Worley Limited · ASX:WOR
Worley — WorleyParsons — FY2015 Earnings Presentation
50 slides from Worley's earnings presentation, Aug 26, 2015
Slide 1: Full year results 2015
For personal use only Full year results 2015 Andrew Wood, CEO WorleyParsons
Slide 2: Disclaimer
Disclaimer The information in this presentation about the WorleyParsons Group and its activities is current For personal use only as at 26 August 2015 and should be read in conjunction with the Company’s Appendix 4E and Annual Report for the full year ended 30 June 2015. It is in summary form and is
Slide 3: Overview: FY2015 – Positioning for the future
Overview FY2015 – Positioning for the future For personal use only ►Positioning for the future ►Cost reduction charges taken in FY2015 ►Taking action to ensure sustainable business ►105 significant awards ►Sound financial position ►Deploying strategy for growth in medium to long term ►Focusing on: ●
Slide 4: Total headcount and monthly movements
Total headcount and monthly movements Continually making the necessary adjustments For personal use only Global headcount Headcount Change to Prior Month * Economic downturn Mining Crude price during GFC downturn decline Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Ja
Slide 5: Financial snapshot
Financial snapshot Result impacted by non-recurring charges For personal use only ►Statutory result ● Total revenue of $8,757.5m ● Statutory loss after tax of $54.9m ● Recognized $198.6 million non-cash write down of goodwill ►Underlying result ● Aggregated revenue1 of $7,227.5m, down 1.8%2 ● Underl
Slide 6: OneWay to Zero Harm
OneWay™ to Zero Harm We aim for Zero Harm For personal use only ►Our safety performance is among the best in the industry ● Employee Total Recordable Case Frequency Rate (TRCFR) for FY2015 was 0.12 (FY2014: 0.10) ● Achieved a 25% reduction in frequency rate for all employees and managed contractors
Slide 7: Full year results 2015 – Simon Holt, CFO
For personal use only Full year results 2015 Simon Holt, CFO 7
Slide 8: Group financial profile
Group financial profile Redundancy and onerous lease charges lower 2H result For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue1 ($m) 7,227.5 7,363.7 (2)% 3,613.7 3,613.8 Underlying EBIT2 ($m) 355.7 452.2 (21)% 180.8 174.9 Underlying EBIT margin 4.9% 6.1% (1.2)% 5.0% 4.8
Slide 9: Fourth quarter performance
Fourth quarter performance Revenue up, margins impacted by charges For personal use only 4Q unaudited result 4Q2015 4Q2014 vs. 4Q2014 Aggregated revenue1 ($m) 1,906.5 1,759.7 8.3% Underlying EBIT2 ($m) 104.4 188.6 (44.6%) Underlying EBIT margin 5.5% 10.7% (5.2%) Underlying Net Profit After Tax3 ($m)
Slide 10: Non-trading items
Non-trading items YOY result comparison adjusting for non-trading items For personal use only FY2015 ($m) FY2014 ($m) Additions Fair value gain - 11.4 Sub-total additions - 11.4 Subtractions Impairment of goodwill (198.6) - Redundancies, post tax (27.3) (9.8) Onerous leases & write down of leasehold
Slide 11: Underlying NPAT by business line
Underlying NPAT ($m) By business line For personal use only Reflects changes in contribution to EBIT at constant currency (75.0) (17.2) 32.5 (11.3) 11.2 (48.7) 33.5 6.4 3.6 0.2 263.4 198.6 Benefits of cost reductions partially offset the decline in chargeable hours and pressure on gross margin 11
Slide 12: Underlying NPAT by sector
Underlying NPAT ($m) By sector For personal use only Reflects changes in contribution to EBIT at constant currency (19.1) (57.1) (16.1) 32.5 (48.7) 33.5 6.4 3.6 0.2 263.4 198.6 Hydrocarbons sector performance holding up well. Benefits of cost reductions has delivered improved Infrastructure performa
Slide 13: Margin profile
Margin profile EBIT and NPAT margins under pressure For personal use only Group underlying EBIT margin % 8.0% 7.2% 6.9% 6.1% 9.4% 4.9% 7.1% 7.3% 7.6% 4.8% 6.6% 7.3% 6.5% 5.0% 4.7% FY2011 FY2012 FY2013 FY2014 FY2015 1H prior years Group underlying NPAT margin % 2H prior years 5.1% 4.7% 4.2% 3.6% 1H c
Slide 14: Segment results
For personal use only Full year results 2015 Segment results 14
Slide 15: Operational EBIT margin
Operational EBIT margin Advisian margin growth supports strategic direction For personal use only Operational EBIT margin by business line % 9.7% 9.0% 8.0% 7.8% 9.1% 7.4% 11.5% 6.1% 10.6% 7.9% 8.2% 5.7% 1H FY2014 5.0% 7.2% 3.3% 2H FY2014 6.4% 4.3% 16.0% 1H FY2015 1.4% 2H FY2015 8.0% 8.0% 7.6% 7.6% 7
Slide 16: Services
Services Redundancy and onerous lease charges impact margin For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 5,501.4 5,618.2 (2%) 2,808.0 2,693.4 Professional services $m 4,322.2 4,471.5 (3%) 2,209.7 2,112.5 Construction and fabrication $m 857.9 888.7 (3%) 438.9 419
Slide 17: Major Projects
Major Projects Revenue mix compressing margins For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 922.7 862.9 7% 377.6 545.1 Professional services $m 881.5 827.1 7% 360.4 521.1 Procurement revenue with margin $m 41.2 35.8 15% 17.2 24.0 Segment result $m 46.3 67.5 (31%
Slide 18: Improve
Improve Challenging conditions in North America For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 649.0 785.6 (17%) 363.4 285.6 Professional services $m 645.7 777.0 (17%) 361.6 284.1 Procurement revenue with margin $m 3.3 8.6 (62%) 1.8 1.5 Segment result $m 37.0 48.1
Slide 19: Development
Development Advisian grows through MTG acquisition For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 154.4 97.0 59% 64.7 89.7 Professional services $m 142.9 91.2 57% 59.4 83.5 Procurement revenue with margin $m 11.5 5.8 98% 5.3 6.2 Segment result $m 14.1 1.4 907% (0.
Slide 20: Operational EBIT margin by sector
Operational EBIT margin by sector Hydrocarbons margin supported by construction For personal use only Operational EBIT margin by CSG % 10.3% 10.3% 10.1% 9.0% 8.7% 7.4% 10.5% 12.0% 6.5% 7.5% 15.1% 1H FY2014 10.6% 7.2% 2H FY2014 4.9% 4.2% 1H FY2015 10.2% 3.4% 2H FY2015 3.5% x.x% Full year 9.8% 9.8% 8.
Slide 21: Hydrocarbons
Hydrocarbons Includes $44.6m of cost reduction charges For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 5,332.1 5,371.5 (1%) 2,696.9 2,635.2 Professional services $m 4,196.2 4,255.1 (1%) 2,118.8 2,077.4 Construction and fabrication $m 857.9 888.7 (3%) 438.9 419.0 Pr
Slide 22: Minerals, Metals & Chemicals
Minerals, Metals & Chemicals Result impacted by project cancellations For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 903.7 1,065.9 (15%) 447.4 456.3 Professional services $m 894.3 1,042.4 (14%) 441.5 452.8 Procurement revenue with margin $m 9.3 23.1 (60%) 5.8 3.5
Slide 23: Infrastructure
Infrastructure Moving to the right cost structure For personal use only FY2015 FY2014 vs. FY2014 1H2015 2H2015 Aggregated revenue $m 991.7 926.3 7% 469.4 522.3 Professional services $m 901.8 869.3 4% 430.8 471.0 Procurement revenue with margin $m 86.0 52.4 64% 37.5 48.5 Other income $m 3.9 4.6 (15%)
Slide 24: Group revenue by region
Group revenue by region Geographic diversity supports modest revenue decline For personal use only Aggregated revenue by region 43.2% 39.3% 1,539 1,413 26.3% 22.5% 23.3% 1H FY2014 21.2% 2H FY2014 1,019 759 874 711 1H FY2015 1,645 1,431 2H FY2015 5.3% 5.4% 5.7% % Full year share 894 821 839 877 4.4%
Slide 25: Operational EBIT and margin by region
Operational EBIT and margin by region EURMENA region comes to the fore For personal use only Operational EBIT by region 8.4% 13.5% 158.8 8.6% 5.7% 111.3 10.3% 9.1% 1H FY2014 61.7 63.9 92.4 2H FY2014 93.3 1H FY2015 111.5 107.2 2H FY2015 96.1 8.2% 96.6 62.7 71.3 4.6% 9.2% % EBIT Margin 24.3 1.9% 9.7 0
Slide 26: Capital management
For personal use only Full year results 2015 Capital management 26
Slide 27: Cash flow
Cash flow Strong cash flow generation For personal use only $m FY2015 FY2014 Underlying EBIT 355.7 452.2 Add: Depreciation and amortization 110.0 109.5 (Less): Interest and tax paid (208.1) (140.2) (Less)/Add: Working capital/other (6.3) 128.6 Net cash inflow from operating activities 251.3 550.1 Hi
Slide 28: Gearing metrics
Gearing metrics Gearing in middle of target range For personal use only FY2015 FY2014 Gearing ratio1 % 28.0% 18.7% Facility utilization2 % 59.4% 50.0% Average cost of debt % 4.7% 5.4% Average maturity (years) 3.5 4.2 Interest cover2 (times) 6.4x 8.3x Net debt3 $m 784.6 501.1 Net Debt3/EBITDA (times)
Slide 29: Liquidity
Liquidity Financial capacity remains strong For personal use only vs. • Total liquidity largely Liquidity summary $m FY2015 FY2014 FY2014 Loan, finance lease & 2,087 1,783 17% unchanged from FY2014 overdraft facilities Less: facilities utilized (1,240) (897) 38% • Bonding facilities value up due to
Slide 30: Strategy update and outlook
For personal use only Full year results 2015 Strategy update and outlook 30
Slide 31: Strategy update
Strategy update Realize our future – 5 strategic themes, 5 projects For personal use only Technical Capability & Local Presence ►Early success building Advisian ►Positioning to be PMC provider of choice and expanding Improve capabilities ►Rolling out changes to remain smartest, most agile local serv
Slide 32: Business line outlook: Services
Business line outlook Services – local delivery of global expertise For personal use only ►Subdued trading conditions expected to remain across APAC ►Activity levels expected to be variable in North America ►Flat outlook for EURMENA, Middle East offsetting declines in Europe ►Trading conditions in L
Slide 33: Business line outlook: Major Projects, Improve and Advisian
Business line outlook Major Projects, Improve and Advisian For personal use only ►Major Projects – Global delivery of complex projects ● Secured backlog activity shifting to the construction phase ● Customer rate concessions expected to impact margins ►Improve – Optimizing the performance of operati
Slide 34: Sector outlook
Sector outlook Mixed outlook For personal use only ►Hydrocarbons ● Customers maintain cautious position with regard to investment plans ● Difficult to predict activity levels ● Benefits of actions taken and further overhead reductions expected to temper effect on earnings ►Minerals, Metals & Chemica
Slide 35: Group outlook
Group outlook For personal use only Aggregated revenue has proven to be resilient through the Company’s strategy of sector and geographic diversification and its broad range of services. The Company remains focused on continuing to improve the delivery of services to its customers, taking costs out
Slide 36: Q&A
For personal use only Full year results 2015 Q&A 36
Slide 37: Supplementary information
For personal use only Full year results 2015 Supplementary information 37
Slide 38: Reconciliation
Reconciliation Decline in procurement services at nil margin For personal use only $m FY2015 FY2014 Revenue and other income 8,757.5 9,582.5 Procurement services at nil margin (2,038.0) (2,726.1) Share of revenue from associates 514.6 524.0 Net gain on revaluation of investments - (11.4) Interest in
Slide 39: Aggregated revenue by type
Aggregated revenue by type Relatively stable revenue mix For personal use only $m FY2015 FY2014 vs. FY2014 Aggregated revenue 7,227.5 7,363.7 (2%) Professional services 5,992.3 6,166.8 (3%) Construction and fabrication 857.9 888.7 (3%) Procurement revenue at margin 373.1 302.9 23% Other income 4.2 5
Slide 40: Reconciliation
Reconciliation FY2015 impacted by impairment and project settlement For personal use only $m FY2015 FY2014 EBIT 87.1 428.2 Add: impairment of goodwill 198.6 - Add: Arkutun-Dagi project settlement costs 70.0 - Less: net gain on revaluation of investments previously accounted for as equity accounted -
Slide 41: Strategy funding requirements
Strategy funding requirements Payout ratio at top of range For personal use only Dividend history 200 90.0% 180 79.6% 80.0% 160 70.8% 70.8% 69.7% Cents per share 70.0% 140 64.7% Payout ratio % 63.6% 120 57.8% 60.0% 100 50.0% 80 55.0 51.0 51.0 60 50.0 51.0 40.0% 40.0 40 22.0 30.0% 20 38.0 35.5 36.0 4
Slide 42: Dividend history
Dividend history Final dividend of 22.0 cps (FY2014: final dividend 51.0 cps) For personal use only FY2011 FY2012 FY2013 FY2014 FY2015 Interim dividend (cps) 36.0 40.0 41.5 34.0 34.0 Franked % 100% 79% 100% 25% 8% $m total 88.6 98.3 102.4 83.9 84.1 Final dividend (cps) 50.0 51.0 51.0 51.0 22.0 Frank
Slide 43: Foreign Exchange
Foreign Exchange Effects of different currencies offset each other For personal use only Total EBIT Currency Average exchange rate movement Spot exchange rate movement USD BRL 6.09% 16.93% Pegged CAD (0.57%) (5.23%) AUD CNY (8.15%) (18.06%) USD GBP (6.19%) (11.14%) NOK 7.36% 4.64% BRL USD (8.88%) (1
Slide 44: FX translation impact
FX translation impact Limited FX benefit due to currency mix For personal use only Movement in major currencies Group EBIT FX impact since FY2011 110.0 FY2011 FY2012 FY2013 FY2014 FY2015 105.0 50 100.0 25 41 95.0 4 A$m 90.0 11 0 -18 85.0 -32 -25 80.0 Jul-14 Jan-15 Aug-14 Oct-14 May-15 Nov-14 Sep-14
Slide 45: Diverse geographic presence
Diverse geographic presence Consolidating offices For personal use only 31,400people 148 offices 46 countries 45
Slide 46: FY2015 contract revenue contribution
FY2015 contract revenue contribution Majority of earnings come from smaller contracts For personal use only 8.6% 10.4% >100 Mil 7.7% 50-100 Mil 20-50 mil Rest 73.3% 46
Slide 47: FY2015 significant awards announced to the ASX
FY2015 significant awards 16 awards announced to the ASX For personal use only 21 61 105 23 47
Slide 48: Diversification in earnings
Diversification in earnings Click to add text For personal use only ►Top 10 customers deliver 31% of the gross margin ►Top 10 projects deliver 15% of the gross margin ►Top 10 locations deliver 66% of the operating EBIT 48
Slide 49: Contractual acronyms
Contractual acronyms Click to add text 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
Slide 50: WorleyParsons resources & energy
WorleyParsons resources & energy 50