Worley Limited · ASX:WOR
Worley — WorleyParsons — Merger or Acquisition (October 2017)
37 slides from Worley's merger presentation, Oct 9, 2017
Slide 1: Acquisition of AFW UK and Capital Raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only WorleyParsons Acquisition of AFW UK and Capital Raising 9th October 2017
Slide 2: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Important notice and disclaimer For personal use only This investor presentation (“Presentation”) has been prepared by WorleyParsons (ACN 096 090 158) (“WorleyParsons”). This Presentation has been prepared in conn
Slide 3: Important notice and disclaimer: Investment risk
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Investment risk For personal use only An investment in WorleyParsons shares is subject to known and unknown risks, some of which are beyond the control of WorleyParsons and its directors. WorleyParsons does not gu
Slide 4: Important notice and disclaimer: Effect of rounding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Effect of rounding For personal use only A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation (including in charts, graphs or tables in the Presentation) a
Slide 5: Transaction overview
Transaction overview NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES WorleyParsons has entered into a binding agreement to acquire AFW UK Oil & Gas Limited (“AFW UK”) for an enterprise value (“EV”) of £182m (A$303m¹), pre-adjustments 1. Transaction for surplus working capital and cash in the
Slide 6: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda For personal use only 1. Transaction summary 2. Overview of AFW UK 3. Strategic rationale for acquisition 4. Financial impact 5. Funding 6. Timing Appendix Pro forma financial information Key risks International offer restrictions 6
Slide 7: 1. Transaction Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1. Transaction Summary WorleyParsons acquiring AFW UK, a world class MMO service provider in the UK oil and gas sector, For personal use only and undertaking an entitlement offer to fund the acquisition Enterprise value £182 million (A$303 milli
Slide 8: Overview of AFW UK: A leader in the UK Oil & Gas O&M and E&C markets
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 2. Overview of AFW UK A leader in the UK Oil & Gas O&M and E&C markets For personal use only Operates under four business lines: O&M, Consulting Locations and project offices & Front End, E&C, and Hook-up Earnings underpinned by core MMO capab
Slide 9: Proven execution strategy and excellent track record
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 2. Overview of AFW UK Proven execution strategy and excellent track record For personal use only 1 Opex focus with a strong order book 2 Extensive experience in the MMO market Repositioned business towards opex opportunities in recent years Wo
Slide 10: Broad offering of integrated solutions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 2. Overview of AFW UK Broad offering of integrated solutions For personal use only Subsidiary businesses support main business units and AFW UK divisions can also operate as standalone businesses Typically stable, longer term contracts relating to
Slide 11: Robust entry into the UK North Sea as a profitable market leader
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Strategic Rationale Robust entry into the UK North Sea as a profitable market leader For personal use only AFW UK’s positioning1 #1 EPC / E&C contractor in UKCS Core MMO capability #3 O&M contractor in UKCS #1 Hook-up contractor in UKCS 45 year
Slide 12: Global MMO market fundamentals are positive
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Strategic Rationale Global MMO market fundamentals are positive For personal use only Market profile1 Global offshore MMO expenditure1 Global offshore MMO expenditure is a US$81bn USDbn market CAGR Strong growth is expected (2017-20) 100 94
Slide 13: Delivers on WorleyParsons' strategy to create a world-class MMO capability
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Strategic Rationale Delivers on WorleyParsons’ strategy to create a world-class MMO capability and For personal use only significant expansion of our Integrated Solutions business AFW UK’s capability WorleyParsons global network World class M
Slide 14: The acquisition of AFW UK drives WorleyParsons' key strategic priorities
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Strategic Rationale The acquisition of AFW UK drives WorleyParsons’ key strategic priorities For personal use only Strategic architecture—how we win How AFW UK delivers Viable and competitive Maintaining a competitive business cost structure
Slide 15: Core earnings underpinned by stable, long term opex linked contracts
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4. Financial Impact For personal use only Core earnings underpinned by stable, long term opex linked contracts, with upside driven by the O&G capex cycle AFW UK core1 earnings driven by increasing share of opex project revenue in challenging mar
Slide 16: Financial Impact: pro forma EBITDA and revenue
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4. Financial Impact For personal use only Combined pro forma integrated solutions EBITDA1 WorleyParsons pro forma revenue (A$m)1 WorleyParsons stand-alone WorleyParsons pro forma ~160% increase 7% 18% Step change in WorleyParsons MMO WorleyParsons
Slide 17: Acquisition funded via A$322 million entitlement offer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 5. Funding Acquisition funded via A$322 million entitlement offer For personal use only Acquisition funding details1 Sources and uses Sources £m A$m1 Purchase EV of £182m (A$303m) Acquisition Entitlement offer 193 322 consideration of £228m (A
Slide 18: Entitlement offer details
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 5. Funding Entitlement offer details For personal use only 1 for 10 fully underwritten pro rata accelerated non-renounceable entitlement offer, to raise gross proceeds of approximately A$322m Offer size approximately 24.8 million new fully pai
Slide 19: Entitlement offer timetable
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 6. Timing Entitlement offer timetable 1,2 For personal use only Dates and times are subject to change without notice Date Trading halt and announcement of acquisition and Entitlement Offer Monday, 9 October 2017 Institutional Entitlement Offer ope
Slide 20: Appendix
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only Appendix 20
Slide 21: Pro forma balance sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pro forma balance sheet Acquisition and A$ million, 30 June 20171,2 WorleyParsons AFW UK Pro forma For personal use only financing adjustments Cash 226 16 242 Receivables, inventory 1,110 268 1,378 PP&E 52 10 62 Goodwill & intangibles 2,003 1 215
Slide 22: Reconciliation of total consideration
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Reconciliation of total consideration £ million A$ million1 For personal use only Enterprise value 182 303 Balance sheet cash (30 June 2017)2 10 16 Surplus working capital and other cashflow items3 37 61 Separation / one-off costs (6) (10) Transac
Slide 23: General risks
General risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES There are general risks associated with investments in equity capital such as WorleyParsons shares. The financial performance of WorleyParsons may be affected by a number of factors common to public companies generally or common Fo
Slide 24: Specific risks
Specific risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Demand risk in the energy and resources services industry The markets for WorleyParsons’ services are exposed to volatile and cyclical commodity prices, particularly the oil price. Those prices impact demand for For personal use o
Slide 25: Specific risks: reputation and liquidity
Specific risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Reputation risk The strength of WorleyParsons’ reputation contributes to its success in winning and retaining work, attracting and retaining employees, and securing lines of For personal use only credit and access to capital. Ther
Slide 26: Specific risks: key personnel and health and safety
Specific risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Key personnel and specialist labor shortage WorleyParsons' growth and profitability may be limited by the loss of key management and other personnel, the inability to attract and retain new suitably For personal use only qualified
Slide 27: Specific risks: acquisition and disposal, insurance
Specific risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition and disposal risk WorleyParsons' strategy includes pursuing acquisitions and disposals. There is a risk that these may not always create value for shareholders or that acquisition For personal use only targets will be
Slide 28: Transaction risks: acquisition accounting
Transaction risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Acquisition accounting In accounting for the acquisition, WorleyParsons will need to perform a fair value assessment of all of the assets, liabilities and contingent liabilities of AFW UK, For personal use only which will inclu
Slide 29: Transaction risks: analysis and equity funding
Transaction risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Analysis of acquisition opportunity For personal use only WorleyParsons has undertaken financial, business and other analyses of AFW UK in order to determine its attractiveness to WorleyParsons and whether to pursue the acquisi
Slide 30: Transaction risks: vendor recourse and integration
Transaction risks NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Financial capacity of, and recourse to, vendors and warranty and indemnity insurer If the acquisition completes, there can be no guarantee as to the on-going financial capacity of the vendors of AFW UK (and in any case recourse
Slide 31: Transaction risks: historical liabilities
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction risks Historical liabilities If the acquisition of AFW UK completes, WorleyParsons will become directly or indirectly liable for any liabilities that AFW UK has incurred in the past, including For personal use only liabilities which
Slide 32: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of WorleyParsons in any jurisdiction in which it would be unlawful. In particular, this document may not For personal use only be dis
Slide 33: International offer restrictions: New Zealand
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions New Zealand For personal use only This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (the "FMC Act"). The New Shar
Slide 34: International offer restrictions: Singapore
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions Singapore For personal use only This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Si
Slide 35: International offer restrictions: United Arab Emirates
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions United Arab Emirates For personal use only Neither this document nor the New Shares have been approved, disapproved or passed on in any way by the Emirates Securities and Commodities Authority (ESCA) or any other
Slide 36: International offer restrictions: United States
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES International offer restrictions United States For personal use only This Presentation may not be released or distributed in the United States. This Presentation does not constitute an offer to sell, or a solicitation of an offer to buy, any s
Slide 37: For personal use only
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES For personal use only