WS Atkins plc UK growth markets Analyst breakfast 28 March 2017 1 - - PowerPoint PPT Presentation

WS Atkins plc

UK growth markets

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Analyst breakfast

28 March 2017

Nick Roberts

UK and Europe, chief executive officer

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Overview

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The market

• UK Government has reaffirmed its commitment to key national

projects in its recently announced industrial strategy

• Large project pipeline includes High Speed 2, Crossrail 2, Hinkley

Point C and Heathrow expansion

• Well funded regulatory cycles in rail, roads and water with attractive

growth opportunities Atkins

• Multi disciplinary offering with differentiation through our technical

excellence, increasing use of technology and our global design centres

• Strong position and delivery track record in a market with good

growth opportunities.

What we do

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Transportation

• Highways and intelligent

transport systems

• Rail and urban transport
• Aviation

Infrastructure

• Urban development
• Buildings
• Water and environment
• Education

Aerospace, Defence, Security and Technology (ADS&T)

• Aerospace
• Defence and security
• Technology solutions and

services

• Business consulting

Energy

• Nuclear
• Power and renewables

Our markets and clients

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A well balanced portfolio (£944m revenue)

Revenue by sector

Rail (including mass transit) Defence and security Highways Water and environment Aeropsace and aviation Education Urban development Buildings Other 34% 15% 14% 8% 7% 6% 9% 3% 4%

Revenue by client type

Public sector:local government Public sector: national government Regulated Private sector 31% 28% 27% 14%

• UK segment includes F+G, our project and programme management

business

Financial performance

• UK segment includes F+G, our project and programme management business
• H1 2017 UK and Europe operating margin of 8.7%.

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UK and Europe revenue

200 400 600 800 1,000 2012 2013 2014 2015 2016 £m

Continuing operations Disposals

Operational excellence and portfolio optimisation success

5.7 6.4 6.3 6.7 7.8

4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 2012 2013 2014 2015 2016

UK and Europe operating margin (%)

Our focus

Operational excellence

• Organisational re-shaping and consolidation
• Measures to improve productivity

Portfolio optimisation

• Highways services
• Poland
• Portugal

Sector growth

• Terramar acquisition
• Organic investment.

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2011 to 2016

Our focus

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Ongoing operational excellence initiatives Digital opportunities

• Digital asset management
• Intelligent mobility
• Cyber

Four key growth markets

• Strategic highways
• Water
• Defence
• High speed rail.

2017 and beyond

Growth through differentiation

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Our investment in Intelligent Mobility, Digital Engineering and Digital Asset Management increasingly recognised by our clients. Well-positioned to build on the strength and depth of our client relationships, develop strategic partnerships and relationships with contractors and other supply chain partners, to deliver added value services and propositions Collaboration Client relationships Technology Our clients value our unique ability to bring experience and best practice expertise from across the different market sectors in which Atkins operates and from our global design centres

Strategic highways

10 Contains private information

Total capital spend per annum across strategic highways of £3.4bn Strategic highways – 7,500 miles of strategic highways in UK, including 4,500 miles in England Core design services

• Strategic highways improvements – UK wide
• Smart Motorways programme

Advisory and consultancy services

• Author of Highways England’s strategic economic growth plan
• Route strategy work to inform second Road Investment Strategy 2 (2020-2025)
• Asset valuation services for all four UK Strategic Highway Authorities.

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Strategic highways

Market overview

Atkins’ addressable spend in UK strategic highways estimated in excess of £400m per annum

Strategic highways

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Our clients

Strategic highways

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Opportunities for growth

Highways England capital spend expected to grow at 11% CAGR (2017 to 2020)

• 4% CAGR expected on consultancy fees over the same funding period
• Maintain 20% market share in design services and increase our share

in consultancy services across specialist and operational areas

• Growing spend with Transport Scotland and Welsh Government
• New opportunities based on our ability to mesh technology with legacy

infrastructure - intelligent mobility, digital asset management.

Strategic highways

• An integrated, collaborative approach with our JV partner (CH2M)
• Design will create £70m of construction efficiencies
• Significant design delivery from our global design centres
• Virtual reality modelling from BIM to allow ‘drive through’ of completed

scheme

• Commitment to deliver a full digital legacy for operation and maintenance.

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Current project - A14 Cambridge to Huntingdon

Water

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Water

• Water market is changing rapidly in response to market reforms and
• utcome-based regulation
• Major frameworks with water utility companies in England and Wales

through AMP6 and AMP7 spending cycles

• AMP6 (2015-2020) totex of £44bn, work in preparation for AMP7
• Scotland and Northern Ireland capital spend of £4.5bn (2015-2021)
• Environment Agency spend £2.3bn (2015-2021)
• International engineering services market, downstream from Acuity.

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Market overview

Atkins’ addressable spend in UK water market estimated at £500m per annum

Water

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Our clients

Water

Market growth driven by increasing water scarcity, population growth/urbanisation, climate change/flooding and carbon reduction Development of new digital value propositions and innovative commercial models linked to delivery of client outcomes

• Around 15% market share of £500m per annum addressable spend across

the UK

• Digital asset management and cyber capability with our key water clients

Skills, knowledge and expertise export to drive our growth in the global water market

• Atkins currently has less than 1% of our estimate of addressable spend of

£500m+ per annum for our services offered out of the UK

• Delivering engineering services downstream of Acuity.

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Opportunities for growth

Water

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• An alliance delivering £2-3bn of essential works for Thames Water

– the UK's largest water and wastewater services provider (15m customers)

• Alliance members are incentivised on the basis of collective

performance, with incentives aligned to Thames AMP6 outcomes

• Partnership comprises Thames Water, Balfour Beatty, Skanska,

MWH, Costain, Black & Veatch and IBM.

Eight2O alliance

Water

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• New £4.3bn, 25km tunnel – biggest infrastructure project ever

undertaken by the UK water industry

• JV between Atkins and Arup appointed to provide design services into

the delivery JV for the West section

• £416m West section covers 7 sites on 6km stretch between Acton and

Wandsworth

• Connecting new super sewer into existing Thames Water network
• Completion is scheduled for 2022.

Thames Tideway Tunnel – West section

Carnwarth Road riverside worksite - main drive site for West Tunnel boring machine

Defence

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Defence

Design, engineering and project management expertise to the UK Ministry of Defence:

• Four front line commands
• Defence Equipment & Support organisation
• Defence Infrastructure organisation
• Defence Science &Technology Laboratory

Mechanical design and analysis of systems used on planes, ships, submarines and land vehicles Procurement of military equipment Advising on through-life management of military equipment and infrastructure Design of new facilities/infrastructure, particularly nuclear related facilities.

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Market overview

Front line commands Defence equipment and support Defence Infrastructure Organisation Other Defence industry

Split of £750m of addressable spend

Defence

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Our clients

• Increasing defence equipment spending by £12bn over the

next decade (to £178bn)

• Additional £2.5bn counter-terrorism spending
• Increase in spending on cyber security totalling £1.9bn by

2020

• The UK’s nuclear deterrent will be renewed
• Specific initiatives:

− DE&S support with their new ‘balanced matrix’ model − Submarine enterprise support − Digital Asset Management as a Service − Cyber security and resilience − MOD ICT implementation support − Intelligent mobility in the military space.

Defence

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Opportunities for growth

Atkins’ addressable spend in the defence market estimated at £750m, increasing to £1bn in 5 years.

*National Security Strategy & Strategic Defence and Security Review, November 2015

“The threats to our country are growing ... the world is more dangerous and uncertain today than five years ago”*

Defence

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Armoured Fighting Vehicles

• £4.5bn procurement of next

generation Armoured Fighting Vehicles (currently known as Scout) for the Army

• First ever digitally enabled platform

with step change military capability

• Atkins provide the specialist

engineering expertise to support the MOD’s procurement.

Contains public sector information licensed under the Open Government Licence v3.0.

High speed rail

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High speed rail

• In the UK high speed rail (HSR) means HS2, although this

includes a wide range of associated transport and infrastructure opportunities

• Agreed capital spend budget for HS2 of £55.7bn (phase 1 and

2 including rolling stock), we estimate our addressable market at £2.5bn

• Major high speed schemes in Scandinavia (£35bn of projects

between 2017 and 2035), the US and Asia, we will build on the expertise and experience gained on HS2.

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Market overview

Global high speed rail

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Opportunities for growth

Export opportunities where we can offer a clear differentiator for example in the delivery model, specialist skills or a compelling value proposition.

£1.78 trillion in value of high speed projects planned including Asia Pacific £718bn Europe £579bn Middle East & Africa £204bn North America £253bn

High speed rail

• Valued at £250-350m over 10 years
• Joint venture with CH2M and SENER;

Atkins share = 40%

• Scope (civils, stations, planning and

environment, railway systems):

• Preparation/evaluation of tenders for the main works

contracts, enabling works start-up

• Design management, assurance and integration
• Technical approvals and BIM compliance
• Programme, contract and construction management
• Environmental management and planning consents
• Support to stakeholder management and public consultation
• Contract extendable through to commissioning

and operation.

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HS2 Engineering Delivery Partner

Extending deep and sustained client relationships

• Highways England

New propositions, notably digital

• digital asset management in the water and defence industries

New revenue opportunities in growing markets

• defence
• strategic highways

Market share opportunities Export opportunities for UK expertise

• water
• high speed rail.

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Key take-aways

Opportunities for growth

Summary

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The market

• UK Government has reaffirmed its commitment to key national

projects in its recently announced industrial strategy

• Large project pipeline includes High Speed 2, Crossrail 2, Hinkley

Point C and Heathrow expansion

• Well funded regulatory cycles in rail, roads and water with attractive

growth opportunities Atkins

• Multi disciplinary offering with differentiation through our technical

excellence, increasing use of technology and our global design centres

• Strong position and delivery track record in a market with good

growth opportunities.

Disclaimer

The information in this presentation pack, which does not purport to be comprehensive, has been provided by Atkins and has not been audited or otherwise 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
• utcomes 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. Nothing in this presentation should be construed as a profit forecast.

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