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WS Atkins plc
UK growth markets
1
Analyst breakfast
28 March 2017
Nick Roberts
UK and Europe, chief executive officer
2
Overview
3
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
4
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
5
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%.
6
UK and Europe revenue
0
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 6.36.7
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.
7
2011 to 2016
Our focus
8
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
9
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
10Contains 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.
11
Strategic highwaysMarket overview
Atkins’ addressable spend in UK strategic
highways estimated in excess of £400m per annum
Strategic highways
12
Our clients
Strategic highways
13
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.
14
Current project - A14 Cambridge to Huntingdon
Water
15
Water
• Water market is changing rapidly in response to market reforms and
outcome-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.
16
Market overview
Atkins’ addressable spend in UK water market
estimated at £500m per annum
Water
17
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.
18
Opportunities for growth
Water
19
• 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
20
• 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
21
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.22
Market overview
Front line commands
Defence equipment and support
Defence Infrastructure Organisation
Other
Defence industry
Split of £750m of addressable
spend
Defence
23
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
24
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
25
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
26
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.
27
Market overview
Global high speed rail
28
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.
29
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.
30
Key take-awaysOpportunities for growth
Summary
31
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, HinkleyPoint 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
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. Nothing in this presentation should be
construed as a profit forecast.
32