Worley Limited · ASX:WOR

Worley — WorleyParsons — FY2017 Earnings Presentation

50 slides from Worley's earnings presentation, Aug 23, 2017

  1. Slide 1: Full Year Results 2017

    For personal use only Full Year Results 2017 Andrew Wood, CEO

  2. Slide 2: Disclaimer

    Disclaimer For personal use only The information in this presentation about the WorleyParsons Group and its activities is current as at 23 August 2017 and should be read in conjunction with the Company’s Appendix 4E and Annual Report for the full year ended 30 June 2017. It is in summary form and is

  3. Slide 3: FY2017 summary

    FY2017 summary For personal use only Margins improved $33.5m $123.2m  $500m annualized overhead savings delivered Statutory NPAT Underlying NPAT  Gross margin improved with better customer June 2016: $23.5m June 2016: $153.1m delivery Balance sheet strengthening $500m $163.7m  Cash flow of $79m (

  4. Slide 4: Overview

    Overview FY2017 achievements For personal use only  Aggregated revenue decline of 24% in line with overall market contraction  H2 revenue grew by 2% from H1  Profitability supported by management action on costs Financial results  Gross margin, EBIT and NPAT margins improved  Positive operating

  5. Slide 5: Our FY2017 priorities

    Our FY2017 priorities For personal use only Our priorities FY2017 achievements  Increased total delivery to $500m in overhead savings program Reduce internal costs  Staff utilization on target  Gross margin improved Improve customer delivery  Improved customer feedback on our performance  Resha

  6. Slide 6: OneWay to Zero Harm

    OneWay™ to Zero Harm We aim for zero harm For personal use only Our safety performance is industry leading  Employee Total Recordable Case Frequency Rate (TRCFR) for FY2017 was 0.08 (FY2016: 0.07).  Employee, Contractor & Subcontractor and Partner TRCFR for FY2017 was 0.14 (FY2016: 0.17)  The Heb

  7. Slide 7: Environment, social and governance commitments

    Environment, social and governance commitments Corporate Responsibility progress For personal use only  Over 6,800 Group personnel participated in over 350 corporate responsibility activities across 22 countries.  Employees volunteered 15,000 hours in FY2017  FY2020 target for woman senior execut

  8. Slide 8: Headcount stabilizing – above staff utilization target

    Headcount stabilizing – above staff utilization target For personal use only Growth in global headcount Staff utilization Headcount Change to prior month* 87% Target 85% Monthly rate Utilization % 83% 81% 79% 77% July Jan July Jan July Jan July Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar

  9. Slide 9: Significant awards

    Significant awards For personal use only  New Global Sales and Minerals, Metals Hydrocarbons Revenue Marketing team delivering & Chemicals $1.9+ billion improved results Revenue $190+ million 12 48  Business development 86 campaigns focused in sectors Significant awards of strategic priority  Win

  10. Slide 10: Backlog has increased

    Backlog has increased For personal use only 36 month backlog ($b) Approximate timing of backlog ($b) Backlog as at 30 June 2017 5.5 5.1 5 FY18 3.0 4.7 4.6 4.5 4.2 4 FY19 1.2 3.5 FY20 0.9 3 Dec 15 Jun 16 Dec 16 Jun 17 10 Full year results 2017

  11. Slide 11: Strengthening customer capex budgets – Energy

    Strengthening customer capex budgets Energy For personal use only Select Oil & Gas majors – global capex YoY growth (%)  Trend continues to indicate modest increases 10% 3% 6% in global hydrocarbons capex 0%  Customer spending sensitive to their (10%) operational cash flow (20%) (23%) Source: Fact

  12. Slide 12: Strengthening customer capex budgets – Resources

    Strengthening customer capex budgets Resources For personal use only Select Minerals & Metals companies – global capex YoY growth (%)  After several years of strong contraction, 20% 10% mining customers are indicating a modest 0% return to spending (20%) (2%)  We are seeing early signs of increase

  13. Slide 13: New strategic architecture

    New strategic architecture For personal use only Who we are • Biggest energy industry transition in 40 years, for which we are well positioned We help our customers meet the world’s • Disproportionate growth in emerging markets, where we have an changing resources and energy needs. enviable track re

  14. Slide 14: Strategic priorities

    Strategic priorities For personal use only Horizon 3 Horizon 2 Emerging markets Growth Potential & products Chemicals & Petrochemicals New Energy (Europe) Digital Horizon 1 Minerals & Metals (Internal and External) Core growth Power – Fossil (Middle East, Africa & SE Asia) Belt & Road Initiative Ons

  15. Slide 15: Full Year Results 2017 – Tom Honan, CFO

    For personal use only Full Year Results 2017 Tom Honan Group Managing Director Finance, CFO 15

  16. Slide 16: Statutory statement of financial performance

    Statutory statement of financial performance For personal use only 30 June 2017 ($m) 30 June 2016 ($m) REVENUE AND OTHER INCOME Professional services revenue 3,558.7 4,641.8 Procurement revenue 1,142.4 2,571.7 Construction and fabrication revenue 502.8 561.6 Interest income 7.1 8.8 Other income 9.6

  17. Slide 17: Reconciliation of statutory to underlying NPAT result

    Reconciliation of statutory to underlying NPAT result Adjusted for non-trading items For personal use only FY2017($m) FY2016 ($m) Statutory result 33.5 23.5 Additions (pre-tax) Staff restructuring costs 59.2 76.8 Onerous lease contracts 24.2 86.4 Onerous engineering software licences 3.2 14.3 Other

  18. Slide 18: FY2017 key financials

    FY2017 key financials For personal use only Statutory Results FY2017 FY2016 vs. FY2016 Total revenue ($m) 5,220.6 7,790.1 (33.0%)  Revenue down in line with market EBIT ($m) 129.6 128.9 0.5% contraction Net profit after tax ($m) 33.5 23.5 42.6% Basic EPS (cps) 13.5 9.5 42.1%  Overhead savings driv

  19. Slide 19: Aggregated revenue

    Aggregated revenue Half on half revenue For personal use only  Second half revenue 2% above H1 H2 AUD'm 4,000.0 first half 3,614 3,614 3,107 3,000.0 2,619 2,166 2,211 2,000.0 1,000.0 0.0 FY2015 FY2016 FY2017 19 Full year results 2017

  20. Slide 20: Underlying Group EBIT evolution

    Underlying Group EBIT evolution Realize our future program reduced impact of market contraction For personal use only 246.5 369.9 78.5 302.7 257.8 FY 2016 Gross margin % impact Overhead savings/Reductions Volume impact FY 2017 20 Full year results 2017

  21. Slide 21: Segment result by business line

    Segment result By business line For personal use only FY2017 FY2016 (Restated) vs. FY2016 (Restated)  Services result supported by favourable project outcomes in Europe, Middle East and Aggregated Revenue ($m) 4,377.0 5,725.9 (23.6%) Africa (EMEA) Services 2,681.1 3,630.8 (26.2%) Major Projects & I

  22. Slide 22: Realize our future

    For personal use only Full Year Results 2017 Realize our future 22

  23. Slide 23: $500 million cost savings

    $500 million cost savings For personal use only 1500  Delivered program total 1400 120 of $500m of annualised overhead savings, ahead 1300 80 of initial target of 1200 $300m 1450 220 1100 1330  Savings generated in IT 1000 1250 and third party spend, 80 reduction of property 900 1030 950 and optim

  24. Slide 24: Strengthening the balance sheet

    Strengthening the balance sheet For personal use only Clear focus to improve balance sheet metrics FY17 FY15 Cash $m $m Conserved $m  Cash conservation measures Capex 45 89 44  Lowered capital expenditure Dividends - 209 209  No dividend payments M&A 19 106 87  Reduced M&A spend Total 64 404 340

  25. Slide 25: Key indicators

    Key indicators Heading in right direction For personal use only Overhead cost index FY14 HY15 FY15 HY16 FY16 HY17 FY17 Gearing ratio % 0% 35% (10%) 30% 25% (20%) 20% (30%) Gearing ratio = net debt/net debt + equity 15% (40%) 10% (50%) FY14 HY15 FY15 HY16 FY16 HY17 FY17 Gross margin (%) Covenant leve

  26. Slide 26: Capital management

    For personal use only Full Year Results 2017 Capital management 26

  27. Slide 27: Cash flow

    Cash flow Impact of restructuring For personal use only Underlying operating cash flow – 180  Strong improvement in cash flow in Cash restructuring costs paid – 101 second half 267 43 500.0 63  Receivables from the four state owned customers we flagged at half year 400.0 134 373 85 reduced from $2

  28. Slide 28: Gearing metrics

    Gearing metrics Current balance sheet metrics For personal use only FY2017 HY2017 Gearing ratio1 % 29.1% 32.9%  Gearing within target band and <30% Facility utilization2 % 60.0% 56.7% Average cost of debt % 4.8% 5.0%  Net debt reduction of $153.5 in Total liquidity3 ($m) 981 1,212 second half Aver

  29. Slide 29: Liquidity

    Liquidity Core debt facility For personal use only Debt facility utilization and maturity profile $m 1,000 800 600 A$M 400 200 - FY18 FY19 FY20 FY21 FY22 FY23 Utilized Not utilized Refinancing activities  All core FY19 maturities addressed this calendar year  Positive discussions held with Banks t

  30. Slide 30: Outlook

    For personal use only Full Year Results 2017 Outlook 30

  31. Slide 31: Concluding remarks

    Concluding remarks Progress in last 12 months For personal use only  Our markets appear to be at an inflexion point  Revenue increase delivered in second half  Increased program total to $500m of annualised costs removed  Margin improvement at all levels  Strong cash result in second half  Bac

  32. Slide 32: Group outlook

    Group outlook For personal use only We are beginning to see increased activity from our energy and resource customers despite the constrained resource price environment. While increased backlog provides support for the near term, the medium term revenue outlook remains uncertain. Our focus on costs

  33. Slide 33: Q&A

    For personal use only Full Year Results 2017 Q&A 33

  34. Slide 34: Supplementary information

    For personal use only Full Year Results 2017 Supplementary information 34

  35. Slide 35: Segment result by region

    Segment result By region By region For personal use only FY2016 vs. FY2016 FY2017 (Restated) (Restated) Aggregated Revenue ($m) 4,377.0 5,725.9 (23.6%)  Revenue declines in all regions – APAC 1,064.8 1,366.7 (22.1%) driven by projects completing and EMEA 1,577.6 1,892.4 (16.6%) slow ramp up of new

  36. Slide 36: Segment result by sector

    Segment result By sector For personal use only FY2017 FY2016 vs. FY2016  Upstream Oil and Gas remains the (Restated) (Restated) Aggregated Revenue ($m) 4,377.0 5,725.9 (23.6%) largest segment in Hydrocarbons sector Hydrocarbons 3,105.6 4,099.9 (24.3%) Professional Services1 2,602.8 3,538.3 (26.4%)

  37. Slide 37: Global operations and significant contract awards

    Europe, Middle East Global operations and significant contract awards Infrastructure 7 & Africa Hydrocarbons 15 28 Significant For personal use only Awards Minerals, Metals & Chemicals 6 Infrastructure 26 Hydrocarbons 48 86 Significant Awards Minerals, Metals & Chemicals 12 Australia, Pacific, Asia

  38. Slide 38: Backlog has increased

    Backlog has increased For personal use only Backlog by region Backlog by sector as at 30 June 2017 as at 30 June 2017 0.4 Australia, Pacific, Hydrocarbons 1.2 Asia, China (APAC) 0.9 Minerals & Metals, 2.4 Americas (AM) Chemicals Europe, Middle East, 3.8 Infrastructure 1.5 Africa (EMEA) 38 Full year

  39. Slide 39: Backlog has increased

    Backlog has increased For personal use only Backlog by region Backlog by sector as at 30 June 2017 as at 30 June 2017 6.0 6.0 5.0 5.0 0.0 0.3 0.6 0.2 0.1 0.6 4.0 4.0 A$'B A$'B 3.0 3.0 5.1 5.1 2.0 4.2 2.0 4.2 1.0 1.0 - - 39 Full year results 2017

  40. Slide 40: Underlying earnings profile

    Underlying earnings profile For personal use only Group underlying EBIT $m 527.0 452.2 418.0 275.1 302.7 274.0 257.8 237.2 152.5 139.9 251.9 178.2 180.8 150.2 117.9 1H FY2013 FY2014 FY2015 FY2016 FY2017 2H Group underlying NPAT $m 322.1 263.4 243.1 167.0 153.1 162.7 138.8 123.2 79.2 155.1 66.1 100.7

  41. Slide 41: Margin profile

    Margin profile Operational underlying EBIT % For personal use only 6.5% 6.9% 4.7% 6.1% 5.8% 7.3% 7.6% 5.0% 6.5% 4.8% 5.3% 5.4% 5.8% 6.3% 5.9% FY2013 FY2014 FY2015 FY2016 (Restated)* FY2017 Operational underlying NPAT % 1H 2H FY 4.0% 2.7% 4.5% 4.2% 3.6% 2.9% 3.8% 3.4% 2.4% 3.0% 2.6% 4.5% 2.7% 3.0% 2.

  42. Slide 42: Revenue split

    Revenue split For personal use only Contribution to aggregated revenue (%) 10% USA, 19% ANZ, 18% Hydrocarbons 19% Asia, 7% Minerals & Metals, Chemicals Middle East & Africa, 17% Infrastructure Canada, 20% 71% Europe, 19%  Contribution from all regions and sectors not significantly changed 42 Full y

  43. Slide 43: Revenue reconciliation

    Revenue reconciliation For personal use only FY2017 ($m) FY2016 ($m) vs. FY2016 Revenue and other income 5,220.6 7,790.1 (33.0%) Less: Procurement revenue at nil margin (826.2) (2,226.4) (62.9%) Less: Pass through revenue at nil margin (229.0) (167.0) 37.1% Plus: Share of revenue from associates 218

  44. Slide 44: EBIT reconciliation

    EBIT reconciliation For personal use only FY2017 ($m) FY2016 ($m) EBIT 129.6 128.9 Less: net gain on revaluation of investments previously accounted for as joint operations - (4.5) Add: staff restructuring costs 59.2 76.8 Add: onerous lease contracts 24.2 86.4 Add: onerous engineering software licen

  45. Slide 45: Cash flow

    Cash flow For personal use only FY2017 ($m) FY2016 ($m)  Strong improvement in second half EBIT 129.6 128.9 Add: Depreciation, amortization 80.8 90.1  Working capital utilized for restructuring (45.8) (118.4) Less: Interest and tax paid Less: Working capital/other (85.7) 91.4 costs and development

  46. Slide 46: Liquidity and debt maturity

    Liquidity and debt maturity For personal use only Liquidity Summary $m FY2017 FY2016 change Loan, finance lease & overdraft facilities 1,835 2,182 (15.9%)  Sufficient liquidity, Less: facilities utilized (1,106) (1,244) (11.1%) bonding and debt facilities Available facilities 729 938 (22.3%) Plus:

  47. Slide 47: FX translation impact

    FX translation impact For personal use only Average exchange rate Spot exchange rate Movement in major currencies against AUD (indexed) Currency movement movement 115 BRL (9.8%) 6.0% 110 CAD 3.7% 3.5% 105 CNY 9.7% 5.0% 100 EUR 5.4% 0.0% GBP 22.0% 5.6% 95 NOK 3.7% 3.4% 90 AUD:USD AUD:GBP AUD:CAD SGD

  48. Slide 48: Foreign exchange

    Foreign exchange For personal use only Impact total EBIT 1.0 0.7 Millions - (0.6) (0.7) (1.0) (1.1) (0.9) (0.8) (1.5) -1.0 (2.6) -2.0 -3.0 CAD CNY GBP KWD KZT MZN NGN OMR Other Group EBIT FX translation impact 40 30 A $m 20 41 10 11 12 0 4 (8.3) -10 FY13 FY14 FY15 FY16 FY17 48 Full year results 2017

  49. Slide 49: Acronyms

    Acronyms For personal use only APAC – Australia Pacific Asia China IT – Information Technology AM – Americas M&A – Mergers & Acquisitions CPS – Cents Per Share MP&IS – Major Projects & Integrated Solutions DSO – Day Sales Outstanding MSA – Master Service Agreement EBIT – Earnings Before Interest and

  50. Slide 50: WorleyParsons resources & energy

    WorleyParsons resources & energy

WorleyParsons — FY2017 Earnings Presentation on 6ix