Half year results 2013 Andrew Wood Overview First half earnings in - - PowerPoint PPT Presentation

Half year results 2013

Andrew Wood

First half earnings in line with guidance

► Aggregated revenue of $3,879m, up 14%* ► Hydrocarbons professional services revenue and margin up* ► Strong contribution from lower margin reimbursable EPC activity,

particularly from our fabrication and construction business, WorleyParsonsCord

► Good cashflow performance ► Number of people employed 40,400 ► 61 significant project and long term contract awards ► Expansion in key growth markets of China and Brazil continued ► Strong performance and growth in Canada ► Zero harm remains our ultimate goal ► Interim dividend of 41.5 cents per share

Overview

2 * versus previous corresponding period

HY13 HY13 vs. HY12

Aggregated revenue $3,879 m 14% EBIT $252 m 2% Net profit after tax $155 m 2% Operating cash flow $125 m 95% Basic earnings per share 63.0 c/s 2% Interim dividend 41.5 c/s 4%

Financial highlights

The IFRS financial information contained within this presentation has been derived from the 31 December 2012 Interim Financial Report which has been reviewed by Ernst & Young. This presentation however has not been reviewed or audited.

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 Zero Harm is our goal and to get

there we strive for year on year improvement

 Performance remains good but we

are further increasing our effort to ensure continued improvement

 Commenced a number of programs

across the Group including:

• Board and Executive Committee

structured HSE site visit program

• Road safety program
• Optimising our approach to

safety in construction and contractor management

• Updating our incident

investigations processes

 Increased market volatility primarily

driven by fluctuating commodity prices and escalating project costs

 South Africa impacted by decline in

market conditions

 Low cost of natural gas in the US

continues to drive downstream developments

Snapshot

 Growth in unconventional oil and gas

developments

 Aging assets and greater regulatory

requirements driving increased demand for Improve

 Major customers seeking common global

delivery platforms

 Recovery of the US power market has not

yet eventuated

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 Diversified operations enabled

growth in volatile markets

 Canada, and in particular

WorleyParsonsCord, contributed to growth in Hydrocarbons

 Strong performance from the

Chinese and Brazilian businesses

 Material growth in the chemicals

sector

Snapshot

 Increased project awards from tier

2 customers

 Local global model implemented

with outcome of customer focus and delivery efficiency

 Infrastructure & Environment

• perations in the US and South

Africa restructured due to reduced activity

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Local delivery, global support

40,400 people 165 offices 41 countries

2.9 million workshare hours (HY2012: 2.1 million)

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Significant awards for HY2013

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61 significant and long term contracts / projects

► Improve remains a key

differentiator

► Demand for our Improve

services continues to increase

► Randy Karren appointed to

the Executive Committee as Group Managing Director – Improve

► Total of 19 new Improve

contracts awarded

► 6 contracts renewed ► Currently have more than

275 Improve contracts

Improve contracts

Improve services continue to diversify

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Financial results

Simon Holt

Financial profile

$m HY09 HY10 HY11* HY12 HY13 vs. HY12 Aggregated Revenue 3,256 2,548 2,905 3,399 3,879 14% EBIT 315 210 193 248 252 2% EBIT Margin 9.7% 8.2% 6.6% 7.3% 6.5% (0.8%) Net profit 198 138 119 152 155 2% Net profit margin 6.1% 5.4% 4.1% 4.5% 4.0% (0.5%) Basic EPS (cps) 81.6 56.8 48.5 61.8 63.0 2% Cash flow from operating activities 235 148 125 64 125 95% ROE 23.7% 18.9% 15.6% 18.8% 18.8% 0%

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First half earnings in line with guidance

* The underlying result for HY11 includes the fair value gain on acquisition of associates of $9.4m

Financial profile

Robust aggregated revenue growth

* The underlying result for FY11 and FY12 excludes the fair value gain on acquisition of associates of $65.7m and $7.6m respectively

 Robust aggregated revenue  Hydrocarbons primary contributor to

EBIT growth

 Minimal foreign exchange impact  Global support costs remain flat at

approximately 4.5% of aggregated revenue

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Margin profile

Hydrocarbons professional services margin has increased

 Hydrocarbons professional services

revenue and margin have increased

 Increased contribution from

reimbursable EPC, including WorleyParsonsCord, has impacted Hydrocarbons margin

 Power impacted by uncertainty in

North America and cancellation of key government contract in Europe

 Power margin includes a pre tax profit

• f $10.7 million from the sale of

contracts into the TWPS

 Minerals, Metals & Chemicals margins

have held up

 Infrastructure & Environment impacted

by deteriorating markets in South Africa and the US

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Strong performance and growth in Canada

Hydrocarbons

 Record aggregated revenue 12%

EBIT growth from HY2012

 Australia grew in challenging

market conditions

 Reduced activity in Europe, the

Middle East and Sub Saharan Africa

 Increased activity in the US

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* Regions in constant currency

Diversification outside of the US

Power

 Europe impacted by cancellation of key

government project

 Latin America experienced increased

material costs on a lump sum project

 The US grew despite market uncertainty  The Australian power generation asset

management business was consolidated into Transfield Worley Power Services

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* Regions in constant currency

Earnings growth through geographical & sector diversification

 Aggregated revenue up 21% on HY12  5% EBIT growth in challenging market conditions  Australia market conditions deteriorated in the half  Geographical diversification with Australia now

43% of aggregated revenue versus 63% in prior year

 Chemicals performing well in Asia, Latin America

and the US

 Latin America improved EBIT due to key chemicals

projects

Minerals, Metals & Chemicals

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* Regions in constant currency

Impacted by reduced government spending

Infrastructure & Environment

17  Increased environmental work for the

Hydrocarbons sector

 Softening in the Australian resources

sector had a flow-on impact for Western Australia

 Reduced activity in Canada, the Middle

East, Sub Saharan Africa and the US

 Demand for resource infrastructure

providing growth in Latin America

* Regions in constant currency

Cash Flow

$m HY09 HY10 HY11* HY12 HY13 EBIT 315 210 203 248 252 Depreciation and amortization 40 43 47 50 51 Interest and tax paid (103) (132) (56) (64) (89) Working capital / other (17) 27 (69) (170) (89) Net cash inflow from operating activities 235 148 125 64 125 Net cash outflow from investing activities (82) (51) (24) (34) (37) Net cash (outflow) / inflow from financing activities (111) (111) (48) (55) 102

Good cash flow performance

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* The underlying result for HY11 includes the fair value gain on acquisition of associates of $9.4m

Gearing and key metrics

Strong balance sheet metrics

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Key Metrics FY10 FY11* FY12* HY13 Gearing ratio 26% 22% 20% 20% Facility utilization 61% 53% 51% 55% Average cost of debt 5.2% 5.7% 5.7% 5.5% Average maturity (years) 3.8 4.6 3.8 4.2 Interest cover ** 13.3x 12.0x 12.4x 12.0x Net Debt/EBITDA ** 1.2x 0.9x 0.8x 0.8x

* The underlying result for FY11 and FY12 excludes the fair value gain on acquisition of associates of $65.7m and $7.6m respectively ** Rolling 12 month calculation

Liquidity

► Financial capacity to support growth

with gearing at 20%

► US$ 300m of unsecured note payable

issued in the US Private Placement market September 2012 maturing in 5 to 10 years with fixed annual coupon Liquidity Summary $m FY10 FY11 FY12 HY13 Loan & OD facilities 1,286 1,277 1,445 1,705 Less: facilities utilized* (782) (680) (740) (946) Available facilities 504 597 705 759 Plus: cash 141 171 247 434 Total liquidity 645 768 952 1,193 Bonding facilities 669 682 787 777 Bonding facility utilization 50% 61% 66% 68%

*Excludes capitalized borrowing costs

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Well positioned to support growth

Sector outlook

Andrew Wood

Hydrocarbons

North American gas renaissance spurring increased levels of activity

 High level of unconventional oil and

gas development activity

 Remain well positioned in oil sands

market in Canada

 Significant growth in our fabrication

and construction business, WorleyParsonsCord

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HY13

• vs. HY12

Aggregated revenue $2,672 m 14.0% % of Group aggregated revenue 69% EBIT $301 m 11.9% Margin 11.3% 0.2%

 Low cost of natural gas in US

driving downstream developments

 Continue to secure global

services contracts

 Increased activity in Improve

Hydrocarbons

23 Modular transit, Alaska

Key project awards

 Chevron North Sea Limited –

Rosebank front end engineering design (FEED), United Kingdom

 BP Iraq NV, PetroChina and State

Oil Marketing Organisation of the Republic of Iraq – Rumaila oil field engineering, procurement and management services, Iraq

 Saudi Arabian Oil Company –

general engineering and project management service contract, Saudi Arabia

 LukOil Mid-East Limited – West

Qurna-2 oil field project management, technical and construction management personnel, Iraq

 Singapore LNG Corporation – LNG

regasification expansion FEED, Singapore

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Hydrocarbons

24 Dexzel Cogeneration, Badger Creek

Key Improve awards and renewals

 CNOOC and Shell Petrochemicals

Company Limited – site Improve engineering service contract, China

 Canadian Natural Resources Limited

– engineering services, Canada

 Inpex – integrity and maintenance

contract, Australia

 Talisman – engineering and project

delivery alliance, US

 Husky – engineering and

procurement for midstream

• perations, Canada

 Suncor – sustaining capital projects

for upstream and downstream facilities, Canada

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Hydrocarbons

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Sector outlook

 International majors have

announced increased capital expenditure commitments for CY2013

 Favourable economics driving gas

utilization and oil production projects in the US

 High number of greenfield and

brownfield opportunities

 Improve market growth as a result

• f aging assets and increased

regulatory requirements We continue to expect improved earnings in the Hydrocarbons sector in FY2013

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Power

HY13

• vs. HY12

Aggregated revenue $303 m 16.5% % of Group aggregated revenue 8% EBIT $31 m* 11.7% Margin 10.3% 0.5%

► Continued uncertainty in North America ► Focus on developing long term Improve

relationships

► Nuclear performance impacted by

termination of large government funded project in Europe

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Nuclear new builds and safety upgrades remain a focus

► Key resource related power projects

have not been impacted by mining investment slowdown

► TWPS provides a strong platform for

growth in the Australasian operations and maintenance market

* Includes $10.7m from sale of contracts into TWPS

TVA, Lagoon Creek

Power

Key project awards

 Polska Grupa Energetyczna – site

characterisation and licensing / permitting services for the nuclear power plan development program, Poland

 Tennessee Valley Authority (TVA) –

plant outage and support at various fossil plants, US

 Akkuyu NGS Elektrik Üretim Anonim

Şirketi – consultancy services for the Akkuyu nuclear power plant, Turkey

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Power

Key Improve awards and renewals

 Bruce Power – sustaining capital

projects at nuclear facilities, Canada

 US Government, Department of

Energy, National Nuclear Security Administration – technical engineering and programmatic support, US

 Kozloduy Nuclear Power Plant –

assessment process to review the

• perational safety of the power

plant, Bulgaria

 Calpine – sustaining capital projects,

US

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Sector outlook

 Medium to long term outlook

remains strong outside of US

 Expect growth to continue in fossil

Improve business in the US, Canada and Australia

 New build opportunities in Latin

America, South East Asia, Sub Saharan Africa and the Middle East

 Focus on nuclear new build in

emerging markets

 Safety upgrades continue to drive

demand for nuclear Improve

 Continue to strengthen our

relationships with strategic customers We continue to expect improved earnings in the Power sector in FY2013

Power

Minerals, Metals & Chemicals

HY13

• vs. HY12

Aggregated revenue $484 m 21.0% % of Group aggregated revenue 12% EBIT $70 m 5.1% Margin 14.5% 2.3%

► Diversified operations have delivered

continued growth in the developing world

► Significant chemicals growth in

China, the US and LAM

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Global chemicals market continues to provide growth opportunities

► Volatility in iron ore prices has

impacted activity

► Softening in coal market,

particularly in high cost countries

► Studies leading to major projects

Minerals, Metals & Chemicals

Pilbara Iron Ore and Infrastructure, Australia West

Key project awards

 AngloGold Ashanti – Gramalote gold

project, Colombia

 Pacific Aluminium – Katherine to

Gove gas project, Australia

 Elwady Company – phosphoric

fertilizers pre-feasibility study, Egypt

 Votorantim Metais – Rondon

alumina project FEL3, Brazil

 Nyrstar – Port Pirie transformation

pre-feasibility study, Australia

 Ressources d’Arianne – feasibility

study for the Lac à Paul phosphorus mining project, Canada

 Dynasol – SSBR EPCM, China  Potash Corporation of

Saskatchewan – underground expansion construction management, Canada

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Minerals, Metals & Chemicals

OneSteel WorleyParsons Alliance, Australia East

Key Improve awards and renewals

 Minera Escondida (BHPB) –

Escondida Improve contract, Chile

 Tasnee – waste heat boiler solution,

Saudi Arabia

 Xstrata Nickel – MSA, Canada  Stepan Company – chemicals plant

sustaining capital EPCM, US

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Minerals, Metals & Chemicals

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Sector outlook

 Improving near term outlook for iron

• re and metallurgical coal

 Medium to long term outlook

remains strong

 Customers’ capital programs

focused on productivity improvements

 New developments are increasingly

in developing countries

 Strong focus on Improve

• pportunities in developed markets

 Outlook for chemicals remains

strong, particularly in the US and China

 Completion of TWP acquisition will

provide growth opportunities in Africa and underground mining We continue to expect improved earnings in the Minerals, Metals & Chemicals sector in FY2013

HY13

• vs. HY12

Aggregated revenue $420 m 6.4% % of Group aggregated revenue 11% EBIT $45 m 18.4% Margin 10.8% 3.3%

Infrastructure & Environment

► Hydrocarbons customers seeking to

procure enabling front end environmental services on global basis

► Growth in unconventional gas increasing

infrastructure opportunities

► Continued growth in the demand for

restoration services

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Integrated enabling capabilities that differentiate our business

► Regulation changes in Brazil have

• pened opportunities in the port sector

► Resource related rail activity trending

towards safety and productivity

► Increased competition for water

resources is increasing demand for

• ur services

Infrastructure & Environment

Jump Creek Dam, Canada

Key project awards

 Alderon Mining – rail and terminal

expansion pre-feasibility, Canada

 Consórcio Complexo Tapajós –

environmental impact assessment for Sao Luiz do Tapajos dam, Brazil

 Caltex – Kurnell port and berthing

project, Australia

 Ecopetrol – Refineria del Pacifico

port and marine Pre-FEED, Ecuador

 Wafra Joint Operations – integrated

master plan, Kuwait

 Rio Tinto – Koodaiderie hydrology

studies, Australia

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Infrastructure & Environment

Key Improve awards and renewals

 Enbridge – remediation program,

Canada

 BP – oil spill response planning

framework contract, US and Canada

 BP – lighthouse restoration MSA,

Global

 Woodside Petroleum –

environmental services panel contract, Australia

 Chevron – environmental services

panel contract, Australia

 Tullow Oil – global framework

agreement for environmental and social impact assessments, Global

 Water Corporation – infrastructure

design branch panel contract, Australia

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37 Tengizchevroil, Kazakhstan

Infrastructure & Environment

Sector outlook

 Growth in unconventional oil and

gas driving demand for environment and water services

 Demand for resource infrastructure

continues to grow in Sub Saharan Africa and Latin America

 Increased demand for remediation,

decommissioning, risk planning, response and recovery services across oil and gas and mining markets

 Management of social and

environment licenses continues to be a key success factor in project development We expect earnings in the Infrastructure & Environment sector in FY2013 to be in line with FY2012

Summary

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► Robust aggregated revenue growth

across the sector groups despite the volatile markets

► Fluctuating commodity prices and

escalating project costs impacted the market for our services

► Diversified operations enabled us to

take advantage of opportunities for growth

► Expansion in key growth markets of

China and Brazil continues

► Demand for our Improve offering

remained strong

► Strong performance and growth in

Canada with increasing contribution from WorleyParsonsCord

► Strong balance sheet provides a sound

platform for strategic acquisitions

Commenting on the outlook for the WorleyParsons Group, Mr Andrew Wood said: “Volatility in commodity prices impacted the market for our services and our growth in the first half. The markets for our services improved towards the end of the period and we continue to expect growth for FY2013 on FY2012 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 2013 39

* Underlying earnings excludes the fair value gains on acquisitions of associates

Half year results 2013

Supplementary information to half year results 2013

Segment Margins

42

FX translation impact

85.0 90.0 95.0 100.0 105.0

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

USD GBP CAD

Movement in major currencies Annualized NPAT translation impact Average rates of major currencies

29

• 41
• 32
• 18
• 50
• 40
• 30
• 20
• 10

10 20 30 FY09 FY10 FY11 FY12 HY13 A$m

Group EBIT FX Impact Since FY09

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Currency FY12 HY12 HY∆ AUD:USD 103.5 103.9 0.4 AUD:GBP 65.1 65.3 0.2 AUD:CAD 103.2 103.2 0.0 Currency Annualized AUD $m NPAT translation impact of 1c ∆ AUD:USD 0.6 AUD:GBP 0.5 AUD:CAD 0.7

Dividends, amortization and tax

Dividend History HY09 HY10 HY11 HY12 HY13 Interim dividend (cps) 38.0 35.5 36.0 40.0 41.5 Franked 76% 100% 100% 79% 100% $m total 92.2 87.0 88.6 98.3 102.3

Based on asset values as at 31 December 2012

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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 – Engineering Services Provider FEED – Front End Engineering Design FEL – Front End Loading GSA – General Services Agreement GTL – Gas to Liquids I&E – Infrastructure & Environment LNG – Liquefied Natural Gas MM&C – Minerals, Metals & Chemicals MSA – Master Service Agreement PCM – Procurement and Construction Management PMC – Project Management Consultancy SSBR – Solution Styrene Butadiene Rubber TWPS – Transfield Worley Power Services

Contractual acronyms

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