Analyst presentation. Atkins Energy business

Transcription

1 Analyst presentation Atkins Energy business

2 Atkins Energy business Dr Martin Grant, CEO, energy

3 Agenda The energy market Our business, an overview What we do The future. 3

4 Why energy is a good market Compelling drivers of population and income growth Population and income growth are the key drivers behind growing demand for energy. By 2030 world population is projected to reach 8.3 billion, which means an additional 1.3 billion people will need energy; and world income in 2030 is expected to be roughly double the 2011 level in real terms. For both developing and developed nations Energy Outlook 2030, BP, the need to replace ageing infrastructure and the will to further decarbonise mean that the European Union sees the second largest (after China) gross capacity additions in the period to 2035 New Policies Scenario, World Energy Investment Outlook, International Energy Agency,

5 Why energy is a good market Investment levels from 2014 to 2035 Steady rise in annual investment from $1.6tn in 2013, to $2tn per year in 2030s between 2014 to 2035 Of this investment: 15% on engineering 1/3rd in Atkins target countries 10% in Atkins target services Equates to approx. $9bn/year addressable market for Atkins. Source: Atkins in-house estimate Source (unless stated otherwise): World Energy Investment Outlook, International Energy Agency,

6 Why energy is a good market for Atkins The challenges require a high level of engineering expertise, which is Atkins strength Solutions are frequently specific to individual projects resulting in low risk of commoditisation The projects often require the integration of specialist domain expertise, broad civil and structural engineering and cost and project management. Atkins is one of only a few companies with all these capabilities in-house The UK s leading role in certain technologies (offshore integrity and safety assessment, nuclear power, offshore wind) and Atkins strong UK position means we are building highly exportable capability In developing nations increased power generation or oil exploration are often precursors to other infrastructure investments, establishing a strong sales link to other Atkins services. 6

7 Atkins Energy Business overview 7

8 What we do Our core expertise is keeping old assets running safely, for longer and more efficiently. This represents approximately 60% of our workload We have been increasing our involvement in the new build market, which represents approximately 40% of our workload today Our engineers are highly qualified and use advanced assessment methods to make engineering judgements in high hazard industries Our expertise differentiates us in the market and results in a strong reputation with our clients. Revenue split (FY13) Oil and gas Nuclear Thermal power and renewables 8

9 Where we operate North America Sectors: oil & gas, nuclear Staff : 127 (pre. NSA and Houston Offshore Engineering) UK Sectors: oil & gas, nuclear, power, offshore wind Staff: 1,043 Europe Sectors: oil & gas, nuclear Staff: 49 Australia Sectors: oil & gas Staff: 63 Total 1,496* *Numbers based on FTE at end of Q1 FY14/15 Middle East Sectors: oil & gas, nuclear, power Staff: 163 India Sectors: oil & gas, nuclear, power Staff: 52 9

10 Clients we work for 10

11 The importance of our people Our people are a key part of our strategy, we employ engineers and scientists with particularly high levels of technical expertise and establish a strong performance culture Part of how we achieve this is by having a much higher ratio of employees to contractors compared with the market norm Another part is by investing in employees continued professional development and focusing on staff retention We have established a number of programmes including: Graduate recruitment (around 90 this year) Our in-house training academy which provides sector specific expertise and mobility across our Group A mid-career development scheme to support our engineers from structured chartership through to senior management development programmes An instant performance recognition scheme known as Joules. 20.0% 15.0% 10.0% 5.0% 0.0% Staff turnover 2010/ / / /14 11

12 Our financial performance Underlying 10% margin business, diluted short term by investment in growth Revenue growth delivered over 20% CAGR (FY10 to FY14). FY10 FY11 FY12 FY13 FY14 Revenue ( m) Operating profit ( m) Margin 10.2% 8.6% 8.9% 9.1% 8.9% Average staff numbers ,095 1,307 1,424 12

13 What we do Oil & Gas 13

14 Design of terminals, and storage facilities Platform design Asset integrity management and structural analysis Process engineering Subsea engineering Oil & Gas, what we do 14

15 Oil & Gas Our business is focussed on the upstream and midstream segments of the oil and gas industry Within these segments we provide: safety and integrity services to existing assets; and, design services to existing assets brownfield projects and new assets greenfield projects Our design services cover a wide spectrum of the supply chain. Our primary focus is in the feasibility, concept and front-end engineering design ( FEED ) phases of a project. On specific projects and in specific markets we also undertake the detailed design Based on these choices our addressable market is estimated at $6bn/yr. 15

16 An example brownfield project Talisman compression upgrade project, Claymore platform Key facts: Atkins provides structural integrity management support to over 60% of the North Sea s assets (UK Sector) We have supported Talisman since they entered the North Sea in 2001 We recently extended that relationship with a new 5-year contract for the provision of structural integrity management services This project was for an upgrade to Talisman s Claymore platform, part of a field development programme to increase production and extend the production life. 16

17 An example brownfield project Talisman compression upgrade project, Claymore platform Key facts: Claymore was originally installed in 1976 with a 20 year design life A new compression module was needed to increase the pressure in the reservoir, part of a plan to extend the platform s life to 2035 The new module added 1,700 tonnes in weight and our role was to assess the structure s ability to withstand: The increased load The extended design life Higher wave loads arising from increased safety regulations. 17

18 An example brownfield project Talisman compression upgrade project, Claymore platform Key facts: The complex strength assessment involved 15,000 man hours of specialist work by Atkins, including: Advanced structural analysis Probabilistic assessment of wave loading Development of industry leading assessment techniques to demonstrate overall strength integrity When finished our work was independently verified by Lloyd s Register and described as a benchmark for future brownfield projects. The module was successfully installed on 30 August

19 An example greenfield project Premier s Solan development The Solan oil field lies in the UK North Sea, west of the Shetland Islands in a water depth of 135m With an expected lifetime production of 44 million barrels of oil, it is a relatively small oil field and an innovative concept was required Atkins carried out the original concept designs between 2008 and 2011 The approach incorporated a large subsea oil storage tank, the largest of its kind in the world. 19

20 An example greenfield project Premier s Solan development In 2012 we were engaged to undertake the detailed design of this ground breaking storage tank The tank is large enough to hold one month s oil production, around 310,000 barrels. Equivalent to crude selling price of $30m Some of the complexities and challenges in the design derive from the fact that the tank is pressurised for offload (a unique feature), and that it has a 30 year design life. 20

21 An example greenfield project Premier s Solan development Our site engineers supported the tank s construction in Dubai during late 2012 to early 2014 It took 5 million man hours to construct, contained 120km of welding and weighed 10,150 tonnes It was lowered into position by the world s largest offshore crane. 21

22 An example greenfield project Premier s Solan development Leaving Dubai Sailing to Scotland Floating off Cosco vessel Lowering into position 22

23 Acquisition strategy Poyry acquisition (2011) Process engineering Houston Offshore Engineering (2014) Floating structures Atkins Fixed structures Boreas (2007) Subsea engineering 23

24 Houston Offshore Engineering 150 people based in Houston, Texas Leading expert in design of floating structures With intellectual property around a particular type of structure (tension leg platform) Aligned culture and brand positioning, with complementary skills Creates both client and service synergies Strengthens our position in Houston, the global HQ of the oil industry and positions us for the deeper water plays being pursued by the oil majors Reported revenue of US$ 41m in FY13. 24

25 What we do Nuclear 25

26 Nuclear We are involved in all aspects of the nuclear industry from fuel, new build, generation to decommissioning providing: Safety, integrity and design services to existing stations and facilities Licensing, safety and design services to new stations and facilities A specific advantage Atkins has within this market is the combination of nuclear expertise, civil design capability and project management Our future growth is based upon: Continued expansion in the UK, achieved through our strong position in the new build sector coupled with an increase in market share with existing key clients (such as the SDP project at Sellafield) Growth within the Middle East, focussing on the UAE and KSA nuclear programmes and leveraging Atkins significant presence in region Expansion within the USA, the world s largest nuclear market, leveraging skills acquired with NSA We estimate our addressable market to be $1.5bn/year. 26

27 New build We are one of the UK s leading nuclear new build consultancies, with growing presence overseas: Strategic partner for EDF s new build programme Owner s engineer on Horizon s new build programme Involved in the Emirates Nuclear Energy Corporation s (ENEC) programme in the UAE Recently signed Memorandum of Understanding with China National Nuclear Corporation (CNNC). 27

28 Generation Over a ten year relationship Atkins has become one of EDF s four strategic lifetime partners Our scope of work for EDF covers engineering, safety, environmental services project and programme management with an average team size of 300 FTE drawn from across the Group Last year this included an integral role in the successful design and delivery of EDF s Japanese Earthquake Response (JER) facility. 28

29 Decommissioning Atkins has been involved in this market since the late 1980s We are one of the top four companies in the UK sector Our primary delivery vehicle is our ACKtiv joint venture with Jacobs and Carillion. Primarily focussed on the higher hazard aspects of clean up In April 14 we were selected preferred bidder for Sellafield s Silos Direct-encapsulation Plant (SDP). 29

30 Silos Direct-encapsulation Plant (SDP) Atkins, as part of the a.m.a. joint venture, with Areva and Mace, was appointed preferred bidder on 15 April This marks a step change in our position within the UK s largest decommissioning market The a.m.a. joint venture partners will take the project through detailed design, construction, manufacture, procurement, installation and inactive commissioning. Over the next 12 months, we expect to mobilise an Atkins design team of 250+ The successful bid confirms our credibility as a top table nuclear designer. 30

31 Fuel In 2014 Atkins was appointed Urenco s strategic partner for the delivery of its capital investment programme at its UK Capenhurst site Services include provision of infrastructure design and project management, leveraging the broad skills of the Atkins group. 31

32 Nuclear Safety Associates 130 people based in Charlotte, North Carolina A leading expert in area of nuclear safety and licensing, one of the Department of Energy s largest suppliers in this area Establishes Atkins presence in the world s largest nuclear market Aligns with our strategy in this sector of combining in country nuclear expertise with civil design and project management capability NSA s extensive experience of the US s licensing and regulatory regime is directly applicable to many of the nuclear design programmes around the world. 32

33 What we do Power and renewables 33

34 Within Power we work across generation, transmission and distribution and more recently carbon capture and storage 34 34

35 Offshore wind involves our wind, oil & gas, geotechnical and electrical engineering capabilities Design envelope for the wind turbine foundations Offshore wind farm 3-phase AC Cable to shore Land connection point Jacket structure Monopile Offshore substation 35

36 Our projects Islay Round 1 wind farm Walney Burbo Onshore SWP Test Rig North Hoyle Rampion Beatrice Moray Kincardine Humber Gateway Dogger Bank Nordsee Ost Hohe See Race Bank Dudgeon Lincs East Anglia Galloper Round 1 wind farm UK offshore wind: 3.7GW currently installed 8GW expected by GW expected by 2020 Atkins involvement: 10GW - The capacity of wind turbines in offshore wind farm projects Atkins has supported 36

37 Atkins Energy The future 37

38 Conclusion The addressable energy market for Atkins is significant, estimated at $9bn per year Our financial performance has been strong, with an underlying operating margin of 10% We are investing in growth, both organically and by acquisition We see significant opportunities for geographic expansion and to expand from asset care into design Our long term goal is to be one of the world s leading energy design and engineering companies. 38

39 Disclaimer The information in this presentation pack, which does not purport to be comprehensive, has been provided by Atkins and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by Atkins as to or in relation to the accuracy or completeness of this presentation pack or any other written or oral information made available as part of the presentation and any such liability is expressly disclaimed. Further, whilst Atkins may subsequently update the information made available in this presentation, we expressly disclaim any obligation to do so. The presentation contains indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group s results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently expected. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise. 39