Atkinsrealis Group Inc. · TSX:ATRL
Atkinsrealis — SNC-Lavalin — Shareholder Meeting (2013)
44 slides from Atkinsrealis's shareholder meeting presentation, 2013
Slide 1: SNC-Lavalin
®) SNC-LAVALIN ,
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS Statements made in this presentation that describe the Company's o management's budgets. estimates. expectations, forecasts, objectives, predictions, projections of the future or strategles may be “forward-looking statements”, which can be identified by the use of the cond
Slide 3: 102 Years of Service
102 YEARS OF SERVICE CAPABILITIES OPPORTUNITIES FULL SPECTRUM SERVICES INCL. FINANCING ; OIL&GAS INFRASTRUCTURE LEADER U.S. & OTHER GEOGRAPHIC MARKETS #3 IN MINING GLOBALLY ENVIRONMENT & WATER #2 IN POWER IN NORTH AMERICA ETHICS & COMPLIANCE STRONG FINANCIAL POSITION PROJECT DELIVERY $10B ASSETS, IN
Slide 4: Where We Are and What We Are Doing About It
WHERE WE ARE AND WHAT WE ARE DOING ABOUT IT
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Slide 6: Judging from those I've met, SNC-Lavalin's 34,000 employees would be at home in the most ethical companies
JUDGING FROM THOSE I'VE MET, SNC-LAVALIN’'S 34,000 EMPLOYEES WOULD BE AT HOME WORKING IN ANY OF THE WORLD'S MOST ETHICAL COMPANIES
Slide 7: Ethics and Compliance - What We're Doing
ETHICS AND COMPLIANCE - WHAT WE'RE DOING GOVERNANCE > New CEO > New functions & reports - including CCO > New reporting structure - direct to CEO (Legal) - functional links to Board to create autonomy POLICIES & PROCEDURES Commercial Agents/Representatives policy Functional reporting within operatio
Slide 8: Ethics and Compliance - What We're Doing
ETHICS AND COMPLIANCE - WHAT WE’RE DOING O 4 DETECTION > Cooperation with authorities > Internal audit & investigation > Hotline and reporting management ZN PREVENTION Compliance plan & function Enhanced governance New system for partners and suppliers Enhanced risk procedures New systems and tools
Slide 9: What Impact Has This Had on the Company?
WHAT IMPACT HAS THIS HAD ON THE COMPANY?
Slide 10: Ethics - What We Have Found So Far
ETHICS - WHAT WE HAVE FOUND SO FAR ees OUR KEY STAKEHOLDERS BELIEVE THIS IS LIMITED iW AND “FIXABLE”: WE HAVE THEIR TRUST AND RESPECT THAT WE'RE ON THE RIGHT TRACK } WE HAVE BEEN ABLE TO RETAIN FINANCIAL STRENGTH DESPITE THESE ISSUES t COSTS AND MANAGEMENT DISTRACTION HAVE BEEN SIGNIFICANT 10
Slide 11: Put This Behind Us, Ensure Ethics Excellence
oe — PUT THIS OUR ENSURE BEHIND) ow ETHICS US EXCELLENCE
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Slide 13: Committed to Improving Our Safety Performance
WHILE MUCH BETTER THAN THE INDUSTRY AVERAGE, WE’RE COMMITTED TO IMPROVING OUR SAFETY PERFORMANCE
Slide 14: Safety - Total Recordable Cases/Incidents
SAFETY - TOTAL RECORDABLE CASES/INCIDENTS 2013 0.46 2012 0.49 WVHEEH@ZZ™#CMMHWMH@MqWMA Kc[ M"M[cQMIMCMMHHEx[_ 0.41 INDUSTRY WLLMEE@ EXT EH ME#@Z! E@ EZ@ | !@?! |@E@ Ms AVERAGE EX 0.35 VMEEEEH#EHEH@@@@ HMHHH@@ZZHHH#X. 0.40 2011 2010 2009 SAFETY RATE TREND: DECREASING BUT NEEDS TO IMPROVE FASTER 14
Slide 15: Safety Action Plan
SAFETY ACTION PLAN > IMPROVE AND ENFORCE SAFETY SYSTEM ALL ACCIDENTS ARE PREVENTABLE 15
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Slide 17: Financial Performance - History
FINANCIAL PERFORMANCE - HISTORY 0) (BS) 2009 2010 2011 2010 2011 2012
Slide 18: Financial Performance - History
FINANCIAL PERFORMANCE - HISTORY es Share Price SNC-Lavalin's AnnualEPS (monthly) 3 wo oO \ = i=) $2.36 $3.13 $2.49 $2.04 i} i} _I i} i} | 4 i} | i} 1 i} i} | 20 _} | i} i} i} | oO T T T T 12/31/2009 12/31/2010 12/31/2011 12/31/2012 eS
Slide 19: Our Financial Plan
OUR FINANCIAL PLAN | i 2 * 3 UNSEEN GUSINESS MIX \y SG&A DELIVERY MIGRATION || EFFICIENCY ABOVE (MARGIN | AND \ IMPROVEMENT) / EFFECTIVENESS 19
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Slide 21: Strategy Formulation
STRATEGY FORMULATION COMPANY INTERNAL ANALYSIS FINANCIAL ADVISORS INDUSTRY INSIDERS OUT OF THE BOX TESTING ECONOMICS / MARKET COMPETITOR ANALYSIS SCENARIO DEVELOPMENT > STRATEGY
Slide 22: The Market Context - Assumptions
THE MARKET CONTEXT - ASSUMPTIONS THE WORLD WANTS MORE... Preece ccc o mc sceoese- te ' |MPACTON | ENVIRONMENTAL s ' RESOURCES AND ! Me : INFRASTRUCTURE | OPPORTUNITIES —| FORSNC-LAVALIN 22
Slide 23: The Market Context - Assumptions
THE MARKET CONTEXT- “ASSUMPTIONS CONSTRAINED BUT THE GOVERNMENT—— OVERALL FUNDING WILL — GLOBAL PROVOKE? FED * ECONOMY WILL FOR PRIVATE. CONTINUE INVESTMENT “ss TOBE SOFT
Slide 24: Engineering and Construction Industry Context - Assumptions
ENGINEERING AND CONSTRUCTION INDUSTRY CONTEXT - ASSUMPTIONS GROWTH ON as THREE AXES ¢ NO zz \\ GEOGRAPHIES \ / / a | RAPID —_;> CONSOLIDATION | \ \, & GLOBALIZATION _/ DIRECT & INDIRECT cn a SERVICES MARKETS COST EFFICIENCY 24
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Slide 26: Markets - Accelerated Growth Focus
MARKETS - ACCELERATED GROWTH FOCUS OIL & GAS Transformational growth for scale and capability to compete in high-value sectors > Large projects > Demanding but high-quality clients > Good margins in the right subsectors > Moderate cyclicality > Build delivery and know-how strength > Upstream and mid
Slide 27: Markets - Sustained Growth Focus
MARKETS - SUSTAINED GROWTH FOCUS CLEAN POWER Focus on high growth and margin subsectors; build on broad strengths, especially in North America > Strong and mature position in all key sectors > T&D: strong demand and margins to serve renewable market > Nuclear: high entry barriers with good sustainin
Slide 28: Geographic Hubs
GEOGRAPHIC HUBS CANADA Key region to grow market share Key region to consider across all sectors LATIN AMERICA Top priority for international growth for all sectors EUROPE Selective targeting of key projects, leveraging existing footprint MIDDLE EAST Important market and host for regional hub operat
Slide 29: Service Mix - Leverage Full Spectrum
SERVICE MIX - LEVERAGE FULL SPECTRUM COMPETITIVE ADVANTAGE IC] PROJECT FINANCE > Key growth and financial stability enabler > Improve deal flow and active management A SERVICES > Area of core historical strength for the firm > Key to our growth trajectory > Increase as a percentage of total revenues
Slide 30: Growth Enablers
GROWTH ENABLERS EFFICIENT OPERATING WORLD-CLASS PROJECT MODEL EXECUTION TALENT DEVELOPMENT AND RETENTION Ethics & Client t ) Leadership Development Governance Service ai & Recruitment One Company / Relentless Employee Globalization Commitment to H&S Engagement SG&A Efficiency Actively Managed Risk H
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Slide 32: ICI: A Key Part of Our Current Portfolio
ICl: AKEY PART OF OUR CURRENT PORTFOLIO IC] HAS PLAYED A CRITICAL ROLE NO DIREoY, IN THE COMPANY'S FINANCIAL CONTRIBUTIONS, PICTURE, PROVIDING SIGNIFICANT (@GSairaueieveeuay STABILITY, PARTICULARLY IN Rg aeieRmnea RS THE CURRENT CIRCUMSTANCES CREDIT RATING 32
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Slide 34: Principal ICIs - AltaLink & Highway
PRINCIPAL ICls - AltaLink & Highway 407 Per SNC-Lavalin Share 20.00 yn 5 a c o n c is} ° 7) a ED o = < ($) 2006 2010 2011 2013 ($) 2010 2011 2012
Slide 35: Review of the Ongoing Role of the ICI Portfolio
AS PART OF ITS , THE COMPANY HAS REVIEWED THE ONGOING ROLE OF ITS ICI PORTFOLIO AND HOW TO IT FOR THE BENEFIT OF THE COMPANY AND ITS SHAREHOLDERS
Slide 36: Findings from the Analysis
FINDINGS FROM THE ANALYSIS BASED ON RECENT CONSULTATIONS WITH EXTERNAL ADVISORS, THE COMPANY BELIEVES THAT THE RESEARCH ANALYST CONSENSUS ESTIMATES OF ICI VALUE ARE REASONABLE 36
Slide 37: Findings from the Analysis
FINDINGS FROM THE ANALYSIS THE ICI BUSINESS MODEL HAS LONG-TERM POTENTIAL AND SHOULD BE CONTINUED > However, it does not require the entire current large ICI base for success > Need to have a more disciplined approach to employing capital and more focus on exit strategy at the beginning > Concession
Slide 38: Findings from the Analysis
FINDINGS FROM THE ANALYSIS WE BELIEVE THAT MANY MAJOR STAKEHOLDERS VALUE THE STABILITY PROVIDED BY THE IC! BASE > Maintaining the principal ICI assets for the near term is important for financial stability - Near term is until we have achieved a better understanding of the ethics impact and operatio
Slide 39: Findings from the Analysis
FINDINGS FROM THE ANALYSIS PRINCIPAL ICI ASSETS ARE VERY ATTRACTIVE TO POTENTIAL PARTNERS > Evaluating portfolio turnover strategies, including alternatives and time frames, to manage the investments for the Company's long-term benefit > Evaluating a variety of options other than outright dispositio
Slide 40: The ICI Strategy
THE ICI STRATEGY ACTS AS ACATALYST FOR E&C AND O&M REVENUES > Primarily target greenfield concessions with integrated offering > Equity interest in brownfield projects to expand résumé and serve as an additional platform for E&C opportunities 40
Slide 41: The ICI Strategy
THE ICI STRATEGY a oS EMPLOY DISCIPLINED / ‘ APPROACH TO CAPITAL 1 i > Exit at maturity, unless strategic considerations justify otherwise \ \ / > Balance how capital is employed, including \ / impact on credit rating and financial flexibility > ot > Consider potential disposal of non-core oT ~ asse
Slide 42: The ICI Strategy
THE ICI STRATEGY FOCUS ON SELECT GEOGRAPHIES AND SECTORS > Participate in major Canadian P3s > Leverage ICI expertise in select countries, aligned with E&C priorities > Leverage Power Transmission & Distribution and mass transit expertise globally 42
Slide 43: Strategy — 2013-2017
STRATEGY — 2013-2017 Transformational growth to become a global resource sector leader Develop multiple opportunities in Environment and Water Achieve sustained growth in Clean Power and Infrastructure Canada and Latin America top priorities for growth Leverage full spectrum of service mix PHASE | P
Slide 44: Employees, Clients, Shareholders, Partners
EMPLOYEES » CLIENTS » SHAREHOLDERS » PARTNERS