Capital Markets Day 17 June 2015
Adrian Ringrose Chief Executive Attractive growth fundamentals & opportunities
Interserve at a glance Top 3 in UK Support Services # 1 3 in equipment services Growing UK Construction business Access to exciting Middle East markets 75% of Group activities Strong market position 1 2 Fundamental drivers in outsourcing Attractive growth fundamentals & opportunities Drive for public sector efficiency Rising population Ageing population Drivers of future profitability Growth platform in value added segments Front line services Oil & Gas services International FM Growing the range of services within Support Services Increasing utilisation of equipment services Medium term improvement in construction market 2010 2014 CAGR Acquisition Strong growth record Revenue: 11.6% EBIT: 12.9% EPS: 9.9% DPS: 6.3% > 350mm invested ROIC materially ahead of WACC 4 3 Disciplined performance management Contract management Portfolio management Cyclical investment Focus on people 10 years DPS CAGR of 5% Differentiate through SustainAbilities Order book visibility, 74% of 2015 consensus revenue atye14
Executing our vision Strategy Present Future Building strong core businesses Balanced & strong portfolio Increased Support Services offering Capturing related expansion opportunities Successful M&A execution Broad based growth Strong organic growth Expand internationally Record orderbooks Managed volume growth
Thought leaders Strategy Present Future
Industry leaders Strategy Present Future
SustainAbilities delivering business value Strategy Present What it means Wider conversations with clients Broader assessment of performance Creation of operational tools & partnerships Informed investment decisions Realising opportunities Build reputation & relationships New business insights Competitive edge, win more work Reduce costs Encourage knowledge sharing & engagement Employee attraction & retention Addressing risks Reputation/license to operate Long-term skillset to grow the business Integration of new employees
Sector leading ggrowth 2010-2014 CAGR Strategy Present Future Growth Interserve Peer Group Average* Rank Revenue +11.6% +4.0% #1 EBIT +12.9% 1.4% #1 EPS +9.9% 4.9% #1 DPS +6.3% 1.7% #2 5% DPS CAGR over the last 10 years *Peer Group: Capita, Mitie, Kier, Carillion, ISG, Costain, Morgan Sindall, Serco, Balfour Beatty
Evolving business mix Strategy Present Future 119m raised disposal of PFI portfolio 282m raised equity issue & US PP 390m invested in acquisitions *Operating profit %ages pre Group costs and Investments
Strong market positioning Strategy Support Services Present Construction Future Equipment Services UK Top 3 player National reach #1 3 in markets 50/50 public/private Broad frontline services offering Breadth and scale Framework relationships Technical excellence High quality fleet Geographic agility & spread International Pan regional oil services Leverage UK FM skills Pan regional education & training offering Long term local relationships Breadth of technical capability
Growth drivers Strategy Support Services Present Construction Future Equipment Services UK Frontline services Market upturn Upturning world Expanded private sector offering Increased volumes markets Growing Middle & Far East International Pan regional oil services Market upturn Integrated FM capabilities Front line services esp. training Increased volumes Improving US market Recovering UK & Europe Operational gearing effects
Controlling our growth Strategy Present Future Disciplined bidding Disciplined contract management Selecting the right people Promoting the right culture & values Investing to grow
Agenda TimingStrategy TopicPresent Speaker Future 08.45 Strategic update Adrian Ringrose 09.15 UK Frontline services Dougie Sutherland, Yvonne Thomas and Ian Porée 10.00 Commercial FM offering Jeff Flanagan 10.45 Coffee Break 11.00 Middle East social and economic update MEED (Colin Foreman) 11.45 Middle East FM offering Saeed Ahmed 12.30 Middle East Oil & Gas Andrew Beaney 13.15 Wrap up and final Q&A 13.30 Lunch 14.30 Ends
Who you will be meeting Adrian Ringrose Chief Executive Dougie Sutherland Executive Director Adrian has been Chief Executive of Interserve since 2003 during which time the Group has developed significantly, from around 15,000 to circa 80,000 people, p with operations in over 20 countries providing services to governments and a range of commercial and industrial clients. Adrian s background is in commercial management and business development. Prior to leading Interserve he spent time in the outsourcing and utilities sectors. Dougie is Managing Director of Interserve s Developments division and responsible for UK Construction. He was appointed to the Board of Interserve in January 2011. Dougie joined Interserve in September 2006 from 3i, where he was a partner in its infrastructure team. Previously he was a divisional managing director at Amey and Lend Lease, and also worked for HM Treasury developing the Private Finance Initiative. Yvonne Thomas Managing Director Justice Yvonne joined Interserve in November 2012 to build a new Justice business, with a brief to move into front line delivery of justice related government services. This includes the Transforming Rehabilitation service. Prior to this she was at the Ministry of Justice where she was responsible for the commissioning and operational delivery of prison, probation and public protection services, and for the staff who delivered those services. She joined the senior civil service following a successful career in industry, spending 11 years at BT plc.
Who you will be meeting Ian Porée Director, National Offender Management Services Jeff Flanagan Managing Director Commercial Ian has overall accountability for the commissioning and contract management of rehabilitation services to reduce reoffending and protect the public. Ian is accountable for mobilising and managing delivery through contracts with a total contract value estimated to be around 600 million per annum. Ian is also the current chair of the Rehabilitation Forum which is an industry collaboration to work together to deliver better a better justice system in England and Wales. Prior to this role, Ian was the Ministry of Justice Programme Director and led the Transforming Rehabilitation reforms. Jeff joined Interserve in February 2015 and is responsible for private sector FM business in the UK. Prior to joining Interserve he was at Mitie in senior operational and strategic roles and was a member of the Executive Management team. He has 18 years experience in the FM industry. He is a Chartered Accountant qualifying with KPMG and has a Civil Engineering degree from Imperial College. Colin Foreman News Editor MEED Colin Foreman has reported on the Middle East s construction sector since 2003. He has been MEED s news editor since 2010, a role that involves managing a team of journalists covering the economies of the Middle East. Before being appointed as news editor Colin was Gulf Bureau chief from 2008 and Senior Gulf Correspondent from 2005. He was the deputy editor of Construction Week before joining MEED - a title he helped launch in 2003.
Who you will be meeting Saeed Ahmed FM Director MENA Andrew Beaney Managing Director Engineering & Construction (International) Saeed is the Divisional Director for Interserve International, responsible for all of Interserve's Facilities Management businesses in the Middle East, including the UAE, Qatar, Oman and KSA. He has 19 years experience working in the FM industry, 14 in the UK and five in the Middle East, having worked for the some of the largest support services companies in the UK, including Balfour Beatty, Carillion and now Interserve. Andrew graduated with a Masters Degree in Civil Engineering and was sponsored as an Interserve Undergraduate in 1988. He has worked in many roles throughout his career at Interserve, including the Civil Engineering Division, Frameworks & Consulting and Education Sector before reaching the main board of UK Construction in 2008 with responsibility for the UK Regional Building Business. He has now taken up the role of Managing Director for the International Engineering & Construction businesses based in Qatar and is responsible for the growth of the business across the region as well as Interserve s other businesses in Qatar.
UK Frontline Services Dougie Sutherland
Current capabilities 3rd largest supplier of WP services 30,000 people into sustainable employment Exemplar private/3rd sector partnership Welfare & employment Education & skills Training 7,000+ apprentices Vocational training 2,000+ students in Saudi Academy sponsor in Leeds Care for 650+ patients in own home Over 2,500 nursing staff Provide services to 100+ CCGs & 40+ NHS Trusts Healthcare Revenue c 250m Justice & Home Affairs 25% market share, 5 contracts 35,000 cases (community & prison) 2,000+ professional staff Service in 19 prisons
Frontline Services Proposition Redefining the future for people and places Common interventions, resources & process Skills & Employment 3rd & public sector partnerships Improves customer journey Public service in the public interest Interventions Improves social outcomes Efficiencies Justice & Home Affairs Innovation Understand government & PBR Healthcare
Market opportunities 2015 2016 2017 2018 Justice & Home Affairs ( 6bn) Skills & Employment ( 7bn) Police BPO Prison Infrastructure New Prison Contracts? Interventionsentions OLASS 5 DWP/SFA ESF programme National careers service Work Programme 2 City devolution Saudi further colleges Oman Working well HDAS/PIP Assessments Healthcare ( 50bn) New Models of Care Contracts (Pathways, Integrators, Vanguards) Home care / Intermediate care / Step down care Transforming Community Services (2 nd generation)
Justice Yvonne Thomas
Background & context Crime is falling but... Re-offending rates are not moving enough 58% of prisoners serving under 12 months re-offend Flagship Policy pre-election delivery promised
Ian Porée Director, Rehabilitation Services, Commissioning & Contract Management, Ministry of Justice
Partnership with Shelter, P3 & 3SC Five Community Rehabilitation Companies CPA Lifetime contract value Cheshire & Greater Manchester 218m Hampshire & Isle of Wight 103m Humberside, Lincolnshire & North 130m Yorkshire Merseyside 100m West Yorkshire 137m TOTAL 688m
Interchange Transformation Model
Impact of new service As is - 16,500 will desist 35,000 offenders p.a. Supervision Case management Behavioural programmes Interchange model To be - 19,100 will desist Personalised approach
Regional presence
Regional presence
Regional presence
Regional presence
Interventions Women s Services Health Attitudes, Thinking & Behaviour Finance, Benefit & Debt Learning & Skills Housing Drugs & Alcohol Children & Families
In summary - A uniquely positioned business underpinned d by long-term contracts - Significant capability and infrastructure from which to expand - Sustainable margin in contracted business with upside in PBR Significant new opportunities will come to - Significant new opportunities will come to market during this parliament
Q&A
Commercial FM Growth Strategy Jeff Flanagan
The Commercial Business Unit Interserve always in private sector FM BBC won prior to Initial acquisition Combined private sector FM in excess of 900m turnover Private sector revenue split between Commercial BU and Industrial BU Public:Private Sector focus within support services now approx 50:50 All main service lines : cleaning, security, catering, hard services, energy Private Sector focus : Transport, Retail, Education Catering, Corporates
Why Initial? compelling strategic rationale A complementary Facilities Services Business with operations principally i in the UK Created top 3 player by revenue and balance between public and private sector clients Enhanced growth platform in large and attractive markets Market for private sector outsourcing nearly double that of the public sector Builds on strong core business consistent with strategy Addition of private sector soft service focus complements public sector hard service led TFM Synergy opportunities Operational efficiencies and cost savings together with new revenue opportunities Enhanced management and client relationships Both organisations have complementary strong management and a track record of solid customer relationships.
Initial facilities a reminder of what we bought 542.2m revenue and operating profit 25.6m (2013A), representing a margin of 4.7% c25,000 employees - 22,000 based in UK and Ireland - 3,000 based in Spain Broad customer base within the private sector Comprehensive range of facilities services Analysis of Turnover Multi Service 32% Cleaning 26% Other 31% Professional Services 25% Technical, Catering, Security & TFM 42% Largest customer 50m pa London Underground 85% private sector, 15% public sector Local Government 15% Healthcare 14% Transport 15%
Interserve now one of the largest providers of support services in the UK 2,500m Leading FM suppliers 2,000m Revenue e ( m) 1,500m 1,000m 500m 0m Source: Credo
Integration update Cost savings delivered : Streamlining i operational management Removal of duplicate functions Procurement savings arising from economies of scale Other headlines : New opportunities created for our customers, shareholders and people Key personnel retained from both organisations and sector expertise retained Stronger more balanced portfolio of customers in both public and private sectors Integration delivered on plan and on budget
Commercial addressable market 16.4bn Other 20% Hard Services 19% IFM 12% Security 21% Cleaning 28% Opportunity exists in IFM, Bundled and Single Service Source : Credo
Growth rates TFM represents a strong growth market 6 UK Outsourced FM Market Service Gro owth Rates % 2 Source : Frost & Sullivan 2 Single Growth Rate 2012 2013 2014 2015 2016 Multi-Service Growth Rate TFM Growth Rate
A selection of our clients
Private sector strategy Real customer service focus Sector based approach Operational and structural realignment Focus and Single to Service line and subject matter integrated geographic experts service offering expansion TOM Target Operating Model COE service line centre of excellence Innovation
Transport specialists Network Rail Sector expertise and excellence 5 year contract t worth 15m pa 17 stations, 400 Operational site portfolio Cleaning excellence and logistics strength Sector opportunity - full soft services portfolio imminent Network rail currently procure around 5bn of outsourced service lines
Shopping centres Grown by 30% because able to offer an integrated service Market is demanding responsiveness and a sector specific approach Managing agents and property owners Services - Cleaning, Security and M&E Wider market reputation is growing Current pipeline: - 2015 JLL, Westfield and Hammerson - 2016 Land Securities, CBRE and PruPim
Eden Catering in the Education Sector Strong Brand combined with UFSM Currently servicing 260 Primary and 35 Secondary Schools Rejuvenation in the marketplace Market opportunity 30% outsourcing penetration Great people with a vibrant food proposition Award-winning sustainable and healthy food provision My Eden software
BBC IFM Customer Experience 5 year contract worth 150m all buildings and services except catering Broadcasting House in London, Media City in Salford, Pacific Quay in Glasgow Broadcast continuity is mission critical - over 45% of all UK TV output Mobilised on 1 April 2014, with the transfer of 1,100100 staff under TUPE from three different incumbent FM suppliers Vision of Customer Experience key Substantial additional works and projects
Sony International IFM in 27 countries since February 2015 Offices, R&D facilities and retail sites Hybrid solution Managing agent & self delivery Strong customer service focus and value add Opportunities through additional buildings and services in Europe and UK
B&Q the power of customer relationships Service excellence and customer trust Expansion of cleaning and then catering Manage all coffee locations Reputation strong Further opportunities for IFM at HQ and in-store services
The opportunity Integrated FM Sector Specialisation Technical Customer Experience Cleaning Retail and Commercial Customer International Security National reach Outstanding people Catering
Q&A
Middle East social and economic update Colin Foreman News editor, MEED
GCC 2015: A Maturing Market Interserve Capital Markets Day: 17 June 2015
Overview - Challenges Demographic challenge services/employment Lower oil prices budget deficits Post global financialcrisiscrisis Winning over bankers Real estate What goes up can also go down 57 2014 MEED Projects
Overview - Response Focus on job creation and social infrastructure Maintaining oil production Engage private sector for project deliver/funding More measured approach to property 58 2014 MEED Projects
Leading up to 2015 Pre 2009 Boom across the region before the global financial crisis Dubai leads with man made islands, worlds longest canal super tall towers, new cities. Name lending, currency revaluation, $147 oil price Soaring real estate prices 2009 20112011 Debt crisis in Dubai recession, dents confidence around region Oil prices briefly drop to $36.61 then rise back above $100 Saudi Arabia takes centre stage in the region Qatar wins World Cup Abu Dhabi nuclear 2012 2014 Capital flight from Arab spring countries Market confidences slowly returns Dubai real estate starts sellingagain Massive infrastructure investment 2013 Metro contracts 59 2014 MEED Projects
The market turns again in 2015 Oil Price slide in late 2014 bottoms at $46 in January 2015 With prices below break even decision making in exporting markets slows Price rebounds to above $60 in. $65 now touted as new normal Politics Ageing leadership UAE, Oman and Saudi Arabia Salman bin Abdulaziz becomes King of Saudi Arabia in late January Major shape up of ministries in Saudi Arabia Security Military actions in Yemen IS/ISIS in Iraq IS bombing in Eastern Province Real Estate After three years of completing projects Dubai is over supplied New mortgage legislation introduced at end of 2013 has impact 60 2014 MEED Projects
Fundamentals stay the same: Population growth Total Population, 2005 2017 (millions) 60.0 UAE KSA 50.0 Qatar 8% Oman Kuwait 40.0 7% 6% 10% 9% 8% 7% 6% 30.00 5% 20.0 10.0 3% 2% 4% 4% 3% 3% 3% 3% 3% 3% 2% 2% 1% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015f 2016f 2017f 0% 61 2014 MEED Projects
GDP composition and GDP per capita Saudi Arabia is largest economy Qatar high highest GDP/capital in the world 62 2014 MEED Projects
Oil remains important Source: BP 63 2014 MEED Projects
The oil price Average oil price 2002 2016 ($ a barrel) 105 95 85 $ a ba arrel 75 Close to a 65 50 per cent fall in 55 the average 45 annual oil price! 35 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F 2014 MEED Projects
Drop in oil price = Drop in GDP GCC nominal GDP, 2005 2018 ($bn) 1,900 1,700 A 10% 15% 15% drop in GDP this year GDP will not recover until 2018 $bn 1,500 1,300 1,100100 900 700 500 65
And a sharp fall in government revenues GCC budget balance, 2002 2018 ($bn) 2014 MEED Projects
The financial impact governments go into the red GCC budget balance, 2002 2018 ($bn) 250 200 150 100 $bn50 0 50 100 150 200 2014 MEED Projects
Budgeted spending is up (except for Kuwait) Budget comparison 2014 15 ($bn) $bn 250 200 150 100 0.6 Qatar has extended its budget pro rata to end of 2015 9 4.5 6.3 17 15 10 5 0 5 % change 10 50 15 0 Saudi Arabia Oman UAE Kuwait* Dubai 2014 2015 Percentage change (%) 20 2014 MEED Projects
Projects Market 69 2014 MEED Projects
Historical awards 2014 was record year Total contract awards in the GCC, 2008 14 ($m) 180,000 160,000 140,000 120,000 127107 149536 139182 133210 118408 161328 170550 100,000 $ m 80,000 60,000 40,000 20,000 0 2008 2009 2010 2011 2012 2013 2014 70 Source: MEED Projects
Oil price and projects market not as close related as you might think Value of GCC contracts awarded correlated against the average oil price ($m) $m 180,000 160,000000 140,000 120,000 100,000 80,000 60,000 40,000 20,000000 2009 saw oil price collapse but record year 2014 was best ever year for contract awards 120 100 80 60 40 20 Aver rage oil pri ice ($ a bar rrel) 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 0 71 Source: MEED Projects
By Country Qatar, Oman and Kuwait had record years Value of GCC contract awards by country, 2008 14 ($m) 80,000 70,000 60,000 56453 50,000 40,000 30,000 25355 29695 41989 20,000000 10,000 0 2229 14829 20 008 20 009 20 010 20 011 20 012 20 013 20 014 Bahrain Kuwait Oman Qatar Saudi Arabia UAE 72 Source: MEED Projects
Finding a new equilibrium in 2015 Value of GCC awards down 28 per cent on last year Surprising results Saudi Arabia up, UAE down, Qatar broadly flat Contractors and clients need to find new pricing equilibrium especially in oil and gas Cost consultants say there is a respite in price inflation Expectation that market will accelerate due to event deadlines and $65/barrel oil price 73 Source: MEED Projects
GCC project priorities in 2015 and beyond Oil, Gas & Petrochemicals Upstream (Maintain production) Downstream (more refined products) Petrochemicals (Industrial development and employment) Infrastructure Transport (Ports, Airports, Railways & Roads) Utilities (Power & water) Social (Housing, Education & Healthcare) Real Estate Private sector development Destination Tourism Dubai Expo 2020 Qatar World Cup 2022 Grand Prix 74 2014 MEED Projects
Saudi Arabia - Snapshot Low oil prices King Salman bin Abdulaziz al Saud Crown Prince Mohamed bin Nayef al Saud Deputy Crown Prince Mohammed bin Salman al Saud Yemen e military action/change a of strategic focus (Sunni bloc/iran) Spending this year is up Refocus of priorities (11 stadiums) Education, healthcare & housing Changing contracting landscape Aramco PM venture $160m ( 103bn) over oe10 years 75
UAE- Snapshot Low oil prices Direct impact Reduction in capital expenditure Counter cyclical? Oil production Increasing ceas gsae state involvement e in business Real estate Emirati housing, retail Low oil prices Indirect impact Real estate over supplied Still niche areas for development Grade A commercial Destination schemes es Infrastructure (Airport) 76
Qatar- Snapshot Low oil and gas prices Major infrastructure contracts let more to come Overheating market/supply chain Prioritising projects either for 2022 and 2030 Limited local players payessoso real opportunities for internationals New infrastructure needs maintaining FIFA corruption investigation Qatar not implicated but a concern Publicly officials committed to event and 2030 goals Danger of losing impetus, not projects themselves es Worker rights 77
Oman- Snapshot Large infrastructure programme Steady market attracting interest Government committed to projects Funding concerns due low oil prices Post Arab Spring corruption crack down Low bidder wins 78
Q&A
Facilities Management in the Middle East Saeed Ahmed
FM services in the Middle East INTEGRATED MANAGEMENT SERVICES QSHE SERVICES CALL CENTRE MEP MAINTENANCE CLEANING SECURITY MINOR RECEPTION STOCK / MAIL AND AND MESSENGER CONCIERGE WORKS / PROJECTS SUPPLIES MANAGEMENT SPECIALIST MAINTENANCE LANDSCAPING WASTE MANAGEMENT PEST CONTROL CATERING SERVICES
Middle East FM market Country Outsourcing Rate Oman 15% Kuwait 21% Bahrain 35% Qatar 37% UAE 45% KSA 31% Source - Credo
Relative size of Middle East FM market Relatively large, mature markets Saudi Arabia Source - Credo
Developing markets Source - Credo
FM Growth Drivers High Levels of Construction Activity Dubai Expo 2020 Qatar Vision 2030 Investment in aviation Gulf railway Government plans & visions to meet the demographic challenges Improving pov education educato systems s Increased healthcare facilities Growing private sector Investment in transport (particularly air and rail) Leisure, entertainment, hospitality and culture International ti spotlight on Middle East Increasing awareness of the need to protect the investment in the assets, driving improved FM standards and increased outsourcing
Mega Developments, UAE Mohammed Bin Rashid City Landmark development compromising of leisure and tourism destinations, retail, residential, arts and culture Project cost estimated at AED 3 billion
Mega Developments, UAE Mall of the World Worlds first temperature controlled city Occupies 48 million square feet Largest shopping mall in the world, 8 million square feet
Mega Developments, UAE Dubai Creek Harbor Will house the worlds tallest twin towers 3 times the size of Downtown Dubai 39,000 residences and 22 hotels
Mega Developments, UAE Dubai Expo Site 438 hectare site area 150 hectare gated expo area 153,000 expected average weekly attendance
Mega Developments, UAE Dubai World Central Site Based around the new Al Maktoum International Airport Will include logistics, aviation, commercial, exhibition, humanitarian, residential and other related businesses
Mega Developments, UAE Dubai Opera District Vibrant cultural community in Downtown Dubai Will feature luxury hotels, residential, retail, promenades and parks, centred around the 2,000 seat multi format Dubai Opera
Mega Developments, KSA King Abdullah Financial District Providing over 3 million square metres of space Smart City providing offices in high quality and sophisticated infrastructure
Mega Developments, KSA King Abdullah Economic City Providing 1 Million jobs and homes for 2 million residents Will contain a sea port and industrial districts
Mega Developments, KSA Jizan Industrial City Will cover 117 million square metres Providing 500,000 jobs and homes for 300,000 residents In addition to industrial, will include residential and commercial space
Mega Developments, KSA Kingdom City 5 million square metres of space in Jeddah Home of Kingdom Tower, tallest tower in the world Provides primarily residential and commercial space
Mega Developments, KSA Saudi Railways Expansion of current rail network across the Kingdom 2,750 km of railway, 23 stations Linked to the Gulf Railways Project, connecting the GCC Countries
Mega Developments, Qatar QP District Covering circa 7 hectares in West Bay next to the financial district Nine office towers, one hotel and energy centre
Mega Developments, Qatar Doha Festival City Mixed use retail, entertainment, leisure and hospitality destination 250,000 square metres of gross leasable space, providing 500 retailers and 85 restaurants
Mega Developments, Qatar Qatar Rail Multi-billion dollar state of the art integrated rail network Doha Metro, Lusail Light Rail, Long Distance Passenger and Freight FM Services Procurement commencing in 2015
Mega Developments, Qatar Katara Cultural Village Spread over 1 million square metres between West Bay and the Pearl Includes theatres, concert halls, exhibition galleries and cutting-edge facilities, aims to become a world leader for multi-cultural activities.
Outlook for growth Industry estimates suggest 10-20% annual growth across the GCC Growth in a large number of sectors Mixed Use Developments/Mega Projects Commercial/Residential/Retail Real Estate Healthcare Aviation Education Defence Government Services Increasing awareness of the need to protect the investment in the assets, driving improved FM standards and increased outsourcing
Al Ra idah Investment Company King Abdullah Financial District 100+ Buildings providing 3M square metres of space, providing Commercial, Hospitality, Retail, Leisure and Residential Space. Includes Monorail around the site that links directly to the Riyadh Metro station with direct links to the airport. Information Technology and Communications Complex 40+ buildings catering for IT and Communications companies. We provide Managing Agents services to both Smart City developments, covering a full range of FM and Property Management Services Circa 70 Management Staff with circa 35% Saudisation, managing an FM delivery team of circa 5,000 staff Mobilisation commenced in November 2014 3+2 Year contract
Interserve Differentiators Trusted provider with long successful history in the Middle East Regional capability Integrated self delivery solutions Interserve best practice & quality Innovative technology Partnership approach Flexible commercial offerings SustainAbilities Global Expertise, Local Knowledge
Summary Large FM market in the Middle East Relatively l low levels l of FM outsourcing, expected to increase Demographic challenge leading to - Mega Developments to create employment and tourism Targeted Private Sector growth Investment in Education and Vocational Training Investment in Infrastructure, Aviation and Rail Investment in Healthcare Industry expects 10-20% annual growth of FM market across the region Developers looking to protect their investment, best practice FM solutions sought Partnered with established and well reputed local providers
Q&A
Oil & Gas in the Middle East Andrew Beaney
Interserve Oil & Gas operations in Qatar, UAE and Oman
Business Streams
Adyard YEAR OF ACQUISITION: 2013 2014 REVENUE: c 60m MANPOWER: 2,000 ORDER BOOK: c 110m YARDS: Mussafah, Liwa, Fujairah KEY PROJECTS ON HAND: 1. ADMA/HDEC - SARB 4 Process Modules c 28m 2. ZADCO - Installation of ESP s - c 52m 3. ADMA - Replacement of Helidecks c 18m
TOCO YEAR OF ACQUISITION: 2013 2014 REVENUE: c 60m MANPOWER: 2,000 ORDER BOOK: c 120m YARDS: Muscat, Mukhaizna, Sur, Fahud, Safah & WL KEY PROJECTS ON HAND: 1. OXY Mukhaizna - Oilfield works c 77m 2. Bahwan Exel/PDO - 4 PL Rig Moving Services c 72m 3. OXY Safah WL - Oilfield Services c 64m
Madina Group YEAR OF ACQUISITION: 2007 2014 REVENUE: c 80m MANPOWER: 2,500 ORDER BOOK: c 50m WORKSHOPS: Doha & Ras Laffan KEY PROJECTS ON HAND: 1. Shell GTL Shutdown works c 10m 2. Maersk Oil Maintenance Manpower Service c 8m 3. Technip (Oryx GTL) Fabrication works c 10m
Shared Services Shared Services Integration of the three businesses One functional head instead of three BD and Estimating QHSE Commercial HR IT Finance
Order Book Growth 350 300 250 200 m 150 100 50 0 YE2012 YE2013 YE2014
Work in Hand SARB 4 (engineering, g procurement & construction) Zadco ESP (submersible pump installation) MSPP (construction of 227km pipeline) BP Khazzan (construction of 60km pipeline) Shell Pearl (maintenance services) Oxy (oil field services)
Forecast of GCC contract awards $bn 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000000 5,000 0 2012 2013 2014 2015 2016 Source: MEED Actual Forecast
Market trend 18% cut in global capex spend (2014 to 2015) Reduced new project awards & mega projects LNG projects delayed or cancelled Customer response Operational efficiency Maximise existing assets More competition and margin pressures Little LNG investment in ME Strategy Focus on operational maintenance Focus on operational capex Brownfield LNG/ Maintenance Low commodity prices Power & infrastructure boost other sectors likely to grow Target key prospects outside Oil & Gas
Revenue and Workload Growth 350 300 250 200 m 150 100 50 0 YE2012 YE2013 YE2014 Future workload Revenues
The GCC market 85bn 13bn Total value of GCC Oil & Gas projects from 2015 2017 (3 years) Combined stated value of oil & gas related spending by companies in the energy sectors in GCC IEC Addressable Market value of contracts where Interserve Engineering & Construction (IEC) could have participation, including contracts where we may lack capacity, local presence or track-record record 2.8bn* IEC Pipeline IEC Strategic & Current Prospects 0.8bn* IEC Pipeline Current Prospects *Strategic Prospects: Target projects identified. Current Prospects: Proposals submitted to clients, proposals being bid and negotiated. IEC Pipeline values are taken from IEC Pipeline trackers system (some prospects are long term framework agreements). Total value of Middle East Oil and gas Projects are based on MEED values from January 2015 December 2017.
Saudi Arabia and Kuwait Saudi Arabia and Kuwait Exploring opportunities over medium term Entry through existing relationships
Summary We have seen good growth in our oil and gas business since acquisition Oil price has had little impact We focus on operations and maintenance Target brownfield operational capex New markets being explored Still plenty of opportunity for growth
Q&A
Summary
Agenda TimingStrategy TopicPresent Speaker Future 08.45 Strategic update Adrian Ringrose 09.15 UK Frontline services Dougie Sutherland, Yvonne Thomas and Ian Porée 10.00 Commercial FM offering Jeff Flanagan 10.45 Coffee Break 11.00 Middle East social and economic update MEED (Colin Foreman) 11.45 Middle East FM offering Saeed Ahmed 12.30 Middle East Oil & Gas Andrew Beaney 13.15 Wrap up and final Q&A 13.30 Lunch 14.30 Ends
Executing our vision Strategy Present Future Building strong core businesses Balanced & strong portfolio Increased Support Services offering Capturing related expansion opportunities Successful M&A execution Broad based growth Strong organic growth Expand internationally Record orderbooks Managed volume growth