Investor Presentation - Investis...
Transcript of Investor Presentation - Investis...
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Investor Presentation26 March 2004
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Introduction
Today we will:-
Tell you what we do
How we fit in the ‘Professional & Support Services Sector’
Explain our strengths, opportunities and potential
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Introduction
Today we will not talk about:-
Current trading
Future financial prospects
Revised strategy
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Agenda
OverviewOur business
Design and Engineering SolutionsDesign, Environment & EngineeringIndustry
Management & Project ServicesFaithful & GouldPFI
TransportHighways & TransportationRail
Our peopleConclusion
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Atkins at a glance
With a turnover of c.£1.2bn, Atkins is:
the largest engineering consultancy in the UK
the largest multi-discipline consultancy in Europe
the 8th largest design firm in the world
Sources: NCE Consultant Files 2003
SFCEA 2003
Engineering News Record 2003
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Value Chain
Realestate
PlanDesign
EnableConstruct
FM
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Value Chain
Realestate Plan Design Enable Construct FM
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Turnover c.£1bn
Value Chain
Realestate Plan Design Enable Construct FM
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Location of staff
UK 11,300
The Gulf 500 Eastern Europe 100
Europe 600
USA 500
South East Asia 1,000
Total: 14,000
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Organisation structure
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Design & Engineering Solutions
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Design & Engineering Solutions
Half Year2003-04
Turnover £131.3mOperating profit £5.0mOperating margin 3.8%
Number of staff 4,400
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Norman SchunterIvor Catto
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Norman Schunter
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Design, Environment and Engineering
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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DE2 overview
Turnover – c.£140m per annum
3100 staff architectsplanners engineersenvironmentalists surveyorsspecialist disciplines
Key markets education health public sector leisure commercialurban design
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DE2 overview
Design (50% of turnover)architecture and designbuilding services engineeringstructural engineeringlandscape architecturetown planningurban design
Environment (25% of turnover)contaminated land solutionswaste managementarchaeology and heritagesustainability consultancynoise and air pollution
Engineering (25% of turnover)civil engineeringgeotechnical engineeringtunnellingadvanced analysis
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Designing an icon
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Concept to Reality
“The World’s best hotel”
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Project Management Services
Building Services Engineering
Architecture
Civil & Structural Engineering
Geotechnical & Marine Engineering
Planning & Environmental Studies
Concept to Reality
Burj Al Arab
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We design the schools your children learn in
Education
Health
Public Sector
Leisure
Commercial
Urban Design
Liverpool City Academy
St Brides Primary School Leyton Schools
Education
FreemantlesSchool
Liverpool City Academy
St Brides Primary School Leyton Schools
Leyton Schools
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The hospitals that you are treated in
Education
Health
Public Sector
Leisure
Commercial
Urban Design
Health
Diagnostic Treatment CentreHereford Hospital
Wythenshawe Hospital Gartnaval Laboratories
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Education
Health
Public Sector
Leisure
Commercial
Urban Design
The services youdepend on
Job Centre Plus
Kent Constabulary PFI
Public Sector
Colchester Garrison PFI
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The places you go to relax
Education
Health
Public Sector
Leisure
Commercial
Urban Design
Leisure
Millennium Stadium
Durat Island
Faro Stadium
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The places you work in
Education
Health
Public Sector
Leisure
Commercial
Urban Design
Commercial
Swiss Cottage,London
China World Trade Centre, Beijing
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The cities that you live in
Education
Health
Public Sector
Leisure
Commercial
Urban Design
Urban design & regeneration
Glasgow Bridge
Greenwich Penninsula
Trafalgar Square
Song Jiang Garden CityShanghai
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DE2 markets
Order Book60% of budget revenue for 04/05 secured£180m total order book with high volume repeat business <10% of bids won on price alone£60m of framework and long tem relationship
CompetitionDesign: Arup, Norman Foster, BDPEngineering: Mouchel Parkman, Mott McDonald, Halcrow, WSPEnvironment: RPS
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Public sector investment
0
5
10
15
20
25
2002-03 2003-04 2004-05 2005-06
HousingTransportHealthEducation
Investment in priority areas 2002-03 to 2005-06 (£billion)
Source: HM Treasury Spending Review
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DE2 Summary
Large multi-discipline business
Technical excellence
Strong markets
We enjoy doing what we do
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Ivor Catto
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Industry
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Industry overview
Turnover – c.£120m per annum
1300 staff planners engineersscientistsenvironmentalists safety specialists
Engineering consultant serving Industry clients
Focus on high value engineering
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Industry overview
Utilities: 360° engineering planning, design and project management services
Oil and gas: Provision of high end engineering analysis services to the oil majors
Defence: Planning, design and system & safety engineering services for defence equipment
Utilities64%
Oil & Gas12%
Defence24%
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Supporting Key Clients
70% of revenue from 30 UK clients
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Focus
To make the complex simple
Solve client problems and reduce timescales / costs
Foster strong partnership relationships with key clients
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Utilities
Thames WaterWorking together for over 20 yearsWater Network Calming
Hydraulic modelling & analysisZone reconfigurationPressure management
Client ValueReduced water leakageReduced energy consumptionImproved water resource managementAsset life extension
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Oil & GasWorking for BP across the Globe
Safety engineering support in Vietnam (Hai Thach).
Process engineering support in China (Shanghai Ethylene Cracker Complex).
Simulation TechnologyConcept risk analysisStructural Integrity monitoringFinite Element AnalysisFatigue AnalysisSafety EngineeringComputational Fluid Dynamics
Structural engineering support in the North Sea (SNS).
Process engineering support in the Caspian Region (Sangachal).
Process engineering support offshore Angola (Block 18).
Safety engineering support in the Gulf of Mexico (Thunder Horse).
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Defence
Joint Strike Fighter
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Defence
A400M: HerculesReplacement
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Defence
Maritime Integration Support Centre
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Defence
NATO SubmarineRescue Assessment
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Industry competition
One of the UK’s largest Industry engineering consultants
Major competitorsUtilities – Mott MacDonald, Parsons Brinckerhoff, MWH Europe Oil & Gas – Genesis, DNV, AEA TechnologyDefence – QinetiQ, PA Consulting, NNC
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Industry order book
60% of budget revenue for 04/05 secured
£80m total order book
Only 5% of bids are won on price alone
Key Clients85%
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Industry opportunities
Fuelled by
Partnership approach with key clientsEnvironmental & Safety LegislationOutsourcing & supply chain consolidationMarket growthThe capability of our staff
Future
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Design & Engineering Solutions
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Management & Project Services
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Management & Project Services
Half Year2003-04
Turnover £109.3mOperating profit £3.0mOperating margin 2.7%
Number of staff 3,300
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Management & Project Services
Management ConsultantsProgramme & change managementManagement consultancy
Asset Management
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Richard HallDavid Clements
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Richard Hall
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Faithful & Gould (F&G)
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Why F&G Brand?
Brand strength in global cost management market
Clients & funders want their commercial advice to be independent
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F&G overview
A 'global' Project & Cost Management Consultancy
Big player in industry
c.£110m turnover per annum
1600+ staff worldwideQuantity surveyorsProject managersPlannersTechnical advisers
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F&G overview
Consultancy advice beyond property sector
Tradition of early exploitation of emerging markets
Rail Manufacturing Aviation Highways Commercial property Telecoms Pharmaceuticals
Banking Retail Health Education Oil & gas Nuclear Water
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F&G What we do
“We provide cost advice when clients wish to construct new buildings and infrastructure”
First port of call advising onEarly project cost Contractor procurementChange controlNegotiation of final project cost
We ‘live’ with projects from conception to completion
Cost is a vital issue
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F&G our clients
Longstanding international ‘blue chip’ client portfolio
Largest client – other parts of Atkins
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F&G Now and the Future
Strong order book2004/05 - 55% secured
Margin growth North American business developmentUrban regenerationPFI technical advisory market
The Future
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David Clements
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Basic structure of a PFI Project
Client
SeniorDebt
Project co /Shareholders
OperationConstruction
Equity
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PFI – the story so far
High-profile role as sponsor and investorProgression from Bridgend prison £0.4m to LUL £70mAtkins equity obligations total £100m25% now recycledEstablished major player in PFIChanged perception of company
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Atkins roles as PFI investor/sponsor
Client
SeniorDebt
Project co /Shareholders
OperationConstruction
Equity
Design
Facilities Management
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Atkins roles as PFI technical advisor
Client
SeniorDebt
Project co /Shareholders
OperationConstruction
CommercialManagement
ProjectManagement FM Advice
Life Cycle Costing
Cost Management
Design Advice Cost/Procurement
Design
Due Diligence/Risk Identification
IndependentCertifier
Design
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Atkins as PFI Technical Adviser
Involvement in c.130 projects with a total value of c.£7bn
Leading in technical services for PFI projects
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PFI – the way forward
Equity role will not be a presumption
Equity used sparingly to secure top table seat and gear up downstream revenues
Atkins will not be long-term holder of equity
Equity will be recycled to enable further projects to be bid
Lead with our skills in planning, designing, enabling and managing PFI projects
Utilising Atkins core skills
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Revisiting Metronet
Applying this model to LUL (Metronet):
Would we invest today?
Answer: under our new criteria we would invest £70m again
We will remain a major player
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Winning major projects
Current focus on unrivalled range of niche technical skills
Challenge to harness the power of Atkins to deliver major projects
Enhance wider programme and project management skills
Exploit major project opportunities in UK market (witness success of Bechtel)
We aim to become the automatic choice for major projects in the UK
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Management & Project Services
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Transport
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Transport
Half Year2003-04
Turnover £207.3mOperating profit £12.4mOperating margin 6.4%
Number of staff 4,700
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Richard DeaconTony Fletcher
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Richard Deacon
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Highways & Transportation (H&T)
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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H&T overview
Turnover c.£200m per annum
3000 staff PlannersEngineersTechnicians InspectorsManagers
1400 current contracts and projects ranging from £10k to £120m
Key marketsHighways AgencyLocal authorities
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H&T overview
Planning
Conceptual solutions to transport and regeneration issues
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H&T overview
Engineering & Systems Design
Design for the detailed solution: civil and technology
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H&T overview
Operations & Maintenance
Managing the highway asset and integrating maintenance
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H&T overview
Approximate split of turnover
10%
30%
60%Operations and
maintenance
Engineeringsystems design
Planning
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Highway Management forHighway Agency
Managing AgentAreas 2, 6, 10
MAC ContractArea 11
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Typical Super Agency Network
Stoke-on-Trent
Stafford
TelfordShrewsbury
Wolverhampton
Birmingham
Nuneaton
Northampton
Leicester
Coventry
RoyalLeamingtonSpa
Kidderminster
Worcester
Derby
DERBYSHIRE
STAFFORDSHIRE
CHESHIRE
SHROPSHIRE
WEST MIDLANDS
WARWICKSHIRE
HEREFORD & WORCESTER
NORTHAMPTONSHIRE
LEICESTERSHIRE
NOTTINGHAMSHIRE
Nottingham
Burton-on-Trent
A34
A500
A50
A34
A34A449
M6
A38A42
A50
A453
A38
A5
A5A452
A446
A452
M54
M42
M1
M6M1M6
M69
A5
A45
A45
A45
A46A45
A46
A423
A435
1100 carriageway kms
1100 structures
Client budget of £45m per year
180,000 vehicles/day
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Operations : Managing the Asset
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Maintenance Strategy –Managing the Budget
0.0
1 .0
2 .0
3 .0
4 .0
5 .0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
T im e: Y ears
Cost
: m
£
WorksLane C losure Charges
30 year maintenance programme cost budget
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Incident Management
Tank accident on M1
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Routine Maintenance
ResurfacingPatchingGully EmptyingRoad MarkingsSign MaintenanceTraffic ManagementFences LightingSafety BarriersWinter MaintenanceEmergencies & Accident RemediesCompound Maintenance
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Improvement Schemes
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Long Term Relationships
New Civil Engineer, February 2004:
“Atkins emerges as top CAT in Highways Agency rating scheme.”
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H&T markets and competition
Market leader –No.1 Roads & Bridges Consultant (17% of market) source: New Civil Engineer
Competition
PlanningMVA, Faber Maunsell, Steer Davies Gleave
EngineeringArup, Babtie, KBR, Motts, Mouchel Parkman, Halcrow, WSP
O&MBalfour Beatty, Jarvis, Carillion
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H&T markets & competition
USP - Leveraging high technical competence
65% of contracts / projects >2 years duration
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H&T order book
80% of budget revenue for 04/05 secured
£280m total order book
No major bids are won on price alone
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Highways market
2,100
700 900Strategic Roads
Local Transport
London
Source: Department for Transport
Average Public Investment expenditure p.a. to 2009 (£m)
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Highways & Transportation
PlanningDesignOperations
It’s in our blood
H&T Summary
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Tony Fletcher
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Rail
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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Rail overview
Turnover c.£210m per annum
1700 staff Design engineersProject engineersProject managers
Engaged on >1000 projects – project values from £10k to £50m
Key ClientsNetwork RailLondon Underground Rail Denmark
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Rail overview
Unique selling point – combined capability infrastructure & trains
Control & Systems Integration: (50% of turnover)Design, testing and commissioning of signalling and telecommunications systems
Civil Engineering: (20% of turnover)Civil engineering of rail infrastructure projects, from embankments and cuttings through tunnels and bridges to track designs and stations
Vehicles: (10% of turnover)Safety case management to vehicle acceptance, interior designs and exterior liveries
Electrification: (10% of turnover)Third rail and overhead line power supplies.
Programme management: (10% of turnover)Developing and managing projects across several industry sectors
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Large Project – Rugby Remodelling
Design of signalling
Track alignment
Electrificationdesign
Testing andcommissioning
of layout
Train safety case
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Small projects and assignments -performance and reliability
Design of signalling
Testing and commissioning of layout
Safety case
Train protection warning system
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Small projects and assignments –reliability of the high performance switch system
Major initiative by Network RailAssess performance and recommend modifications.Time criticalMTBF improved from 44 to 68 days
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Metronet
In the supply chain for the Metronet programmes we are providing:
Station refurbishment and civil engineeringAssets inspections and assessmentDesign, build and commissioning of station passenger informationsystemsGeneral, technical and project management
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Rail markets and competition
Major competitors
Rail InfrastructureMott McDonald, Scott Wilson, Corus & Arups
Rail Programme/Project Management:Bechtel, Client in-house teams, Parsons Brinckerhoff, Fluor/Mott McDonald
Rail Vehicle engineering Interfleet, AEAT
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Rail order book
60% of budget revenue for 04/05 secured
c£400m total order book
Characteristics of order book40% related to large projects >2years duration60%, related to projects <6 months duration
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Rail market
£385
£1,820
£915
£225
£425
Track and structures
Signalling
Electrification
Telecoms andinformation systems
Stations andbuildings
Source: Network Rail Expenditure Forecast
Average annual renewals spend to 2009 (£m)
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Transport
Transport
Rail H&T
Design & Engineering Solutions
DE2 Industry
Management &Project Services
Faithful & Gould
Management Consultancy
Asset Management
Project Development
Atkins
Equity Investments
Investments/Metronet
LambertSmith
Hampton
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People
Alun Griffiths
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The employer of choice
Size and strength
Breadth
Market position
Most significant projects
Career development
options
Forefront of technology
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No 1 or 2 in our key markets
Rail
Highways
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No 1 or 2 in our key markets
Environment
Aviation
Defence
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No 1 or 2 in our key markets
Building Design
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Capability
Powerhouse of talent:PlanningDesignProject management
90+% white collar
80% professional/technical
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Workforce overview
ATKINS Age Analysis
0 500 1000 1500 2000 2500 3000 3500
UNDER 25
26 - 35
36 - 45
46 - 55
OVER 56
Age
Ban
d
No. of Employees
Age balance graph Skills mix graph
Skill MixEngineers
Surveyors
Technologists
Architects
Planners
Project Managers
Scientists
ManagementConsultants
70% of staff aged 45 or under
Strong talent pool
Capacity
High proportion of engineers
Strength in all key areas
Depth and flexibility of resource
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People issues
Wealth of talent …..but live in a competitive market
Recruitment and retention are key
Areas for action
People management
Flexibility
Career development
People leave managers not organisations!
Employee engagement
Relevant to diverse workforce
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Investment in people
c.£11m next year on training & development (3% of payroll)
Action at 3 levels:
Senior management
First line managers
Graduates
Business school linksWarwick, Imperial, Henley
Succession and career development
250 graduates pa –formal development
350 managers through assessment centres
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Summary
Atkins is the employer of choice
Powerhouse of talent
Excellent skills/age balance
Significant investment in people
Stable and resilient
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Conclusions
Keith Clarke
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Turnover c.£1bn
Value Chain
Realestate Plan Design Enable Construct FM
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Order book
£1.7bn total
Key indicator: work in hand for year
60% for year 04/05
BenchmarkPoor Average Good Excellent<25% 25-40% 40-60% >60%
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Context of our order book
Overall UK economy
Government is committed to public expenditure
Best value procurement
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Conclusion
Atkins is focused
Ability to improve margins and achieve targeted turnover growth
Robust market with increasing barriers to entry for competitors