Worley Limited · ASX:WOR
Worley — WorleyParsons — Investor Day (May 2016)
88 slides from Worley's investor day presentation, May 25, 2016
Slide 1: Sydney Investor Day 2016
For personal use only Sydney Investor Day 2016 Andrew Wood
Slide 2: Disclaimer
Disclaimer For personal use only The information in this presentation about the WorleyParsons Group and its activities is current as at 30 April 2016 and should be read in conjunction with the Company’s Appendix 4D and Interim Financial Report for the half year ended 31 December 2015. It is in summa
Slide 3: OneWay – Fort McMurray evacuation
OneWay – Fort McMurray evacuation For personal use only 3
Slide 4: Trading conditions – Overview
Trading conditions – Overview For personal use only ► Industry activity levels expected to remain low ► Customers remain cautious ► Focused on cost, cash, and safely delivering what we promise to customers ► Committed to resources and energy industries and our leadership position in Hydrocarbons ► P
Slide 5: Trading conditions - Significant awards flow
Trading conditions - Significant awards flow Making good progress in Chemicals and Infrastructure For personal use only YTD 3Q2016 Significant awards YTD 3Q2015 Significant awards Revenue Revenue Revenue $480+ $2.5+ billion $1.55+ billion million (including (includes recent BP renewal of $900 millio
Slide 6: What we do
For personal use only What we do Andrew Wood
Slide 7: What we do – Helping our customers solve complex problems
What we do – Helping our customers solve complex problems Our purpose For personal use only We are a professional services business, a partner in delivering sustained economic and social progress, creating opportunities for individuals, companies and communities to find and realize their futures. We
Slide 8: What we do – Where we play
What we do – Where we play Leadership position in upstream engineering For personal use only FY13 - 15 Revenue (AUD $B) 22 16 22 22 22 100% Midstream SSA MM&C Other LAM Other Downstream ASIA EPC 80 Infra- PMC MENA Lump Sum structure Construction EUR 60 EPCM USA Core Business 40 Upstream Hydro- ANZ R
Slide 9: What we do – Upstream onshore
What we do – Upstream onshore For personal use only 9
Slide 10: What we do: Upstream offshore
What we do: Upstream offshore For personal use only 10
Slide 11: What we do: Heavy oil sands innovative approaches
What we do: Heavy oil sands innovative approaches For personal use only 11
Slide 12: What we do: Market leading supply chain innovation
What we do: Market leading supply chain innovation For personal use only Fort McMurray - Module Ft. McMurray installation at site Edmonton Calgary Beijing - Design/drafting Vancouver Beijing Qingdao Calgary - Engineering and procurement Qingdao - Prefabrication 350 containers shipped Trucking of mod
Slide 13: What we do: Break through project delivery
What we do: Break through project delivery For personal use only 13
Slide 14: What we do: BASF cloned polymer plants for Brazil and China
What we do: BASF cloned polymer plants for Brazil and China For personal use only 14
Slide 15: What we do – Power station and mine maintenance
What we do – Power station and mine maintenance For personal use only 15
Slide 16: What we do: New energy, renewables
What we do: New energy, renewables For personal use only 16
Slide 17: Understanding the business
For personal use only Understanding the business Tom Honan
Slide 18: Understanding our business – Strategy to reposition the business
Understanding our business Strategy to reposition the business For personal use only ► Diversify the customer base ► Respond to decline in demand for mega projects and refocus on local customers ► Improve the performance of Infrastructure through focus on Power, Transport, Ports and Rail ► More bala
Slide 19: Understanding the business – Our customers
Understanding the business – Our customers Diverse customer base For personal use only HYDROCARBONS MINERALS, METALS & CHEMICALS INFRASTRUCTURE Tier 1 customers include Tier 1 customers include Tier 1 customers include IOCs, NOCs and large EPC global minerals, metals and & major regional customers i
Slide 20: Understanding our business – Top customers by sector
Understanding our business – Top 10 customers by sector For personal use only ► The Group’s top 10 customers contribute 32% of the total gross margin ► Recovery in Infrastructure sector 32% 28% ► Gross margin earned from the top 10 customers in Hydrocarbons sector declined 2% 2% ► Gross margin earne
Slide 21: Understanding the business - Contract value
Understanding the business - Contract value Average size of contract has decreased For personal use only Contribution to aggregated ► Typically less than 10 contracts revenue (%) per year are over $100 mil 7% 21% ► Hundreds of medium sized contracts ► Thousands of small contracts 75% ► In FY2013 50%
Slide 22: Understanding the business – Top Group contracts
Understanding the business – Top 10 Group contracts Majority of earnings come from smaller contracts For personal use only Top 10 Group contracts, YTD April revenue ($mil) 400 FY2013 FY2016 300 200 100 0 1 2 3 4 5 6 7 8 9 10 Top 10 Group contracts account for approximately 20% of YTD revenue in FY20
Slide 23: Understanding the business – Regional revenue split
Understanding the business – Regional revenue split Europe and Middle East contribution is growing For personal use only Contribution to aggregated revenue (%) FY2013 FY2016 29% 22% 22% 19% 19% 13% 14% 17% 15% 15% 8% 8% Australia Canada USA Middle East Europe Other ► Australia impacted by decline in
Slide 24: Understanding the business – Typical profile
Understanding the business – Typical profile Limited exposure to mega projects and LSTK contracts For personal use only Capex vs opex 10% 75% 15% Mega Projects Modification, sustaining and small capex Opex Commercial model Typical < 12 85% 15% project Reimbursable Fixed price/Lump Sum duration month
Slide 25: Understanding the business – Competitor comparison
Understanding the business – Competitor comparison Concentration to O&G design and engineering For personal use only WorleyParsons Competitor 1 Competitor 2 Competitor 3 Competitor 4 Competitor 5 Competitor 6 Competitor 7 Work Type E/EP/EPCM 80%+ 30% 45% <5% 62% 10% 10% 20% EPC <10% 50% 50% 72% 27%
Slide 26: Understanding the business – Trends in revenue security
Understanding the business – Trends in revenue security Earnings security from smaller, shorter projects For personal use only Typical earnings security profile through the year % 3% 2% 10% 20% 10% 30% 15% 20% Prospective 95% Proposal 80% Secured 65% 50% 3 months out 6 months out 9 months out 12 mon
Slide 27: Understanding the business – WorleyParsons Backlog
Understanding the business – WorleyParsons Backlog For personal use only Definition 36 months backlog ($B) ► Represents 3 years/36 months view Backlog Soft backlog Total ► Includes total dollar value of the amount of revenues we expect to 5.4 5.3 record in the future as a result of work performed un
Slide 28: Understanding the business – Backlog as at March 2016
Understanding the business – Backlog as at 31 March 2016 For personal use only Approximate timing of backlog ($m) 2.9 1.3 0.4 0.7 4QFY2016 FY2017 FY2018 FY2019 ► 4Q backlog represents a significant proportion of the expected revenue for the quarter ► Current view of split of backlog across FY2017 –
Slide 29: Transformation Program
For personal use only Transformation Program Tom Honan
Slide 30: Transformation program – Priorities for the next months
Transformation program – Priorities for the next 6 to 18 months For personal use only • Targeting a further $180 million of ongoing annual overhead savings Reduce • Maintain utilization > 85% internal costs • Integrated team driving cost out program includes external advisors • Deliver enhanced valu
Slide 31: Transformation program - Overview
Transformation program - Overview For personal use only Strengthen the balance sheet and reduce internal costs Functional Business Cash hunt Project resources optimization development HR policies Geographic External spend IT footprint Optimize portfolio Improve customer productivity Results Delivery
Slide 32: Transformation program – Focus on improving utilization
For personal use only Utilization % 78 79 80 81 82 83 84 85 86 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Target Mar-15 Apr-15 May-15 Jun-15 Monthly rate Monthly utilization trend improving Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Transformation program – Focus on improving utilization
Slide 33: Transformation program – Reducing internal costs
Transformation program – Reducing internal costs Gross margin relatively stable For personal use only 1.5% 1.0% 0.5% 0.0% FY2012 -0.5% -1.0% Focus on overhead reduction to close spread between -1.5% margins -2.0% -2.5% -3.0% FY2013 FY2014 FY2015 HY2016* Underlying EBIT Margin % Gross Margin % * HY20
Slide 34: Transformation program – Reducing internal costs
Transformation program – Reducing internal costs Delivered $120m annualized savings, targeting a further $180m For personal use only DELIVERED - $120 million ongoing annualized savings ► Eliminated overhead roles ► Property ► Engineering software licenses SHORT TERM ACTIONS ► Further overhead reduct
Slide 35: Transformation program - Overhead reduction of $300 million
Transformation program - Overhead reduction of $300 million Underlying overhead reduction For personal use only 17 60 43 180 1,450 $120 million in annualized overhead savings 1,330 1,150 35
Slide 36: Transformation program – Reduction in property spend
Transformation program – Reduction in property spend Further consolidation of floor space For personal use only 26,100People 124 Cities with offices 42 countries 36
Slide 37: Transformation program – Working capital improvements
Transformation program – Working capital improvements Strengthening the balance sheet For personal use only SHORT TERM ACTIONS ► Lower capital expenditure ► Tighter invoicing and cash collection processes ► No interim dividend paid MEDIUM TERM ACTIONS ► Continue work to improve invoicing and cash co
Slide 38: Transformation program – Competitor Day Sales Outstanding
Transformation program – Competitor Day Sales Outstanding Many of our competitors are able to collect faster For personal use only Chicago Bridge & Iron Company NV Broadspectrum (Transfield Services Limited) Fluor Corporation UGL Limited Costain Group plc Downer EDI Limited Monadelphous Group Limite
Slide 39: Working capital – WorleyParsons DSO Leaderboard
Working capital – WorleyParsons DSO Leaderboard For personal use only Best in class Average Locations performers 0 20 40 60 80 100+ 39
Slide 40: Working capital – A success story
Working capital – A success story Increased focus provides improvement For personal use only 80 70 6 60 20 50 7 18 40 30 20 10 0 Dec-15 Jan-16 Feb-16 Mar-16 No. of days to raise Draft invoice from cut-off No. of days to raise Final invoice from draft Contract Payment Period (days) No. of Days Delay
Slide 41: Transformation program – Objective to reduce level of net debt
Transformation program – Objective to reduce level of net debt For personal use only FY2015 Facility type profile $m 800 600 400 200 0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 Bilateral Syndicated USPP Debt Tranche FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 September 2012
Slide 42: Strategy update
For personal use only Strategy update Andrew Wood
Slide 43: Strategy update - Strategic framework
Strategy update - Strategic The scope framework of presentation Corporate and global sector strategies For personal use only The strategy pyramid shows how the various layers of strategic effort fit together. The 4 levels are 1. Corporate Strategy 2. Global Sector Strategy 3. “Regional” Strategy 4.
Slide 44: Strategy update - External challenges
Strategy update - External challenges For personal use only 44
Slide 45: Strategy update – Based on our key differentiator
Strategy update – Based on our key differentiator For personal use only Technical Capability & Local Presence 45
Slide 46: Strategy update - Focus on front end and selective delivery
Strategy update - Focus on front end and Improve Selective delivery offerings For personal use only 46
Slide 47: Strategic themes, projects
5 strategic themes, 5 projects One differentiated strategy For personal use only 47
Slide 48: Strategy update – Project
Strategy update – Project 2 For personal use only ► Objective • Be the global PMC provider of choice ► Digital Enterprise initiated establishment of a data centric PMC platform ► Developing interactive and smarter project control systems. ► Integrating Breakthrough Project Delivery procurement initi
Slide 49: Strategy update – Project
Strategy update – Project 3 For personal use only ► Objective • Build a leading Improve business ► Ongoing business development initiatives to pursue opportunities • Secured two key contracts ► Identified integrated offering partners in all regions ► Continue to pursue Power operations and maintenan
Slide 50: Strategy update – Project
Strategy update – Project 5 For personal use only ► Objective • A company that leapfrogs the competition in the use of global delivery centres and applies digital technology to revolutionize the delivery of our services ► Completed operational model design ► Standardizing processes ► Commenced trans
Slide 51: Sector strategy
Sector strategy WorleyParsons is well positioned to capture growth in several attractive areas For personal use only CORE EXPAND Defend leading Current Near term position opportunities opportunities Onshore New Energy/ Chemicals Conventional Renewables Offshore Power One Belt One Road Heavy Oil & Wa
Slide 52: Advisian Feature
For personal use only Advisian Feature Dennis Finn
Slide 53: Sydney Investor Day – Dennis Finn, Advisian CEO
For personal use only Sydney Investor Day Dennis Finn, Advisian CEO 25 May 2016 www.advisian.com
Slide 54: For personal use only
For personal use only
Slide 55: The world is complex and changing fast…
The world is complex and changing fast… For personal use only Lower Carbon World Social Energy and Licence Resource Security Unstoppable Trends Accelerating Water Driving long term market dynamics Urbanization Scarcity Fall in Commodity Prices Increased Oil Price Cost Recent Market Shifts Pressures
Slide 56: Bringing together all WorleyParsons consulting capabilities under one brand
Bringing together Acceleration of all WorleyParsons For personal use only Digital Enterprise consulting and capabilities under New Energy one brand The world is The acquisition and Build the Advisian changing fast… integration of MTG Build a global brand, including and globalization of and we need t
Slide 57: Our Purpose
Our Purpose To create value by solving the For personal use only world’s critical resource, energy and infrastructure challenges
Slide 58: A differentiated offering in the current landscape
A differentiated offering in the current landscape personal use only Management Consulting Capability High >> Management Consultants with minimal technical grounding Engineering Companies with limited management consulting capability For << Low << Low High >> Technical Capability Advisian / 6
Slide 59: The journey to building a world class consulting business
The journey to building a world Advisian Goal class consulting business $1 Billion+ For personal use only Horizon 3 “Secure the future” >$600m Horizon 2 “Step Out” FY19/20 Horizon 1 • Drive differentiation “Build the global through the Advisian $150m advisory platform” FY18 experience • Use of leadi
Slide 60: Combination of Management and Technical Consulting
Combination of Management and Technical Consulting For personal use only From initial concepts, through to delivery, operation and post- closure; our consultants add value at all stages of the asset and business lifecycle
Slide 61: Deep domain knowledge backed by real-world experience
For personal use only Deep domain knowledge backed by Our technical experts bring a deep understanding of assets, both existing and new, with extensive experience on real-world experience many of the world’s most challenging projects
Slide 62: We advise, then deliver
We advise, then deliver For personal use only We first advise, then go on to deliver extraordinary outcomes based on that advice
Slide 63: Global reach, local delivery
For personal use only With over 2,700 consultants in 19 countries around the world we have the right person to deliver a solution for you We draw upon these global skills and experiences and deliver them locally to our clients Global reach, local delivery
Slide 64: What makes us different?
What makes us different? For personal use only Combination of management We advise, then and technical deliver consulting expertise Deep domain Global reach, local knowledge delivery backed by real- world experience
Slide 65: Growing global footprint – 2,700 people across countries
Growing global footprint – 2,700 people across 19 countries For personal use only Europe, Middle East and Americas Africa >900 >330 people people Asia Pacific >800 people Digital Enterprise globally INTECSEA >50 globally people >700 people To ensure we deliver the best solution to our clients’ chall
Slide 66: Understanding the market and building our capabilities
Understanding the market and building our capabilities For personal use only Estimated consulting market (2014) HYDROCARBONS ~$17.8 billion MINERALS & e.g. EUROPE METALS DOWNSTREAM ~$15.6 billion ~$2.5 billion CHEMICALS ~$8.0 billion INFRASTRUCTURE ~$24.5 billion Advisian / 14
Slide 67: Understanding the market and building our capabilities
Understanding the market and building our capabilities For personal use only Estimated consulting market (2014) HYDROCARBONS ~$17.8 billion MINERALS & METALS ~$15.6 billion CHEMICALS ~$8.0 billion INFRASTRUCTURE ~$24.5 billion Advisian / 15
Slide 68: Growth strategy requires right mix of management and technical consultants
Growth strategy requires right mix of management and technical consultants For personal use only Current State Desired State Strategy Consulting Management Consultants Management Consulting 1 Specialist +=3 1 Consulting Technical Consultants Technical Consulting Advisian / 16
Slide 69: A snapshot of emerging…
A snapshot of emerging… For personal use only Client New Partnerships Stories Businesses Advisian / 17
Slide 70: 2016 Infrastructure Partnerships Australia Project of the Year Award
Advisian, as part of a joint consortium, won the For personal use only prestigious 2016 Infrastructure Partnerships Australia Project of the Year Award
Slide 71: Client Story – Oil Sands Upgrader, Canada
Client Story – Oil Sands For personal use only Upgrader, Canada Our Role Advisian put together a team combining management and technical consulting to develop a strategy and technical scope to extend the run-life of the upgrader by 30 years.
Slide 72: Client Story – Development of Biofuels Industry, Australia
Client Story – Development of For personal use only Biofuels Industry, Australia Our Role Advisian is helping the Queensland State Government formulate a strategy for the development of its biofuels industry
Slide 73: Alliance formed with technology company – KBC
Alliance formed with technology company – KBC For personal use only
Slide 74: Strategic alliance between INTECSEA and Innospection
For personal use only The strategic alliance between INTECSEA and Innospection is redefining flexible riser integrity management • Best in class inspection and computational simulation • Accurate damage detection and impact on design life • Improved understanding of operational risk • A fully integr
Slide 75: Creation of Advisian Digital Enterprise
The creation of Advisian Digital Enterprise is underpinned by the move For personal use only towards digitization Our clients need help with the transformation to a new digital world https://www.digital.advisian.com
Slide 76: Solving client challenges through smart data utilization
Solving client Digital Asset Digital Sensing challenges through For personal use only smart data utilization and digital application, Remote and Instrument applied with Digital Asset Management Data Capture and domain expertise Analytics e-Commerce Technology Cloud based Deep Domain Commerce Platfor
Slide 77: Client Story – Asset Data Transformation, Australia
Client Story – Asset Data For personal use only Transformation, Australia Our Role In less than nine months, Advisian Digital Enterprise helped the client remediate and transform master data across 11 of its operating assets
Slide 78: Aerial Data Management – Advisian & Lockheed Martin
Aerial Data Management For personal use only Advisian & Lockheed Martin Advisian / 26
Slide 79: Aerial Data Endeavour leverages years of field experience
Aerial Data Endeavour leverages 12 years of field experience Management For personal use only Advisian & Lockheed Martin 1st long duration (8 hours) Beyond Visual-Line-of Sight UAV in Australia Advisian / 27
Slide 80: Client Story – UAV for fire protection
Client Story – UAV for fire For personal use only protection Client challenge Monitor bushfires more effectively to establish appropriate mechanisms to save lives and properties Advisian / 28
Slide 81: The New Energy market is a key focus area
The New Energy market is a key focus area Major disruption in New Energy Market For personal use only Solar Smart Grids The Electric Autonomous Community Generation and Big Data Vehicle and Vehicles and Mini Grid Management Electrical Vehicle Power Storage Ownership Advisian / 29
Slide 82: Advisian assists clients to transition to future energy systems
For personal use only Advisian assists clients to transition from energy systems of the past to those of the future We are technology neutral, globally agile and pragmatic, leveraging off our legacy power experience and broad group network Advisian / 30
Slide 83: New Energy Projects – A Global Profile
New Energy Projects – A Global Profile For personal use only Large Scale Delivery Offshore energy Distributed power Westermeerwind Wind Project, Xi-Xian High-Tech Zone, China Lake Turkana Wind Farm, Kenya The Netherlands Energy Storage Compressed Air Storage, USA Plant Operations Starfish Hill Wind
Slide 84: Khi Solar Tower, South Africa
Khi Solar Tower, South Africa For personal use only Photo courtesy of Abengoa
Slide 85: Distributed Hybrid Energy Systems, China
Distributed Hybrid Energy For personal use only Systems, China Photo courtesy of PowerChina Northwest Engineering Co. Ltd Advisian / 33
Slide 86: Shagaya Renewable Energy Park, Kuwait
Shagaya Renewable For personal use only Energy Park, Kuwait Photo courtesy of KISR
Slide 87: In summary
In summary For personal use only • Advisian is the new global independent Advisory arm of WorleyParsons • It combines all WorleyParsons consulting capabilities under one brand • Created to increase our relevance in a complex and changing world • The formation has been in the middle of a storm, howev
Slide 88: For personal use only
For personal use only