to presentation

Capital
p
Markets Day
y
17 June 2015
Adrian Ringrose
Chi f Executive
Chief
E
ti
Attractive
growth
fundamentals
&
opportunities
Interserve at a glance
Fundamental drivers in
outsourcing
 Top 3 in UK Support Services
75% of Group activities
 # 1–3 in equipment services
 Growing UK Construction business
 Access to exciting Middle East
 Drive for public sector
 Front line services
efficiency
 Rising population
 Ageing population
 Oil & Gas services
Strong market
position
markets
1
Acquisition
 Revenue: 11.6%
 >£350mm invested
 EBIT:
12.9%
 ROIC materially
 EPS:
9.9%
 DPS:
6.3%
ahead of WACC
 International FM
Drivers of future profitability
 Growing the range of services within Support
2
Attractive
growth
fundamentals
&
opportunities
2010–2014 CAGR
Growth platform in
value added segments
Services
 Increasing utilisation of equipment services
 Medium term improvement in construction market
Strong
growth
record
4
3
 Contract management
Disciplined
performance
management
 Portfolio management
 Cyclical investment
 Focus on people
10 years DPS CAGR of 5%
Order book visibility, 74% of 2015 consensus
revenue atYE14
 Differentiate through SustainAbilities
Executing our vision
Strategy
Building strong core
businesses
Capturing related
expansion
opportunities
Present
Future
Balanced & strong
portfolio
Increased Support
Services offering
Successful
S
f l M&A
execution
Broad based growth
Strong organic growth
Expand
internationally
Record orderbooks
Managed volume growth
Thought leaders
Strategy
Present
Future
Industry leaders
Strategy
Present
Future
SustainAbilities
– delivering business value
Present
Strategy
Wh t it means
What
•
•
•
•
Wider conversations with clients
Broader assessment of performance
Creation of operational tools & partnerships
Informed investment decisions
Realising opportunities
•
•
•
•
•
•
Build reputation & relationships
New business insights
Competitive edge, win more work
Reduce costs
Encourage knowledge sharing & engagement
Employee attraction & retention
Addressing risks
•
•
•
Reputation/license to operate
Long-term skillset to grow the business
Integration of new employees
Sector leading
g growth
g
2010-2014 CAGR
Strategy
Present
Future
Growth
Interserve
Peer Group
Average*
Rank
Revenue
+11.6%
+4.0%
#1
EBIT
+12.9%
‐1.4%
#1
EPS
+9.9%
‐4.9%
#1
DPS
+6.3%
‐1.7%
#2
5% DPS CAGR over the last 10 years
*Peer Group: Capita, Mitie, Kier, Carillion, ISG, Costain, Morgan Sindall, Serco, Balfour Beatty
Evolving
g business mix
Strategy
Present
Future
£119m raised – disposal of PFI portfolio
£282m raised – equity issue & US PP
£390m invested in acquisitions
*Operating profit %ages pre
Group costs and Investments
Strong
g market positioning
p
g
Strategy Support Services Present
Construction
UK
Future
Equipment Services
T 3 l
Top 3 player
N ti
National reach
l
h
#1 3 i
#1‐3 in markets
k t
50/50 public/private
Breadth and scale
Technical excellence
Broad frontline
services offering
Framework relationships High quality fleet
Geographic agility & spread
d
International
Pan‐ regional oil services
Long term local relationships
Leverage UK FM skills
Breadth of technical capability
Pan ‐ regional g
education & training offering
Growth drivers
Strategy Support Services Present Construction
UK
International
F tli
Frontline services
i
M k t t
Market upturn
Expanded private sector offeringg
Increased volumes
Pan‐ regional oil services
Market upturn
Integrated FM capabilities
Increased volumes
Front‐line services esp. training
Future
Equipment Services
Upturning world U
t i
ld
markets
Growing Middle & Far g
East
Improving US market
Recovering UK & Europe
Operational gearing effects
Controlling
g our growth
g
Strategy
• Disciplined
p
bidding
g
Present
• Disciplined contract management
• Selecting the right people
• Promoting the right culture & values
• Investing to grow
Future
Agenda
g
TimingStrategy
TopicPresent
Speaker
Future
08 45
08.45
Strategic update
Strategic update
Adrian Ringrose
Adrian Ringrose
09.15
UK Frontline services
Dougie Sutherland, Yvonne
Thomas and Ian Porée
10.00
Commercial FM offering
Jeff Flanagan
10.45
Coffee Break
11.00
Middle East social and economic update
MEED (Colin Foreman)
11.45
Middle East FM offering
Middle East FM offering
Saeed Ahmed
Saeed Ahmed
12.30
Middle East Oil & Gas
Andrew Beaney
13.15
Wrap up and final Q&A
13.30
Lunch
14.30
Ends
Who you will be meeting
Adrian Ringrose
Chief Executive
Adrian has been Chief Executive of Interserve since 2003 during which
time the Group has developed significantly, from around 15,000 to circa
,
p
people,
p , with operations
p
in over 20 countries p
providing
g services
80,000
to governments and a range of commercial and industrial clients.
Adrian’s background is in commercial management and business
development. Prior to leading Interserve he spent time in the
outsourcing and utilities sectors.
Dougie Sutherland
Executive Director
Dougie is Managing Director of Interserve’s Developments division and
responsible for UK Construction. He was appointed to the Board of
Interserve in January 2011.
Dougie joined Interserve in September 2006 from 3i, where he was a
partner in its infrastructure team. Previously he was a divisional managing
director at Amey and Lend Lease, and also worked for HM Treasury
developing the Private Finance Initiative.
Yvonne Thomas
Managing Director
Justice
Yvonne joined Interserve in November 2012 to build a new Justice
business, with a brief to move into front line delivery of justice related
government services. This includes the Transforming Rehabilitation
service. Prior to this she was at the Ministry of Justice where she was
responsible for the commissioning and operational delivery of prison,
probation and public protection services,
services and for the staff who
delivered those services. She joined the senior civil service following a
successful career in industry, spending 11 years at BT plc.
Who you will be meeting
Ian Porée
Director National
Director,
Offender
Management
Services
Jeff Flanagan
Managing Director
C
Commercial
i l
Colin Foreman
News Editor
MEED
Ian has overall accountability for the commissioning and contract
management of rehabilitation services to reduce reoffending and protect
the public. Ian is accountable for mobilising and managing delivery through
contracts with a total contract value estimated to be around £600 million
per annum. Ian is also the current chair of the Rehabilitation Forum which
is an industry collaboration to work together to deliver better a better
justice system in England and Wales.
Prior to this role, Ian was the Ministry of Justice Programme Director and
led the Transforming Rehabilitation reforms.
Jeff joined Interserve in February 2015 and is responsible for private
sector FM business in the UK.
Prior to joining Interserve he was at Mitie in senior operational and
strategic roles and was a member of the Executive Management team.
He has 18 years experience in the FM industry. He is a Chartered
Accountant qualifying with KPMG and has a Civil Engineering degree
from Imperial College.
Colin Foreman has reported on the Middle East’s construction sector since
2003. He has been MEED’s news editor since 2010, a role that involves
managing a team of journalists covering the economies of the Middle East.
Before being appointed as news editor Colin was Gulf Bureau chief from
2008 and Senior Gulf Correspondent from 2005.
He was the deputy editor of Construction Week before joining MEED - a
title he helped launch in 2003.
Who you will be meeting
Saeed Ahmed
FM Director
MENA
Andrew Beaney
Managing Director
Engineering &
Construction
(International)
Saeed is the Divisional Director for Interserve International, responsible
for all of Interserve's Facilities Management businesses in the Middle
East, including the UAE, Qatar, Oman and KSA.
He has 19 years experience working in the FM industry,
industry 14 in the UK and
five in the Middle East, having worked for the some of the largest
support services companies in the UK, including Balfour Beatty, Carillion
and now Interserve .
Andrew graduated with a Masters Degree in Civil Engineering and was
sponsored as an Interserve Undergraduate in 1988. He has worked in many
roles throughout his career at Interserve, including the Civil Engineering
Division, Frameworks & Consulting and Education Sector before reaching
p
y for the UK
the main board of UK Construction in 2008 with responsibility
Regional Building Business. He has now taken up the role of Managing
Director for the International Engineering & Construction businesses based
in Qatar and is responsible for the growth of the business across the region
as well as Interserve’s other businesses in Qatar.
UK Frontline Services
D
Dougie
i Sutherland
S h l d
Current capabilities
p
• 3rd largest
supplier of WP
services
• 30,000 people
into sustainable
employment
• Exemplar
private/3rd
sector
partnership
• Care for 650+
patients in own
home
• Over 2,500
nursing staff
• Provide
services to
100+ CCGs &
100
40+ NHS Trusts
Welfare &
employment
Education &
skills
Justice &
Home
Affairs
Healthcare
Revenue c£250m
• Training 7,000+
apprentices
i
• Vocational
training 2,000+
students in
S di
Saudi
• Academy
sponsor in
Leeds
• 25% market
share, 5
contracts
• 35,000 cases
(community &
prison)
• 2,000+
professional
staff
• Service in 19
prisons
Frontline Services Proposition
p
Redefining the future for people and places
 Common
interventions,,
resources &
process
 Improves
customer
journey
 Improves social
outcomes
Skills &
Skill
Employment
3rd & public
sector
partnerships
Public service
in the public
interest
Interventions
Efficiencies
Understand
government &
g
PBR
Justice & Home
Affairs
Innovation
Healthcare
Market opportunities
pp
2015
Justice & Home Affairs
(£6bn)
2016
2017
2018
Police BPO New Prison Contracts? Prison Infrastructure Inter entions
Interventions
OLASS 5 DWP/SFA ESF programme
Work Programme 2
o
og a
e
Skills & Employment
(£7bn)
National careers service
City devolution
Oman
Saudi – further colleges
Working well Healthcare
(£50bn)
HDAS/PIP Assessments
HDAS/PIP Assessments
New Models of Care Contracts (Pathways, Integrators, Vanguards) Home care / Intermediate care / Step down care
p
Transforming Community Services (2nd generation)
J ti
Justice
Yvonne Thomas
Background
g
& context
Crime is falling but...
• Re-offending rates are
not moving enough
• 58% of prisoners serving
under 12 months
re-offend
• Flagship Policy –
pre-election delivery
promised
Ian Porée
Director, Rehabilitation Services,
Commissioning & Contract
Management, Ministry of Justice
Partnership
p with Shelter,, P3 & 3SC
Five Community Rehabilitation Companies
CPA
Lifetime contract value
Cheshire & Greater Manchester
£218m
Hampshire & Isle of Wight
£103m
Humberside, Lincolnshire & North
Yorkshire
£130m
Merseyside
£100m
West Yorkshire
£137m
TOTAL
£688m
Interchange
g Transformation Model
Impact
p
of new service
‘As
As is
is’ 16,500
will
desist
35 000 offenders p.a.
35,000
pa
Supervision
Case management
Behavioural
programmes
‘To
To be
be’ 19,100 will
desist
Personalised
approach
Interchange
model
Regional
g
presence
p
Regional
g
presence
p
Regional
g
presence
p
Regional
g
presence
p
Interventions
Women’s Services
Health
Attitudes, Thinking & Behaviour
Finance Benefit & Debt
Finance, Benefit & Debt
Learning & Skills
Housing
Drugs & Alcohol
Children & Families
In summary
y
- A uniquely
i
l positioned
iti
db
business
i
underpinned
d i
db
by
long-term contracts
- Significant capability and infrastructure from
p
which to expand
- Sustainable margin in contracted business with
upside
id in
i PBR
- Significant new opportunities will come to
market during this parliament
Q&A
Commercial FM Growth
Strategy
Jeff Flanagan
The Commercial Business Unit
•
Interserve always in private sector FM – BBC won prior to Initial acquisition
•
Combined private sector FM in excess of £900m turnover
•
Private sector revenue split between Commercial BU and Industrial BU
•
Public:Private Sector focus within support
pp
services now approx
pp
50:50
•
All main service lines : cleaning, security, catering, hard services, energy
•
Private Sector focus : Transport, Retail, Education Catering, Corporates
Why
y Initial? –
compelling strategic rationale
•
A complementary
l
t
F
Facilities
iliti S
Services
i
B
Business
i
with
ith operations
ti
principally
i i ll iin th
the UK
Created top 3 player by revenue and balance between public and private sector clients
•
Enhanced growth platform in large and attractive markets
Market for private sector outsourcing nearly double that of the public sector
•
Builds on strong core business – consistent with strategy
Additi off private
Addition
i t sector
t soft
ft service
i ffocus complements
l
t public
bli sector
t h
hard
d service
i
led TFM
•
Synergy opportunities
Operational efficiencies and cost savings together with new revenue opportunities
•
Enhanced management and client relationships
B th organisations
Both
g i ti
h
have complementary
l
t
strong
t g management
g
t and
d a ttrack
k record
d off
solid customer relationships.
Initial facilities –
a reminder of what we bought
•
£542.2m revenue and operating profit £25.6m (2013A), representing a margin of 4.7%
•
c25,000 employees
- 22,000 based in UK and Ireland
•
- 3,000 based in Spain
B d customer
Broad
t
base
b
within
ithi th
the private
i t sector
t
Comprehensive range of facilities services
Multi
Service
32%
Cleaning
26%
Technical,
Catering,
Security &
TFM
42%
•
•
Largest customer £50m pa London Underground
85% private sector, 15% public sector
Analysis of Turnover
Professional
P
f i
l
Services
25%
Other
31%
Transport
15%
L
Local
l
Government
15%
Healthcare
14%
Interserve now one of the largest
g
providers of support services in the UK
Leading
g FM suppliers
pp
£2,500m
Revenue
e (£m)
£2,000m
£1,500m
£1,000m
£500m
£0m
Source: Credo
Integration
g
update
p
Cost savings delivered :
•
St
Streamlining
li i g operational
ti
l management
g
t
•
Removal of duplicate functions
•
Procurement savings
g arising
g from economies of scale
Other headlines :
•
New opportunities created for our customers, shareholders and people
•
Key personnel retained from both organisations and sector expertise retained
•
Stronger more balanced portfolio of customers in both public and private sectors
Integration delivered on plan  and on budget 
Commercial addressable market
£16.4bn
Other
20%
IFM
12%
Hard Services
19%
Security
Sec
rit
21%
Cleaning
28%
Opportunity exists in IFM Bundled and Single Service
Opportunity exists in IFM, Bundled and Single Service
Source : Credo
Growth rates
TFM represents a strong growth market
UK Outsourced FM Market
Service Gro
S
owth Rates %
6
2
‐2
2012
Single Growth Rate
Source : Frost & Sullivan
Source : Frost & Sullivan
2013
2014
Multi-Service
Growth Rate
2015
2016
TFM Growth Rate
A selection of our clients
Private sector strategy
gy
Real customer
service focus
Sector based
approach
Operational and
structural
realignment
Focus and
subject matter
experts
Single
g to
integrated
service offering
Service line and
geographic
expansion
TOM –Target
Operating Model
COE – service
line centre of
excellence
Innovation
Transport
p
specialists
p
– Network Rail
•
Sector expertise and excellence
•
5 year contract
t t worth
th £15
£15m pa
•
17 stations, 400 Operational site portfolio
•
Cleaning excellence and logistics strength
•
Sector opportunity - full soft services portfolio
imminent
•
Network rail
Netwo
a l cu
currently
e tly p
procure
ocu e a
around
ou d £5bn
5b o
of
outsourced service lines
Shopping
pp g centres
•
Grown byy 30% because able to offer an integrated
g
service
•
Market is demanding responsiveness and a sector specific approach
•
Managing agents and property owners
•
Services - Cleaning,
Cleaning Security and M&E
•
Wider market reputation is growing
•
Current pipeline:
- 2015 – JLL, Westfield and Hammerson
- 2016 – Land Securities, CBRE and PruPim
Eden – Catering
g in the Education Sector
•
Strong Brand combined with UFSM
•
Currently servicing 260 Primary and 35 Secondary Schools
•
Rejuvenation in the marketplace
•
M k opportunity
Market
i – 30% outsourcing
i penetration
i
•
Great people with a vibrant food proposition
•
Award-winning sustainable and healthy food provision
•
My Eden software
BBC – IFM Customer Experience
p
•
5 year contract worth £150m – all buildings and services except catering
•
Broadcasting House in London, Media City in Salford, Pacific Quay in Glasgow
•
Broadcast continuity is mission critical - over 45% of all UK TV output
•
M bili d on 1 April
Mobilised
A il 2014,
2014 with
i h the
h transfer
f off 1,100
1 100 staff
ff under
d TUPE from
f
three
h
diff
different
incumbent FM suppliers
•
Vision of Customer Experience key
•
Substantial additional works and projects
Sony
y – International
•
IFM in 27 countries since Februaryy 2015
•
Offices, R&D facilities and retail sites
•
Hybrid solution – Managing agent & self delivery
•
Strong customer service focus and value add
•
Opportunities through additional buildings and services in
Europe and UK
B&Q – the p
power of
customer relationships
•
Service excellence and customer trust
•
Expansion of cleaning and then catering
•
Manage all coffee locations
•
Reputation strong
•
Further opportunities for IFM at HQ and in-store services
The opportunity
pp
y
Integrated FM
Sector
Specialisation
Technical
Customer
Experience
Cleaning – Retail
and Commercial
Customer
Security –
National reach
International
Outstanding
people
Catering
Q&A
Middle East social and
economic update
Colin Foreman
News editor, MEED
GCC 2015: A Maturing Market
Interserve Capital Markets Day: 17 June 2015
Overview - Challenges
Demographic challenge – services/employment
Lower oil prices – budget deficits
Post global financial crisis ‐ Winning over bankers
Post global financial crisis Winning over bankers
Real estate What goes up can also go down
Real estate –
What goes up can also go down
57
© 2014 MEED Projects
Overview - Response
Focus on job creation and social infrastructure
Maintaining oil production
Engage private sector for project deliver/funding
Engage private sector for project deliver/funding
More measured approach to property
More measured approach to property
58
© 2014 MEED Projects
Leading up to 2015
Pre‐2009
• Boom across the region before the global financial crisis
• Dubai leads with man made islands, worlds longest canal super tall towers, new cities. • Name lending, currency revaluation, $147 oil price
$
• Soaring real estate prices
2009‐2011
2009
2011
• Debt crisis in Dubai – recession, dents confidence around region
• Oil prices briefly drop to $36.61 then rise back above $100
• Saudi Arabia takes centre stage in the region
g
g
• Qatar wins World Cup
• Abu Dhabi nuclear
2012‐2014
• Capital flight from Arab spring countries
• Market confidences slowly returns
• Dubai real estate starts selling again
Dubai real estate starts selling again
• Massive infrastructure investment
• 2013 Metro contracts
59
© 2014 MEED Projects
The market turns again in 2015
Oil
• Price slide in late 2014 bottoms at $46 in January 2015
• With prices below break even decision making in exporting markets slows
• Price rebounds to above $60 in. $65 now touted as “new normal” Politics
• Ageing leadership – UAE, Oman and Saudi Arabia
• Salman bin Abdulaziz becomes King of Saudi Arabia in late January
• Major shape up of ministries in Saudi Arabia
Security
• Military actions in Yemen
• IS/ISIS in Iraq
IS/ISIS in Iraq
• IS bombing in Eastern Province
Real Estate
Real
Estate
• After three years of completing projects Dubai is over supplied
• New mortgage legislation introduced at end of 2013 has impact
60
© 2014 MEED Projects
Fundamentals stay the same: Population growth
Total Population, 2005 – 2017 (millions) 60.0 UAE
KSA
Qatar
50.0 8%
Oman
Kuwait
7%
40.0 6%
10%
9%
8%
7%
6%
30 0
30.0 20.0 10.0 5%
4%
4%
3%
3%
3%
3%
3%
3%
3%
2%
2%
2%
1%
‐
0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015f 2016f 2017f
61
© 2014 MEED Projects
GDP composition and GDP per capita
Saudi Arabia is largest economy
Qatar high highest GDP/capital in
the world
62
© 2014 MEED Projects
Oil remains important
63
Source: BP
© 2014 MEED Projects
The oil price
Average oil price 2002‐2016 ($ a barrel)
$
105
95
$ a baarrel
85
75
65
55
45
Close to a Close
to a
50 per cent fall in the
the average annual oil price!
35
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015F 2016F
© 2014 MEED Projects
Drop in oil price = Drop in GDP
GCC nominal GDP, 2005‐2018 ($bn)
$
1,900
1,700
$bn
1,500
1,300
1,100
1 100
900
700
500
65
A
A 10%‐15% drop in GDP this year
10% 15% drop in GDP this year
GDP will not recover until 2018
And a sharp fall in government revenues
GCC budget balance, 2002‐2018 ($bn)
$
© 2014 MEED Projects
The financial impact – governments go into the red
GCC budget balance, 2002‐2018 ($bn)
$
250
200
150
100
$bn
50
0
‐50
‐100
‐150
‐200
© 2014 MEED Projects
Budgeted spending is up (except for Kuwait)
Budget comparison 2014‐15 ($bn)
15
200
Qatar has extended its budget pro Qatar
has extended its budget pro
rata to end of 2015
9
6.3
4.5
0.6
150
10
5
$bn
$
0
100
‐5
‐17
% cchange
250
‐10
50
‐15
0
‐20
20
Saudi Arabia
Oman
2014
UAE
2015
Kuwait*
Dubai
Percentage change (%)
© 2014 MEED Projects
Projects Market
69
© 2014 MEED Projects
Historical awards – 2014 was record year
Total contract awards in the GCC, 2008‐14 ($m)
180,000
161328
160,000
140,000
149536
139182
127107
133210
118408
120,000
$m
170550
100,000
80,000
60,000
40,000
20,000
0
2008
70 Source: MEED Projects
2009
2010
2011
2012
2013
2014
Oil price and projects market not as close related as you might think
Value
of GCC contracts awarded correlated against the average oil price ($m)
Value of GCC contracts awarded correlated against the average oil price ($m)
180,000
160 000
160,000
2009 saw oil price collapse but record year
y
120
2014 was best ever year for contract awards
for contract awards 140,000
$m
m
120,000
80
100,000
60
80,000
60,000
40
40,000
20
20 000
20,000
0
0
2005
71 Source: MEED Projects
2006
2007
2008
2009
2010
2011
2012
2013
2014
Averrage oil priice ($ a barrrel)
100
By Country – Qatar, Oman and Kuwait had record years
Value of GCC contract awards by country, 2008‐14 ($m)
$
80,000
70,000
56453
60,000
50,000
41989
40,000
30,000
29695
25355
20 000
20,000
10,000
20
008
20
009
20
010
20
011
20
012
20
013
20
014
14829
2229
0
Bahrain
72 Source: MEED Projects
Kuwait
Oman
Qatar
Saudi Arabia
UAE
Finding a new equilibrium in 2015
Value of GCC awards down 28 per cent on last year
Surprising results – Saudi Arabia up, UAE down, Qatar broadly flat
Contractors and clients need to find new pricing equilibrium – especially in oil and gas
Cost consultants say there is a respite in price inflation
Expectation that market will accelerate due to event deadlines and $65/barrel oil price
73 Source: MEED Projects
GCC project priorities in 2015 and beyond
Oil, Gas & Petrochemicals
Upstream (Maintain production)
Downstream Downstream
(more refined products)
Petrochemicals
(Industrial development and employment)
Infrastructure Transport (Ports, Airports, Railways & Roads)
Utilities
(Power & water)
Social
(Housing, Education & Healthcare)
Real Estate
Private sector development
Destination
Tourism
Dubai Expo 2020
Qatar World Cup 2022
Grand Prix
74
© 2014 MEED Projects
Saudi Arabia - Snapshot
Low oil prices
King Salman bin Abdulaziz al‐Saud
Crown Prince Mohamed bin Nayef al
Crown Prince Mohamed bin Nayef
al‐Saud
Saud
Deputy Crown Prince Mohammed bin Salman al‐Saud
• Yemen military action/change of strategic e e
a y ac o /c a ge o s a eg c
focus (Sunni bloc/Iran)
•
•
•
•
75
•
•
•
•
•
Spending this year is up
Refocus of priorities (11 stadiums)
Education, healthcare & housing
Education, healthcare & housing
Changing contracting landscape
Aramco PM venture ‐$
$160m (£103bn) over 10 years
60 ( 03b ) o e 0 yea s
UAE- Snapshot
Low oil prices
Direct impact
Reduction in capital expenditure
Reduction in capital expenditure
Counter cyclical?
Oil production
Increasing state involvement in business
c eas g s a e o e e
bus ess
Real estate – Emirati housing, retail
•
•
•
•
•
•
•
76
•
•
•
•
•
•
•
Low oil prices
Indirect impact
Real estate over supplied
Real estate over supplied
Still niche areas for development
Grade A commercial
Destination schemes
es a o sc e es
Infrastructure (Airport)
Qatar- Snapshot
• Low oil and gas prices
• Major infrastructure contracts let – more to come
• Overheating market/supply chain
• Prioritising projects either for 2022 and 2030
• Limited local players so real opportunities for ed oca p aye s so ea oppo u es o
internationals
• New infrastructure needs maintaining
77
• FIFA corruption investigation
• Qatar not implicated but a concern
• Publicly officials committed to event
Publicly officials committed to event
and 2030 goals • Danger of losing impetus, not projects
themselves
e se es
• Worker rights
Oman- Snapshot
Large infrastructure programme
Steady market attracting interest
Government committed to projects
Government committed to projects
Funding concerns due low oil prices
Post Arab Spring corruption crack down
Low bidder wins
o b dde
s
•
•
•
•
•
•
78
Q&A
Facilities
F
iliti M
Managementt iin
the Middle East
Saeed Ahmed
FM services in the Middle East
INTEGRATED
MANAGEMENT
SERVICES
QSHE SERVICES
CALL
CENTRE
MEP
MAINTENANCE
CLEANING
SECURITY
MAIL AND
MESSENGER
RECEPTION
AND
CONCIERGE
LANDSCAPING
WASTE
MANAGEMENT
MINOR
WORKS /
PROJECTS
SPECIALIST
MAINTENANCE
STOCK /
SUPPLIES
MANAGEMENT
PEST
CONTROL
CATERING
SERVICES
Middle East FM market
Source - Credo
Country
Outsourcing Rate
Oman
15%
Kuwait
21%
Bahrain
35%
Qatar
37%
UAE
45%
KSA
31%
Relative size of Middle East FM market
Relatively
large,
mature
markets
Saudi Arabia
Source - Credo
Developing
p g markets
Source - Credo
FM Growth Drivers
High Levels of Construction Activity
•
Dubai Expo 2020
•
Qatar Vision 2030
•
Investment in aviation
•
Gulf railway
Government plans & visions to meet the demographic challenges
•
Improving
p ov g education
educat o syste
systemss
•
Increased healthcare facilities
•
Growing private sector
•
Investment in transport (particularly air and rail)
•
Leisure, entertainment, hospitality and culture
I t
International
ti
l spotlight
tlight on Middl
Middle E
Eastt
Increasing awareness of the need to protect the investment in the assets, driving improved FM
standards and increased outsourcing
Mega
g Developments,
p
UAE
Mohammed Bin Rashid City
•
Landmark development compromising of leisure and tourism destinations,
destinations retail,
retail residential
residential,
arts and culture
•
Project cost estimated at AED 3 billion
Mega
g Developments,
p
UAE
Mall of the World
•
Worlds first temperature controlled city
•
Occupies 48 million square feet
•
Largest shopping mall in the world, 8 million square feet
Mega
g Developments,
p
UAE
Dubai Creek Harbor
•
Will house the worlds tallest twin towers
•
3 times the size of Downtown Dubai
•
39,000 residences and 22 hotels
Mega
g Developments,
p
UAE
Dubai Expo Site
•
438 hectare site area
•
150 hectare gated expo area
•
153,000 expected average weekly attendance
Mega
g Developments,
p
UAE
Dubai World Central Site
•
Based around the new Al Maktoum International Airport
•
Will include logistics, aviation, commercial, exhibition, humanitarian, residential and other
related businesses
Mega
g Developments,
p
UAE
Dubai Opera District
•
Vibrant cultural community in Downtown Dubai
•
Will feature luxury hotels, residential, retail, promenades and parks, centred around
the 2,000 seat multi format Dubai Opera
Mega
g Developments,
p
KSA
King Abdullah Financial District
•
Providing over 3 million square metres of space
•
Smart City providing offices in high quality and sophisticated infrastructure
Mega
g Developments,
p
KSA
King Abdullah Economic City
•
Providing 1 Million jobs and homes for 2 million residents
•
Will contain a sea port and industrial districts
Mega
g Developments,
p
KSA
Jizan Industrial City
•
Will cover 117 million square metres
•
Providing 500,000 jobs and homes for 300,000 residents
•
In addition to industrial, will include residential and commercial space
Mega
g Developments,
p
KSA
Kingdom City
•
5 million square metres of space in Jeddah
•
Home of Kingdom Tower, tallest tower in the world
•
Provides primarily residential and commercial space
Mega
g Developments,
p
KSA
Saudi Railways
•
Expansion of current rail network across the Kingdom
•
2,750 km of railway, 23 stations
•
Linked to the Gulf Railways Project, connecting the GCC Countries
Mega
g Developments,
p
Qatar
QP District
•
Covering circa 7 hectares in West Bay next to the financial district
•
Nine office towers, one hotel and energy centre
Mega
g Developments,
p
Qatar
Doha Festival City
•
Mixed use retail
retail, entertainment
entertainment, leisure and hospitality destination
•
250,000 square metres of gross leasable space, providing 500 retailers and 85 restaurants
Mega
g Developments,
p
Qatar
Qatar Rail
•
Multi-billion dollar state of the art integrated rail network
•
Doha Metro, Lusail Light Rail, Long Distance Passenger and Freight
•
FM Services Procurement commencing in 2015
Mega
g Developments,
p
Qatar
Katara Cultural Village
•
Spread over 1 million square metres between West Bay and the Pearl
•
Includes theatres, concert halls, exhibition galleries and cutting-edge facilities,
aims to become a world leader for multi-cultural activities.
Outlook for g
growth
•
Industry estimates suggest 10-20% annual growth across the GCC
•
Growth in a large number of sectors
Mixed Use Developments/Mega Projects
Commercial/Residential/Retail Real Estate
Healthcare
Aviation
Education
Defence
Government Services
•
Increasing awareness of the need to protect the investment in the assets,
g improved
p
FM standards and increased outsourcing
g
driving
Al Ra’idah Investment Company
p y
•
King Abdullah Financial District – 100+ Buildings providing 3M square metres of space, providing
Commercial, Hospitality, Retail, Leisure and Residential Space. Includes Monorail around the site that
links directly to the Riyadh Metro station with direct links to the airport.
•
Information Technology and Communications Complex – 40+ buildings catering for IT and
Communications companies
companies.
•
We provide Managing Agents services to both ‘Smart City’ developments, covering a full range of FM
and Property Management Services
•
Circa 70 Management Staff with circa 35% Saudisation, managing an FM delivery team of circa 5,000 staff
•
Mobilisation commenced in November 2014
•
3+2 Year contract
Interserve Differentiators
•
Trusted provider with long successful history in the Middle East
•
Regional capability
•
Integrated self delivery solutions
•
Interserve best practice & quality
Innovative technology
Partnership approach
Flexible commercial offerings
SustainAbilities
Global Expertise, Local Knowledge
Summary
y
•
Large FM market in the Middle East
•
Relatively
l
l low
l
levels
l
l of FM outsourcing, expected
d to increase
•
Demographic challenge leading to Mega Developments to create employment and tourism
Targeted Private Sector growth
Investment in Education and Vocational Training
Investment in Infrastructure, Aviation and Rail
Investment in Healthcare
•
I d t expects
Industry
t 10
10-20%
20% annuall ggrowth
th off FM market
k t across th
the region
gi
•
Developers looking to protect their investment, best practice FM solutions sought
•
Partnered with established and well reputed
p
local providers
p
Q&A
Oil & Gas
G iin th
the Middl
Middle
East
A d
Andrew
B
Beaney
Interserve
Oil & Gas operations
in Qatar,, UAE and Oman
Business Streams
Adyard
y
Q
• YEAR OF ACQUISITION:
2013
• MANPOWER: 2,000
• YARDS: Mussafah, Liwa, Fujairah
•
KEY PROJECTS ON HAND
HAND:
•
•
2014 REVENUE: c£60m
ORDER BOOK: c£110m
1. ADMA/HDEC - SARB 4 – Process Modules – c£28m
2. ZADCO - Installation of ESP’s - c£52m
3. ADMA - Replacement of Helidecks – c£18m
TOCO
• 2014 REVENUE: c£60m
• YEAR OF ACQUISITION:
Q
2013
• ORDER BOOK: c£120m
• MANPOWER: 2,000
• YARDS: Muscat, Mukhaizna, Sur, Fahud, Safah & WL
•
KEY PROJECTS ON HAND:
HAND
1.
2.
3.
OXY Mukhaizna - Oilfield works – c£77m
Bahwan Exel/PDO - 4 PL Rig Moving Services – c£72m
OXY Safah WL - Oilfield Services – c£64m
Madina Group
p
• YEAR OF ACQUISITION:
Q
2007
• MANPOWER: 2,500
• WORKSHOPS: Doha & Ras Laffan
•
KEY PROJECTS ON HAND:
HAND
•
•
2014 REVENUE: c£80m
ORDER BOOK: c£50m
1. Shell
1
Sh ll GTL – Shutdown
Sh td
works
k – c£10m
£10
2. Maersk Oil – Maintenance Manpower Service – c£8m
3. Technip (Oryx GTL) – Fabrication works – c£10m
SharedServices
Services
Shared
Integration of the three
businesses
One functional head instead
of three
– BD and Estimating
– QHSE
– Commercial
– HR
– IT
– Finance
Order Book Growth
350
300
250
£m
200
150
100
50
0
YE2012
YE2013
YE2014
Work in Hand
SARB 4
((engineering,
g
g p
procurement
& construction)
Zadco ESP
(submersible pump installation)
MSPP
(construction of 227km pipeline)
BP Khazzan
(construction of 60km pipeline)
Shell Pearl
(maintenance services)
Oxy
(oil field services)
Forecast of GCC contract awards
$bn
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10 000
10,000
5,000
0
2012
Source: MEED
2013
Actual
2014
Forecast
2015
2016
Market trend
Customer
response
• 18% cut in global capex
• Operational efficiency
spend (2014 to 2015)
• Reduced new project
awards & mega projects
Maximise existing assets
• More competition and
margin pressures
• LNG projects delayed or • Little LNG investment in
cancelled
• Low commodity prices
boost other sectors
ME
• Power & infrastructure
likely
y to grow
g
Strategy
• Focus on operational
maintenance
• Focus on operational
capex
• Brownfield LNG/
Maintenance
• Target key prospects
outside Oil & Gas
Revenue and Workload Growth
350
300
250
£m
200
150
100
50
0
YE2012
YE2013
Future workload
Revenues
YE2014
The GCC market
£85bn
Total value of GCC Oil & Gas projects from
2015 – 2017 (3 years)
Combined stated value of oil & gas related spending by companies in
the energy sectors in GCC
£13bn
IEC Addressable
Add
bl
Market value of contracts where Interserve
Engineering & Construction (IEC) could have
participation, including contracts where we may
lack capacity,
capacity local presence or track-record
track record
£2.8bn*
IEC Pipeline
IEC Strategic & Current Prospects
*Strategic Prospects: Target projects identified.
IEC Pipeline
£0 8b *
£0.8bn*
Current
Prospects
Current Prospects: Proposals submitted to
clients, proposals being bid and negotiated.
IEC Pipeline values are taken from IEC Pipeline
trackers system (some prospects are long term
framework agreements).
Total value of Middle East Oil and gas Projects
are based on MEED values from January 2015 –
December 2017.
Saudi Arabia and Kuwait
Saudi Arabia and Kuwait
• Exploring opportunities over medium term
• Entry through existing relationships
Summary
y
• We have seen good growth in our oil and gas
business since acquisition
• Oil price
i h
has had
h d littl
little iimpactt
• We focus on operations and maintenance
• Target brownfield operational capex
• New markets being explored
• Still plenty of opportunity for growth
Q&A
Summary
Agenda
g
TimingStrategy
TopicPresent
Speaker
Future
08 45
08.45
Strategic update
Strategic update
Adrian Ringrose
Adrian Ringrose
09.15
UK Frontline services
Dougie Sutherland, Yvonne
Thomas and Ian Porée
10.00
Commercial FM offering
Jeff Flanagan
10.45
Coffee Break
11.00
Middle East social and economic update
MEED (Colin Foreman)
11.45
Middle East FM offering
Middle East FM offering
Saeed Ahmed
Saeed Ahmed
12.30
Middle East Oil & Gas
Andrew Beaney
13.15
Wrap up and final Q&A
13.30
Lunch
14.30
Ends
Executing our vision
Strategy
Building strong core
businesses
Capturing related
expansion
opportunities
Present
Future
Balanced & strong
portfolio
Increased Support
Services offering
Successful
S
f l M&A
execution
Broad based growth
Strong organic growth
Expand
internationally
Record orderbooks
Managed volume growth