Worley Limited · ASX:WOR
Worley — WorleyParsons — FY2014 Earnings Presentation
38 slides from Worley's earnings presentation, Aug 27, 2014
Slide 1: Full year results 2014
For personal use only Full year results 2014 Andrew Wood
Slide 2: Overview
Overview FY2014 Strong operating cash flow For personal use only ► Earnings in line with guidance ► Business reorganization completed ► Further reduction of 1,200 overhead roles ► Strong operating cash flow result ► Final dividend of 51.0 cents per share ► Total dividend of 85.0 cents per share 2
Slide 3: Financial snapshot
Financial snapshot For personal use only ► Aggregated revenue1 of $7,364m, down 3%2 ► Underlying NPAT 3 of $263m, down 18%2 ► Improvement in Group EBIT margin in second half ► Operating cash flow up 24% to $550m ► Costs associated with restructuring amounted to $35.4m ► Gearing ratio remains strong
Slide 4: OneWay to Zero Harm
OneWayTM to Zero Harm For personal use only Performance remains good > Total Recordable Case Frequency Rate (TRCFR) for FY2014 was 0.10 (FY2013: 0.13) We continue a number of programs across the Group including: > Board and Executive Committee structured HSE site visit program > Road safety program
Slide 5: Our Group Strategy
Our Group Strategy For personal use only To enhance and leverage our broad and deep technical capabilities and our diverse geographic presence 5
Slide 6: Horizon: Getting better at what we do
Horizon 1 Getting better at what we do For personal use only 6
Slide 7: Growth from the core: Hydrocarbons
Horizon 2 Growth from the core For personal use only Hydrocarbons > Australian market contracted across FY2014 as the wave of LNG projects and the associated upstream developments approached “start-up” phase > The next wave of global LNG capacity in North American based on unconventional oil & gas (
Slide 8: Growth from the core: Minerals, Metals & Chemicals
Horizon 2 Growth from the core For personal use only Minerals, Metals & Chemicals > Minerals and metals short term market remains soft with improving outlook for study activities > Continued growth in chemicals in US, Middle East and China > Fertilizer market providing global opportunities > South A
Slide 9: Growth from the core: Infrastructure
Horizon 2 Growth from the core For personal use only Infrastructure > Resource infrastructure is in decline > Cancellation of a nuclear project, but improving outlook > Positive outlook in North America for water and environment services to unconventional oil & gas customers > Resource infrastructur
Slide 10: Our new ventures - Digital Enterprise and Advisian
Horizon 3 Our new ventures - Digital Enterprise and Advisian For personal use only 10
Slide 11: Full year results 2014
For personal use only Full year results 2014 Simon Holt
Slide 12: Financial Profile
Financial Profile Strong operating cash flow For personal use only FY2014 FY2013 vs. FY2013 Aggregated revenue1 ($m) 7,364 7,627 (3)% Underlying EBIT2 ($m) 452 527 (14)% Underlying EBIT margin 6.1% 6.9% (0.8)% Underlying Net Profit After Tax2 ($m) 263 322 (18)% Underlying NPAT margin 3.6% 4.2% (0.6)
Slide 13: Total revenue by region
Total revenue by region North America region grows, Australia in decline For personal use only FY2014 Total Revenue $9,583m FY2013 Total Revenue $8,832m SSA ASCHI SSA 2% 5% 3% ASCHI 5% MENA ANZ LAM MENA 15% 12% 5% 14% ANZ LAM 17% 3% EUR 9% EUR 12% USAC CAN CAN 29% 33% 19% USAC 17% 13
Slide 14: Aggregated revenue by region
Aggregated revenue by region For personal use only 29% 29% 23% 17% 15% 15% 15% 2,158 2,088 10% 1,737 7% 7% 7% 8% 1,248 1,123 1,149 1,096 5% 5% 806 4% 4% 564 502 531 591 394 325 288 391 FY2013 ($m) FY2014 ($m) % of total aggregated revenue ► EUR grows through increased contribution from Rosenberg and
Slide 15: Underlying Operating EBIT
Underlying Operating EBIT For personal use only 14.6% 8.9% 9.0% 12.6% 13.7% 13.0% 11.9% 15.7% 254 19.5% 22.1% 193 188 157 11.5% 146 137 150 110 111 126 7.3% 3.8% 0.9% 6.0% 61 2.8% 15 3 43 8 24 FY2013 ($m) FY2014 ($m) % EBIT margin ► Significant decline in EBIT from ANZ due to lower project activity
Slide 16: CSG segment EBIT
CSG segment EBIT For personal use only 904 822 654 627 143 131 107 64 Hydrocarbons Minerals, Metals & Infrastructure Total Chemicals FY2013 ($m) FY2014 ($m) 16
Slide 17: Underlying NPAT ($m)
Underlying NPAT ($m) Reflects changes in contribution to EBIT at For personal use only constant currency (69.7) (18.4) 27.7 (47.0) 30.3 (6.0) 5.0 19.4 322.1 263.4 17
Slide 18: Hydrocarbons
Hydrocarbons For personal use only FY2014 FY2013 ► Segment margin holding up Aggregated revenue $m 5,371.5 5,492.9 ► Project activity declining in Professional services $m 4,255.1 4,393.1 ANZ, ASCHI and MENA Construction and fabrication $m 888.7 847.7 ► USAC & CAN declined due Procurement revenue wi
Slide 19: Minerals, Metals & Chemicals
Minerals, Metals & Chemicals For personal use only FY2014 FY2013 ► 2H margin improvement Aggregated revenue $m 1,065.9 1,096.5 ► ANZ downturn due to reduced Professional services $m 1,042.4 1,085.2 project activity ► TWP adding to SSA result Procurement revenue with margin $m 23.1 11.1 ► Iron Ore an
Slide 20: Infrastructure
Infrastructure ► ANZ includes FY2013 non- For personal use only FY2014 FY2013 Aggregated revenue $m 926.3 1,037.6 recurring benefit Professional services $m 869.3 967.8 ► Cancellation of nuclear Procurement revenue with margin $m 52.4 57.1 project and general reduction Other revenue $m 4.6 12.7 in p
Slide 21: Margin profile
Margin profile For personal use only Group Underlying EBIT Margin % 8.6% ► Highest second half margin for 8.0% 7.2% 6.9% three years 6.1% 9.0% ► Full year margin down 0.8% 9.4% 7.1% 7.3% ► Margins holding up in 7.6% Hydrocarbons 8.2% 7.3% ► Construction margin recovered in 6.6% 6.5% 4.7% second half
Slide 22: Cash flow
Cash flow Strong cash flow generation For personal use only $m FY2014 FY2013 Underlying EBIT 452 527 Depreciation and amortization 110 102 Interest and tax paid (140) (192) Working capital/other 128 7 Net cash inflow from operating activities 550 444 22
Slide 23: Gearing metrics
Gearing metrics Gearing below target range For personal use only FY2014 FY2013 Gearing ratio % 20% 25% Facility utilization1 % 50% 56% Average cost of debt % 5.4% 5.5% Average maturity (years) 4.2 3.8 Interest cover1 (times) 8.3x 10.6x Net debt $m 528 742 Net Debt/EBITDA (times) 1.0x 1.2x 1 Loans, f
Slide 24: Liquidity
Liquidity Financial capacity to support growth For personal use only vs. ► Repaid US$140.5m Liquidity summary $m FY2014 FY2013 FY2013 tranche Loan, finance lease & 1,783 1,912 (7)% overdraft facilities ► US$520m US Bank Less: facilities utilized* (897) (1,062) (16)% Syndication refinance Available f
Slide 25: Full year results 2014
For personal use only Full year results 2014 Andrew Wood
Slide 26: Summary: Responding to market conditions and our customers
Summary Responding to market conditions and our customers For personal use only What we promised What we delivered ► Underlying NPAT of Underlying NPAT of $260m – $300m net of $263.4m restructuring costs ► Reorganization charge Reorganization charge of estimated at $35m $35.4m ► Reduction in overh
Slide 27: Group outlook
Group outlook For personal use only Commenting on the outlook for the WorleyParsons Group, Mr Andrew Wood said: “We have taken decisive action to improve margins and ensure the business is responding to market conditions and our customers’ needs. We are focused on realizing our objective of providin
Slide 28: Q&A
For personal use only Q&A Full year results 2014
Slide 29: Supplementary information
For personal use only Supplementary information Full year results 2014
Slide 30: Reconciliation
Reconciliation For personal use only $m FY2014 FY2013 Revenue and other income 9,582.5 8,831.5 Procurement services at nil margin (2,726.1) (1,747.7) Share of revenue from associates 524.0 549.2 Net gain on revaluation of investments (11.4) - Interest income (5.3) (6.0) Aggregated revenue* 7,363.7 7
Slide 31: Aggregated revenue by type
Aggregated revenue by type Aggregated revenue down, revenue mix stable For personal use only $m FY2014 FY2013 vs. FY2013 Aggregated revenue 7,363.7 7,627.0 (3)% Professional services 6,166.8 6,446.1 (4)% Construction and fabrication 888.7 847.7 5% Procurement revenue at margin 302.9 319.1 (5)% Other
Slide 32: Reconciliation
Reconciliation For personal use only $m FY2014 FY2013 EBIT 428.2 527.0 Less net gain on revaluation of investments previously accounted for as equity accounted associates (11.4) - Plus restructuring costs 35.4 - Underlying EBIT 452.2 527.0 NPAT 268.6 344.2 Less non-controlling interests (19.5) (22.1
Slide 33: Dividend history
Dividend history Final dividend of 51.0 cents per share For personal use only FY2010 FY2011 FY2012 FY2013 FY2014 Interim dividend (cps) 35.5 36.0 40.0 41.5 34.0 Franked % 100% 100% 79% 100% 25% $m total 87.0 88.6 98.3 102.4 83.9 Final dividend (cps) 40.0 50.0 51.0 51.0 51.0 Franked % 47% 26% 61% 0%
Slide 34: FX translation impact
FX translation impact For personal use only Movement in major currencies Group EBIT FX Impact Since FY2010 110.0 FY2010 FY2011 FY2012 FY2013 FY2014 45 105.0 35 25 100.0 41 15 5 95.0 4 A$m -5 -18 -15 -32 90.0 -41 -25 85.0 -35 -45 80.0 -55 Jul-13 Oct-13 Apr-14 Feb-14 Aug-13 Sep-13 Jan-14 Nov-13 Dec-13
Slide 35: Strength in diversification
Strength in diversification For personal use only 35,600 157 46 people offices countries 5.2m workshare hours 35
Slide 36: Diversification in earnings
Diversification in earnings For personal use only ► Top 10 customers deliver 33% of the gross margin ► Top 10 projects deliver 15% of the gross margin ► Top 10 locations deliver 71% of the operating EBIT 36
Slide 37: Significant awards
Significant awards For personal use only 42 23 90 25 37
Slide 38: Contractual acronyms
Contractual acronyms For personal use only CY – Calendar year EDS – Engineering and Design Services E&P – Engineering and Procurement EPC – Engineering, Procurement and Construction EPCM – Engineering, Procurement and Construction Management ESA – Engineering Services Agreement ESP – Engineering Ser