No one can accuse CEO Samir Brikho of failing to deliver in his eighteen months with AMEC plc (LSE, AMEC). Under his guidance the international project management and services provider has been steered through a significant restructuring programme, giving the group more focus and strategic direction. This has been to the tangible benefit of shareholders. AMEC's stock price has doubled since his appointment.

"We have much admiration for the manner in which a strong management team headed by proactive CEO Brikho has transformed AMEC from a distracted support services company.. However having rode the turnaround story we believe now is the appropriate time to take money off the table."

And this month's full year results announcement further underline the bottom line impact these changes are having. Indeed we fully expect the benefits to continue to flow following the strip out of non-core businesses, completion of a cost cutting 'STEP' change programme, and instillation of an "Operational Excellence" plan.

From a strategic viewpoint the decision to focus on opportunities in resource markets was and is highly astute in our view. AMEC is already a credible player in the energy services sector. And recognition of the potential in this 'field' is being greatly appreciated by investors with the shares now trading around 22 times forward earnings.

It does however concern us somewhat that the majority of city brokers now have AMEC on their buy lists - in our experience this is often a sure fire sign that a valuation is becoming stretched. As Members will know we try to 'zig' when others were 'zagging'. The time to buy AMEC was when it was a disorganised basket case several years ago. A glance towards the charts suggests that the smart money is already appreciating this point.

Despite initially recovering from the January low of 634p, prices have failed to sustain the subsequent rally to 807.5p. In our opinion, this indicates that investor support for the stock is wavering. As a result, we believe a further pullback is likely.

Not that you would guess by looking at recent results though.

AMEC moved into the black in 2007 with pre-tax profit in the year to 31 December of £151.6 million versus a loss of £27 million in 2006. Gains on asset disposals helped but the underlying picture was robust also. Revenues were up 11 percent to £2.4 billion with continuing business growth even better at 21 percent. All three core divisions chimed in with solid growth in turnover and margins.

As energy and commodities bulls it is no surprise to us that the Natural Resources segment, the largest division, accounting for two thirds of profits, led the way. The segment's principal activities are in servicing robust end markets, namely oil and gas services (67 percent of revenue), oil sands (18 percent) and the minerals and metal industries (15 percent).

Revenues were up 24 percent to £1 billion, with margins continuing to widen on the back of operational efficiency measures and a robust order book. EBITA (earnings before interest, tax and amortisation) rose 62 percent to £86 million with margins of 9.4 percent easily exceeding an earlier target of 7 to 8 percent. The group is now aiming for 9 to 10 percent in 2008 and 10-11 percent by 2010.

We have every confidence the natural resource division will continue to enjoy the bull market ride in commodities. Recent contract wins in the North Sea and Nigeria have already set the tone. We also believe that there are tremendous opportunities still in the Canadian oil sands market. We note management's intention to expand here through acquisition. Indeed, across the group, management refer to a £100 million war chest for 'three or four' acquisitions in the first half.

One is already done. Yesterday AMEC announced the acquisition of project services company Rider Hunt International for £25 million. The company provides services to the oil, gas, chemical, energy and process industries. Crucially Rider has operations in both mature markets and frontier regions, including Azerbaijan and Kazakhstan, further widening AMEC's reach.

"In terms of cash AMEC is also looking much healthier these days. Robust operating cash flows and the shedding of non-core operations have seen the coffers swell to a record of £733 million."

AMEC's second largest segment, Power and Process designs, delivers, enhances and maintains infrastructure for clients in power process and nuclear markets. The unit has also seen strong growth in 2007 with major UK contract wins (gas and electricity infrastructure) and a solid North American market (particularly power generation and alternative fuels).

With robust demand (revenues up 27 percent to £1 billion) it is also reassuring that management are not losing sight of profitability. The minimum gross margin required on all contracts has been lifted to 9 percent. A more selective approach is already flowing through to the bottom line with EBITDA up 71 percent to £38.9 million.

The smallest division of the group, Earth and Environmental, has also experienced good growth in 2007 despite a weakening US dollar, and a lower level of foreign project expenditure by the US government. The division which provides specialist environmental, geotechnical, programme management and consultancy services saw revenues and profits rise 5 and 20 percent to £288 and £21 million respectively. Margins came in at 7.4 percent and management's moves to lift operational performance are also clearly evident in this segment. The 2008 margin target is revised upwards to a range of 8 to 9 percent.

With all core divisions performing strongly we are heartened that the company's rationalisation programme is almost at an end. Last month AMEC sold the tool and equipment hire business for £12.5 million to Speedy Hire. Given the increasingly sombre outlook in this industry we view this is a timely move.

The completion of the STEP change programme is another milestone in the group's restructuring efforts.

This initiative saw savings of £11 million last year, with a further £29 million pencilled in for 2008, and £40 million per annum going forward. Now attention shifts to a 2-3 year Operational Excellence plan, aimed at improving portfolio quality, customer service and internal controls. We have every confidence in management assertions that this will help drive group EBITDA margins to 8 percent in 2010. Meanwhile margins for this year of 6 percent are the focus.

"The time to buy AMEC was when it was a disorganised basket case several years ago. A glance towards the charts suggests that the smart money is already appreciating this point."

We fully support the group's rigorous approach in implementing this programme and are encouraged that it has fostered a culture of accountability for all levels of management through transparency. Indeed it has also been very much a changing of the guard, with the imminent departure of finance director Stuart Siddall, sympotomatic of the decision to focus AMEC away from traditional engineering services.

In terms of cash AMEC is also looking much healthier these days. Robust operating cash flows and the shedding of non-core operations have seen the coffers swell to a record of £733 million. The question is what does the company do with this cash? Buybacks are on the cards but we have a suspicion that a major acquisition is also in the frame. We endorse any decision to increase exposure to the resource sector, provided the valuation is on the mark. As such we will be following events closely.

All in all we believe the latest result firmly heralds a new dawn for AMEC. The turnaround is almost complete. However a look at the company's valuation suggests there is little margin for error going forward. The shares now trade at around 22 times prospective 2008 earnings and yield 2 percent.

We have much admiration for the manner in which a strong management team headed by proactive CEO Brikho has transformed AMEC from a distracted support services company into one with unambiguous and accountable strategic path. However having rode the turnaround story we believe now is the appropriate time to take money off the table.

From a charting perspective, in the near-term, we anticipate the development of a period of choppy consolidation. However, while prices remain below the 775p to 807.5p region, risk remains for a move below the March low of 683.5p to retest the January low of 634p. In our opinion, this key level underpins the broader upward trend.

While the longer-term underlying upward trend remains intact, upward momentum has clearly slowed since prices hit an all-time high of 849.5p in November. We believe that it is prudent now to move to lock in a portion of the gains achieved to date by selling half of our position in AMEC at around 723p. We will maintain a reduced holding for exposure to longer term out-performance.