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


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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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Transport

Rail H&T


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


LambertSmith

Hampton

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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


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


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


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


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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Transport

Rail H&T


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


LambertSmith

Hampton

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Management & Project Services

Transport

Rail H&T


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


LambertSmith

Hampton

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Half Year2003-04



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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


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


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



Equity

Design

Facilities Management

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Atkins roles as PFI technical advisor

Client

SeniorDebt



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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Transport

Rail H&T


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


LambertSmith

Hampton

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Transport

Transport

Rail H&T


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


LambertSmith

Hampton

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Transport

Half Year2003-04



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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


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


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


£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


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


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


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


DE2 Industry


Faithful & Gould


Asset Management

Project Development

Atkins

Equity Investments


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

106


Environment

Aviation

Defence

107


Building Design

108

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


115

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

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