Half year results 2012 John Grill Overview Strong first half paves - - PowerPoint PPT Presentation

Half year results 2012

John Grill

► Strong first half paves the way for good full year

result

• Reported revenue of $3,300 million. Record aggregated revenue of

$3,399 million; up 17%

• EBIT increase of 29% on HY11 underlying result
• Reported NPAT of $152 million up 18% (up 27% on HY11 underlying

NPAT)

• Earnings grew across all sectors compared to HY11
• Markets strengthening in Australia, Canada and USA, but productivity,

cost and schedule issues currently impacting margins

• Continuing expansion in the developing world
• Expanded and awarded new framework agreements with Tier 1

customers

• People numbers continue to increase
• FX impact was material
• Interim dividend 40.0 cents per share

Overview

2

Financial highlights

* The underlying results for HY2011 excludes the fair value gains on acquisitions of $9.4m

HY12 HY12 vs HY11 Underlying Results* Net profit after tax $152m 27% Aggregated revenue $3,399m 17% EBIT $248m 29% Operating cash flow $64m 49% Basic earnings per share 61.8 c/s 27% Interim dividend 40.0 c/s

3

The IFRS financial information contained within this presentation has been derived from the 31 December 2011 Interim Financial Report, which has been reviewed by Ernst & Young. This presentation however has not been reviewed or audited.

 Our safety performance remains

solid

 Areas of focus

• Project and site activity initiation and

implementation for safety success

• Road safety. Pledged to the UN Global

Road Safety Commitment program  Highlights

• WorleyParsons Singapore awarded

2011 Risk Management Award of the Workplace Safety & Health (WSH) Council

• 40 million hours lost time injury free on

the Singapore Parallel Train project for ExxonMobil

Safety performance

Zero Harm

4



Capital spending in resource markets continue to increase, led by global majors in Hydrocarbons and Minerals & Metals



Solid growth in Australia, Canada, USA and China



Economic uncertainty in light of the Eurozone debt concerns impacting smaller resource clients.



Currency fluctuations on translation continue to impact results



Major resource companies are seeking global support from their suppliers



I&E markets strong in resource sector, weak in others



Power markets stabilising

Snapshot

5

 Our focus on the developing

world has led to key project awards in:

• Brazil
• Costa Rica
• Ecuador
• Indonesia
• South Africa

 Board composition

• The Board has been strengthened

− Ms Wang Xiao Bin; and − Dr Christopher Haynes

Snapshot

6

Local delivery, Global support

37,800 people 148 offices 44 countries

2.1 million workshare hours

7

► WorleyParsons’ performance continues

to be underpinned by our extensive long-term contract base

• Total of 18 new Improve contracts

awarded

• 11 contracts renewed
• 240 Improve contracts

► Our selection was based upon:

• Recognition of our leadership position in

long term contracts

• Proven safety performance
• Global footprint

Improve contracts

New Global or Multi-Site Agreements

8

Sector reporting change

 Group wide organisation restructure  Outstanding location based delivery – effective global support  Change to sector reporting to align with management reporting

9

• 1. Australia East and New Zealand (AENZ)
• 2. Australia West (AUW)
• 1. Australia and New Zealand (ANZ)
• 3. Asia China (ASCH)
• 4. Middle East, North Africa and India (MENAI)
• 2. Asia and Middle East (AME)
• 5. Canada (CAN)
• 3. Canada (CAN)
• 6. Europe (EUR)
• 7. Sub-Saharan Africa (SSA)
• 4. Europe and Africa (E&A)
• 8. United States and Caribbean (USAC)
• 9. Latin America (LAM)
• 5. United States and Latin America

(USLAC)

Five Regions into Nine groups of locations

Financial results

Andrew Wood

Financial profile

* The underlying results for HY2011 excludes the fair value gains on acquisitions of $9.4m

$m HY08 HY09 HY10 HY11* HY12 vs. HY11 Aggregated Revenue 2,362 3,256 2,548 2,905 3,399 17% EBIT 232 315 210 193 248 29% EBIT Margin 9.8% 9.7% 8.2% 6.6% 7.3% 0.7% Net profit 153 198 138 119 152 27% Net profit margin 6.5% 6.1% 5.4% 4.1% 4.5% 0.4% Basic EPS (cps) 63.3 81.6 56.8 48.5 61.8 27.4% Cash flow from operating activities 112 235 148 125 64 (49%) ROE 27.9% 23.7% 18.9% 15.6% 18.8% 3.2%

11

5 year financial profile



Record aggregated revenue



EBIT margin has improved by 0.7% from HY11 to 7.3%



Effective tax rate up 1.4% from HY11 to 27.1%



NPAT unfavourable FX impact of $10.1m



Dividend payout of 40 cents per share, 79.3% franked

2,354.1 3,256.1 2,548.1 2,905.1 3,399.0 4,882.4 6,219.4 4,967.1 5,903.5 FY08 FY09 FY10 FY11 FY12

Aggregated Revenue $m

152.7 197.5 138.0 119.2 151.9 343.9 390.5 291.1 298.5 FY08 FY09 FY10 FY11 * FY12

Net profit $m

12

9.8 9.7 8.2 6.6 7.3 11.4 9.8 9.0 9.4 10.7 9.7 8.6 8.0 FY08 FY09 FY10 FY11 FY12

EBIT Margin %

* The underlying results for HY2011 excludes the fair value gains on acquisitions of $9.4m

Change in net profit after tax HY2011 v HY2012

119.2 31.8 4.8 31.3 14.2 (11.5) (4.4) (19.5) (3.9) (10.1) 151.9

HY11 * Hydrocarbons Power Minerals & Metals Infrastructure & Environment Corporate

• verhead

Net Interest Income Tax Minority Interest FX Impact HY12 $m

13

* The underlying results for HY2011 excludes the fair value gains on acquisitions of $9.4m

ASCH 10% MENAI 11% AENZ 7% AUW 9% CAN 24% EUR 13% SSA 3% LAM 1% USAC 22%

HY12 aggregated revenue % by region

Hydrocarbons

1 Regions in constant currency

246.0 4.9 5.9 1.6 1.0 9.5 0.2 0.2 1.4 7.4 11.5 263.0

HY11 ASCH AENZ AUW CAN EUR LAM MENAI SSA USAC FX Impact HY12

EBIT by Region HY12 vs HY11 1 $M



Overall strong performance



Strong performance in the Europe driven by increased activity for global majors



Significant increase in activity in the USA particularly upstream



Improved results in ASCH coming from Malaysia, China and Brunei



AENZ results up due to additional work in the coal seam methane market



Lower margins during the period caused by a few major projects that are expected to be completed in the second half

1,760.3 2,373.7 1,869.1 1,974.1 2,344.9 1,844.5 2,366.4 1,556.3 2,069.8 FY08 FY09 FY10 FY11 HY12

Aggregated revenue $M

14

ASCH 5% MENAI 2% AENZ 9% AUW 12% CAN 7% EUR 21% SSA 1% LAM 6% USAC 37%

HY12 aggregated revenue % by region

Power



Increased activity in the European nuclear market



Improved US performance with the US and Latin America contributing 43% of segment revenue

1 Regions in constant currency

23.6 0.0 0.4 0.3 0.7 2.4 0.8 0.8 0.0 2.0 0.6 27.2

HY11 ASCH AENZ AUW CAN EUR LAM MENAI SSA USAC FX Impact HY12

EBIT by Region HY12 vs HY11 1 $M

217.7 289.3 247.3 278.2 259.8 248.2 257.0 262.1 235.5 FY08 FY09 FY10 FY11 HY12

Aggregated revenue $M

15

ASCH 14% MENAI 4% AENZ 33% AUW 30% CAN 8% EUR 2% SSA 1% LAM 4% USAC 4%

HY12 aggregated revenue % by region

Minerals & Metals



Record first half aggregated revenue for Minerals & Metals



Continuing to grow our relationships with major global companies



Strong commodity prices driving demand for services

1 Regions in constant currency

214.1 371.8 239.8 311.5 400.0 255.2 211.2 322.7 332.3 FY08 FY09 FY10 FY11 HY12

Aggregated revenue $M

34.9 6.2 11.4 14.6 0.9 0.4 0.3 1.0 1.0 0.1 2.3 65.7

HY11 ASCH AENZ AUW CAN EUR LAM MENAI SSA USAC FX Impact HY12

EBIT by Region HY12 vs HY11 1 $M

16

ASCH 6% MENAI 8% AENZ 22% AUW 22% CAN 14% EUR 4% SSA 10% LAM 9% USAC 5%

HY12 aggregated revenue % by region

Infrastructure & Environment



First half FY12 reports record aggregated revenue for the I&E business



Increased investment in resource projects is driving an increased demand for services



Pit to port projects executed with the Minerals & Metals segment providing growth



Six month contribution from the acquisition

• f KV3 in South Africa in January 2011

162.0 221.3 191.9 341.3 394.3 180.4 128.7 277.9 360.8 FY08 FY09 FY10 FY11 HY12

Aggregated revenue $M

42.5 0.2 0.2 1.5 1.3 0.0 0.6 0.9 7.2 1.3 1.2 54.1

HY11 ASCH AENZ AUW CAN EUR LAM MENAI SSA USAC FX Impact HY12

EBIT by Region HY12 vs HY11 1 $M

1 Regions in constant currency

17

Cash Flow

$m HY08 HY09 HY10 HY11 HY12 EBIT 232 315 210 203 248 Depreciation and amortisation 31 40 43 47 50 Interest and tax paid (75) (103) (132) (56) (64) Working capital / other (76) (17) 27 (69) (170) Net cash inflow from operating activities 112 235 148 125 64 Net cash outflow from investing activities (104) (82) (51) (24) (34) Net cash (outflow) / inflow from financing activities 10 (111) (111) (48) (55)

18

Gearing and key metrics

Key Metrics FY09 FY10 FY11 HY12 Gearing ratio 26% 26% 22% 26% Facility utilization 54% 61% 53% 60% Average cost of debt 5.5% 5.2% 5.7% 5.3% Average maturity (years) 4.1 3.8 4.6 4.1 Interest cover * 14.1x 13.3x 12.0x 13.4x Net Debt/EBITDA * 0.8x 1.2x 0.9x 1.0x

19

* Rolling 12 month calculation

• 50

100 150 200 250 300 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 A$M

Bilateral bank facilities Syndicated debt facilities Captial markets: USPP

Liquidity

 Minimal refinance risk  Liquidity available to support growth  Loan and overdraft facilities of

A$247 million maturing in calendar year 2012

Liquidity Summary $m FY09 FY10 FY11 HY12 Loan & OD facilities 1,376 1,286 1,277 1,341 Less: facilities utilized (745) (782) (680) (809) Available facilities 631 504 597 532 Plus: cash 178 141 171 165 Total liquidity 809 645 768 697 Bonding facilities 453 669 682 683 Bonding facility utilisation 53% 50% 61% 73%

Facility maturity profile 20

Sector Outlook 2012

John Grill

 Hydrocarbons market remains buoyant

fuelled by sustained high oil prices

 Capital spend by the international majors

increased by 19% in CY11

 Unconventional oil and gas sectors

continue to expand in Australia, Canada, the USA, Middle East and Europe

 Expanding global and multi-regional

relationships with global majors

 Demand in the developing world remains

strong in both Delivery and Improve service offerings

 Increase in downstream activity in the last

quarter with key awards secured in Costa Rica and Ecuador

 Reduced margins on a few projects

finalizing in FY12

Hydrocarbons

First time Brent Crude has averaged more than USD100/ barrel HY12 vs HY11 Aggregated Revenue $2,345 m 19% EBIT $263 m 6.9% Margin 11% 1.3%

22

Hydrocarbons

IOL refinery Key project awards

 ExxonMobil - Point Thompson initial

production system, Alaska

 SORESCO - Moin refinery expansion

project, Costa Rica

 PetroEcuador - Refineria del Pacifico

Refining and Petrochemical Complex project, Ecuador

 Chinese National Offshore Oil Company -

LNG cold energy air separation unit, China

 Hess - Equus front end engineering and

design (FEED), Australia

 Arrow Energy - Surat coal bed methane

upstream development pre-FEED project, Australia

 Oman Oil Company - gas plant detailed

design and procurement services, Oman

23

Hydrocarbons

Nanticoke refinery Key Improve awards and renewals

 Imperial Oil - Nanticoke

refinery (renewal), Canada

 Chevron - Duri oil field,

Indonesia

 Shell - downstream, North

America

 Esso Production Malaysia -

EPCM umbrella agreement (renewal), Malaysia

 Suncor - gas facility

supplier of choice, Canada

24

Segment outlook

 Growth and strengthening in global

greenfield and Improve markets

 Increase in Select opportunities

resulting from increased capital spend

• n new field developments

 Continued high level of capital spending

in offshore upstream and onshore unconventional markets

Hydrocarbons

► Improved outlook for the downstream

hydrocarbons, particularly in the USA and Latin America

► Global customer relationships underpin

results, with expansion underway

► Increased confidence in the market

• growth. We expect improved earnings

in the Hydrocarbons sector in the second half

25

 Developed world - optimisation of existing

generation and networks assets

 Developing world - new generation capacity

and networks to meet rising demand

 Nuclear performance remains solid with new

build projects secured in Turkey and Saudi

 Key developments in the US provide

foundation for future growth

• New EPA emissions standards agreed
• Retiring old coal plus upgrading transmission

 Renewables: Wind favoured and solar going

to photo voltaic

 Expanding opportunities in Improve globally  Improved EBIT and margins despite reduction

in revenues

Power

HY12 vs HY11 Aggregated Revenue $260 m 6.6% EBIT $27 m 15% Margin 11% 2%

26

Power

Key project awards

 Akkuyu NGS Elektrik Uretim Anonim

Sirketi - nuclear power plant project, Turkey

 King Abdullah City for Atomic and

Renewable Energy - nuclear power plant siting services project, Saudi Arabia

 Inter RAO UES - Baltic nuclear power plant

bankable feasibility study development phase 2, Russia

 American Electric Power – various

electrostatic precipitator upgrade studies, USA

 Saudi Electricity Company - Power Plant

10 engineering & owner’s engineer support, Saudi Arabia

 Odebrecht – Chaglla hydropower plant,

Peru

27

Power

Verve Energy Key Improve awards and renewals

 Kozloduy - stress-tests for nuclear power

facilities, Bulgaria

 Bruce Power - sustaining projects, Canada  Ontario Power Generation - Nuclear Division,

Canada

 Arizona Public Services - Palo Verde nuclear

power plant task level planning, USA

 Pacific Gas & Electric - master services

agreement (MSA) power network services, USA

 PPL Corp - MSA engineering services, USA  First Energy - MSA engineering services,

USA

 Dynergy - MSA engineering services, USA  Verve Energy - Muja / Kwinana maintenance

alliance, Australia

28

Segment outlook

 Expect continued growth in the nuclear

sector

 Developments in the US provide

• pportunity for near term growth

 Pipeline of works in developing markets for

major new generation projects

 Recent Improve awards in the US, Canada

and Australia underpin earnings in H2

 Projects secured in H1 in the Middle East

and Latin America will commence contributing to earnings in the second half

 The Coal Power Execution Centre in

Malaysia is now in place to support in- region coal-fired power plant opportunities

 We continue to expect improved earnings

in the Power sector in the second half

Power

29

 Strong commodity prices for coal, iron ore

and copper supporting increased investment in the sector. Contraction in the aluminium sector

 Global majors driving market growth although

seeing some caution in capital programs

 Tightening financial market impacting smaller

• perators

 Primary geographic areas contributing are

Australia and Canada

 Chemicals market buoyant in China  Expansion of engagement with tier one

customers continues

 Strong start to FY12 with new Improve

contracts

 Select engagements providing opportunities

for project pull through

Minerals & Metals

Strong commodity prices supporting increased investment in the sector HY12 vs HY11 Aggregated Revenue $400 m 28% EBIT $66 m 88% Margin 16% 5.2%

Bulks and metals price performance (2010–2011) 30

Minerals & Metals

Key project awards

 Sasol – Shondoni coal mine

development EPCM, South Africa

 MMX Mineracao e Metalicos – Serra

Azul iron ore facilities expansion, Brazil

 Anglo American – Chagres copper

smelter engineering, Chile

 Evonik Degussa – Marco Polo integrated

chemical plant project, China

 Xstrata – Askaf iron ore project definitive

feasibility study, Mauritania

 BASF – Acai / Nanjing super absorbent

polymer projects, Brazil and China

 BHP Billiton – iron ore major projects

framework agreement EPCM services, Australia

 WICET – Wiggins island coal expert

terminal stage 1 PMC, Australia

31

Minerals & Metals

Key Improve awards and renewals

 BHP Billiton Mitsubishi Alliance -

engineering and construction management services for Bowen Basin coal facilities, Australia

 BHP Billiton - iron ore sustaining

capital EPCM services, Australia

 Fortescue Metals Group - iron

• re sustaining capital services,

Australia

 BASF - North America

engineering partner contract, USA and Canada

 Rio Tinto Alcan - Weipa refinery

engineering services, Australia

32

Segment outlook



Outlook remains positive



Expect continued growth in developing world – in particular, Latin America, Africa and China



Growth in bulk materials and chemicals markets is expected to continue



Pit to port opportunities remain strong



Implementation of global agreements with Tier 1 customers supporting growth



Uncertainty in the financial markets resulting in delays in projects for our Tier 3 customers



We continue to expect improved earnings in the Minerals & Metals sector in the second half

Minerals & Metals

Demand shift for Commodities 33



Resource sector demand for infrastructure and environmental services growing strongly



Public infrastructure demand flat in the developed world but demand continuing to grow in the developing world



Pit to port projects being executed with Minerals & Metals



Water and water security expertise has secured resource sector projects in USA, Australia and Canada



Strong demand for remediation, decommissioning, response and recovery services



Integration of environment, coastal marine and geoscience disciplines realising growth in Australia and Canada



South African business contributing strongly

Infrastructure & Environment

HY12 vs HY11 Aggregated Revenue $394 m 16% EBIT $54 m 27% Margin 14% 1.2%

34

Infrastructure & Environment

SSWA Key project awards

 Water Corporation of Western

Australia - Southern Seawater Desalination plant expansion stage 2, Australia

 Chemtura - multi-purpose

manufacturing facility project, China

 National Grid Property Holdings -

remediation contract, UK

 Qatar Government - Doha port

development detailed design, Qatar

 Qatar Government - Lusail

infrastructure conceptual and detailed design, Qatar

 Huta Marine - King Abdullah port

detailed design, Saudi Arabia

 Jeddah Municipality - project

management services, Saudi Arabia

35

Infrastructure & Environment

Key Improve awards and renewals

 BP - remediation

management North American framework contract (engineering and consulting), USA and Canada

 Port of Los Angeles -

restoration services framework agreement, USA

36

Segment outlook

 Strengthening of resource markets

globally provide opportunities for growth

 South African business to provide

capacity as opportunities expand in Africa

 Increasing demand from the Middle

East with Qatar awarded the FIFA world cup

Infrastructure & Environment

► Remediation, decommissioning,

response and recovery activities increasing

► Strong relationships with Hydrocarbons

and Minerals & Metals assisting entry into Latin America

► We continue to expect improved

earnings in the infrastructure and environment sector in the second half

37

Summary

► Strong growth compared to HY11, with

earnings growth reported in all sectors

► Capital spend in resource markets

continues to increase

► Number of people expected to continue

to increase

► Expanded and awarded new framework

agreements with key customers for project and Improve activity providing a solid platform for future growth

► Markets strengthening in the developed

world

► Continuing to expand our footprint in

the developing world

38

“The group experienced strong growth in the first half compared to the previous corresponding period and, subject to the markets for our services remaining strong, we expect to achieve good growth in FY2012 compared to FY2011 underlying earnings. “This positive outlook is subject to sustained business confidence and commodity prices remaining reasonably strong. “The group continues to evaluate opportunities for new business growth that will add to its existing capabilities and provide value for our shareholders. “The group is confident that its medium term and long term prospects remain positive based on its competitive position, its diversified operations and strong financial capacity.”

Group outlook

February 2012 39

Half year results 2012

Contractual acronyms

41

EPCM – Engineering, Procurement and Construction Management FEED – Front End Engineering and Design MSA – Master Service Agreement PMC – Project Management Consultancy

Segment margins

42 H1 FY12

Hydrocarbons Power Minerals & Metals Infrastructure & Environment TOTAL Sales to external customers 2,192.9 233.4 399.6 378.1 3,204.0 Procurement services revenue at margin 151.4 24.9 0.3 15.3 191.9 Other Income 0.6 1.5 0.1 0.9 3.1 Total 2,344.9 259.8 400.0 394.3 3,399.0 Segment Result 263.0 27.2 65.7 54.1 410.0 Segment Margin 11.2% 10.5% 16.4% 13.7% 12.1%

H1 FY11*

Hydrocarbons Power Minerals & Metals Infrastructure & Environment TOTAL Sales to external customers 1,857.7 275.7 311.5 333.6 2,778.5 Procurement services revenue at margin 113.6 0.7

• 6.7

121.0 Other Income 2.8 1.8

• 1.0

5.6 Total 1,974.1 278.2 311.5 341.3 2,905.1 Segment Result 246.0 23.6 34.9 42.5 347.0 Segment Margin 12.5% 8.5% 11.2% 12.5% 11.9%

FY11*

Hydrocarbons Power Minerals & Metals Infrastructure & Environment TOTAL Sales to external customers 3,784.1 483.3 606.2 679.5 5,553.1 Procurement services revenue at margin 258.3 27.8 37.0 21.0 344.1 Other Income 1.5 2.6 0.6 1.6 6.3 Total 4,043.9 513.7 643.8 702.1 5,903.5 Segment Result 554.3 65.3 102.6 101.0 823.2 Segment Margin 13.7% 12.7% 15.9% 14.4% 13.9%

* Restated segment results taking into consideration the change in allocation of overhead costs

FX translation impact

43

Currency FY11 HY12 HY ∆ AUD:USD 98.8 103.2 4.4 AUD:GBP 62.1 64.8 2.7 AUD: CAD 98.8 103.1 4.3 Currency Annualized AUD $m NPAT translation impact of 1c ∆ AUD:USD 0.8 AUD:GBP 0.6 AUD: CAD 0.5

• 20.0

29.0

• 41.0
• 31.5
• 10.1
• 50.0
• 40.0
• 30.0
• 20.0
• 10.0
• 10.0

20.0 30.0 FY08 FY09 FY10 FY11 HY12 A$m

FX Impact Movement in Major Currencies

Dividends, amortisation and tax

44

Dividend History HY07 HY08 HY09 HY10 HY11 HY12 Interim dividend (cps) 28.0 38.0 38.0 35.5 36.0 40.0 Franked % 19% 30% 76% 100% 100% 79% $m total 57.5 91.9 92.2 87.0 88.6 98.3



Based on asset values as at 31 December 2011



FY2012 peak due to several acquired intangibles being fully amortised in FY2012

• 10.0

20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 FY12 FY13 FY14 FY15+ A$m

Amortisation Profile (A$m)

Acquired intangibles Computer software Leasehold improvements

22.0% 24.0% 26.0% 28.0% 30.0% 32.0% FY08 FY09 FY10 FY11 HY12

Effective tax rate

Statutory earnings Underlying earnings Underlying earnings excluding associates profit