) (8,543)
(81,999)(7,368)
ContributionsincludingthoseofemployeesOthernetfinancecosts Actuarialgain/(loss)
13,448 859
6,806
12,826(525)
(28,605)
Post-retirement deficit at the end of the year (93,101) (105,671)
ThefollowingamountshavebeenincludedwithinoperatingprofitunderFRS17:
2006 £000
2005£000
Currentservicecost Employeecontributions
Total operating charge
8,543 (2,400)
6,143
7,368(2,545)
4,823
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
33 Pension commitments (continued)
Thefollowingamountshavebeenincludedasnetfinanceincome/(costs)underFRS17:
2006 £000
2005£000
ExpectedreturnonpensionschemeassetsInterestonpost-retirementliabilities
Net return to credit/(charge)to finance income/(costs)
20,317 (19,458)
859
17,198(17,723)
(525)
Thefollowingamountshavebeenrecognisedwithinthestatementoftotalrecognisedgainsandlosses(STRGL)underFRS17:
2006 £000
2005£000
DifferencebetweentheexpectedandactualreturnonschemeassetsExperiencegainsandlossesarisingonschemeliabilitiesLossduetochangesinassumptionsunderlyingthevalueofschemeliabilities
Actuarial gain/(loss) recognised in the STRGL
8,668 (1,090)
(772)
6,806
32,793(1,432)
(59,966)
(28,605)
Thehistoryofexperiencegainsandlossesis:
2006 £000
2005£000
2004£000
2003£000
2002£000
Actualreturnlessexpectedreturnonschemeassets
Percentageofschemeassets
Experiencegains(andlosses)arisingonschemes’liabilities
Percentageofthevalueoftheschemes’liabilities
TotalamountrecognisedintheSTRGL
Percentageofthevalueoftheschemes’liabilities
8,668
2.54%
(1,090)
(0.25%)
6,806
10.44%
32,793
10.61%
(1,432)
(0.35%)
(28,605)
(6.90%)
7,110
2.78%
200
0.06%
(13,553)
(4.02%)
15,467
6.82%
4,810
1.60%
421
0.14%
(44,323)
(22.65%)
(5,984)
(2.22%)
(50,307)
(18.64%)
TheabovepercentagesshowtheSTRGLcomponentsasapercentageoftheend-of-yearschemes’assetorliabilityvalue,asappropriate.
Alldefinedbenefitschemesareclosedtonewentrantsand,underthemethodusedtocalculatepensioncostsinaccordancewithFRS17,thecostasapercentageofcoveredpensionablepayroll,beforedeductionofemployeecontributions,willtendtoincreaseastheaverageageofthemembershipincreases.
Notes to the financial statements | fortheyearended31December2006
�0 | Halcrow Holdings Limited | Annualreportandaccounts2006
33 Pension commitments (continued)
TheeffectofretirementbenefitsonoperatingprofitcalculatedinaccordancewithFRS17isincludedinthefinancialstatementsasfollows:
2006 £000
2005£000
Fundeddefined-benefitschemes
Definedcontributionschemes
Chargepernote7b
6,107
3,030
9,137
5,130
1,970
7,100
34 Assets pledged
Thegrouphasgrantedfixedandfloatingchargesoverallitsassetsassecurityforbankingfacilities.
35 Related party transactions
Joint venturesInthecourseofitsnormaloperations,thegrouphascontractedonanarm’s-lengthbasiswithHalcrowWaterServicesLimited,whichwasajointventureuntil31July2006,whentheremaining51%oftheshareswerepurchasedandthecompanybecameasubsidiaryundertaking.Thetransactionswhichhavenotbeendisclosedelsewhereinthefinancialstatementsareshownbelow:
2006 £000
2005£000
SalesPurchases
121 1,026
2221,661
Therewerenotransactionswith,oramountsduetoorby,VitukiConsultRtorHalcrow(Shanghai)EngineeringConsultingCorporationLimitedat31December2006(2005:nil).
Associated undertakings TherewerenosignificanttransactionswithDavyBritishRailInternationalLimitedduringtheyear.Therewasaninterest-freeloanof£184,000owedtoDavyBritishRailInternationalLimitedat31December2006(2005:£184,000).
The Halcrow Trust Anamountof£3,195,000wasowedbythegrouptotheHalcrowTrustat31December2006(2005:£1,075,000).
Notes to the financial statements | fortheyearended31December2006
Halcrow Holdings Limited | Annualreportandaccounts2006 | �1
36 Principal subsidiary and associated undertakings and joint ventures
Subsidiary undertakings Percentage owned
HalcrowGroupLimited*HalcrowCanadaInc* HalcrowConsultingLimited HalcrowAsiaPartnershipLimited* HalcrowAsiaLimited* HalcrowChinaLimited* HalcrowInternationalLimited* HalcrowInternationalPartnership* HalcrowGroupIrelandLimited* HalcrowManagementSciencesLimited* HalcrowPacificPtyLimited* HalcrowRuralManagementLimited* HPAInc* SirWilliamHalcrow&PartnersInc* SirWilliamHalcrow&Partners(Malaysia)Limited* YollesPartnershipInc* YollesPartnershipLimited* BurderopInvestmentsLimitedHalcrowWaterServicesLimited*
Joint ventures
VitukiConsultRt* Halcrow(Shanghai)EngineeringConsultingCorporationLimited* HalcrowBarryLimited*
Associated undertakings DavyBritishRailInternationalLimited* HalcrowULGLimited* Allholdingsareofordinaryshares.*Indicatesthatthesharesareheldbyanintermediateholdingcompany.
100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%100%
Percentage owned
33%50%50%
40%50%
All these undertakings are registered in England except:
HalcrowPacificPtyLimited HalcrowChinaLimited SirWilliamHalcrow&PartnersInc HalcrowCanadaInc HPAInc YollesPartnershipInc VitukiConsultRt PyramidDevelopmentInternationalCorporationLimited Halcrow(Shanghai)EngineeringConsultingCorporationLimitedHalcrowGroupIrelandLimitedHalcrowBarryLimited
Country of registration
AustraliaHongKong
USACanada
USACanada
HungaryThailand
ChinaRepublicofIrelandRepublicofIreland
Notes to the financial statements | fortheyearended31December2006
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
36 Principal subsidiary and associated undertakings and joint ventures (continued)
TheprincipalcountryofoperationofalltheseundertakingsisGreatBritainexceptthefollowingundertakingswhichoperateintheareasindicated:
HalcrowAsiaPartnershipLimitedHalcrowAsiaLimitedHalcrowInternationalPartnershipHalcrowGroupIrelandLimitedHalcrowBarryLimitedHalcrowPacificPtyLimitedHalcrowRuralManagementLimited SirWilliamHalcrow&PartnersIncHPAIncSirWilliamHalcrow&Partners(Malaysia)LimitedHalcrowChinaLimitedVitukiConsultRtHalcrowULGLimitedPyramidDevelopmentInternationalCorporationLimitedHalcrow(Shanghai)EngineeringConsultingCorporationLimited
EastAsiaEastAsia
MiddleEastRepublicofIrelendRepublicofIrelend
AustraliaWorldwide
USAUSA
EastAsiaEastAsia
EasternEuropeEastAsiaEastAsiaEastAsia
Theprincipalactivityofalltheaboveundertakingsisthesupplyofservicesasconsultingengineers,exceptforBurderopInvestmentsLimitedwhoseprincipalactivityispropertyinvestment.
Registered office VineyardHouse44BrookGreenHammersmithLondonW67BYtel+44(0)2076027282fax+44(0)[email protected]
Share registrar CapitaRegistrarsNorthernHouseWoodsomeParkFenayBridgeHuddersfieldHD80LAtel08701623131www.capitaregistrars.com
Worldwide
Argentina Buenos AiresSergioSourtel+541143114911fax+541143125819emailhalcrowba@halcrow.com
AustraliaMelbourneBillAustintel+61398999777fax+61398991214emailaustinmw@[email protected]
SydneyChrisAdamstel+61292509900fax+61292412228emailadamscg@halcrow.com.au
BahrainDavidAldistel+97317877829fax+97317877849emailaldisdg@[email protected]
BangladeshDhakaGhulamMustafatel+88028821877or9882625fax+88028823663emailhalcrow@halcrowbd.com
BelizeBelmopan CityIanCoopertel+5018221362fax+5018222001emailcooperi@halcrow.com
BrazilRio de JaneiroAugustoGuimaraestel+552122402700fax+552122402700ext201emailhalcrowbrasil@halcrow.com
CanadaTorontoCathySparktel+14163638123fax+14163630341emailcathy.spark@halcrowyolles.com
VancouverJimChimtel+16042932882ext111fax+16042932892emailjim.chim@halcrow.com
ChileSantiagoAlejandroLabbetel+5626585094fax+5626585095emaillabbeaa@halcrow.com
ChinaBeijingCathyHutel+861082888540fax+861082888541emailhucq@halcrow.com
Hong Kong [email protected]
Shanghai Dr.VictorCheungtel+862163190808fax+862163190809emailcheungvw@halcrow.com
ShenzhenDr.VictorCheungtel+8675582979070fax+8675583382696emailcheungvw@halcrow.com
HungaryBudapestJánosFehé[email protected]
IndiaNew DelhiPradeepJaintel+911146501500fax+911146501599emailhcil@halcrow.com
IrelandDublinSamMcCurdytel+35314033600fax+35314594357emailmccurdys@halcrow.com
LatviaRigaValdisVitolinstel+3717320234fax+3717320235emailhb@halcrow.com
LibyaTripoliGiumaBenMahmoudtel+218214441322fax+218213332172emailhalcrow@lttnet.net
MalaysiaKuala LumpurNorzalinaSulaimantel+60362015402fax+60362014406emailhalcrowkl@halcrow.com
NepalKathmanduMadanShresthatel+97714350509fax+97714350509emailnepal@halcrow.wlink.com.np
PakistanIslamabadAbbasHassantel+92512203451fax+92512203462emailisb@halcrowpk.com.pk
PhilippinesMakati CityMichaelYaxleytel+6328195231fax+6327500468emailhalcrow@halcrow.com.ph
PolandWarsawJarekKarpiejuktel+48226308379fax+48226254211emailwarsaw.office@halcrow.com
QatarDohaStewartHaytel+9744420507fax+9744421898emailhays@[email protected]
RomaniaBucharestGeorgePanatel+40212111871fax+40212103013emailpanag@halcrow.com
RussiaSt PetersburgDavidEdwardstel+78123321378fax+78123321377emailedwardsd@halcrow.com
South KoreaSeoulAndreaChoitel+8227795437fax+8227795439emailchoia@halcrow.com
Saint LuciaCastriesMandishSinghtel+17584521112fax+17584531454emailhalcrows@candw.lc
Syria [email protected]
ThailandBangkokAliAdamtel+66(0)26763830fax+66(0)[email protected]
Officesandcontacts
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
United Arab EmiratesSami Al-QazzazIanMcLennantel+97126790804fax+97126785422emailhme-abudhabi@halcrow.com
DubaiDavidYawtel+97143370380fax+97143379239emailhme-dubai@halcrow.com
SharjahJohnFarrertel+97165734333fax+97165732999emailfarrerj@[email protected]
United KingdomBirminghamPeterRoberytel+44(0)1214562345fax+44(0)[email protected]
BristolChrisKearnstel+44(0)1179389300fax+44(0)[email protected]
CardiffBarrieJonestel+44(0)2920720920fax+44(0)[email protected]
ChichesterRachelFowlertel+44(0)1243649900fax+44(0)[email protected]
CrawleyCatherineMerlanetel+44(0)1293434500fax+44(0)[email protected]
DerbyLesleyDhindsatel+44(0)1332222620fax+44(0)[email protected]
EdinburghRonBeardtel+44(0)1312723300fax+44(0)[email protected]
ExeterSarahDawetel+44(0)1392444252fax+44(0)[email protected]
GlasgowDonaldBelltel+44(0)1415522000fax+44(0)[email protected]
HandforthJohnDalytel+44(0)1625540456fax+44(0)[email protected]
InvernessJohnWalkertel+44(0)1463231707fax+44(0)[email protected]
LeedsSharonWatttel+44(0)1132208220fax+44(0)[email protected]
London MatthewWernhamVineyardHousetel+44(0)2076027282fax+44(0)[email protected]
VanessaConstableShortlandstel+44(0)2082333800fax+44(0)[email protected]
Newcastle and GatesheadTomBrowntel+44(0)1914873555fax+44(0)1914875818emailtyne&[email protected]
Norwich KevinMarshtel+44(0)1603226161fax+44(0)[email protected]
PeterboroughGarethHeatleytel+44(0)173356003fax+44(0)[email protected]
Plymouth SteveBurgetel+44(0)1752502980fax+44(0)[email protected]
ReadingPaulGranttel+44(0)1189650100fax+44(0)[email protected]
Snodland CatherineMerlanetel+44(0)1634244114fax+44(0)[email protected]
Stockton-on-Tees JohnNicholastel+44(0)1642632800fax+44(0)[email protected]@teesside.com
Swindon GarryWhitakertel+44(0)1793812479fax+44(0)[email protected]
Waltham Cross RolandGrzybektel+44(0)1992707100fax+44(0)[email protected]
WorcesterChrisKearnstel+44(0)1905361361fax+44(0)[email protected]
YorkCarolSnowdenLendaltel+44(0)1904559900fax+44(0)[email protected]
CarolSnowdenMuseumStreettel+44(0)1904559900fax+44(0)[email protected]
United States of America Houston MichaelPraughttel+18322423816fax+18322423818emailmpraught@han-padron.com
Jacksonville [email protected]
Las Vegas StephanKordttel+17022536617fax+17022530031emailstephan.kordt@halcrowyolles.com
Long BeachKenForssentel+15624938300fax+15624938308emailkenforssen@han-padron.com
New York HelgaJunoldtel+12126084963fax+12125665059emailjunoldh@halcrow.com
JonathanGoldsticktel+12126083990fax+12125665059emailjgoldstick@hpa.com
OaklandGayleJohnsontel+15104520040fax+15104520041emailgjohnson@han-padron.com
TampaTodStockbergertel+18138766800fax+18138766700emailtstockberger@hpa.com
WashingtonBobUlrichtel+17033515025fax+17033127068emailulrichr@halcrow.com
VenezuelaCaracas PaulNixontel+582122665322fax+582122675827emailvenezuela@halcrow.com
VietnamHanoi City [email protected]
Halcrow Holdings Limited | Annualreportandaccounts2006 | ��
Notes
�� | Halcrow Holdings Limited | Annualreportandaccounts2006
DesignedandeditedbyHalcrow’scorporatecommunicationsteam.
PrintedbyRumboldHollandLithoPrinters.
Cover270gsmColorplandarkgreymadefromElementalChlorine-Freefibre,withsilverblocktextonouter.Textprintedon170gsmNovatechSilk,a100%recyclablepapermanufacturedaccordingtoISO9002andISO14001standardsusingchlorinefreepulpsfromsustainableforests.NovatechisproducedatEuropeanUnion’sEcoManagementandAuditSchemecertifiedmills.Theoriginatingforestsareauthenticallymanagedandsustainable:atleasttwotreesareplantedforeveryonefelled.
Notes
Halcrow Holdings LimitedAnnual reportand accounts 2006