WS Atkins plc UK growth markets Analyst breakfast 28 March 2017 1 - PowerPoint PPT Presentation

WS Atkins plc UK growth markets Analyst breakfast 28 March 2017 1

Nick Roberts UK and Europe, chief executive officer 2

Overview 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. 3

What we do Aerospace, Defence, Transportation Infrastructure • • Highways and intelligent Urban development Security and Technology • transport systems Buildings (ADS&T) • • Rail and urban transport Water and environment • Aerospace • • Aviation Education • Defence and security • Technology solutions and Energy services • Nuclear • Business consulting • Power and renewables 4

Our markets and clients A well balanced portfolio (£944m revenue) Revenue by sector Revenue by client type 3% 9% 4% 14% 6% 34% 31% 7% 27% 8% 15% 28% 14% Rail (including mass transit) Defence and security Public sector:local government Highways Water and environment Public sector: national government Aeropsace and aviation Education Regulated Urban development Buildings Other Private sector • UK segment includes F+G, our project and programme management business 5

Financial performance Operational excellence and portfolio optimisation success UK and Europe operating margin (%) UK and Europe revenue 1,000 8.0 7.5 7.8 800 7.0 600 6.5 6.7 £m 6.4 6.0 6.3 400 5.5 5.7 5.0 200 4.5 4.0 0 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 Continuing operations Disposals • UK segment includes F+G, our project and programme management business • H1 2017 UK and Europe operating margin of 8.7%. 6

Our focus 2011 to 2016 Operational excellence • Organisational re-shaping and consolidation • Measures to improve productivity Portfolio optimisation • Highways services • Poland • Portugal Sector growth • Terramar acquisition • Organic investment. 7

Our focus 2017 and beyond Ongoing operational excellence initiatives Digital opportunities • Digital asset management • Intelligent mobility • Cyber Four key growth markets • Strategic highways • Water • Defence • High speed rail. 8

Growth through differentiation Well-positioned to build on the strength and depth of our client relationships, develop strategic partnerships and relationships with Client contractors and other supply chain partners, to deliver added value relationships services and propositions Our clients value our unique ability to bring experience and best practice expertise from across the different market sectors in Collaboration which Atkins operates and from our global design centres Our investment in Intelligent Mobility, Digital Engineering and Technology Digital Asset Management increasingly recognised by our clients. 9

Strategic highways Contains private information 10

Strategic highways Market overview 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. Atkins’ addressable spend in UK strategic highways estimated in excess of £400m per annum 11

Strategic highways Our clients 12

Strategic highways 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. 13

Strategic highways Current project - A14 Cambridge to Huntingdon • 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

Water 15

Water Market overview • 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. Atkins’ addressable spend in UK water market estimated at £500m per annum 16

Water Our clients 17

Water Opportunities for growth 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

Water Eight 2 O alliance • 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. 19

Water Thames Tideway Tunnel – West section • 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 . Carnwarth Road riverside worksite - main drive site for West Tunnel boring machine 20

Defence 21

Defence Market overview Split of £750m of addressable spend 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 Front line commands Advising on through-life management of Defence equipment and support military equipment and infrastructure Defence Infrastructure Organisation Design of new facilities/infrastructure, Other particularly nuclear related facilities. Defence industry 22

Defence Our clients 23

Defence Opportunities for growth “The threats to our country are growing ... the world is more dangerous and uncertain today than five years ago”* • Increasing defence equipment spending by £12bn over the Atkins’ addressable next decade (to £178bn) spend in the defence • Additional £2.5bn counter-terrorism spending market estimated • Increase in spending on cyber security totalling £1.9bn by at £750m, increasing 2020 to £1bn in 5 years. • 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. *National Security Strategy & Strategic Defence and Security Review, November 2015 24

Defence 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. 25

High speed rail 26