Chief Executive's Statement
Our strategy

Strategy process

Our strategy is developed by establishing the Group's priorities and evaluating the strengths of the businesses within the Group. Business unit bottom-up five-year plans are set in the context of the top-down Group strategic aims. The Group top-down strategic aims encompass market sectors and geographies in which to operate and establish ways in which the business units may be assisted in delivering superior performance. Increasingly multiple business units can be brought together to deliver complex projects in various parts of the world.

Last year we noted that we were mindful of the indirect consequences of a prolonged downturn in the commercial property market. Macro-economic conditions worsened during late 2008 and started to affect our UK and Middle East building design businesses. We recognised the position and took swift action to reduce headcount and match costs to the available market. The Group will continue to monitor market developments and take appropriate action. We have a diverse skill base and geographic footprint which provides resilience in uncertain times. Many markets remain resource-constrained. The Group is agile and flexible enough to continue to hire as necessary and shrink where required to maintain levels of performance.

The 2008 strategy review focused on the evolution of the Group strategy, building on the work of previous years.

The review confirmed:

• the consultancy business model is appropriate
• the business units remain the core of the strategy
• economic uncertainty could lead to a wider range of credible scenarios - but the Group is well placed to deal with this
• communication of the strategy is important
• implementation of the strategy is now at the forefront of activity - determining how to optimise delivery, what services and skills to offer and in which geographical markets to operate.

The majority of our business is in the UK which remains the core market for our activities. Our existing businesses outside of the UK present attractive opportunities for further growth. The huge potential outside the UK includes areas where we are well established such as the Middle East, which despite recent liquidity issues, has significant medium-term promise.

We have strong technical skills in a number of robust markets where quality is a significant determinant for selection.

• In the UK we have niche positions in numerous markets. We propose to continue to invest in management, deepen the skill base and organise the business in a suitable way. We will, as demonstrated, undertake controlled reduction or exit of businesses and structure appropriately for downturns in activity.
• In the Middle East we will continue to add niche skills and prepare for the economic upturn.
• In Asia Pacific we will focus on and push hard in our available markets - principally the transit market in Hong Kong and building design and urban planning in China. We will continue to invest to take advantage of opportunities as the market opens up, recognising that it could be at least two years before significant growth is achieved.
• In Europe we will continue to develop our local businesses.
• In the USA, Faithful+Gould and our oil and gas businesses provide the organic growth focus. Skill additions remain possible.
• Other geographic areas will continue to be reviewed.

The Board met in the final quarter of 2008/09 to consider strategic themes in light of global market developments. The main tenets of the strategy were re-affirmed and the top-down multi-skill, multi-local strategy remains unchanged.

The decentralised and empowered business model is fundamental to the success of the Group. In current conditions, tactical responses have priority in certain markets but the need to maintain a medium-term view in many of the businesses was also noted by the Board so that the Group may adequately position itself to take advantage of opportunities as they arise.

During 2009/10 the Group will continue to evaluate the services and countries that will provide the best long-term returns for the Group and, where appropriate, will follow specific sector opportunities into new and related markets. Acquisitions and organic investment will be considered which deepen the Group's skill base and strengthen our market position in line with our strategy. Acquisitions can accelerate growth in our home geographies and elsewhere. Attractive geographies continue to be those with good cultural fit and market scope i.e. a material market with good growth prospects and potential for Atkins to grow market share.

The Board remains alive to the challenges and opportunities that arise from unprecedented world economic conditions. The Group is well placed to weather the downturn and take advantage of opportunities that may present themselves. It has the resources to emerge strongly as markets recover.