atkins analyst presentation/media/files/a/atkins-corporate/... · why energy is a good market 4...

Analyst presentationAtkins’ Energy business

Atkins’ Energy businessDr Martin Grant, CEO, energy

Agenda

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● The energy market

● Our business, an overview

● What we do

● The future.

Why energy is a good market

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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

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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

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• 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.

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Atkins’ EnergyBusiness overview

What we do

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● 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*

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Clients we work for

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The importance of our people

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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

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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

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What we doOil & Gas

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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

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• 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

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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.


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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.


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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

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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.


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.

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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.


Leaving

DubaiSailing to

Scotland

Floating

off Cosco

vessel

Lowering

into position

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Atkins

Fixed structures

Poyry acquisition (2011)

Process engineering

Houston Offshore

Engineering (2014)

Floating structures

Boreas (2007)

Subsea engineering

Acquisition strategy

Houston Offshore Engineering

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• 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.

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What we doNuclear

Nuclear

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• 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

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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

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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

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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)

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Fuel

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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

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• 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.

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What we doPower and renewables

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Within Power we work across generation, transmission and

distribution and more recently carbon capture and storage

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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

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Atkins’ EnergyThe future

Conclusion

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● 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

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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.

atkins analyst presentation/media/files/a/atkins-corporate/... · why energy is a good market 4...

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