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This analyst presentation from our energy business gives insights into the market, our business and operations, projects around the world, our acquisition strategy and the future for energy at Atkins.
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Analyst presentationAtkins’ Energy business
Atkins’ Energy businessDr Martin Grant, CEO, energy
Agenda
3
● The energy market
● Our business, an overview
● What we do
● The future.
Why energy is a good market
4
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.”
Energy Outlook 2030, BP, 2013
For both developing and developed nations…
“...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, 2014
Why energy is a good market
Investment levels from 2014 to 2035
5
Steady rise in annual investment
from $1.6tn in 2013, to $2tn per
year in 2030s
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, 2014
between
2014 to 2035
Why energy is a good market for Atkins
6
• 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.
7
Atkins’ EnergyBusiness overview
What we do
8
● 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
Thermalpower andrenewables
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
India
Sectors: oil & gas,
nuclear, power
Staff: 52
Australia
Sectors: oil &
gas
Staff: 63
Middle East
Sectors: oil & gas,
nuclear, power
Staff: 163
*Numbers based on FTE
at end of Q1 FY14/15
Total
1,496*
9
Clients we work for
10
The importance of our people
11
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.
0.0%
5.0%
10.0%
15.0%
20.0%
2010/11 2011/12 2012/13 2013/14
Staff turnover
Our financial performance
12
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) 82.0 98.6 128.4 151.9 169.6
Operating profit (£m) 8.4 8.5 11.4 13.8 15.1
Margin 10.2% 8.6% 8.9% 9.1% 8.9%
Average staff numbers 805 970 1,095 1,307 1,424
13
What we doOil & Gas
14
Oil & Gas,
what we do
Asset integrity
management and
structural analysis
Design of terminals,
and storage facilities
Process
engineering
Subsea engineering
Platform design
Oil & Gas
15
• 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.
An example brownfield projectTalisman compression upgrade project, Claymore platform
16
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.
An example brownfield projectTalisman compression upgrade project, Claymore platform
17
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.
An example brownfield projectTalisman compression upgrade project, Claymore platform
18
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 2013.
An example greenfield projectPremier’s Solan development
19
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.
An example greenfield projectPremier’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 $30m
Some of the complexities and
challenges in the design derive
from the fact that the tank is
pressurised for offload (a unique
feature), and that it has a 30 year
design life.
20
An example greenfield projectPremier’s Solan development
21
Our site engineers supported
the tank’s construction in Dubai
during late 2012 to early 2014
It took 5 million man hours to
construct, contained 120km of
welding and weighed 10,150
tonnes
It was lowered into position by
the world’s largest offshore
crane.
An example greenfield projectPremier’s Solan development
Leaving
DubaiSailing to
Scotland
Floating
off Cosco
vessel
Lowering
into position
22
23
Atkins
Fixed structures
Poyry acquisition (2011)
Process engineering
Houston Offshore
Engineering (2014)
Floating structures
Boreas (2007)
Subsea engineering
Acquisition strategy
Houston Offshore Engineering
24
• 150 people based in Houston, Texas
• Leading expert in design of floating structures
• With intellectual property around a particular type of structure (tension leg platform)
• Aligned culture and brand positioning, with complementary skills
• Creates both client and service synergies
• Strengthens our position in Houston, the global HQ of the oil industry and positions us for the deeper water plays being pursued by the oil majors
• Reported revenue of US$ 41m in FY13.
25
What we doNuclear
Nuclear
26
• 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.
New build
27
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).
Generation
28
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.
Decommissioning
29
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).
Atkins, as part of the a.m.a. joint venture,
with Areva and Mace, was appointed
preferred bidder on 15 April 2014. 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.
Silos Direct-encapsulation Plant (SDP)
30
Fuel
31
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.
Nuclear Safety Associates
32
• 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.
33
What we doPower and renewables
34
Within Power we work across generation, transmission and
distribution and more recently carbon capture and storage
34
35
Offshore wind involves
our wind, oil & gas,
geotechnical and
electrical engineering
capabilities
Offshore wind farm
Offshore substationMonopile
3-phase AC
Jacket structure
Cable to shore Land connection point
Design envelope for the
wind turbine foundations
3636
Our projects
Islay
Rampion
North Hoyle
Onshore SWP
Test Rig
Round 1 wind farm
Walney
Burbo
Nordsee Ost
Galloper
East Anglia
Round 1 wind farm
Hohe See
Race Bank
Dudgeon
Beatrice
Moray
Kincardine Dogger Bank
Humber Gateway
Lincs
Atkins’ involvement:10GW - The capacity of wind
turbines in offshore wind farm
projects Atkins has supported
UK offshore wind: 3.7GW currently installed
8GW expected by 2016
18GW expected by 2020
37
Atkins’ EnergyThe future
Conclusion
38
● 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.
Disclaimer
39
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.