Analyst presentation Atkins’ Energy business
Atkins’ Energy business Dr Martin Grant, CEO, energy
Agenda ● The energy market ● Our business, an overview ● What we do ● The future. 3
Why energy is a good market 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 4
Why energy is a good market Investment levels from 2014 to 2035 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 between 2014 to 2035 Equates to approx. $9bn/year addressable market for Atkins. Source: Atkins’ in -house estimate Source (unless stated otherwise): World Energy 5 Investment Outlook, International Energy Agency, 2014
Why energy is a good market for Atkins • 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. 6
Atkins’ Energy Business overview 7
What we do ● Our core expertise is keeping old assets Revenue split (FY13) running safely, for longer and more efficiently. This represents approximately Oil and gas 60% of our workload ● We have been increasing our involvement in the new build market, which represents Nuclear approximately 40% of our workload today ● Our engineers are highly qualified and use advanced assessment methods to make Thermal engineering judgements in high hazard power and industries renewables ● Our expertise differentiates us in the market and results in a strong reputation with our clients. 8
Where we operate North America Europe Australia UK Sectors: oil & gas, nuclear Sectors: oil & gas, Sectors: oil & Sectors: oil & gas, Staff : 127 (pre. NSA and nuclear gas nuclear, power, Houston Offshore Engineering) Staff: 49 Staff: 63 offshore wind Staff: 1,043 Total 1,496* Middle East India Sectors: oil & gas, Sectors: oil & gas, *Numbers based on FTE nuclear, power nuclear, power at end of Q1 FY14/15 Staff: 163 9 Staff: 52
Clients we work for 10
The importance of our people 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 Staff turnover Part of how we achieve this is by having a much higher ratio of employees to contractors compared with the market norm 20.0% Another part is by investing in employees’ continued professional 15.0% development and focusing on staff retention We have established a number of programmes including: 10.0% • Graduate recruitment (around 90 this year) 5.0% • Our in-house training academy which provides sector specific expertise and mobility across our Group 0.0% 2010/11 2011/12 2012/13 2013/14 • 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. 11
Our financial performance 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 12
What we do Oil & Gas 13
Design of terminals, and storage facilities Platform design Asset integrity Process management and engineering structural analysis Oil & Gas, what we do Subsea engineering 14
Oil & Gas • 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. 15
An example brownfield project Talisman compression upgrade project, Claymore platform 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. 16
An example brownfield project Talisman compression upgrade project, Claymore platform 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. 17
An example brownfield project Talisman compression upgrade project, Claymore platform 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. 18
An example greenfield project Premier’s Solan development 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. 19
An example greenfield project Premier’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 $30m Some of the complexities and challenges in the design derive from the fact that the tank is pressurised for offload (a unique feature), and that it has a 30 year design life. 20
An example greenfield project Premier’s Solan development Our site engineers supported the tank’s construction in Dubai during late 2012 to early 2014 It took 5 million man hours to construct, contained 120km of welding and weighed 10,150 tonnes It was lowered into position by the world’s largest offshore crane. 21
An example greenfield project Premier’s Solan development Leaving Sailing to Dubai Scotland Floating Lowering off Cosco into position vessel 22
Acquisition strategy Poyry acquisition (2011) Process engineering Houston Offshore Engineering (2014) Floating structures Atkins Fixed structures Boreas (2007) Subsea engineering 23
Houston Offshore Engineering • 150 people based in Houston, Texas • Leading expert in design of floating structures • With intellectual property around a particular type of structure (tension leg platform) • Aligned culture and brand positioning, with complementary skills • Creates both client and service synergies • Strengthens our position in Houston, the global HQ of the oil industry and positions us for the deeper water plays being pursued by the oil majors • Reported revenue of US$ 41m in FY13. 24
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