Profile: Robert MacLeod, Atkins’ CFO

Robert MacLeod, Atkins' CFO

Robert MacLeod, Atkins’ CFO

As soon as you step across the threshold at
Atkins’ leafy Epsom
offices the illusion of suburban idyll is shattered. Not many companies ask
guests to list their citizenship when they sign in and you immediately get an
idea of the scope and the security procedures at the global engineering company.

CFO Robert MacLeod greets Accountancy Age with a handshake that
could have easily stood in for an industrial vice on one of Atkins engineering
projects before he ushers us into his office.

MacLeod is upbeat as
Atkins has recently
published its yearly numbers.It posted revenues of £1.3bn and an increase in
pre-tax profits of 24%. The company is the largest engineering consultancy in
the UK, the largest multidisciplinary consultancy in Europe and the eighth
largest design business in the world, providing engineering, highways and rail

At a time when most of the business world is battening down the hatches,
Atkins is doing a roaring trade and MacLeod sees no reason why this will not
continue. ‘Margins have gone up, the profitability has gone up, revenues are up
and we’re hiring more people. All these things are saying that the strategy of
focusing on engineering excellence is working.’

But for all the bullish sentiment the company is far from bullet-proof,
particularly when Atkins found itself in a murderous crossfire as Metronet
collapsed. The company was one of five plcs with a stake in Metronet but when
the underground maintenance company said it had run out of cash, Atkins, Balfour
Beatty, Bombardier, EDF Energy, and RWE Thames Water’s worst nightmare came

‘On that particular contract we lost £120m, so it was a very significant hit
for us. There’s no silver lining to losing £120m but you learn the lesson and
move on.’

MacLeod says the main issue for Atkins was working with an intermediate,
which handled the work on the companys behalf. Atkins had moved outside of its
business model and got involved in a contracting joint venture. ‘We’re not a
contractor,’ says MacLeod. ‘Now we’re working directly for the company which is
now in public hands rather than the PPP.’

Atkins’ CFO recalls that there were worrying signs way before the scandal hit
the headlines. Teething problems emerged from the outset but just like the other
five backers Atkins was past the point of no return and fully committed to the
deal. ‘After two years, the chief exec was replaced so within a fairly short
period of time we could tell things weren’t going as well as we’d hoped.
Sometimes when you go off on the wrong foot, you can never get back. It was not
good, it distracted us and it took a lot of management time and effort and we
deeply regret it and for us the biggest disappointment was that it did fail.

‘The fact that we are still working for the new Metronet and won the M25
contract (worth around £500m to Atkins) where we are preferred bidder does say
that we are still trusted. And rather than stepping back from the problem, we
went onto the front foot and really tried to engage.’

A combination of shrewd decision-making and good timing has helped Atkins to
pre-empt fallout from the credit crunch. Last year, the company set about
trimming the excess fat and sold off its
Lambert Smith Hampton
real estate business before the credit crunch hit.

The good times can never be guaranteed so Atkins is guarding against an
‘inevitable’ slowdown in parts of the business by thinking about how to redeploy
‘scarce resources’ into the most effective areas.

MacLeod says the Middle East part of the group is ‘growing massively’. It
provides design, engineering and project management services for buildings,
transportation and other infrastructure through seven offices in the Gulf, and
India. In China Atkins has planning, urban design, architectural and engineering
services in the mainland market and Hong Kong. Moving people to these potential
cashcows is Atkins preferred direction of travel. ‘We don’t want to have a hire
and fire mentality. It doesn’t work in a people-based business.’

For MacLeod, the CFO role is the perfect job, and he attributes his
attraction to the role to the simple phrase: ‘I can do numbers.’

This may seem like a glaringly obvious statement, but it’s a single-minded
to a job with such a diverse spectrum of operations.

Due to its scale, the Atkins operates on a heavily devolved basis and he says
that the company has a very good relationship with its auditors

‘They’ve had a much deeper delve into the business than we have because it’s
heavily devolved and that’s invaluable to us and the rest of the board,’ says

Some 85% of its trade is UK-based but Atkins provides services across the
globe and plans for more work in overseas tax jurisdictions, which is why, like
many other UK companies, it craves some clarity from the Treasury on the
taxation of foreign profits.

‘Tell us what you’re going to do and stick with it,’ MacLeod demands. ‘At the
moment, the international things in particular, there seems to be a lack of
crystallisation about where they are going to go. One minute they are going to
go this way and next minute they change their minds and that’s just unhelpful.
What I would like is some clarity and that will make our lives easier and then
we can make some reasonable decision about where things are going and invest

Internal communication

MacLeod adds that, for all of a CFO’s City-facing responsibilities, internal
communication was just as important especially in terms of working out key
performance indicators. ‘If you’re going into harder times you’ve got to spend
more time talking to the business than sitting here in our ivory tower because
they’re the ones who know what’s going on.

‘You have to get closer and closer to the coalface to do that. We run a
heavily devolved management business so we have the right people and allow them
to get on with the job. Of course, you’ve got to run a set direction and set
guidelines in terms of delegation of authority and corporate governance but once
you’ve done that, let them get on with it.’

Naguib Kheraj recently said that he had knocked back several finance jobs to
hold out for a chief executive’s position, the job coveted by many an FD, but
MacLeod was single-minded enough to not just follow the herd.

‘I don’t think I’m looking to be a chief exec. You’ve got to recognise what
you’re good at and the FD role is what I’m good at. What I really enjoy is
working with good people and working alongside a good and talented team and
chief exec. As a CFO, you can get a lot more done if you get that dynamic right
between the chief executive, the finance team and the rest of the business.’

career highlights

Being proactive has always been high on MacLeod’s agenda. A qualified
chemical engineer, he followed in his father’s footsteps by taking up
accountancy in order to get a good business grounding. A KPMG summer internship
during his third year at Cambridge University lit the touchpaper on his
accountancy career and he never looked back.

MacLeod went back to KPMG after completing his degree and embarked on a
steady climb up the corporate ladder after qualifying. He won the financial
controller’s position at Atkins in March 2003 and was promoted to FD barely 12
months later.

IMS stress

Companies have been landed with publishing interim management statements in
addition to their other reporting requirements and MacLeod panned the extra

Instead, where we were reporting four times a year, we’re now reporting six
times a year with the IMS. It’s just too much.’ After reporting annual results
on the 25 June, Atkins had to post an interim management statement on 6 August
only six weeks later. ‘We’ve got an AGM trading statement on the third of
September which is four weeks after that. Our business doesn’t change that
rapidly. Talking to the analysts they actually don’t need that information
because frankly I don’t know what we are going to tell them. These additional
IMSs don’t help. It has just added to the burden of the work we do.

‘One would hope that the FD and management teams in our kind of business,
which is more project-based rather than transactional-based like retail for
example, we would be able to have a good idea of what’s happening in the

MacLeod said that the finance function was now more efficient in its
reporting and tax structuring, treasury management, and how it utilise its
skills and drive the business forward, but still took issue with other parts of
the reporting regime.

‘There’s a lot more disclosure about debtors and financial instruments. For a
business like ours, financial instruments information isn’t particularly
relevant for us or the shareholders. I do sometimes think that there’s this
blanket application rather than doing what’s more fit-for-purpose for individual

MacLeod added that the reporting burden had increased to such an extent that
Atkins’ annual report had swelled to 120 pages in 2008, from 88 in 2005. ‘We’ve
added 32 pages and I’m not convinced that’s helped anybody. If you compared the
two sets of accounts the extra you are giving isn’t helping the shareholder.’

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