Global Environmental Consulting Strategies

Global research summary for survey participants Environment Analyst would like to take this opportunity to thank you for your help with our market research last year looking at the environmental consulting sector in 2013 and 2014. We are very grateful to all those who have assisted us by completing our surveys, participating in email/phone/ Global Environmental face-to-face interviews and verifying/ commenting on their company profiles. Our thanks go to all who have helped.

Consulting Strategies and With the last of the consultancies reporting their results for 2013/14, we are pleased to say that last year’s research has Competitor Analysis 2014 come to an end and, by way of thank for your assistance, we can now provide you with this free summary of selected Specialists stand out as global research findings. Please feel free to circulate the document among your colleagues. environmental consulting market If you subscribe to our Market Intelligence Service, you grinds to a halt again should have received instructions separately on how to download the reports • Twenty five companies are spearheading the global environmental consulting (EC) sector, together accounting for 46% of the total US$28.7bn market • But market revenues fell flat in 2013 following three successive years of growth - following the previous dip associated with the GFC in 2009 - owing to the slowdown in demand from key client sectors such as the US federal government and international mining industry. The ‘Global 25’ peer group of EC practices saw a 1.4% decline in their combined turnover • Those firms with a specialist environmental/sustainability focus are coping far better than those operating as part of broader integrated and multi-service companies - going against the trend for ‘super-sized’ companies following the spate of M&A activity in the wider professional and technical services sector • The global EC market is set to reach US$32.6bn in the next five years - up 13.5% on its 2013 value - as key markets recover and growth also comes from emerging economies

The value of the global environmental consultancy (inc. CRA) and Cardno . The next fifteen are: (EC) market reached US$28.7bn (£17.3bn) in 2013, Grontmij NV, Antea Group, MWH Global, RPS down 0.8% over the previous year, according to the Group, ENVIRON, Jacobs (inc. SKM latest report1 by business intelligence provider Consulting), Parsons Brinckerhoff (owned by Environment Analyst. The sector was assessed to be WSP Global from 2014), WorleyParsons, Royal lagging global economic growth - which was 2.9% in HaskoningDHV, WSP Global, ICF International, 2013 - mainly owing to the impact of the international Mott MacDonald, ATKINS, SLR and Coffey mining sector downturn, and US government International . The three market leaders in each shutdown and federal budget squeeze. global region are shown in the map provided.

The top ten firms ranked in order of gross global EC As a result of recent M&A activity, two firms appear revenues in 2013 are: CH2M Hill, Tetra Tech Inc, in the analysis for the first time in this edition - Jacobs Arcadis, URS Corporation (owned by AECOM (which acquired SKM Consulting) and GHD (which from 2014), Golder Associates, Environmental bought Conestoga Rovers and Associates (CRA). Resources Management (ERM), AECOM, Antea Group (headquartered in the Netherlands) is AMEC Environment & Infrastructure, GHD another newly-profiled firm this year. www.Environment-Analyst.com [email protected] tel +44(0)1743 818008 fax +44(0)1743 818121 Environment Analyst Limited, 140B Longden Coleham, Shrewsbury SY37DN, United Kingdom

Together, the environmental consultancy practices of are a wide variety of business models operating in the the ‘Global 25’ claim a combined share of 46.3% of space. Environment Analyst identifies three major the total global market in 2013. Reflecting the types of operator in terms of their core business fragmented nature of the market, only the top three model, market positioning and how environmental players - CH2M Hill, Tetra Tech Inc and Arcadis - are consultancy fits in with the overall group, defined as: able to boast overall market shares in excess of 4.5%, large-scale integrated firms, multidiscipline hybrids largely thanks to their strong positions in the and specialists. dominant North American region (which accounts for 53% of the total). But this is set to change when Editor of Environment Analyst's Global Market the latest ‘mega-mergers’ completed in the wider Intelligence Service and co-author of the report Liz engineering and professional services sector are taken Trew commented: “International environmental into account. consultancies are once again seeing challenging conditions with many of their key markets flat or in The joining forces of AECOM and URS in a $4 decline - and this has been one of the drivers for billion takeover deal completed in Q4 2014 - creating consolidation in the sector. Unfortunately news of job an entity with staff numbering 100,000 - will see this losses has once again been hitting the headlines as pairing leapfrog straight to the top of the pile with many of these firms seek to adjust their resources to combined pro forma EC sales giving it a market share the slowing demand. of 7.2% and a clear lead over its nearest rivals. Other M&A deals set to shake up the top rankings include “But positively, our research shows that the smaller the acquisition of Parsons Brinckerhoff by WSP specialist firms in the peer group have been growing Global (also completed at the end of last year) and and thriving over the last few years in spite of the Danish player Ramboll’s intended purchase of market challenges, while the large-scale integrated and ENVIRON. multidisciplinary firms - for whom environmental consulting activities account for less than 50% of the The nature of the global EC market is such that there business (and for some as little as 2-5%) - have been

FURTHER INFORMATION

1. Global Environmental Consulting Strategies and Competitor Analysis 2014 is an in-depth market report including detailed profiles of 25 leading operators – for further information (including a full list of contents and figures, and sample company profile download) see http://environment- analyst.com/global

2. The report is based on core financial figures and strategic information collated through an annual research process in collaboration with the environmental consultancy companies – via market surveys, phone/face-to-face interviews with senior executives, and publicly-available annual reports/accounts and websites. The 25 profiled firms have all had the opportunity to review their company profiles and core financial statistics

3. The report is part of Environment Analyst ’s 2014 Global Market Intelligence Service. The full service includes this market assessment, company profiles of the leading 25 environmental consultancies updated throughout the year, the results of a global market trends survey issued each summer, weekly environmental services business news and Market and Company Insight articles.

4. Environment Analyst Ltd (http://www.environment-analyst.com ) is a publishing and market research organisation focusing on the environmental consulting and support services sector – we collect and analyse information from the industry for the benefit of the industry

www.environment-analyst.com 2 struggling to grow organically in the space.” share held by water and waste management. Environmental impact assessment & sustainable Although they are in the minority among the Global development takes a further 18%, whilst 25, the report finds that the specialist firms - environmental management, compliance and due including Antea Group, ENVIRON, ERM, Golder diligence services represent 14%. Climate change & Associates, SLR and Tetra Tech - achieved average energy related services generate a further 8% of the organic EC revenue growth in excess of 25% from total. A breakdown by key client sectors is also 2010-2013. Meanwhile, the non-specialists were only illustrated in the figures attached. able to record organic growth of 1-1.3% during the three-year period. According to the study, the global EC market is forecast to reach $32.6bn (£19.7bn) by 2018, up Trew added: “Our analysis supports the theory that 13.5%. Commenting on future growth prospects for there is a definite client preference for firms which the global EC market, Liz Trew said: “Although our retain their specialist focus in the forecast model for the global market has been environmental/sustainability consulting field. But at downgraded from the previous edition of the report a the same time, the wider support services market is year ago to a modest compound annual growth rate moving towards super-sized companies with full life- (CAGR) of 2.6% over the next five years, this cycle service provision offering clients a one-stop nevertheless equates to an additional £3.9 billion in shop, which means the specialists are under pressure EC revenues being added by 2018. to diversify. “We expect the specialist firms which retain their “Another issue is that the large integrated firms are independence and environmental focus to continue to more focused on winning high-value contracts worth do well and grow organically above the market rate as tens or hundreds of millions of dollars, while the EC they have done so historically. There are also more sector is characterised by a large tail of much smaller big M&A deals on the horizon to further shake up contracts. We have already seen some evidence of the the rankings. super-groups cutting back their environmental teams and operating them more as an internal support “Future market growth will also be highly sector- and function than as standalone consulting units.” region-specific, with spend on climate change and energy services set to grow by over 30.5% in the next The EC staff numbers employed by the Global 25 five-year period, while Latin America and rose by just 1.8% to reach approximately 72,400 in Africa/Middle East will be higher growth regions - 2013, but twelve of the practices saw a contraction in seeing increases of 33.6% and 26.7% respectively.” headcount. Contact for further information: Based on the service area breakdown of the Global 25's aggregated EC revenues, Environment Analyst Liz Trew, Editor finds contaminated land services remains the largest Environment Analyst Market Intelligence Service single work area in global EC market in 2013, Tel: +44 (0)20 3603 2106 representing some 32% of the total, ahead of the 23% Email: [email protected]

Thirteen tables and charts are provided overleaf as a thank you for your participation in the survey.

Please visit http://environment-analyst.com/global for further information.

www.environment-analyst.com 3

Figure 1 Global 25 – top 3 market leaders in each region

Ranking Consultancy Env. management, 1 CH2M Hill compliance & due diligence 14% 2 Tetra Tech Inc EIA & sustainable development Water and waste 3 Arcadis 18% management 23% 4 URS Corporation 5 Golder Associates 6 Environmental Resources Management 7 AECOM Other AMEC Environment & Infrastructure 5% 8 9 GHD Climate change Contaminated land & energy 10 Cardno 32% 8% 11 Grontmij NV 12 ANTEA GROUP Figure 2 Global environmental consultancy 13 MWH Globa l market share by service area 201 3 14 RPS Group Energy & utilities 15 WorleyParsons (inc. waste) Government & 27% 16 Jacobs (inc. SKM Consulting) regulators 27% 17 Parsons Brinckerhoff 18 ENVIRON 19 WSP Global Inc 20 Royal HaskoningDHV ICF International Other 21 2% Mining, manuf. 22 Mott MacDonald & process Financial, industries 23 ATKINS 30% professional & Construction, SLR service sector property & 24 4% transportation 25 Coffey International 10%

Figure 3 Global environmental consultancy Figure 4 Ranking (by revenue) of the Global 25, 2013 market share by client sector 2013

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20% 18.9% Asia- Pacific 18% 16.8% 15% Africa & 16% Middle 14.714.7%%%% 13.713.7%%%% East North 14% 5% America 53% East 12% Europe/ 10% 9.59.59.5%9.5 %%% 9.59.59.5%9.5 %%% FSU 2% 8% 7.47.47.4%7.4 %%%

6% 5.35.35.3%5.3 %%% %of respondents West 4.24.24.2%4.2 %%% Europe 4% 20% 2%

0% Latin <-20% -10 to - -5% to - 0 to -5% 0% 0 to 5% 5% to 10% to >20% America 20% 10% 10% 20% 5% Turnover growth SOURCE: ENVIRONMENT ANALYST

Figure 5 Global environmental consultancy Figure 6 Range of average turnover growth 201 3 market share by region 2013

Better Same Worse

Large 27.327.3%%%% 48.5% 24.2%

Small 41.841.8%%%% 37.337.3%%%% 20.920.9%%%%

All 37.637.6%%%% 40.640.6%%%% 21.821.8%%%%

0% 20% 40% 60% 80% 100% % of respondents SOURCE: ENVIRONMENT ANALYST

Figure 7 Q1 2014 performance in relation to budget, by consultancy size

Significantly better Slightly better About the same Slightly worse Significantly worse

2014 prospects 12.412.4%%%% 53.3% 25.7% 4.84.84.8%4.8 %%%

3.83.83.8%3.8 %%%

1.01.01.0%1.0 %%% 2015 prospects 23.323.3%%%% 56.356.3%%%% 17.517.5%%%% 1.91.91.9%1.9 %%%

0% 20% 40% 60% 80% 100%

% of respondents SOURCE: ENVIRONMENT ANALYST

Figure 8 2014 and 2015 prospects in relation to 2013, by percent of respondents

www.environment-analyst.com 5 60% All Small 505050%50 %%% Large 50%

42%

40% 373737%37 %%% 373737%37 %%% 333333%33 %%% 313131%31 %%% 30% 262626%26 %%% 24%

20% 171717%17 %%% 151515%15 %%% 151515%15 %%% 12%12 % 11% 1212 %% 10% 8%8%8%

000%0%%% 0% Actively recruiting to Recruiting to keep Recruitment is There have been Anticipate (or have boost staff numbers stable frozen at the current redundancies during already made) numbers/capabilities time 2013 redundancies in 2014

SOURCE: ENVIRONMENT ANALYST

Figure 9 Staff recruitment trends, by consultancy size

>20% 0.90.90.9%0.9 %%%

5-20% 17.0%

0-5% 48.148.1%%%%

0% 16.0%

-0-5% 9.49.49.4%9.4 %%%

-5--20% 0.90.90.9%0.9 %%%

<-20% 7.57.57.5%7.5 %%%

0% 10% 20% 30% 40% 50% 60% % of respondents

SOURCE: ENVIRONMENT ANALYST

Figure 10 Range of renumeration change in last 12 months, by percent of respondents

Africa 9.09.09.0%9.0 %%%

Australasia 3.53.53.5%3.5 %%%

East Europe (Incl. Russia) 2.62.62.6%2.6 %%%

Indian sub-continent 4.24.24.2%4.2 %%%

Latin America/Caribbean 5.85.85.8%5.8 %%%

Middle East 5.65.65.6%5.6 %%%

North America 4.54.54.5%4.5 %%%

South East Asia (incl. China) 8.28.28.2%8.2 %%%

Western Europe 2.52.52.5%2.5 %%%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%

% growth rate (CAGR) SOURCE: ENVIRONMENT ANALYST

Figure 11 International turnover growth potential, by percent of respondents

www.environment-analyst.com 6 Positive Static Negative

Is the proportion of repeat business growing? 383838%38 %%% 545454%54 %%% 888%8%%% Are you spending more or less on marketing effort & the tendering process per contract won? 404040%40 %%% 494949%49 %%% 121212%12 %%% Is your forward order book more or less full? 272727%27 %%% 535353%53 %%% 202020%20 %%%

What is the overall trend in contract values? 424242%42 %%% 343434%34 %%% 232323%23 %%%

What is the overall trend in fee rates? 222222%22 %%% 585858%58 %%% 202020%20 %%% What is the trend in staff turnover (exclusive of redundancies)? 232323%23 %%% 636363%63 %%% 141414%14 %%% What is the overall trend in staff utilisation? 272727%27 %%% 535353%53 %%% 202020%20 %%% Are you sub-contracting more or less (to other consultancies)? 202020%20 %%% 545454%54 %%% 262626%26 %%% Do you have more (or less) offices in this country? 131313%13 %%% 777777%77 %%% 101010%10 %%% Are you winning more (or less) work from overseas markets? 414141%41 %%% 454545%45 %%% 141414%14 %%% Do you have more (or less) offices internationally? 272727%27 %%% 656565%65 %%% 888%8%%%

0% 20% 40% 60% 80% 100% % of respondents SOURCE: ENVIRONMENT ANALYST

Figure 12 Key operational trends (compared with previous year), by percent of respondents

More Stable Less

Business development & marketing (investment per contract won) 454545%45 %%% 474747%47 %%% 888%8%%% Diversify environmental services range 545454%54 %%% 393939%39 %%% 777%7%%% Focus more on non-domestic (overseas) clients/markets 606060%60 %%% 323232%32 %%% 999%9%%% Focus on core specialist env. consulting services 505050%50 %%% 454545%45 %%% 444%4%%% Focus on improving staff ultilisation 606060%60 %%% 393939%39 %%% 111%1%%% Grow through mergers & acquisitions 303030%30 %%% 515151%51 %%% 191919%19 %%% Integration of env. consulting/sustainability and design & engineering services 535353%53 %%% 414141%41 %%% 666%6%%% Integration of env. consulting/sustainability and management consulting/business strategy services 484848%48 %%% 474747%47 %%% 444%4%%% Investment in graduate schemes & university links 272727%27 %%% 515151%51 %%% 222222%22 %%% Offer fixed price contracts 313131%31 %%% 595959%59 %%% 101010%10 %%% Reduce costs 353535%35 %%% 595959%59 %%% 666%6%%% Seek to establish long-term relationships with clients/key client accounts 848484%84 %%% 151515%15 %%% 111%1%%% Staff development and training (investment per head) 464646%46 %%% 464646%46 %%% 999%9%%% Sub-contract (to other consultants) 252525%25 %%% 464646%46 %%% 292929%29 %%% Work on a risk/reward sharing basis with clients 363636%36 %%% 515151%51 %%% 131313%13 %%%

0% 20% 40% 60% 80% 100% % of respondents SOURCE: ENVIRONMENT ANALYST

Figure 13 Strategies consultancies expect to adopt over next 5 years, by percent of respondents

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Market Intelligence Service 2015 - Global What you get in your 2015 subscription package

Our fla gship report, Global Environmental Consulting Strategies and Competitor Analysis (2014 & 2015 editions) Profiles of 25 global environmental consulting firms, plus year-on-year comparisons Includes data from the 2014 and 2015 market trends surveys Full access to the online news service

See ordering details at www.environment-analyst.com/global

Global Environmental Consulting Strategies and Competitor Analysis 2014

This latest edition (issued December 2014) contains profiles of the following 25 global environmental consultancies:

AECOM, AMEC Environment & Infrastructure, ANTEA GROUP, Arcadis, ATKINS, Cardno, CH2M Hill, Coffey International, ENVIRON, Environmental Resources Management, GHD, Golder Associates, Grontmij NV, ICF International, Jacobs (inc. SKM Consulting), Mott MacDonald, MWH Global, Parsons Brinckerhoff, Royal HaskoningDHV, RPS Group, SLR, Tetra Tech Inc, URS Corporation, WorleyParsons, and WSP Global Inc

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