Worley Limited · ASX:WOR
Worley — Investor Presentation (October 2018)
65 slides from Worley's investor presentation, Oct 22, 2018
Slide 1: Acquisition of Jacobs ECR and capital raising
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Preliminary Draft Acquisition of Jacobs ECR and capital raising 22nd October 2018
Slide 2: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Important notice and disclaimer ▪ This investor presentation (“Presentation”) has been prepared by WorleyParsons (ACN 096 090 158) (“WorleyParsons”). This Presentation has been prepared in connection with WorleyPars
Slide 3: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Investment risk ▪ 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 guarantee any particular
Slide 4: Important notice and disclaimer
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Important notice and disclaimer Effect of rounding ▪ A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation (including in charts, graphs or tables in the Presentation) are subject to the effe
Slide 5: Transaction overview
Transaction overview NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES ▪ WorleyParsons has entered into a binding agreement to acquire Jacobs' Energy, Chemicals and Resources division ( “Jacobs ECR”) for an enterprise value (“EV”) of US$3.3bn (A$4.6bn)1 1. Transaction ▪ Expected to deliver approx
Slide 6: Agenda
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Agenda 1. Transaction summary 2. Overview of Jacobs ECR 3. Strategic rationale 4. Integration plan 5. Financial effects and funding 6. Timeline 7. Operating structure, trading update and summary Appendix ▪ Glossary ▪ Pro forma balance sheet ▪ Furt
Slide 7: Transaction summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction summary 7
Slide 8: Transaction Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction Summary WorleyParsons to acquire Jacobs' Energy Chemicals and Resources division, “Jacobs ECR”, a leading global technical services provider across Hydrocarbons, Chemicals, Minerals & Metals, and undertake an entitlement offer to parti
Slide 9: Overview of Jacobs ECR
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Overview of Jacobs ECR 9
Slide 10: Jacobs ECR—Overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Jacobs ECR—Overview Jacobs ECR has a global footprint with long-term client relationships in key strategic markets ✓ Leading technical services provider delivering full life-cycle capabilities across Hydrocarbons, Chemicals and Mining & Minerals s
Slide 11: Jacobs ECR—a global leader offering full suite of capabilities
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Jacobs ECR—A global leader offering full suite of capabilities Jacobs ECR’s service offerings (further details in appendix) By sector4 By contract type4 2% Global ENR #1 ranked1: Delivery of complex petrochemical and chemical Chemicals Chemicals p
Slide 12: Jacobs ECR—Historical financial profile
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Jacobs ECR—Historical financial profile ▪ Financial performance underpinned by Jacobs ECR's strong position in global hydrocarbons (refining and upstream) and chemicals sectors ▪ Exposure to markets with attractive growth profiles driving improvin
Slide 13: Strategic Rationale
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Strategic Rationale 13
Slide 14: The acquisition of Jacobs ECR drives our growth plan across all three horizons
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES The acquisition of Jacobs ECR drives our growth plan across all three horizons Horizon 3 Emerging markets & products Horizon 2 New Energy Growth Potential (including power networks) Chemicals & Petrochemicals (Europe) Digital Horizon 1 (Internal a
Slide 15: Delivering significant benefits to WorleyParsons’ shareholders
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Delivering significant benefits to WorleyParsons’ shareholders In combining two complementary organisations, the transaction: 1 Generates material EPS accretion and returns for shareholders 2 Creates a pre-eminent global provider of professional p
Slide 16: Generates material EPS accretion and returns for shareholders
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 1. Generates material EPS accretion and returns for shareholders Strong pro forma EPS accretion while retaining balance sheet strength Highly EPS accretive 20% 2.1x ▪ Expected to generate approximately 20% EPS accretion on an FY18 pro Approx. EPS
Slide 17: Creates a pre-eminent global provider of professional project and asset services
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 2. Creates a pre-eminent global provider of professional project and asset services in resources and energy WorleyParsons 26,700 CAN UK EUR Jacobs ECR 30,900 USA M. ASIA EAST AFRICA IND Sectors Upstream Hydrocarbons Midstream Hydrocarbons LATAM Do
Slide 18: Creates a pre-eminent global provider: step-change in scale
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 2. Creates a pre-eminent global provider of professional project and asset services in resources and energy Pre-transaction Pro forma Step-change in scale (FY18) (FY18) Δ% Highlights Staff ✓ Creates the largest professional (Sep -2018) 26,700 57,6
Slide 19: Provides global sector leadership across Hydrocarbons, Chemicals and Minerals & Metals
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Provides global sector leadership across Hydrocarbons, Chemicals and Minerals & Metals Combination of complementary businesses establishing leadership positions in key markets and adding significant scale FY18 revenue (A$bn)1 Complementarity 5.
Slide 20: ENR global design rankings
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Provides global sector leadership across Hydrocarbons, Chemicals and Minerals & Metals ENR Hydrocarbons global design rankings1 ENR Chemicals global design rankings1 ENR Metals & Mining sector global design (upstream only) (includes Petrochemic
Slide 21: The combined group provides end-to-end solutions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 3. Provides global sector leadership across Hydrocarbons, Chemicals and Minerals & Metals The combined group provides end-to-end solutions across Hydrocarbons, Chemicals and M&M 21
Slide 22: Delivers enhanced earnings diversification and resilience: chemicals
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4. Delivers enhanced earnings diversification and resilience A step change in exposure to the stable and expanding chemicals market… Highlights Global chemicals capital expenditure2 ✓ Balances exposure to upstream hydrocarbons ✓ Global chemicals c
Slide 23: Delivers enhanced earnings diversification: refining market
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4. Delivers enhanced earnings diversification and resilience … and a much greater exposure to the downstream refining market…. Twin drivers of investment in the global refining market Global refining capital expenditure (US$bn)2,3 ✓ Greenfield meg
Slide 24: Exposure to North American market and stable opex revenue
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4. Delivers enhanced earnings diversification and resilience … with more exposure to the North American market …and more stable opex revenue... Highlights Highlights ✓ Exposure to large-scale North American energy market strengthened ✓ Increased e
Slide 25: All sectors indicating medium term growth
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 4. Delivers enhanced earnings diversification and resilience … with all sectors indicating medium term growth Highlights Chemicals annual global capex ✓ 2018 Chemicals capex continuing long term growth trend ✓ 2018 Hydrocarbons capex >40% below 20
Slide 26: Significant cost synergies
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 5. Brings significant value upside through cost and revenue synergies Significant cost synergies expected to deliver benefits from year one Estimated A$130m Cost synergies p.a. cost synergies within 2 years ▪ Consolidation of IT server, database,
Slide 27: Revenue synergies across sectors, customers and capabilities
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 5. Brings significant value upside through cost and revenue synergies Revenue synergies across sectors, customers, service offering and capabilities Hydrocarbons Chemicals Minerals & Metals ▪ Jacobs ECR's Downstream + ▪ Complementary geographic fo
Slide 28: GID/GDC key driver of global growth and margin protection
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES 5. Brings significant value upside through cost and revenue synergies GID/GDC is a key driver to achieving global growth and margin protection—leveraging lower cost resources combined with customer facing locations to provide a cost competitive of
Slide 29: Integration plan
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Integration plan 29
Slide 30: Integration plan—overview
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Integration plan—overview WorleyParsons has a detailed integration plan that leverages the deep combined expertise of both businesses Integration execution team Objectives ▪ Both WorleyParsons and Jacobs ECR management have strong track records of
Slide 31: Integration plan—indicative timeline
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Integration plan—indicative timeline WorleyParsons is targeting completion of the majority of integration activities over a 12 month period from announcement Announcement: Full integration Transaction 22 Oct team in place close Transaction & Integ
Slide 32: Financial effects and funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Financial effects and funding 32
Slide 33: Combined group – pro forma financial summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Combined group – pro forma financial summary FY18 pro forma financial profile Combined ▪ Expect approximately 20% EPS accretion on an WorleyParsons Jacobs ECR Combined Estimated cost A$m (post estimated FY18 pro forma basis (pre-synergies)8 (under
Slide 34: Funding details
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Funding details Acquisition funded via A$2.9bn entitlement offer, A$985m stock consideration and A$895m debt Acquisition funding details1 Sources and uses ▪ Purchase EV of A$4.6bn (US$3.3bn) Sources A$m US$m1 Acquisition ▪ cash consideration of A$
Slide 35: Debt funding
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Debt funding Conservative leverage profile maintained ▪ Transaction is expected to be materially credit enhancing for WorleyParsons Balance sheet impact2,3 Pro forma leverage is expected to reduce further by deal ▪ preserves a conservative capital
Slide 36: Equity funding details
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Equity funding details Entitlement offer details ▪ 1 for 1.47 fully underwritten pro rata accelerated non-renounceable entitlement offer to raise gross proceeds of c.$2.9bn Offer size ▪ approximately 186.5m new fully paid ordinary shares ("New Sha
Slide 37: Timeline
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Timeline Key dates Dates and times are subject to change without notice1,2 Date Trading halt and announcement of accelerated non-renounceable entitlement offer Monday, 22 October 2018 Institutional Entitlement Offer opens Monday, 22 October 2018 I
Slide 38: Operating structure, trading update and summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Operating structure, trading update and summary 38
Slide 39: Operating structure and key personnel
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Operating structure and key personnel ▪ Strong cultural alignment between Jacobs ECR and WorleyParsons Cultural ▪ Alignment of values at management level affirmed through Alignment diligence process ▪ Very similar risk profile and governance proce
Slide 40: Trading update and outlook
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Trading update and outlook1 Outlook as per FY2018 results guidance – WorleyParsons is expected to deliver improved earnings in FY2019 on a standalone basis (prior to the impact of the Jacobs ECR transaction) Driven by continued improvement in mark
Slide 41: Transaction Summary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Transaction Summary WorleyParsons to acquire Jacobs' Energy Chemicals and Resources division, “Jacobs ECR”, a leading global technical services provider across Hydrocarbons, Chemicals, Minerals & Metals, and undertake an entitlement offer to parti
Slide 42: Appendix
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix 42
Slide 43: Glossary
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Glossary Term Definition BSC Business services center CFIUS The Committee on Foreign Investment in the United States CH2M A global design, build and manage professional services firm acquired by Jacobs (completed December 2017) ENR Engineering New
Slide 44: Pro forma balance sheet
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Pro forma balance sheet Acquisition and A$m, 30 June 20181,2 WorleyParsons3 Jacobs ECR4 Pro forma financing adjustments5,6 Cash 262 34 296 Inventory, receivables 1,348 1,443 2,791 PP&E 54 385 439 Goodwill & intangibles 2,282 1,941 1,913 6,136 Othe
Slide 45: Summary Sale and Purchase Agreement terms
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Summary Sale and Purchase Agreement terms Term Description Transaction price and ▪ Enterprise Value of US$3.3bn on a cash and debt free basis, of which US$700m is payable in WorleyParsons stock and the residual in cash consideration ▪ Purchase pri
Slide 46: Jacobs ECR—key sectors
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Jacobs ECR—key sectors Chemicals Downstream hydrocarbons ▪ Full asset lifecycle project management and process technology offering ▪ Major revamps and grassroots projects focused on sustainable value in petroleum refining and environmental facilit
Slide 47: Jacobs ECR—key sectors
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Jacobs ECR—key sectors Upstream hydrocarbons Mining & Minerals ▪ Complete life cycle solutions on greenfield and brownfield projects – onshore, ▪ Capabilities span entire asset lifecycle, from planning, feasibility studies, offshore and pipelines
Slide 48: Jacobs ECR—CM&T and Technology
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Jacobs ECR—CM&T and Technology Construction, Maintenance & Turnaround Proprietary technology ▪ CM&T performs work across the Chemicals, Upstream, Downstream and Chemetics Mining and Minerals sectors. CM&T division revenue of c.US$1.2bn in FY18 is
Slide 49: General risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information General risks ▪ 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 publ
Slide 50: Specific risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Specific risks 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 i
Slide 51: Specific risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Specific risks Reputation risk ▪ The strength of WorleyParsons’ reputation contributes to its success in winning and retaining work, attracting and retaining employees, and securing lines of credit and access to
Slide 52: Specific risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Specific risks Counterparty risk ▪ WorleyParsons is exposed to credit-related losses if counterparties to contracts fail to meet their obligations. This could occur if customers were to become insolvent or not me
Slide 53: Specific risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Specific risks Cybersecurity risk ▪ WorleyParsons’ work relies on the effective processing and storing of information using information technology. With the use of IT systems, there is a risk of unauthorized acce
Slide 54: Specific risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Specific risks Internal Reporting Risk ▪ WorleyParsons operates a complex business which provides a wide range of services in a dynamic environment, while straddling multiple jurisdictions and regulatory framewor
Slide 55: Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Transaction risks Future dividends and franking capacity ▪ No assurances can be given in relation to the payment of future dividends. Future determinations as to the payment of dividends by WorleyParsons will be
Slide 56: Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Transaction risks Analysis of acquisition opportunity ▪ WorleyParsons has undertaken financial, business and other analyses of Jacobs ECR in order to determine its attractiveness to WorleyParsons and whether to p
Slide 57: Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Transaction risks Financial capacity of vendors ▪ If the acquisition completes, there can be no guarantee as to the on-going financial capacity of the vendor of Jacobs ECR. In these circumstances, if a warranty o
Slide 58: Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Transaction risks Debt funding ▪ WorleyParsons intends to fund the acquisition of Jacobs ECR in part by a committed debt bridge of US$636m under a new debt facility. The drawdown of funds under this bridge facili
Slide 59: Transaction risks
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information Transaction risks Historical liabilities ▪ If the acquisition of Jacobs ECR completes, WorleyParsons will become directly or indirectly liable for any liabilities that Jacobs ECR has incurred in the past, includi
Slide 60: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information 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 m
Slide 61: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information International offer restrictions Malaysia ▪ This document may not be distributed or made available in Malaysia. No approval from, or recognition by, the Securities Commission of Malaysia has been or will be obtai
Slide 62: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information International offer restrictions Singapore ▪ 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 Au
Slide 63: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information International offer restrictions United Arab Emirates ▪ 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
Slide 64: International offer restrictions
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES Appendix Supplementary information International offer restrictions United States ▪ This document may not be released or distributed in the United States. ▪ This document does not constitute an offer to sell, or a solicitation of an offer to buy,
Slide 65: NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES