74
Kentz Corporation Limited Capital Markets Forum London, Thursday 4 th October 2012
Kentz Corporation Limited
Capital Markets Forum
London, Thursday 4th October 2012
1
Agenda
Introduction and Business Objectives Christian Brown
Market Overview Rory O’Donnell
Engineering Eli Wawi
Construction Eoin Hurley
Technical Support Services Kevin Moroney
Enterprise Risk Adrian Griffin
Resourcing for Growth Sharon Paul
2
Christian Brown Chief Executive Officer
Introduction and Business Objectives
-100%
0%
100%
200%
300%
400%
2007 2008 2009 2010 2011
-100%
-50%
0%
50%
100%
150%
200%
2007 2008 2009 2010 2011
Exceptional Past
3
0%
20%
40%
60%
80%
100%
120%
140%
160%
2007 2008 2009 2010 2011
Revenue Growth EPS Growth
Kentz
Small and Mid Cap Peers
Large Cap Peers
Market Cap Growth
FTSE250
Small and Mid Cap : Hunting, Lamprell, Cape Large Cap: AMEC, Petrofac, Wood Group
Kentz’s Story
Opened first South
African office in
Johannesburg.
Invited to tender
Sasol II and III
synthetic fuel
projects.
Opened Qatar
office with award of
EPC contract for
NGL I & II analyser
upgrade projects for
QP in Mesaieed.
First award on
Shell Pearl GTL,
Qatar. Contracts
across EPC,
Construction and
TSS worth over
US$400m.
Listing on the
London Stock
Exchange
Global Business
Units established.
Significant growth in
global operations,
spread of services,
revenue and
backlog.
1980s 1990s 2006 2008 2009 2010
Five year Global
Framework
Agreement for the
provision of
engineering, design
and technical
support services to
ExxonMobil projects
around the world
2011 2012
Gorgon LNG
$2.3bn contract for
MEI Construction
and commissioning
support for the
construction of three
LNG trains.
AMR
Canada
Syncrude's Aurora
North Mine
Relocation (AMR)
Project, in Fort
McMurray, Alberta
4
1977
First project award
outside Ireland with
Fluor USA in Saudi
Arabia.
Kentz today;
revenue of
US$1.4bn* from
three business units
with 14,000 staff in
29 countries
* Revenue for year ended 31 December 2011
Chief Executive’s Organisation
Adrian Griffin
Group
Commercial,
Contracts
and Risk Officer
Sharon Paul
Group Talent and
People
Development
Officer
Rory O’Donnell
Group
Development
Officer
James Moore
COO
Specialist EPC
Business Unit
Eoin Hurley
COO
Construction
Business Unit
Michael Murphy
COO
TSS
Business Unit
Christian Brown
Chief Executive Officer
Ed Power
Chief Financial
Officer
Eamonn
O’Hanlon
Group Project
Services Officer
Business
Development
Strategy
M&A
Project Controls
Engineering
Procurement
5
Construction
Fu
nc
tio
na
l S
up
po
rt
6
Construction DNA
• Focus on higher value services for blue chip resource clients
• Successful where barriers to entry high; large complex plant facilities,
remote locations and technologically challenging projects
• Own construction workforce of c.6,500 people. Quality of people and
retention, with skills enhancement training programmes for local labour
• Develop structural, mechanical and piping capabilities in areas where we
have an electrical and instrumentation footprint
• Excellent track record in safety
Courtesy of Chevron
7
Value Chain Flexibility
Pre-
FID*
work
Sustaining Capital
Asset
Enhancement
P E C
Ea
rly W
ork
s
Co
mp
leti
on
s a
nd
Co
mm
iss
ion
ing
SPECIALIST EPC
CONSTRUCTION
TECHNICAL SUPPORT SERVICES
* FID: Final investment decision
8
End Market Flexibility
• Clients from across the oil and gas, petrochemical and mining and metals
sectors; both national and majors
• Flexibility in our Global Business Units, contracting models and resourcing
to fit any project and location
Mining & Metals
22% (24%)
Other
5% (6%)
Oil and Gas
51% (52%)
Petrochemicals
17% (11%)
Power
5% (7%)
Construction
Specialist EPC
Technical Support Services
9
Agile, Decentralised Operations
Sustaining our Turnover in excess of US $ 600M
Regional Operations: Projects completed in over 60 countries
Project
management and
regional
engineering
centres
9
Strength of the
underlying business
EPS growth
Leverage balance
sheet; acquisition
Moving up the value
chain
Attract, grow and
retain people
10
Key objectives for growth
• Consistent delivery; repeat business
• Specialist, not commodity focused
• Continue top quartile sector earnings growth
• Cash generation, financial prudence
• Invest capital into technical capabilities
• Local capacity to strengthen market position
• Broaden services, continual improvement
• Extend addressable market
• Deliver the Kentz way; people differentiators
• Global leader in health and safety
11
Market Opportunity
Total value of global resource projects Combined stated value of capital spending by companies in the resource and
energy sectors
Total value of contracts awarded Contracts awarded to E&C and oil services companies,
e.g. outsourced rather than overhead, internal R&D, client management and self-performed scopes etc.
Kentz Addressable Market value of contracts awarded
where Kentz GBUs could have participation, but including contracts where we may lack capacity, local
presence or track-record
Kentz Pipeline Current view
$845bn
* Kentz pipeline figure is discounted
$4.5tr
$503bn
$13bn*
Our Future Growth
• Maintain core business principles of safety and consistency across the
business units and preserve the Kentz delivery model and culture
• Even balance of lump sum and reimbursable mix of projects
• Further globalisation and broadening of specialised service offerings for
TSS and Construction business units
• Increase addressable market for EPC delivered via engineering capability,
build out inorganically through agile and responsive organisation
• Top quartile earning growth
12
13
Rory O’Donnell Group Development Officer
Market Overview
14 14
Kentz Market
North America
Europe
S and C America
0
1,000
2,000
3,000
4,000
5,000
2000 2005 2010 2015 2020 2025 2030
15
Energy Demand: Liquids and Gas
• Liquids demand growth 17% (0.8% pa) 2010-30. Gas demand growth 50%
(2.1% pa)
• Compares to 13% (1.2% pa) and 30% (2.8% pa) growth respectively for
2000-10
• Outlook is for slower demand growth but from a large base
• Long term trends point to need for massive increase in energy production
over next 20 years
• Prices likely to remain on upward trend and volatile
Africa
Middle East
Asia Pacific
0
1,000
2,000
3,000
4,000
5,000
2000 2005 2010 2015 2020 2025 2030
Liquids Demand Growth
m toe
Natural Gas Demand Growth
m toe
Source: BP Energy Outlook 2030
16
Liquids Supply Outlook
• Global liquids supply flattening overall with need for significant
replacements
• Currently producing field production down 50% in next 20 years
• 30mbpd needed to replace existing production of conventional crude
• Another 30-50mbpd to be found from new sources
Source: IEA
17
Gas Supply Outlook
• Conversely, gas reserves are far in excess of demand; over 65 years of
production at current rates if unconventional reserves are added
• Development of unconventional gas is accelerating
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Conventional Unconventional Current Production
Source: BP Statistical Review of World Energy 2011; US Geological Survey
Global Gas Reserves vs Production (TCF)
North America
Europe and Eurasia
Africa
S and C America
Middle East
Australasia
18
Upstream Regional Outlook 2013-15
Australasia
$13bn Virtually all projects lined to
supplying gas for LNG
CBM over 50% of spending
Asia
$7bn Essentially all offshore
Malaysia, Indonesia deepwater
plus China shale gas
Russia
$24bn Projects linked to
supplying gas for LNG in
Sakhalin or Yamal
EOR for old fields
Canada
US$44bn Spending down slightly due to
capacity constraints
SAGD continues at high level as
long as oil above $80 bbl –Large,
growing O&M market
United States
$18.5bn Massive shale gas
development
Related oil changes US into
a net exporter of refined
products
Africa
$20bn Onshore in East Africa creates
new opportunities
Nigeria, Angola, Ghana offshore
East Africa offshore large but
subsea to shore
Latin America
$29bn Major spending possible in heavy oil
in Venezuela but Asian investment
limits opportunities; Brazil $ 5 bn but
all offshore
Middle East
$44bn Major spending in Iraq, Saudi –
over 60% of awards
Caspian dependent on Kashagan
Europe
$24bn Driven entirely by a few
large Norwegian and UK
offshore projects,
Global Awards
US$238bn
19
Midstream: LNG Leads the Way
• Increased gas supply will see continued growth in LNG production, with
major new capital investments. Capacity could double by 2020
• Led by Japan, Asia accounts for 60% of demand. Europe, led by Spain,
accounts for 30%
• Demand growing 10% annually since 2004 with spot LNG cargoes at
US$16/mm BTU+
0
100
200
300
400
500
600
700
East Africa
North Africa
West Africa
Latin America
North America
Russia
Middle East
SE Asia
Australasia
Projected LNG Capacity (mtpa)
Source: MLP Database
20
Midstream Regional Outlook 2013-15
Australasia
$55bn Massive expansion underway
with 16 plants possible by 2020
Highest cost producer-will limit
market
Asia
$3bn Large installed base but few new
plants
Regas in Malaysia, Indonesia,
others
Canada
$8bn 4 new LNG plants planned
based on shale gas
United States
$7bn Massive shale gas spurs
development in LNG (4
possible – 10 planned)
Africa
$6.5bn Major growth in LNG in East
Africa (Mozambique & Tanzania)
plus possible expansions in
Nigeria and Eq. Guinea
Latin America
$2bn Only a regas market- terminals
in Colombia, Brazil, Caribbean
Middle East
$2bn Largest installed base in Qatar but
no new expansions
O&M and regas import terminals in
Kuwait & UAE
Europe
$100m Only a regas market
Russia
$8bn Sakhalin II expanding
Yamal
Global Awards
US$89bn
21
Downstream: Refining and Petrochemicals
• Outside of China, global demand for
refining very slow since 2009
• Refiners evaluating long term
position and refocusing business;
slow growth and overcapacity
• Project opportunities will be in
brownfield asset enhancement &
turnaround services
• Chemical demand growth slow. New
capacity in olefins and polymers
• Significant opportunities in other
chemicals
70%
75%
80%
85%
90%
95%
100%
2005 2006 2007 2008 2009 2010 2011 2012
0
10
20
30
40
50
60
70
80
90
100
2009 2010 2011 2012
Utilisation Rates
Ethylene
Refining
Global Oil Demand (mbpd)
Non-OECD OECD China
Source: BP Statistical Review of World Energy 2012, US DOE
22
Downstream Regional Outlook 2013-15
Australasia
$1bn No significant activity
Asia
$54bn India & China largest
markets, but projects in
Vietnam and Malaysia
Large TSS market
Russia
$3bn Refining upgrades /
modernizations
Major O&M needs
Canada
$13bn Upgrading and refineries
expansion to process
heavy crude
United States
$22bn 3-4 major new petrochemicals
planned. Shale related oil
changes US into a net exporter of
refined products. Largest O&M
market – 50% of spending
Africa
$23bn Numerous refineries planned but likely to be delayed Major TSS market New chemicals in Mozambique ?
Latin America
$29bn Major spending possible in
Venezuela but Asian investment
limits opportunities
Brazil planning 4 major new
refineries and chemical
complexes
Middle East
$128bn Major spending on
petrochemicals and refining in
Saudi, Kuwait, UAE order to
monetize resources
New shale gas based US plants
may impact new projects
Europe
$16bn Large, aging production base
drives O&M/TSS spending
1 Mmbpd+ in closures
Global Awards
US$313bn
23
Mining: Overall market situation
• Cyclic market driven in recent years by Chinese economy
• Weakening commodity prices causing project delays/cancellations, especially in high cost areas such as Australia
• Growing interest in Africa and Latin America; expenditure focus has shifted
• Challenge of declining extraction grades, more remote and/or politically challenging regions and scale of projects needed for economic returns
• Capital spending will be focused in iron, coal, copper and gold (50%)
0%
10%
20%
30%
40%
50%
Copper Aluminium Zinc Nickel Lead
China’s share of global consumption
1980 1990 2000 2010
Source: Macquarie Commodities Research Source: PwC Analysis
$0
$20
$40
$60
$80
$100
$120
$140
$160 Mining Capital Spending ($bn)
24
Mining Regional Outlook
Australasia
$50bn Largest market and largest
resource base but highest
cost producer
Cancellations will continue
Asia
$20bn India & China drive
market due to coal;
but no real opportunities
Russia
$5bn Limited by lack of
investment by non-
Russian firms
Canada
$34bn Large resource base but
high costs will likely lead
to cancellations
Africa
$27bn Numerous opportunities
across region but Chinese
investment may limit market
Latin America
$25bn Lowest cost producer in copper
Major projects in Chile, Peru and
Brazil
Competition well established
Middle East
$9bn Opportunities in Saudi
and Kazakhstan
Europe
$5bn Large, aging
production base (coal)
drives O&M/TSS
spending United States
$10bn High cost producer ,
coal exporter
Large O&M market
Global Awards
US$189bn
25
Total Capital Spending
• Total capital spending grew at an average annual rate of 13% since 2000
reaching US$1.2tr in 2012; growth rate slowed to 5% pa since 2008
• Overall capital spending could exceed $1.5tr by 2015 with 6% average
annual growth between 2012-15
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Total Capital Spending (US$bn)
Other Chemicals
Oil and Gas
Refining
Mining
Source: MLP Database
Pipeline Overview by Region
Sustaining our Turnover in excess of US $ 600M 26 Construction Specialist EPC
Technical Support Services
1%
74%
25%
Americas
(US$0.640bn)
31%
66%
4%
Africa
(US$1.973bn)
75%
9%
16%
Middle East
(US$3.278bn)
Far East & Russia
(US$0.934bn)
47%
37%
16%
Australasia
(US$5.938bn)
30%
70%
Americas
Onshore oil and gas
production facilities
Opportunities for Kentz
27
Middle East
& Caspian
Africa
Australasia
Far East &
Russia
MEI construction
services:
gas monetisation in US
oil sands in Canada
Completions &
commissioning
services (C&C)
Onshore oil & gas
production facilities in
Iraq & Saudi
Brownfield EPC
MEI construction
services in existing &
new (Kazakhstan)
markets
PMC & general
engineering services
(GES)
Power, utility &
product handling
MEI construction
services regionally in
M&M, LNG and O&G
production
Shutdown, turnaround,
operation &
maintenance (STOM)
in South Africa
Non Process
Infrastructure & utilities
MEI construction
services in upstream &
midstream
C&C
STOM
GES
Non Process Infra. in
Arctic Russia
Sakhalin onshore
expansion
Remote MEI
construction services in
Arctic Russia (TSS)
Shutdown, turnaround,
operation &
maintenance (STOM)
in Sakhalin
Sustaining our Turnover in excess of US $ 600M Construction Specialist EPC
Technical Support Services
28
Conclusions and Outlook
• Sustained spending on oil and gas. Significant growth opportunities across
all three business units
• Strong LNG market with opportunities to expand MEI* construction services
in existing & new locations
• Refining and petrochemicals flat, but significant in Middle East. Growth
opportunities across all three business units
• Slow growth in mining and metals, especially in high cost areas; focus on
Africa & Middle East in short term
• Implies good prospects for continued capital spending growth
• Kentz well positioned across the different regions, sectors and E&C** value
chain for future growth
*MEI: Mechanical, electrical and instrumentation **E&C: Engineering and construction
29
Eli Wawi Group Engineering Director
Engineering
What is our ambition for Engineering?
• Build upon our success in delivering niche EPC packages with core clients
over 20 year period
• Expand our share of the addressable market and opportunity, greater focus
required
• Reach critical mass, increase skills and enhance qualifications, therefore
allowing participation in increased number of these projects; goals best
reached inorganically
• Build close relationship with more clients through involvement in more projects
from early stages
• Provide ability to deliver solutions from concept to completion
• FEED*, detailed engineering, EPCM*
• Capture full potential by complementing current strength in construction and
commissioning and develop the ability to offer full EPC
30 * FEED: Front-end engineering design, EPCM: Engineering, procurement and construction management
31
Relevant Experience: Examples
Jubail II Master Plan
EPCM services for KSA
Royal Commission
Architectural design, detailed
engineering, local approvals,
integration of all power, water
treatment and telecoms services,
construction and handover for major
infrastructure development, office
complex and University in Jubail.
Total engineering hours +2.4m
Kearl Telecoms
Integration, Canada
Imperial Oil and Amec
Detailed design for all
telecommunications systems and site
communications networks at the Kearl
Oil Sands Project. Scope includes
access security, CCTV surveillance
and intrusion systems, VOIP Network
and large scale plant wide fibre optic
networks.
NEED CLIENT APPROVAL & IMAGE FROM EW
Laffan Refinery,
Turnkey EPC contract in
Ras Laffan, Qatar
Process design, engineering,
procurement, construction, testing,
pre-commissioning and
commissioning for the civil,
mechanical, electrical, instrumentation
and communications scopes
Value: US$85m
Key Clients
• Gorgon construction village project nearing successful completion
• Engineering success supported longer term MEI project
• 10 year working relationship
• Contract for engineering support services in place
• Successful project execution on Pearl GTL, world’s largest GTL plant
• Potential to support Shell in other ventures in Africa and Middle East
• Working on projects with ExxonMobil across the globe
• Strong relationship has supported Kentz’s entry into new markets
• Strategically positioned engineering offices in Africa to service
• Sasol approved EC rating to execute EPC/M contracts
32
EPC Opportunity
33
166 336 355
837 780 626
2,965
4,333 4,403
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2009 2010 2011
Revenue
Backlog
Pipeline
All chart figures 31 December position
• Current pipeline of
US$12.8bn contains 50%
EPC prospects
• In-house ability to
address current
US$6.4bn EPC pipeline
• EPC addressable market
exceeds US$200bn
• Aim to build world class
FEED and detailed
engineering capability to
service future growth
US$m
415
150
50 50
1
10
100
1000
Middle East* South Africa Australia Canada
Employees and Engineering Capacity
34
Middle East South Africa Australia Canada
Man-hours/
year 700k 225k 90k 90k
Discipline
Multidiscipline
engineering with FEED,
detailed engineering
and specialty in
instrumentation
Multidiscipline engineering
with specialty in telecom
Specialty in telecom and
instrumentation
engineering
Specialty in telecom
engineering
Employee numbers
* 3 engineering centres in Qatar, Saudi Arabia, UAE
35
RNE Engineering and Projects
• RNE Engineering and Projects (Pty) Ltd acquired in February 2011
• RNE forms part of Kentz RSA Engineering Centre of Excellence
• Earn-out used to integrate RNE management
• Building sustainable future now for 2014 onwards
• Successful operational, financial and cultural integration
• Provides a foundation for future larger transactions
36
Functional Engineering Role
• Aim is to build world class FEED and detailed engineering capability
consistent with Kentz strategy to provide:
• Cost effective engineered solutions and technical differentiators to
proposals
• Service to EPC, TSS and Construction Business Units
• Technical oversight across all projects with engineering liability
• Global responsibility for resource management, training and
development of engineering resources, cost effective delivery, best
common practices, maintaining quality
• An engineering capability that works effectively in both reimbursable
and lump sum contracting models
37
Opportunities
• Selection and integration of new engineering business that provides us with
• the required critical mass,
• the skills and competencies,
• the qualifications to expand our pipeline of EPC projects; the future
growth engine of Kentz.
• Strengthen collaboration between Engineering Centres
• Enhance and harmonise Global work processes
• Increase the pool of resources
• Attract additional technical expertise
• Increase usage of high value engineering
38
Outlook
• Engineering and construction companies are bullish on the potential for
growth in the upstream oil and gas sector
• Investment in the shale gas plays continues, especially in the US and
Canada
• Interest in the oil sands development project continues
• Mining sector constricting as growth rates slow for Chinese economy
39
Eoin Hurley Chief Operating Officer, Construction
Construction
40
Ambition for Construction
• Construction DNA to continue as a key differentiator
• Continue growing Construction business unit organically – 165% backlog
growth in past two years
• Develop a sustainable business in M&M sector; long-term opportunity
• Expand construction service offering to new locations
• Develop structural steel, mechanical and piping opportunities in areas
where we have an electrical & instrumentation presence
• Capitalise on strong client relationships to identify opportunities for other
business units
41
• Key differentiator for Kentz
• In-house capability to self-perform all construction scopes of work
• Core business with strong track record with blue chip client base
Construction DNA
Gorgon MEI, Western Australia
42
Key Clients
• 30 year working relationship
• Viewed as the construction partner for large capital projects
• Kearl Oil Sands, utilities and tank farm E&I scopes
• Potential for growth in oil sands expansion
• Successful completion of E&I scope on Pluto LNG
• Further LNG projects in planning stage
• Awarded US$2.3bn contract with CB&I for Gorgon MEI
• Successful project completion gives potential for future awards
• Strong relationship built in Mozambique in recent years
• Partner of choice for future opportunities
Construction Opportunity
43
348 475
702
529 658
1,403
2,313
2,528
3,670
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2009 2010 2011
Revenue
Backlog
Pipeline
All chart figures 31 December position
• Strong organic growth
• Successful expansion of
business unit to Canada
and Australia
• Gorgon MEI award
gives visibility to 2015
US$m
44
Mozambique
Moatize Coal Project
SMEIP
Construction Global Footprint
Construction current operations 12 countries Countries where Kentz has worked
South Africa
Medupi Power Station
Structural, mechanical, piping
Australia
Gorgon LNG
ME&I
Middle East
Bariq Mining, Saudi Arabia
SMEIP
North America
Kearl Oil Sands, Canada
Electrical & instrumentation
Dominican Republic
Barrick Gold
Electrical & instrumentation
Future Growth
Sustaining our Turnover in excess of US $ 600M 45
Americas
(US$474m)*
Africa
(US$1.3bn)*
Middle East
(US$295m)*
Australasia
(US$2.2bn)*
Australasia
LNG
Upstream Process Facilities
Mining and Metals
Africa
Mining and Metals
Refinery
LNG
Upstream Process Facilities
Americas
Oil Sands
Upstream Process Facilities
Coal to Liquids and LNG
Shale Gas Developments
Mining and Metals
Refinery and Petrochemicals
Middle East
Upstream Process Facilities
Refinery and Petrochemicals
Mining and Metals
* Current Kentz construction pipeline of prospects per region
46
Mozambique Overview
• Delivering projects in
Mozambique for 12 years
• Peak labour 3,000
• 26 cranes ranging from
24-600 tons
• Country office Maputo
Kenmare Resources
Moma Mineral Sands
US$60m
BHP Billiton
Mozal Phase 1 &2
US$110m
Kenmare Resources
Moma Mineral Sands II
US$50m
Vale
Beira Coal Terminal
US$22m
Vale
Moatize Phase 1
US$130m
Agile, Mobile Workforce
• Location: Madagascar
• Staff numbers: 3,500 staff
• Timeframe to mobilise: 3 – 5 weeks
• Skills: Welders, electricians, boilermakers, riggers
Madagascar
South
Africa
USA
Middle
East
Philippines
Europe
47
48
Outlook
• Expand service offering to new locations e.g. USA, South America, West
Africa
• Further prospects in Australian LNG sector for projects with FID*
• Exciting potential for Kentz in Mozambique with recent gas discoveries
• Expansion of Canadian oil sands offers opportunities where Kentz is
building a strong operation
• Iraq activity building momentum, established presence in Middle East
• Exciting opportunities globally to continue the successful growth of
Construction and maintain the business unit as a key differentiator
*FID: Final Investment Decision
49
Kevin Moroney Group Business and Commercial Director,
Technical Support Services
Technical Support Services
50
2 - Global Engineering
Services (GES)
5 – Shutdown, Turnaround ,
Operations and Maintenance (STOM)
4 - Completions and
Commissioning (C&C)
Conceptual
Construction
Begins
Technical Support Services Overview
3 – Remote Construction Services
(RCS)
1 – Project Management Consultancy Services (PMC)
-40 deg (Arctic) +50 deg (Desert)
Mechanical
Completion
6 – General Support Services (GSS)
Mothballed
Concept Design Construct Commission Operate Maintain Mothball
Key Clients
51
• Five year framework agreement till 2014
• Providing services across 26 plants
• Strong presence in Canadian Oil Sands
• Well positioned for future expansion within Alberta
• 32 year working relationship
• Projects executed across a number of regions
• Long term relationship providing PMC services in Kuwait
• Preferred contractor relationship
• Five year global framework
• Continuing engineering service agreement in place
TSS Backlog and Revenue
52
191 246
311
131 164
372
706
1,249
1,942
0
500
1,000
1,500
2,000
2,500
2009 2010 2011
Revenue
Backlog
Pipeline
All chart figures 31 December position
• Long established client
relationships with several
framework agreements in
place
• Strong growth from Asset
Enhancement Services
• Greater backlog visibility
due to longer term
operations and
maintenance (O&M)
projects
US$m
TSS current operations 15 countries
TSS Global Footprint
53 Countries where Kentz has worked
Papua New Guinea
PNG LNG
Remote construction services
Far East Russia
Sakhalin I
Remote construction services
African Region
Madagascar
Completions & commissioning
Middle East
Kuwait Oil Company
Project management consultancy
North America
Syncrude Canada
Completions & commissioning
Southern Africa
Sasol, Petro SA & Petronas
Maintenance & turnaround
Far East Russia
Chayvo
Maintenance & turnaround
54
Margins
STOM PMC GES C&C RCS GSS
Higher margin services
• Highest margin business unit
• O&M services typically lower margin but with greater visibility
• Entry into new developed markets can imply lower margin targets
Lower margin services
STOM: Shutdown, turnaround, operations and maintenance, PMC: Project management consultancy, GES: Global engineering
services, C&C: Completions and commissioning, RCS: Remote construction services, GSS: General support services
Russia
• Oil, gas and metals >80% of Russia's exports
• Russia has the largest reserves, and is the largest producer of natural
gas and a top producer of oil
• Dominance of national oil companies, but increasing presence of majors
too; ExxonMobil, Total, Shell
• Successful six year track record with Exxon Rosneft in Sakhalin
• Significant future prospects, including Kara Sea development, Yamal LNG,
Sakhalin II LNG (second train), O&M for Sakhalin assets
• Leveraging safety culture from existing to new projects, expectations of
world class performance
• Proven experience in building sustainable Russian JVs
55
Russia
Kara Sea, $150bn
ExxonMobil and Rosneft.
Potential for up to 20
offshore platforms over
the next 10 years.
Yamal, $50bn
Onshore LNG facility
near Sabetta on the
Yamal peninsula. 80%
owned by Novatek and
Total took a 20% share
last year.
West Siberia, c.$10bn
Further development and
scheduled maintenance
of Sakhalin I and
Sakhalin train II over next
three years.
56
57
O&M Market 2013-15
$190 bn in O&M/TAR*
work to be awarded
2013-15
Based on specific projects announced and est. award dates; $ value total amount to be worked over duration of project
* O&M: Operations & maintenance, TAR: Turnaround
Latin America
$79bn
USA
$73bn
Canada
$113bn
Middle East & Caspian
$182bn
Russia
$39bn
Asia
$94bn
Australasia
$122bn
Africa
$77bn
$0
$10
$20
$30
$0
$100
$200
$0
$20
$40
$60
$0
$20
$40
$60
$0
$15
$30
$45
$0
$20
$40
$60
$0
$10
$20
$30
$40
$0
$10
$20
O&G Offshore
O&G Onshore
LNG
O&M
Mining
Ref & Chem.
58
Resourcing Case Study: Natref Shutdown
• 2012 shutdown; large, refinery-wide shutdown
• Natref refinery is a JV between Sasol Oil & Total South Africa
• Contract secured on back of five-year services agreement signed in 2011
• Largest shutdown ever undertaken by TSS worldwide
• Will involve more than 3,000 staff in just two months
59
Key strengths
• Strong track record of delivering complex project solutions in remote
locations
• Low risk projects; unit rate or cost reimbursable contracts
• Access to global resource pool through industry leading database systems
and network of suppliers
• In-house designed, industry leading, Refinery Shutdown Management
(RSM) and asset enhancement database
60
Outlook
• Expand full TSS service offering into existing client relationships
• QGC commissioning project award presents opportunity to enhance
reputation as a premier contractor in this field
• Statutory requirement for maintenance creates further potential for Kentz
• Identify potential opportunities for EPC business unit
• Develop full service offering into mainland Russia
• Improve and grow GES by aligning with blue chip partners in new markets
• Further development of Brownfield Asset Enhancement Services
GES: Global engineering services
Adrian Griffin Group Commercial, Contracts and Risk Officer
Enterprise Risk
61
Kentz Projects Portfolio
62
Backlog by Sector Backlog by Region
Backlog by Contract Type
Power
4%
Other
1%
Oil and Gas
80%
Petrochemicals
9%
Metals &
Mining 6%
Middle East
15%
Americas
11%
Australasia
59%
Africa
13%
Far East, Russia
2%
Lump Sum
22%
Reimbursable
70%
Unit Rate
8%
Backlog figures as at 30 June 2012 Clients reflect top 10 clients by revenue in H1 2012
Enterprise Risk Overview
63
Selective
Approach
Pricing Strategy
Qualifications
Reviews
Contingency
Bo
ard
of
Dir
ecto
rs
Management
Executive
Committee
Risk Review
Committee
Pre-Award
Development
(Risk Register)
Tender
Preparation
(Risk Register )
Business
Development
Group
Inte
rna
l M
an
ag
em
en
t S
ys
tem
(IM
S)
/
Ris
k M
an
ag
em
en
t (R
M)
Pro
ce
du
res
Fu
nc
tio
na
l O
ve
rsig
ht
Operational
GBUs
Post-Award
Mitigation Plans
Insurance
Project Controls
Oversight
Regular Reviews
Lessons Learned
Engineering
(Risk Register)
Procurement
(Risk Register)
Construction
(Risk Register)
Commission and
Handover
(Risk Register)
Kentz Project Controls
64
Procurement and Materials Management
System (PMMS)
• Material Catalogue (MatCat)
• Material Management System (MMS)
• Procurement Management System (PMS)
• Warehouse Management System (WMS)
Construction and Completions
Management Systems (CCMS)
• Cable and drum tracking
• Other tracking modules
• Commissioning
• Reporting
• Correspondence management
• Workflow
• Timesheets
• Committed costs
• Payments
• Forecasting
• Project overview
• Project set up
• Accounts payable
• Accounts receivable
• Change management system
Project Cost Management
System (PMCS)
• General set up
• Kentz document control
• Client document control
• Vendor document control
Document Management
System (DMS)
Summary
• Backlog 70% Reimbursable
• Largest lump sum project does not comprise more than 7% of backlog
• Balanced portfolio across regions and clients
• Leading global insurance broker engaged to advise on best practise in risk
transfer
• Corporate and functional organisations promote oversight
• Systems and procedures in place to support future growth
• Enterprise approach in conjunction with flexible operations
65
66
Sharon Paul Group Talent and People Development Officer
Resourcing for Growth
Core Assets
• People are our greatest asset
• Resourcing is key to implementing strategy
• HR is well positioned to make a difference at Kentz
• Integral to servicing clients and maintaining knowledge bank
• Moving up value chain requires a strengthened approach to recruitment
and employee development
• Recruiting for the different types of roles required
• Retention of staff; both key management and general workforce
67
Attracting and Retaining Great People
• Our recent employee survey demonstrated:
• Employees feel that Kentz cares about them –
A differentiator which instils pride
• Our commitment to safety and to conducting
business in an open and honest manner
• Management respect for employees
• The teamwork and overall camaraderie of the
people
• Being part of a large international business,
opportunities to travel and work abroad
• Kentz has a vast knowledge bank with numerous
employees committing decades to Kentz
68
Pat Fogarty started as an
apprentice with Kentz in 1979
He has now worked
internationally on more than
20 major projects
Through development at
Kentz, Pat is now one of our
leading Site & Construction
Managers, winning CEO
Award for Safety Excellence
in 2007
Pat has led teams of over
2,000 employees for more
than 6,000,000 man-hours
without a single Lost-Time
Incident
69
Utilising our Assets
• White collar and blue collar mix
• Allows us to scale up quickly to support our business units
• Mobile workforce in 29 countries
• Swift mobilisation of specific expertise
• Experience of resourcing projects with regionally appropriate workforce
• Cultural considerations
• Building a robust inventory of our talent
• Best in class work processes
Resourcing for the Future
• Leveraging Kentz “Employer Value Proposition”
• Workforce planning – global talent pool
• Leverage our full weight as one company
• Seamless mobilisations and demobilisations
• Retention of key employees verses staffing a singular project
• Competitive intelligence and global market study
• Talent pipelines
• Internal development of talent
• External resourcing strategy
70
71
Development and Retention
• Build and scale our culture of talent development
• Expand our apprenticeship programmes
• Further invest in supervisory training
• Invest in a high potential programme, fit for purpose
• Continue to invest in up-skilling the local workforce
• Enhance our employee engagement and overall satisfaction
72
In Summary:
• Preserve and leverage our employer brand
• Leverage our global talent pool
• Invest in resource strategies
• Invest in development
• Refine our work processes to scale while preserving our agility
• An excellent foundation to further build upon and continue our growth
The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Except in the case of fraud, none of the Company, shareholders or any of their respective affiliates, advisers or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the Presentation. Unless otherwise stated, all financial information contained herein is stated in accordance with international financial reporting standards.
This document does not constitute a prospectus or admission document and does not constitute an offer or invitation or recommendation to purchase or subscribe for any investments and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any contract or commitment or investment decision whatsoever. The information contained in this document is in draft form, is subject to updating and amending and may refer to events which have not yet taken place but which are expected to occur in due course. Forward looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The Company does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Undue reliance should not be placed on forward looking statements, which speak only as of the date of this document. The forward-looking information contained herein has been prepared on the basis of a number of assumptions which may prove to be incorrect, and accordingly, actual results may vary. In any event, the value of investments can go up as well as down and past performance is not a guide to future returns. Recipients of the information contained in the Presentation are requested to afford an appropriate level of confidentiality to the content.
Legal Disclaimer
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