Annual Report 2015
We are a professional services business, a partner in
delivering sustained economic and social progress,
creating opportunities for individuals, companies and
communities to find and realize their own futures.
We can only do this with the support of our shareholders,
earned by delivering earnings growth and a satisfactory
return on their investment.
OUR VALUES
Leadership
• Energy and excitement
• Integrity in all aspects of business
• Minimum bureaucracy
• Committed, empowered and technically
capable people
• Delivering profitable sustainability
Relationships
• Open and respectful
• A trusted supplier, partner and customer
• Collaborative approach to business
• Willing to challenge and innovate
• Enduring customer relationships
Agility
• Smallest assignment to world-scale developments
• Comprehensive geographic presence
• Global expertise delivered locally
• Responsive to customer preferences
• Optimum customized solutions
Performance
• Industry leadership in health, safety and
environmental performance
• Consistent results for our customers, delivering on
our promises
• People accountable and rewarded for performance
• Innovation delivering value for our customers
• Creating wealth for our shareholders
WorleyParsons delivers projects, provides expertise in engineering,
procurement and construction and offers a wide range of consulting and
advisory services. We cover the full lifecycle, from creating new assets to
sustaining and enhancing operating assets, in the hydrocarbons, mineral,
metals, chemicals and infrastructure sectors. Our resources and energy are
focused on responding to and meeting the needs of our customers over
the long term and thereby creating value for our shareholders.
Annual General Meeting
WorleyParsons’ 2015 Annual General Meeting will be held on Tuesday
27 October 2015 commencing at 2.00pm (AEDT) at The Westin Sydney,
1 Martin Place, Sydney.
We have created our 2015 Shareholder results
microsite, which offers our 2015 results
documents and detailed information on our
business operations.
Visit us online
annualreport2015.worleyparsons.com
Contents
Group Financial Highlights
Chairman and CEOs’ Review
Board of Directors
Global Operations and
Significant Contract Awards
Realize Our Future
Development
Corporate Responsibility
Operating and Financial Review
Directors’ Report
Remuneration Report
Financial Statements
Shareholder Information
Glossary
Corporate Information
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Group Financial Highlights
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FIVE YEAR PERFORMANCE AT A GLANCE
$M
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2012
Aggregated revenue1
5,903.5
7,362.6
7,627.0
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527.0
6.9%
322.1
428.2
5.8%
249.1
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2015
7,227.5
87.1
1.2%
(54.9)
11
11
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12
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(0.8%)
12
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% change
(1.8)
(79.7)
(122.0)
13
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443.5
16.2%
137.8
130.8
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12.5%
108.5
101.0
85.0
251.3
9.2%
(14.7)
(22.2)
56.0
(54.3)
(113.5)
(122.0)
(34.1)
EBIT
EBIT margin
Net profit after tax
539.9
9.1%
364.2
13
13
11
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Net profit margin
12
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14
14
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6.2%
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14
Cash flow from operations
Return on equity2
Basic EPS normalized (cents)3
Basic EPS (cents)
Dividends (cents per share)
293.8
19.8%
159.4
148.3
86.0
537.9
7.3%
353.2
15
15
15
15
4.8%
437.5
18.0%
152.7
143.7
91.0
1 Aggregated revenue is defined as statutory revenue and other income plus share of revenue from associates less procurement revenue at nil margin,
interest income and net gain on revaluation of investments previously accounted for as equity accounted associates. The directors believe the disclosure of
revenue attributable to associates provides additional information in relation to the financial performance of the Group.
2 Based on underlying net profit after tax and underlying equity.
3 Before amortization of intangibles including tax effect of amortization expense.
Aggregated revenue
$7,227.5 m
EBIT
$87.1m
Net profit after tax
($54.9m)
Cash flow from operations
$251.3m
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15
The result was earned on
aggregated revenue of
$7,227.5m, a decrease of
1.8% on the $7,363.7m
reported in 2014.
Cash flow from operations
was $251.3m, representing
cash conversion of 127% of
underlying NPAT.
EBIT for the year was
$87.1m, a decrease of
79.7% on the $428.2m
reported in 2014.
Underlying EBIT, excluding
impairment and Arkutun-
Dagi settlement, for the
year was $355.7m, a
decrease of 21.3% on the
$452.2m reported in 2014.
The full year result for 2015
was a net loss of $54.9m,
a decrease of 122% on the
$249.1m net profit reported
in 2014.
Underlying NPAT, excluding
impairment, Arkutun-
Dagi settlement and tax
associated with the China
business restructure, for
2015 was $198.6m, a
decrease of 24.6% on the
$263.4m reported in 2014.
WorleyParsons Annual Report 2015
1
CHAIRMAN AND CEOS’ REVIEW
Chairman and
CEOs’ Review
Positioning for the future.
John Grill AO and Andrew Wood
2 WorleyParsons Annual Report 2015
Welcome to the WorleyParsons Annual
Report for 2015.
The past 12 months have been a
challenging time for our customers
who have been impacted by sustained
low commodity prices and the fall in oil
prices. This has led to reduced activity
levels across the resources and energy
sectors. WorleyParsons has not been
immune from the impact of this reduction
in our customers’ capital and operating
expenditure, although our geographic
diversification and broad range of services
have been important factors in maintaining
a resilient business.
We have developed a strategy for the medium
to longer term that responds to the unstoppable
trends and market shifts we have been observing.
Our strategy to return the business to growth is
built around our five strategic themes leading to
one differentiated strategy to ‘Realize our future’.
Realize our future
While the Company has taken the necessary short
term actions to reshape the business to align
it with market activity, we have deployed our
recently announced strategy for growth.
Our strategy is founded on five strategic themes,
executed through five projects, delivering one
differentiated strategy. This strategy leverages
our core differentiators of deep and broad
technical capability and our diverse geographic
presence. It strengthens the focus on front end
capability, multiple project delivery offerings
through the execution phase of projects, and on
Improve to provide integrated offerings covering
full asset management services and reimbursable
EPC for sustaining capital projects. The
organizational change into four business lines;
Services, Major Projects, Improve and Advisian,
supported by our Global Delivery Center, provides
the platform for the delivery of this strategy.
Fo c u
s
o n front e
n
d
u s on Impro
v
c
F o
e
PMC
Selective delivery offerings
EPCM/EPC
Our strategy is explained on page 15
The five strategic themes are:
• to build a world class advisory and
consulting business
• to be the global project management
consultant of choice
• to build a leading Improve business
• to be the smartest most agile local
service provider
• to be the company that leapfrogs the
competition in the use of our global delivery
center and applies digital technology to
revolutionize the delivery of our services.
Our strategy to return the business to growth is
built around our five strategic themes leading to one
differentiated strategy to ‘Realize our future’.
We have moved quickly on our strategy.
1 July 2015 saw Advisian operating as a
standalone business line with approximately
3,000 consultants operating in 19 countries.
During the year, we completed the acquisition
of MTG, a management consulting firm
focused in the oil and gas, petrochemicals
and chemicals sectors.
We also acquired Atlantic Nuclear, a
Canadian based consulting business that
specializes in nuclear technology including the
CANDU technology. This acquisition demonstrates
our commitment to deepen our technical
capabilities in support of our customers in the
broader energy sector.
The development of our Global Delivery Center
has progressed with the continuing transfer of
project execution activities to India and China as
we work with customers to lower the cost of the
delivery of their projects.
WorleyParsons Annual Report 2015
3
CHAIRMAN AND CEOS’ REVIEW
Over the last 18 months, we have reorganized,
simplified the way we work and removed costs to
provide a solid foundation for a sustainable business
in the short term and a platform from which to launch
the next phase of our growth.
Financial performance
The Group reported an underlying net profit after
tax of $198.6 million (excluding $198.6 million
impairment of goodwill, $49 million post-tax for
settlement of the Arkutun-Dagi dispute and a
$5.9 million tax adjustment associated with the
China business restructure), down 25% on our 2014
underlying result.
Last year, we anticipated improving margins in
market conditions where revenue was likely to fall.
While we achieved some success in the first half,
the second half margins came under pressure due
to the combined impact of project cancellations, the
charges incurred due to our cost reduction initiatives,
competitive pressures and concessions negotiated
with customers.
The expected lower market activity necessitated
a comprehensive review of asset carrying values,
resulting in the Company recognizing a non-cash
impairment of goodwill of $198.6 million. This
represents approximately 10% of the value of
total goodwill.
The Group delivered a positive cash flow of
$251.3 million (cash conversion at 127% of NPAT)
and our gearing remains within our target range.
The Board has resolved to pay a final dividend of
22.0 cents per share unfranked, taking the total
dividends for the year to 56.0 cents per share, down
from 85.0 cents per share last year.
As the 2015 financial result was below the Group
NPAT threshold, no Combined Incentive was awarded
to Executives.
Health, Safety and Environment (HSE)
WorleyParsons is committed to our vision of Zero
Harm to people and assets and zero environmental
incidents. We thank our Board and management
for their continued strong leadership in support
of the goal of Zero Harm. Our Total Recordable
Case Frequency Rate has increased to 0.12 per
200,000 hours worked compared to 0.10 in
the 2014 financial year. We also enhanced our
Energy Efficiency Program to further reduce our
carbon footprint focusing on our highest energy
consuming operations.
People
As a professional services business, our employees
are our most important asset. It has been a difficult
year for our people, as we adapted to the changing
needs of our customers and the dynamics of our
markets. We have made, and will continue to make,
tough decisions that balance the need to maintain
a local presence to support our customers with the
longer term interests of our shareholders.
Both the Board and Group Leadership Team would
like to express their appreciation of the commitment
and contribution of our people to WorleyParsons over
this past year.
WorleyParsonsCord, Blackfalds Module Yard, Canada
4 WorleyParsons Annual Report 2015
INTECSEA Subsea Structure
Board and management changes
As part of our plan for Board renewal we
completed our search for a new director with
the appointment of Jagjeet (Jeet) Bindra as a
director of the Company with effect from 1 July
2015. Jeet brings to the Board over 35 years’
experience in the global resources and energy
industry including 32 years in senior leadership
roles with the Chevron Group of Companies. We
welcome Jeet to the Board.
We also welcomed two new Executives, Dennis
Finn and Filippo Abba. Dennis commenced
as Group Managing Director/Chief Executive
Officer – Advisian on 1 September 2014. Filippo
commenced as Group Managing Director –
Improve on 1 April 2015, succeeding Randy
Karren who retired on 31 March 2015 after
27 years’ service with WorleyParsons and its
legacy companies. On behalf of the Board and
the senior management team, we would like to
thank Randy for his substantial contribution to
the growth and development of Cord, Colt and
WorleyParsons.
See page 13 for more details on the members of
the Group Leadership Team.
Ethics and Corporate responsibility
We recognize that WorleyParsons’ reputation for
honesty, integrity and ethical dealings is one
of its key business assets and a critical factor
in ensuring the Company’s ongoing success.
All of WorleyParsons’ people continue to strive
to maintain the standard of ethical behavior
expected by our customers, suppliers and
shareholders. The Company continues to refine
its corporate responsibility efforts across all
the parts of the world in which we do business,
in an effort to ensure that our programs
are as effective and efficient as possible
in delivering value to the communities we
support. The Corporate Responsibility section
of this Annual Report provides greater detail on
these activities.
Corporate governance
The Board remains confident that the Company
has in place a strong corporate governance
system, and that this system is well maintained,
reviewed and updated. The Group maintains
a comprehensive, independent, internal audit
program that reports directly to the Audit and
Risk Committee. This function not only focuses
on specific areas of interest, but provides
assurance annually to the Audit and Risk
Committee of the adequacy and effectiveness of
the Group’s internal controls.
The Corporate Governance Statement 2015 can
be found on the Company’s website.
Conclusion
We would like to thank the Directors, the
Group Leadership Team, and our people
for their contribution in what has been a
significant period of change in our markets
and organization. We would like to thank our
shareholders for their continuing support
and look forward to realizing the future of
WorleyParsons together.
John Grill AO
Chairman and Non-Executive Director
Andrew Wood
Chief Executive Officer
WorleyParsons Annual Report 2015
5
Board of Directors
Andrew Wood
Chief Executive Officer
John Grill AO
Chairman and
Non-Executive Director
Catherine Livingstone AO
Non-Executive Director
John M Green
Non-Executive Director
Wang Xiao Bin
Non-Executive Director
John is Chairman of the
Board and Chairman of the
Nominations Committee
and a member of the
Remuneration Committee
and Health, Safety and
Environment Committee.
Catherine is a member of
the Audit and Risk
Committee and the
Nominations Committee.
John is Chairman of the
Remuneration Committee
and a member of the
Nominations Committee.
Xiao Bin is a member
of the Audit and Risk
Committee and the
Nominations Committee.
Note: Jageet (Jeet) Bindra joined the Board of Directors on 1 July 2015 and is not pictured here.
6 WorleyParsons Annual Report 2015
Erich Fraunschiel
Non-Executive Director
Christopher Haynes OBE
Non-Executive Director
Larry Benke
Non-Executive Director
Peter Janu
Company Secretary and
General Counsel Corporate
Erich is Chairman of the
Audit and Risk Committee
and a member of the
Nominations Committee.
Chris is Chairman of the
Health, Safety and
Environment Committee
and a member of the
Nominations Committee.
Larry is a member of the
Audit and Risk Committee,
the Nominations Committee,
and the Health, Safety and
Environment Committee.
Ron McNeilly
Deputy Chairman and Lead
Independent Director
Ron is Deputy Chairman and
Lead Independent Director of
the Board and was previously
Chairman of the Board. He is
a member of the Audit and
Risk Committee,
Nominations Committee,
Remuneration Committee
and Health, Safety and
Environment Committee.
WorleyParsons Annual Report 2015
7
CHAIRMAN AND CEOS’ REVIEW
Global Operations and
Significant Contract Awards
Anchorage
Kitimat
Vancouver
Bellevue
Vancouver, WA
Folsom
Azusa
Arcadia
Monrovia
Fort
St John
Grande Prairie
Edmonton
Cold Lake
Lloydminster
Saskatoon
Blackfalds
Calgary
Chicoutimi
Alma
Trois-Rivières
Montreal
Brossard
Markham
Mississauga
Sudbury
Fermont
Sept-Îles
St John’s
Billings
Bismarck
Sarnia
Quebec City
Saint John
Reading
Phoenix
Tulsa
Houston
Chattanooga
Chattanooga
Deer Park
Jacksonville
Bayport
Stavenger
Aberdeen
Teesside
London
Leeds
Manchester
Gloucester
Bristol
Farnborough
Woking
Madrid
Delft
Plzen
Warsaw
Moscow
Belane
Sofia
Stara Zagora
Istanbul
Tripoli
Cairo
Aksai
Atyrau
Tengiz
Aktau
Astana
Almaty
Tashkent
Basrah
Al Khobar
Ahmadi
Bahrain
Dubai
Muscat
Yanbu
Riyadh
Doha
Abu Dhabi
Ulaanbataar
Beijing
Tianjin
Chengdu
Nanjing
Shanghai
Quito
Lima
Santiago
Port of Spain
Bogotá
Accra
Lagos
Luanda
São Paulo
Belo Horizonte
Rio de Janeiro
Windhoek
Pretoria
Rustenberg
Kathu
Upington
Johannesburg
Kimberley
Bloemfontein
Cape Town
Port Elizabeth
Polokwane
Maputo
Durban
Secunda
East London
Mumbai
Hyderabad
Chennai
Bangkok
Sriracha
Hanoi
Hong Kong
Kuantan
Kuala Lumpur
Duri
Singapore
Ho Chi Minh City
Kerteh
Kota Kinabalu
Kuala Belait
Miri
Bintulu
Balikpapan
Jakarta
Timor-Leste
Port Hedland
Perth
Townsville
Mackay
Gladstone
Brisbane
Newcastle
Sydney
Bunbury
Adelaide
Geelong
Melbourne
Auckland
New Plymouth
Hastings
Wellington
Christchurch
46 Countries
148 Offices
31,400 Employees
8 WorleyParsons Annual Report 2015
Minerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobalMinerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobalMinerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobal
Anchorage
Kitimat
Vancouver
Bellevue
Vancouver, WA
Folsom
Azusa
Arcadia
Monrovia
Phoenix
Chattanooga
Chattanooga
Tulsa
Houston
Bayport
Deer Park
Jacksonville
Fort
St John
Grande Prairie
Edmonton
Chicoutimi
Alma
Trois-Rivières
Montreal
Brossard
Cold Lake
Lloydminster
Saskatoon
Blackfalds
Calgary
Billings
Bismarck
Markham
Mississauga
Sudbury
Sarnia
Fermont
Sept-Îles
St John’s
Quebec City
Saint John
Reading
Stavenger
Aberdeen
Teesside
London
Delft
Plzen
Leeds
Manchester
Gloucester
Bristol
Farnborough
Woking
Madrid
Moscow
Warsaw
Belane
Sofia
Stara Zagora
Istanbul
Aksai
Atyrau
Tengiz
Aktau
Astana
Almaty
Tashkent
Tripoli
Cairo
Yanbu
Ahmadi
Bahrain
Dubai
Muscat
Basrah
Al Khobar
Riyadh
Doha
Abu Dhabi
Ulaanbataar
Beijing
Tianjin
Chengdu
Nanjing
Shanghai
Hanoi
Hong Kong
Accra
Lagos
Luanda
Mumbai
Hyderabad
Chennai
Bangkok
Sriracha
Kuantan
Kuala Lumpur
Duri
Singapore
Ho Chi Minh City
Kerteh
Kota Kinabalu
Kuala Belait
Miri
Bintulu
Balikpapan
Jakarta
Timor-Leste
São Paulo
Belo Horizonte
Rio de Janeiro
Windhoek
Pretoria
Rustenberg
Kathu
Upington
Johannesburg
Kimberley
Bloemfontein
Cape Town
Polokwane
Maputo
Durban
Secunda
East London
Port Hedland
Perth
Bunbury
Adelaide
Port Elizabeth
Geelong
Melbourne
Townsville
Mackay
Gladstone
Brisbane
Newcastle
Sydney
Auckland
New Plymouth
Hastings
Wellington
Christchurch
Port of Spain
Bogotá
Quito
Lima
Santiago
WorleyParsons Annual Report 2015
9
Minerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobalMinerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobalMinerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobalMinerals, Metals & Chemicals 21105Significant AwardsHydrocarbons 5Infrastructure 10Minerals, Metals & Chemicals 1025Significant AwardsHydrocarbons 2Hydrocarbons 33Infrastructure 6Minerals, Metals & Chemicals 544Significant AwardsHydrocarbons 61Infrastructure 23Hydrocarbons 2Infrastructure 3Minerals, Metals & Chemicals 16Significant AwardsHydrocarbons 18Infrastructure 3Minerals, Metals & Chemicals 122Significant AwardsMinerals, Metals & Chemicals 4Infrastructure 1Hydrocarbons 11Significant Award7Significant AwardsAustralia Pacific,Asia and ChinaNorth AmericaEurope, Middle Eastand North AfricaLatin AmericaSub-SaharanAfricaGlobal
CHAIRMAN AND CEOS’ REVIEW
Significant Contract Awards
Case Study
QEZ3 Port, Doha –
PMC, a workshare success story
The QEZ3 port is located on an inland site north of
the Hamad Port and accommodates smaller vessels,
particularly from Qatar and neighboring Gulf states. The
project included a greenfield development of a naval
base on a new reclaimed offshore island to provide
berthing facilities for the Qatar Emiri Naval Forces.
QEZ3 will be an important gateway into Qatar, providing
an economic hub around the port for manufacturing,
logistics and trade. WorleyParsons was appointed as
the PMC to provide the master planning, design and
construction support for construction of port and
naval buildings, infrastructure and utility buildings,
reclamation, marine works mobile equipment and port
cranes and security packages.
WorleyParsons, in association with Royal Haskoning
DHV (RHDHV) as a subcontractor executed the project
primarily in the WorleyParsons Doha office with work
shared with the Dubai office for shallow quay marine
works; and the Mumbai office for the structural design
of the utility buildings.
The master planning for the new port is closely
aligned with the Qatar National Vision 2030
pillars of environmental, economic, human and
social development which focus on harmony
between economic growth, social development and
environmental protection.
HYDROCARBONS
SERVICES
AGL
Professional Services Agreement
panel for works in Australia
Viva Energy
Engineering PM Services
Woodside Petroleum Woodside Brownfield EPCM
Services Program (CY2015 - 19)
BP
Chevron
West Nile Delta FEED
Samal Wind Farm
ConocoPhilips
Ekofisk Capacity Increase
Maersk Oil
Culzean FEED
Ophir Energy
Block R Engineering support
Saudi Aramco
MPP Offshore PMC
1
2
3
4
5
6
7
8
9
10 Ocensa
EPCM Services Contract
APAC
APAC
APAC
EURMENA
EURMENA
EURMENA
EURMENA
EURMENA
EURMENA
LAM
11 Confidential Client Oil
Sands
12 Husky
13 Husky
14 Keyera
Significant Oil Sands Mining
Project Module
North America
DAII Pipelines and Well Pads
North America
Sunrise SAGD SRU Unit Installation
North America
Rimbey Gas Plant Construction
North America
15 Maersk Oil
Chissonga Follow-on Engineering
North America
16 North West Redwater
Unit 70 and Unit 90 modules
North America
Partnership
17 Sempra LNG
LNG Facilities Consulting and Owner's
Engineering Services
North America
18 Shell Canada LNG
RTA Port Development
19 Steelhead LNG
20 TransCanada
Steelhead Environmental Services,
Sarita Bay
Northern Courier Pipeline Project
modules
21 BP
Relief Systems Project
22 Ophir Holdings
MSA for engineering support to
worldwide assets
North America
North America
North America
Global
Global
MAJOR PROJECTS
23 Alaska LNG
Alaska LNG Pipeline
North America
24 Chevron
Buckskin Moccasin SURF Early FEED
North America
IMPROVE
25 BP
26 BP
27 BP
28 Confidential Client
29 Confidential Client
30 ConocoPhilips Alaska
31 Suncor
BP Regional Framework Agreements
for Downstream Business Units
Trinidad Region Onshore
Compression Category B Project
DEFINE/EXECUTE Phase
Trinidad Accommodations Project
DEFINE Phase
North America
North America
North America
Engineering and Procurement Services
Agreement
North America
Engineering and Procurement Services
Agreement
North America
Design, Drafting and Documentation
Services for CPAI North Slope Facilities
North America
Engineering and Procurement
MUA Extension
North America
Note: Contracts mentioned here represent a sample of the total awarded
throughout FY2015.
10 WorleyParsons Annual Report 2015
MINERALS, METALS & CHEMICALS
SERVICES
BASF
BASF
Evonik
RTA Yarwun
BPC Polyisobutene Production Plant
APAC
New Chemical Catalysts
Manufacturing Plant
Evonik Signal Project, EPCM
Engineering Project Management
Drafting
APAC
APAC
APAC
SWICorp
Azin Glass Factory
EURMENA
Brazil Potash
Corporation
Autazes Bankable Feasibility Study
LAM
Dakota Gasification
Urea Plant CM Scope
North America
Exxaro
Vale
Matla No.1 Shaft Relocation Detail
Design
SSA
S11D - CM Support Contract
North America
1
2
3
4
5
6
7
8
9
MAJOR PROJECTS
10
Vale
Vale Kronau FEF3
North America
INFRASTRUCTURE
SERVICES
China Harbour
Engineering Company
MPA
Oil terminal in Walvis Bay
APAC
NSW Treasury
NSW Poles and Wires
EMMP Specialist Consultancy
Services for Tuas terminal Phase 1
APAC
APAC
One Pure International
Group
Public Utilities Board
Queensland
Department of State
Development
RAOS Project Oy
Gluse/PET Waterbottling Plant - EPC APAC
Rehabilitation of sanitary drain
lines - Jurong Lake Catchment
APAC
Abbot Point Approvals Project
APAC
Fennovoima Hanhikivi-1 Nuclear
Power Plant
EURMENA
SEZAD
Sezad Duqm Liquid Berth
EURMENA
Concessionaria do
Monotriho da Linha 18
Metro Linha 18
10
S.P.E.C
Cartagena LNG Floating Storage
Regasification Unit Import Terminal
PMC/OE
11
Buckeye Partners LP
MSA Consulting and
Engineering Services
12
Iberdrola
13
Port of Corpus Christi
Salem Harbour Combined Cycle
Gas Turbine
Consulting and Engineering
Services MSA
Siemens/Channelview
O&M Services
LAM
LAM
North
America
North
America
North
America
North
America
1
2
3
4
5
6
7
8
9
14
15
16
17
Lake Turkana wind
power project
IMPROVE
Lake Turkana Wind Power Project
SSA
Genesis Energy
Genesis Energy Integrated Services
APAC
UCLA
Cogen Plant O&M
North
America
WorleyParsons Annual Report 2015 11
REALIZE OUR FUTURE
Realize our
future
From left to right, Filippo Abba, David Steele, Dennis Finn, Andy Cole,
Marian McLean, Andrew Wood, Simon Holt, Peter Janu
We have the right team to
deliver our strategy.
The Group Leadership Team comprises the leaders of our four business lines; Services,
Major Projects, Improve and Advisian, and the leaders of Strategy, Finance, Assurance
& Development and the Company Secretary. The Group Leadership Team advises the
Chief Executive Officer on effective and efficient functioning of the global business of
WorleyParsons and is responsible for the delivery of our strategy to realize our future.
The existing Group Leadership Team members were joined this year by two new executives. Filippo Abba, Group
Managing Director - Major Projects and Group Managing Director - Improve, brings more than 20 years experience
in the industry. Dennis Finn, Group Managing Director & CEO - Advisian, brings more than 10 years experience in
global advisory businesses.
12 WorleyParsons Annual Report 2015
Filippo Abba, Group Managing Director – Major Projects,
Group Managing Director – Improve
Filippo is accountable for the growth and performance of both the
nominated global Major Projects’ portfolio and Improve relationships
within WorleyParsons. Prior to joining WorleyParsons, Filippo held a
number of senior roles during his 24 years working with Foster Wheeler,
most recently CEO of Foster Wheeler Europe, Middle East and Africa.
Throughout his career, Filippo has built broad global experience and
has led sizeable EPC projects. Filippo holds a Bachelor’s Degree and a
Doctorate in Mechanical Engineering from Politecnico di Milan.
Andy Cole, Group Managing Director – Strategy
Andy is responsible for the development of the Corporate and Sector
level growth strategy within WorleyParsons which covers all operating
business lines and addresses the Hydrocarbons, Minerals & Metals,
Chemicals and Infrastructure sectors. Joining WorleyParsons in 1985 in
Perth as a graduate structural engineer, Andy was involved in the design
of various onshore and offshore oil and gas facilities in Australia, the UK,
South East Asia and the Middle East. He managed the Thailand operation
from 2001 to 2003, returning to Australia to complete a Master of
Business Administration (MBA) and to establish and run the global front
end consulting division, known as Select. Andy holds a Degree in Civil
Engineering and an MBA from The University of Western Australia.
Dennis Finn, Group Managing Director & CEO – Advisian
Dennis is responsible for Advisian, WorleyParsons’ global advisory
and consulting business. Dennis joined WorleyParsons from
PricewaterhouseCoopers (PwC) in 2014 and has a strong background
in transformational change, global strategy and high impact customer
focused interventions. Dennis has advised clients across the globe,
successfully helped to build global advisory businesses, and understands
the importance of talent and culture. His leadership combines significant
global experience with strong commercial acumen. Dennis joined PwC
Australia in 2004 as the lead Partner and Head of Consulting and
went on to hold a number of senior roles in the firm. In 2012 he was
appointed Vice Chairman and Global Human Capital Leader of PwC
International based in New York. His background and experience include
Operations, Manufacturing, HR, Marketing and General Management
across multiple locations (the UK, the US, Australia, New Zealand
and Asia). Dennis started his career as a radiographer after studying
Chemical Plant Operations and Nuclear Processes in the UK.
Simon Holt, Chief Financial Officer
Simon is the Chief Financial Officer and has overall responsibility for
finance including Treasury, Property Leasing, Tax, Shared Services,
Information Management, Corporate Procurement, Travel, Corporate
Finance and Reporting. Simon also has oversight of the operational
finance functions, ensuring the consistent application of standardized
processes, systems and corporate and financial reporting. He has
previously held the roles of Deputy CFO and Group Financial Controller.
Prior to joining WorleyParsons in 2007, Simon held a number of senior
positions in the retail sector. Simon is a Chartered Accountant and holds
a degree in Business (Accounting and Marketing) from the University of
Technology, Sydney.
Marian McLean, Group Managing Director – Assurance & Development
Marian is responsible for both the Assurance and Development activities
at WorleyParsons. In this role, Marian provides leadership of Innovation,
the Group Project Management Office and New Ventures. She is also
responsible for the assurance on the effectiveness and efficiency
of the WorleyParsons internal controls, reliability of reporting and
compliance with laws and regulations. Marian joined WorleyParsons in
June 2008. She has over 20 years’ experience in the manufacturing,
water, construction, service and oil and gas industries. Her qualifications
include: Master of Applied Science (Ergonomics) University of NSW,
Graduate Diploma in Safety Science University of NSW and Bachelor
of Physiotherapy, University of QLD. Marian is a professional member
of the American Society of Safety Engineers, the Society of Petroleum
Engineers and the Human Factors and Ergonomics Society of Australia.
David Steele, Group Managing Director – Services
David has over 30 years’ experience in engineering, project and business
management across a wide range of customer and industry sectors.
David is responsible for the Services business line, which delivers
services to our customers from the 148 offices WorleyParsons has in
46 countries around the globe. David has previously held many roles
within WorleyParsons including other operational, global functional and
customer sector roles. Prior to joining the company in 1999, David held
positions with ABB and Rolls-Royce Industrial Power (Pacific). David
holds a Bachelor’s Degree in Electrical Engineering and an MBA and is a
Chartered Professional Engineer.
For Andrew Wood, Chief Executive Officer and Peter Janu,
Company Secretary and General Counsel Corporate, details can be found
on page 50.
WorleyParsons Annual Report 2015 13
REALIZE OUR FUTURE
Our plan for growth.
The key driver of investment in the global oil market for the last decade has been the
concept of peak oil and the implied diminishment of supply. This in turn drove higher
and higher levels of expenditure in the frontier regions to gain the harder to extract
reserves. That trend changed in the last few years with the shale revolution in North
America. Supply now, can be incrementally increased without the traditional big, long
term investments. This, together with slowing growth rates in China, has created a
challenging market place for both customers and service providers to the oil and gas
sector. The same can be said for many of the resources related subsectors in which we
operate. Given there has been such a fundamental shift in our key markets it was clear
we had to make a fundamental shift in our business.
A period of transition
We are in a period of transition to return
the Company to growth. This is a journey
we commenced in November 2013 as we
sought to address the challenges we saw
ahead. In April 2014, before the fall in
oil prices, we restructured the business,
refreshed the leadership team, reduced our
overhead costs and initiated programs to
enable our staff to deliver better customer
satisfaction. We created the business
lines of Services, Major Projects and
Improve transferring direct accountability
for performance to the leaders of those
business lines. More recently we introduced
the fourth business line, Advisian, to
complete this restructure. Through the
actions we have taken through financial
year 2015 we built a foundation for growth
over the next five years as we deliver on
our strategy and “Realize our future”.
Responding to the unstoppable trends and
recent market shifts
When developing our future growth
strategy we firstly considered the
underlying external context. There are a
number of unstoppable trends that are
driving the long term market dynamics.
Climate change, urbanization, food
security, water scarcity and the increasing
challenge for our customers to gain the
social license to operate, are examples of
true, unstoppable trends that we believe
create opportunities and hence need to be
considered within the long term strategy
development for WorleyParsons.
There have also been recent market
shifts such as the oil price shock, low
gas prices, the fall in iron ore, copper
and coal prices which are affecting our
customers’ investment decisions. We
are also seeing an increase in lump sum
turnkey (LSTK) contracts, the impact of
increasing development costs and changes
to the geopolitical landscape creating
more complexity for our customers. While
these recent market shifts present some
challenges, we again see a number of
opportunities for WorleyParsons in the
near term.
14 WorleyParsons Annual Report 2015
Corporate Strategy
Our strategy is focused on enhancing and leveraging
what we believe is the real essence of WorleyParsons
and our core differentiators. That is our deep and
broad technical capability and our diverse geographic
presence. These two things differentiate us from our
major global competitors and form the foundation for
the strategy to deal with the unstoppable trends and
the recent market shifts.
Enhance and leverage
our broad and deep
technical capabilities
and our diverse
geographic presence.
Fo c u
s
o n front e
n
d
o n Impro
v
e
s
Fo c u
PMC
Selective delivery offerings
EPCM/EPC
Focus on front end
Selective delivery options
Focus on Improve
Our strategy aims to
strengthen our front end
capability, which in turn
positions us at the beginning
of the asset lifecycle,
providing the opportunity to
add value to the customer
across a range of services.
Based on feedback from
customers, our strategy for
growing Improve involves
moving into integrated
offerings covering full asset
management services and
reimbursable EPC services.
Given the slow down in the pace of investment
in the resources sector the associated major
projects space is becoming a challenging
area with competitors taking on substantial
LSTK risk. Customers are also willing to take
advantage of this shift in the market. We
believe there are opportunities to be realized
in helping our customers via a tailored project
management consultancy (PMC) offering or via
a collaborative integrated project management
team (IPMT) model to help manage the currently
favored LSTK delivery model.
These project delivery options provide multiple
pathways to support our customers over the
project lifecycle and position us well to continue
that support through the operating life of the
facility.
WorleyParsons Annual Report 2015 15
REALIZE OUR FUTURE
strategic themes:
one differentiated strategy
5
We have five strategic themes, executed through five projects, delivering one
differentiated strategy, each a substantial undertaking in its own right. This strategy is
built from our broad and deep technical capability and our diverse geographic presence,
supported by the organizational structure of the four business lines of Services, Major
Projects, Improve and Advisian with our Global Delivery Center providing support to all.
The five strategic themes are:
• to build a world class consulting business and dominate the early project phases
• to be the global PMC provider of choice
• to build a leading Improve business
• to be the smartest, most agile local service provider
• to be the Company that leap frogs the competition in the use of our global delivery center
(GDC) and applies digital technology to revolutionize the delivery of our services
Build a world class
consulting business
and dominate the
early project phases
Create low cost,
global delivery center
Customer
Be the global PMC
provider of choice
Be the smartest, most agile
local service provider
Build a leading
Improve business
16 WorleyParsons Annual Report 2015
LONG TERM STRATEGY
based on unstoppable trends
NEAR TERM STRATEGY
business positioning for recent market shifts
Unstoppable Trend
Opportunities for WorleyParsons
Recent Market Shifts
Opportunities for WorleyParsons
CLIMATE CHANGE
Growth in renewable power
OIL PRICE SHOCK
Asset productivity enhancement
Power plant retrofits and
decommissioning
Carbon capture and storage
URBANIZATION
Continued investment in
emerging countries
FOOD SECURITY
Key customers investing in mined
fertilizers – potash and phosphate
Water sourcing and conservation
COMMODITIZATION OF
ENGINEERING
Value recognized in specialist
services (productivity
enhancement, advisory and
technical capability)
Enhanced GDC delivery
SOCIAL LICENSE TO
OPERATE
Community & stakeholder
engagement
Government and industrial relations
Enhanced oil recovery
Refining industry upturn
Increase in chemicals activity in
South East Asia and Middle East.
LOW GAS PRICE
Chemicals and petrochemicals
Upturn in high energy intensity
processes, including aluminium
FALL IN IRON ORE,
COPPER AND
COAL PRICE
Productivity advisory and
enhancement
Supply chain optimization
Capital intensity upgrades and
expansions
ENERGY SECURITY AND
RESOURCE SCARCITY
Advisory & execution support
for customers investing in
foreign markets
INCREASE IN
LUMP SUM TURNKEY
CONTRACTS
Partnering with EPC contractors
Owner’s Engineer (OE), IPMT and
PMC roles
WATER SCARCITY
Water sourcing, treatment
and disposal
Water advisory services
DISRUPTIVE TECHNOLOGY
Develop an integrated digital
environment and workflow
Leverage technology partnerships
RESOURCE DEPLETION
Life of mine extension and new
underground developments
Asset optimization and
management
Brownfield expansions and
upgrades
EMERGING GLOBAL
TALENT POOL
Assist customers to access global
talent and drive new ways of
working together
INCREASED
DEVELOPMENT COST
Asset portfolio optimization
Brownfield asset management
Sourcing and modularization
Alternate project delivery models
GEOPOLITICAL
Investment by NOCs overseas
Customers seeking advisory
and execution support in
foreign markets
Overseas China investment
WorleyParsons Annual Report 2015 17
REALIZE OUR FUTURE
Dennis Finn
Group Managing Director
& CEO – Advisian
PROJECT 1
Build a world class
advisory and consulting
business and dominate
the front end of projects.
Advisian combines the technical capabilities of
WorleyParsons Consulting, Select and INTECSEA with our
existing management consulting expertise. Formed under
our Development Group through financial year 2015,
today, Advisian is our independent advisory and consulting
business that sits alongside our other business lines of
Services, Major Projects and Improve.
Traditional advisory or consulting
businesses generally operate at only
one of a number of levels; either
strategic consulting, management
consulting, niche/specialist consulting
or technical consulting. The initial focus
of the Advisian business has been
on management consulting. Today
however, through the combination of
existing management consulting and the
technical consulting businesses within
WorleyParsons, Advisian has over 3,000
consultants in 19 countries delivering
integrated solutions for our clients
across all our industry sectors.
We believe that a combination of
management consulting with a deep
technical capability is without peer as a
global offering at scale, a genuine white
space within the consulting industry.
Clients of Advisian can now access our
unrivalled technical know-how and deep
domain knowledge and apply that to
their complex asset intensive industries.
We now have a truly global end-to-end
service where we can advise and deliver
value to our clients.
18 WorleyParsons Annual Report 2015
approximately
consultants
Case Study: Project 1
Advisian’s combination of management consulting with deep
technical expertise resulted in financial improvements for the
client including a 30% increase in net income.
A leading North American energy infrastructure
company, focused in Canada, with assets in
gas, power and utilities, sought to optimize the
operation of a 70 year old gas plant. The facility
has changed hands five times in six decades
resulting in a mix of both older and leading edge
equipment. After an initial review of the plant, it
was felt that Advisian’s operational improvement
capability would deliver a significant profitability
boost for the plant and create a model for other
plants across the client organization.
The analysis approach reflected the
organization’s desire to review each aspect of
plant operations and office-to-plant interfaces.
The analysis confirmed that a number of
structural processes were either inadequate or
not present at all. Based on the analysis findings,
a robust implementation project was undertaken.
The team linked the communications, planning
and running of the plant and the central office,
which allowed cross-functional alignment and
a focus on achieving the daily operations plan.
Having access to specialized technical skills
within the broader Advisian team gave the
project team a unique lens through which they
were better able to understand and adjust the
plant processes to ensure maximum efficiency.
This led to changes which realized greater
benefits than would have been possible without
the added technical expertise.
The end result was a 60% increase in plant
throughput via asset reliability, debottlenecking
of processes and an effective management
system. The client saw a 100% increase
in contribution margin from improved
commercial activities linked to plant utilization
improvements. The project also resulted in a high
level of employee engagement which has led
to sustained financial improvements. To date,
a 30% improvement in net income has been
realized, despite challenging market conditions.
The ability to combine management consulting
with deep technical capabilities provided the
client a real step change in the value they were
able to attain.
WorleyParsons Annual Report 2015 19
REALIZE OUR FUTURE
Filippo Abba
Group Managing Director –
Major Projects and Group
Managing Director – Improve
PROJECT 2
Be the global Project
Management Consultant
(PMC) of choice.
Project 2 aims to build this alternative project delivery
pathway, namely WorleyParsons acting as the Project
Management Consultant (PMC), to the same global strength
we have achieved within the Engineering, Procurement and
Construction Management (EPCM) project delivery market.
WorleyParsons has enjoyed a long
history of supporting Middle Eastern
customers using the PMC project delivery
form, typically within the downstream
hydrocarbons sector. This project aims
to further develop the traditional PMC
offering and make it available to a broader
range of customers in new geographies
and across other industry sectors.
Furthermore by bringing our Digital
Enterprise services into our PMC offering
we seek to create a new data-centric PMC
platform that sets the benchmark for the
next generation of this contracting form.
The customer’s heightened need for
this offering is due to the unstoppable
trend of the ever increasing scale
and complexity of today’s mega
projects requiring multiple global
EPC contractors to combine to attain
a successful project outcome. This
longer term trend, combined with the
recent shifts of customers favoring a
LSTK contracting style and significant
de-manning by many customers of their
in-house project management teams,
means that the time has come for this
strategic theme.
Ultimately the role of the PMC is to
support the customer in delivering a
successful outcome. We believe that
the collaborative style of WorleyParsons
sets us apart from our traditional EPC
competitors and that via this alternative
project delivery pathway we can build
a relationship with the customer that
endures far beyond the initial project.
20 WorleyParsons Annual Report 2015
PROJECT 3
Build an integrated
offering with a focus
on key basins.
Project 3 aims to create the next generation of our
Improve business line in order to meet the changing needs
of our customers. In particular, our customers are seeking
a more integrated service where we bring the combination
of white and blue collar resources to support their
operating assets.
Our strategy focuses on key resource
regions or basins where we can establish
relationships with the local supply chain
to deliver a wide range of services from
maintenance through to construction.
This basin by basin approach has served
us well in the past as we have grown
from the North-West shelf in Australian
and Taranaki basin in New Zealand to the
Athabasca oil sands in Alberta and the
North Slope in Alaska. This project aims
to both diversify the range of services
we offer in our home basins as well
as following our global customers into
new regions.
We have enjoyed long term success when
we invest in developing deep domain
knowledge in specific markets. Two
such examples in Australia are in Power
generation and LNG production. From
our Transfield Worley Power Services
Joint Venture we operate and maintain a
significant proportion of Australia’s Power
generation. Similarly we are present in
Australia’s three LNG producing basins
with a two decade long heritage in
this industry. We seek to duplicate this
domain knowledge led strategy into other
growth subsectors across the globe. The
Australian chapter of this strategy is
focused on the iron ore, unconventional
oil and gas and water subsectors.
WorleyParsons Annual Report 2015 21
REALIZE OUR FUTURE
David Steele
Group Managing
Director – Services
PROJECT 4
Local knowledge and
local relationships are
key to our success.
Through Project 4 we continue the drive to be the most
knowledgeable, agile and connected local service provider.
Comprising of more than 40 globally diverse locations, our
Services business is the primary steward of our key long-
term relationships with local customers.
Our Services business is the wellspring
from which we have created the other
three business lines of Major Projects,
Improve and now Advisian. For this reason
it has the additional role in stewarding
the interaction between the various
business lines for the benefit of local
customers. These local businesses have
been WorleyParsons’ engine room in
our past periods of growth and they
now provide the resilience of earnings
during the current challenging global
market conditions.
The focus of this strategic effort is to
turbo charge those specific locations
where significant headroom for growth
exists empowering the location
leadership to pursue the opportunities
available. A good current example of this
type of location are our offices across the
Middle East, where we hold strong local
positions in countries where government
mandated localization initiatives support
those willing to invest in building the local
businesses of the future.
Our locations strive to be within the
top three providers within their local
market. This core principle has guided the
Company across the last three decades
and remains as valid now as it was in
the beginning of the WorleyParsons
geographical growth story. Through this
strategy we continue to seek out new
territories, often in support of our key
global customers.
22 WorleyParsons Annual Report 2015
22 WorleyParsons Annual Report 2015
Case Study: Project 4
Global reach, local delivery
In 2013, a Canadian energy company
sought a single organization to deliver
engineering, procurement and construction
services on one of the largest projects in
its history. Located in the heart of Alberta’s
oil sands, the project is expected to recover
1.7 billion barrels of bitumen over its
projected 50-plus year lifespan.
By the end of 2015, WorleyParsonsCord
will have successfully completed the field
construction component of this project
ahead of schedule. The scope has included
eight steam-assisted gravity drainage well
pads and approximately 15 kilometers
of gathering system pipelines that will
ultimately help the site produce 35,000
barrels of heavy crude oil per day.
This project exemplifies global project
delivery. The engineering and design
leveraged collaboration between
WorleyParsons offices in Beijing and
Calgary, and the prefabricated steel and
piping components were shipped to
WorleyParsonsCord’s Edmonton Module
Yard from a facility in Qingdao, China.
At the yard, these pieces were used to
construct modules that, upon completion,
underwent quality and turnover finalization
before being transported to the project
site several hours away. Once on site,
WorleyParsonsCord crews completed
the construction.
By providing an integrated team, and
by utilizing our global reach, we have
demonstrated our ability to successfully
deliver EPC services on large-scale
projects. This proven EPC track record
will be particularly vital in the coming
years as our industry looks to shift
further towards this delivery model
when developing new projects.
WorleyParsons Annual Report 2015 23
REALIZE OUR FUTURE
Ian Wilkinson
Managing Director –
Global Delivery Center
PROJECT 5
Our global delivery
center (GDC) enhances
our competitiveness.
Project 5 seeks to create a company that leapfrogs the
competition in the use of our global delivery center and
applies digital technology to revolutionize the way we
undertake and deliver our services.
The beneficial effects of this project are
realized across all four business lines
via the creation of a more competitive
position with increased margins. This
project comprises of three strategic
horizons; firstly, to accelerate the transfer
of work and activities to the India and
China GDC locations, secondly to drive a
greater level of standardization in the way
we operate by simplifying our commercial
processes, driving greater use of standard
systems and configurations, and thirdly
to develop an integrated and data-
centric platform for delivering projects in
the future.
The first horizon meets the urgent need
of customers seeking a step change in
the cost of delivery of their projects.
It also reflects the changing attitudes
of our customers and their new found
willingness to undertake significant
proportions of their engineering and
design work in remote sites.
The second horizon further enhances
our ability to utilize the capability of
the GDC by building a standard set of
tools, systems and work processes that
provide the enabling common language
required to connect the global operations
of WorleyParsons. In this horizon we are
creating a digital data centric platform
that drives greater productivity and
helps fully utilize the potential of our
extensive capabilities and knowledge,
thus maximizing the global strength of
our business.
The third horizon requires a fundamental
redesign of the means by which we have
traditionally developed and delivered
projects within the resources and
energy sectors. Engineering and project
management firms like WorleyParsons
readily adopted computer aided design
techniques through the 1980’s and
1990’s facilitating mega project delivery
through the booming years of the last
decade. We are now at the start of the
next step change in project delivery.
How we maximize value from data and
knowledge for our customers and how
quickly we can respond to new data
technologies and innovations lies at the
heart of the challenge that Project 5 has
been created to meet.
24 WorleyParsons Annual Report 2015
24 WorleyParsons Annual Report 2015
Case Study: Project 5
Integrated project delivery for one of Canada’s
largest oil sands producers
Key elements contributing to the success of this
project are:
• early customer engagement and support for the
delivery approach
• early engagement and collaboration with the
GDC to review and align on execution approach
• leveraging of China capability in inspection,
expediting, logistics and procurement to take a
“global view” for supply sourcing
• ability to offer local construction for future
phases of work.
An integrated project delivery method that
maximized the use of the GDC delivered
commercial savings for our Canadian oil sands
customer. By considering all project services
including design, engineering, procurement,
project controls, document control, Engineering
Data Systems, expediting and inspection, nearly
80% of the work on the well pads was undertaken
by our China GDC location.
A key element in winning the bid for the project
was our strategy at the pursuit stage to maximize
delivery from our GDC. It was clear that the
necessary savings could not be achieved with
traditional workshare approaches we have used in
the past. We needed an integrated approach that
considered technical and non-technical delivery.
The project kicked off with a ‘one team’ focus and
continued to deliver that way. There was no home
office and support office, just one virtual team
connected by technology.
WorleyParsons Annual Report 2015 25
REALIZE OUR FUTURE
Marian McLean,
Group Managing Director -
Assurance and Development
DEVELOPMENT
Delivering sustained economic
and social progress, creating
opportunities for individuals,
companies and communities to find
and realize their own futures.
Digital Enterprise
WorleyParsons has a long history
of applying advanced data
structuring and analytic techniques
to solve customer problems. We
believe that digital transformation
will improve the capital efficiency
and reduce operating costs of our
customers’ assets. WorleyParsons
Digital Enterprise was established
in 2014 to combine our data-
centric skills with the best
software options from our partners
to deliver unique data solutions to
our customers.
We have been working with some
of the world’s largest resources and
energy customers to improve their data
integrity, and from there, evolve into the
development of intelligent and predictive
digital assets that can be used to make
informed business decisions, resulting
from the clarity we can create from the
amount of data that is being gathered.
Our extensive domain knowledge
of customer assets helps us to cut
through the complexity, address the
core issues and deal with the technical
uncertainty which cannot always be
achieved by a general data and system
integration approach.
Customer
CLARITY
DATA DRIVEN INSIGHTS
Data
Optimization
Data
Governance
Data
Integration
Data
Analysis
COMPLEXITY
26 WorleyParsons Annual Report 2015
Innovation
One of WorleyParsons’ hallmarks has been its ability to develop innovative
solutions to solve complex problems. To broaden the application of
innovative thinking, the company launched a global innovation program
late last year. The program is designed to further inspire and empower
our people to think differently and deliver innovative solutions to our
customers, our business and our industry and begin to address the impacts
of unstoppable global trends.
The program harvests ideas from anywhere across the globe via an online idea
incubator that captures and then facilitates idea development through collaboration
and socialization. Seed funding can be sought for rapid prototype development and the
idea owner receives sponsorship and mentoring within a totally transparent process.
Ideas can be anything from an internal process improvement to creating value through
optimization, new services, new products or new business models. Since the program
was launched, we have funded over 25 ideas.
Our global reach and diversity are key to our programs’ success. We have created an
innovation ecosystem that can tap into the talent of our people while collaborating with
customers, partners, universities and research organizations from around the globe.
Innovative approach to monitoring environmental impacts
Our Marine Environmental Group used an innovative approach to gain a new
market entry into Asia while at the same time dislodging a long term incumbent
competitor. The group secured an eight year multi-million dollar contract to monitor
the environmental impact of a major ports dredging program. Our approach was new,
bringing together our experience in unmanned underwater monitoring, unmanned
aerial survey vehicles, satellite imagery and automated data analysis and reporting. By
challenging the status quo, we were able to deliver a safer and significantly cheaper
solution for our new customer.
INTECSEA dropped object simulation software
The accidental dropping of major items of equipment or material from an offshore
facility can have catastrophic effects, potentially damaging subsea equipment
and rupturing subsea pipelines. To reduce this risk, INTECSEA has developed a
highly sophisticated dropped object simulation software which has proven to be
highly accurate in predicting the trajectories and seabed impact zones for the most
complex of objects. These simulations have led to a better understanding of risk and
reduced the impact on customers in terms of reduced costs and fewer operational
disruptions during lifts.
Mind Outburst Program
WorleyParsons Annual Report 2015 27
REALIZE OUR FUTURE
STRENGTHEN BY DIVERSIFICATION
Hydrocarbons
The Hydrocarbon Sector strategy seeks to diversify our earning across three axes, namely:
• balancing the portfolio across the Upstream and Midstream/Downstream
industry segments
• an even split between Greenfield and Brownfield projects
• growing the National Oil Company (NOC), strategic “Tier 2” independents
and Asian EPC customer groups.
Upstream, Midstream and Downstream industry segments
Over the past decade we have had our sails set for an
upstream wind and this focus led to the rapid expansion of
the company in a number of geographies. We believe that
similar headroom for growth exists for us in the Midstream
(Pipelines and LNG) and Downstream (Refining and
Petrochemicals) industry segments.
Greenfield vs Brownfield
In the current period of lower commodity prices the
market generally favors ‘sweating’ existing assets rather
than maintaining the record levels of new greenfield
developments seen in the past.
To capitalize on this trend we are actively building our
Improve business line to gain a greater share of work on the
ongoing brownfield upgrades together with the operations
and maintenance spend that supports existing production.
Midstream
Upstream
Midstream
Midstream
Downstream
Downstream
Spreading the customer base
Upstream
Our customer base continues to evolve. In challenging times
new customer groups come to the fore. We seek to emulate
the success we have enjoyed in building our major customer
base in the other current and emerging customer groups.
Downstream
Upstream
BALANCED FOCUS ON UPSTREAM, MIDSTREAM
AND DOWNSTREAM
Midstream
Downstream
Upstream
Midstream
Upstream
Downstream
ACCESS BOTH CAPEX AND OPEX OVER THE
ASSET LIFECYCLE
Upstream
Midstream
Brownfields
Brownfields
Greenfields
Greenfields
(CAPEX)
Tier 1
Downstream
Tier 2
Tier 1
Brownfields
(OPEX)
Asian EPC
Tier 3
NOC
Greenfields
Tier 2
Tier 3
NOC
MAINTAIN CURRENT RELATIONSHIPS AND DEVELOP
TIER 2, NOC, AND ASIAN EPC CUSTOMER BASE
Asian EPC
Tier 1
Tier 2
Tier 1
Tier 3
Asian EPC
NOC
Asian EPC
Tier 2
Tier 3
NOC
Tier 1
Tier 2
Tier 1
Tier 3
Asian EPC
NOC
Asian EPC
Tier 2
Tier 3
NOC
28 WorleyParsons Annual Report 2015
Brownfields
Greenfields
Greenfields
(CAPEX)
Brownfields
(OPEX)
Greenfields
(CAPEX)
Brownfields
(OPEX)
SERVICING THE VALUE CHAIN
Minerals, Metals & Chemicals
At present the Minerals and Metals market faces headwinds due to the low commodity prices.
Our strategy to counter this downturn is to broaden the revenue base via building out our
offering to service the full value chain from the initial Advisory consulting assignments to the
management of the eventual facility closure. The Chemicals market on the other hand remains
buoyant in a time of low feedstock and energy prices. The strategy in this segment is to broaden
our geographical coverage by supporting our key global customers.
Minerals & Metals
THE KEY FOCUS GEOGRAPHIES: US, MIDDLE EAST AND ASIA
Within this period of low commodity prices our
customers’ primary focus is on asset optimization and
productivity improvements.
The combination of the Advisian and Improve business
lines - bringing technical and management consulting
capability combined with real world operational
improvement experience - has proven successful in
the alumina industry and our strategy is to broaden
this offering across the commodities including iron ore,
base metals and fertilizers.
Chemicals
The market fundamentals remain strong driven
by world population growth, urbanization and the
increased demand for consumer products.
We currently offer solutions within the plastics &
polymers, petrochemicals and inorganic chemicals
segments and are targeting key markets within
North America (in particular the Gulf coast),
Middle East and Asia.
Beijing
The Chemicals weighting within our sector revenue is expected to
continue to rise
Minerals &
Metals
Subdued
commodity prices
Cost focus
Chemicals
Buoyant demand
New low cost
feedstock
Minerals &
Metals
Chemicals
THE MINING VALUE CHAIN
Further investment in our China based International Chemicals hub is a
key component of our global Chemicals strategy
Exploration &
Evaluation
Mine Planning
Mining & Mine
Development
Materials
Handling
Mineral
Processing
Tailings & Waste
Management
Hydrometallurgy Pyrometallurgy
Transport to
market
Environment
& Approvals
Non-process
Infrastructure
The Minerals & Metals strategy is to continue to build out the offering across the entire value chain.
The acquisition of TWP – and the associated gain in underground mine EPCM capability - is a prime example of this.
WorleyParsons Annual Report 2015 29
REALIZE OUR FUTURE
ENABLING CAPABILITIES
Infrastructure
The Infrastructure Sector growth strategy has two primary themes, namely:
• support our growth in the Resource sectors via the provision of enabling capabilities
• to position within the Economic Infrastructure sectors of the future
We do this by focusing on those elements that cross over both the Resource and Economic
infrastructure markets, namely; Power, Water, Ports and Rail.
Resource infrastructure
It is the enabling capabilities, such as environmental
approvals management, social stakeholder engagement,
geosciences, master planning and early-works logistics
management that often set the overall timeline of major
resource developments.
It is in this early phase that the Infrastructure Sector
creates value for our resource customers in managing the
technical and non-technical risks that can, if mismanaged, so
drastically affect the outcome of their projects.
Economic infrastructure of the future
Our focus is on national critical infrastructure components
of Power, Water, Ports and Rail. WorleyParsons has the skills
required to support the implementation of the economic
infrastructure of the future.
By way of example, WorleyParsons is currently working
on some of the world’s largest renewable power projects,
including wind farms (300MW Lake Turkana, Kenya), solar
thermal towers (50MW Khi, South Africa, pictured below) and
a photovoltaic plant (450MW Blythe Project, California).
MAINTAIN SUPPORT TO RESOURCE CUSTOMERS
AND CONTINUE TO SHIFT INTO THE ECONOMIC
INFRASTRUCTURE OF THE FUTURE
CUSTOMER TYPE
Undifferentiated
Public & Utility Sector
Resource
Infrastructure
Resource
Infrastructure
Strategic Economic
Infrastructure
Strategic Economic
Infrastructure
Solar thermal tower project, South Africa.
30 WorleyParsons Annual Report 2015
Students of Kelicha Pada (India), where WorleyParsons provided school
infrastructure, solar power systems and the digging of bore wells.
Corporate
Responsibility
The Group aims to be recognized as an industry
leader in corporate responsibility and to this
end has embarked on a journey of continuous
improvement.
The Group is committed to contributing to the development of local
communities through local employment and corporate responsibility
projects. The key drivers for success in these projects have
been the Group’s overarching support and the willingness of our
personnel to volunteer their time and make donations in support of
their local corporate responsibility activities.
For the year ended 30 June 2015 (Reporting Period), the Group
engaged in a broad range of projects across its business with a
strong focus on community projects that require technically skilled
volunteers. Other activities include fundraising for not-for-profit
organizations, scholarships, sponsorships, training, programs to
reduce the Group’s impact on the environment and programs
promoting improved diversity and inclusion.
The Group has reported an increased number of activities, across
more countries, involving more of our people than in previous
years. While there was a solid performance of contributions by our
operations and personnel, the overall value of these contributions
has reduced. Volunteer hours for internal programs and community
skilled volunteering programs has also reduced.
CORPORATE RESPONSIBILITY POLICY
WorleyParsons is committed to working with our customers and
suppliers to achieve results that grow our company, reward our
shareholders and our people and contribute to our communities.
We acknowledge our responsibilities to the communities in which
we operate. Our Corporate Responsibility policy outlines our
commitments to: Governance, Ethics and Transparency, Our
People, Human Rights, Community, Fair Operating Practices and
Supply Chain, and the Environment.
WORLEYPARSONS FOUNDATION
The WorleyParsons Foundation objectives are to:
• support the execution of high impact strategic
community projects;
• become a vehicle for direct corporate investment, fundraising
and volunteering;
• expand opportunities for Group personnel to be directly or
indirectly involved in foundation activities; and
• raise awareness of WorleyParsons’ corporate responsibility
credentials with its stakeholders.
The WorleyParsons Foundation recognizes and acknowledges
the volunteering and participation in activities that help
promote the key themes of education, skilled volunteering and
enterprise development.
Foundation Awards were given to the individuals responsible
for 38 outstanding corporate responsibility activities across
18 countries aligned to the key themes.
Four WorleyParsons Foundation projects commenced in
this Reporting Period which will continue into the next
Reporting Period:
• collaboration with the Red Cross for disaster recovery in the
Philippines, with a pilot project commencing for large scale skilled
remote volunteering;
• capability development of Robogals preparedness for global
expansion, so they can scale their model to introduce careers in
science and technology to schoolgirls across the world;
• project delivery of community bore well water, solar power and
school buildings for families in Kelicha Pada village, India; and
• project delivery of a shelter house for preschool children for the
community of Island of Queullín, Chile.
WorleyParsons Annual Report 2015 31
CORPORATE RESPONSIBILITY CONTINUED
MILESTONES
During the Reporting Period, the Group reached a number of
corporate responsibility milestones, including:
• expanding the WorleyParsons Foundation by supporting more
projects and community partners, governed by the WorleyParsons
Foundation Council;
• launching a global diversity and inclusion program with a
new set of Diversity and Inclusion Expectations across the
business focusing on six key areas; diverse and inclusive
workplace, recruitment and promotion, closing pay gaps,
accountability and engagement, flexibility and community and
created a new policy to support this;
• setting gender diversity targets for the Board, executive
leadership teams and employees;
• setting an environmental carbon emissions reduction target;
• establishing strategic partnerships and collaborations promoting
skilled volunteering opportunities for our people;
• providing for the first time, limited assurance on 2015
non-financial performance commitments covered in this report;
• continued the Group’s corporate responsibility reporting process
using the internationally recognized Global Reporting Initiative
4.0 Framework;
• fulfilled the Group’s third year obligations as a signatory to the
United Nations Global Compact, a strategic policy initiative for
businesses that are committed to aligning their operations and
strategies with 10 universally accepted principles in the areas of
human rights, labor, environment and anti-corruption; and
• continued to deliver sustainability-enhancing services to the
Group’s customers through the Group’s advisory service offering.
ACTIVITY HIGHLIGHTS
DIVERSITY AND INCLUSION HIGHLIGHTS
The Group undertook various corporate responsibility activities
over the Reporting Period, including:
The Group undertook various diversity and inclusion activities over
the Reporting Period, including:
• participating directly in and reporting over 533 corporate
• establishing and progressing six key areas of the Diversity and
responsibility activities across 30 countries, involving over 15,000
Group personnel;
• supporting local communities through the network of corporate
responsibility champions across 78 offices as well as ongoing
participation in the Group’s own programs: DeltaAfrik Foundation
in Nigeria, We Care program in Canada and various corporate
responsibility and local social committees;
• contributing over $442,000 towards educational programs over
40 offices;
• providing scholarships amounting to $52,829;
• group matching $547,108 of Group personnel fundraising
programs in Canada, the United States, Australia, Chile and India;
• donating 328 liters of blood across 16 offices and 700
participants to local health organizations and hospitals;
• reducing the carbon footprint across a number of offices by
behavioral change programs, encouraging use of public transport,
flexible work options from home, recycling and FollowMe
smart printing;
• engaging in bush regeneration, waste and recycling programs and
trail clean-up activities across a number of countries; and
• participating in and contributing to various workshops and forums
on diversity, anti-corruption, Indigenous issues, ethical supply
chain, mega-trends including the United Nations Global Compact,
and global road safety partnerships.
Inclusion Expectations;
• implementing a framework to set diversity priorities for FY2016;
• developing global standards relating to recruitment and promotion
and flexible work to promote equal opportunity and diversity;
• developing training packages to support the Diversity and
Inclusion Expectations and new standards;
• launching a global campaign for International Women’s Day
inviting locations to schedule events, resulting in 22 events
across 18 locations;
• implementing internal career ‘boot camps’ and leadership training
aimed at providing women with skills, tools and networks to
achieve their potential as leaders;
• collaborating with customers on events focused on gender
equality and diversity;
• strengthening the Women of WorleyParsons network to over
770 members across 37 offices, via ongoing engagement and a
committed steering committee which meets regularly to discuss
local activities and progress; and
• providing ongoing support for Australian Indigenous community
internship opportunities.
32 WorleyParsons Annual Report 2015
CORPORATE RESPONSIBILITY INDICATORS
Contributions by Group personnel and Group’s business operations
are measured in terms of Australian dollar contributions and
volunteer time contributions.
The Group uses the United States Occupational Safety and
Health Administration reporting requirements for Total Recordable
Case Frequency Rate (TRCFR) and Lost Workday Case Frequency
Rate (LWCFR).
The Group also measures online training hours.
The Group’s corporate responsibility indicators for the
Reporting Period and the year ended 30 June 2014 were:
INDICATORS1
2015
2014
Contributions by operations2
$2.32 million
$3.09 million
Contributions by personnel members2
$1.56 million
$1.75 million
16,302 hours
Volunteer hours by personnel members
(community/internal)2
of the Group. The Company intends to lodge its NGER Report for
0.12
TRCFR
the Group for the period FY2015 in October 2015.
0.03
0.01
LWCFR
An energy target has been set for the first time for period FY2016,
nm3
Online training hours
at a 2.5% reduction of total carbon dioxide equivalents (tCO2-e)
1 Definitions and clarifications, refer:
against base year FY2014.
33,774 hours
18,091 hours
http://www.worleyparsons.com/InvestorRelations/corporateresponsibility/Documents/
0.10
CRDefinitions.pdf
Data for greenhouse gas emissions and energy consumption for the
year ended 30 June 2014 and the year ended 30 June 2013, were:
2 For corporate responsibility activities
3 Not measured
The Group completed a response for the Carbon Disclosure Project
(CDP) for FY2014 which was reported in June 2015. The Group’s
energy consumption and greenhouse gas emissions were recorded
to assist the Group to measure and reduce its energy consumption
and to reduce its greenhouse gas emissions. The data collection
and analysis stimulated energy and carbon reduction measures
in the global energy efficiency program in selected offices. The
Company also completed a CDP response in respect of its water use
for FY2014.
The Company is registered under the Australian National
Greenhouse and Energy Reporting (NGER) Act 2007 as the
controlling corporation for the Group as prescribed by section 12 of
the NGER Act. The Company lodged its NGER Report for FY2014
in October 2014. This report contained information in relation
to greenhouse gas emissions, energy production and energy
consumption from the operation of facilities under the operational
control of the Group. The Company intends to lodge its NGER
Report for the Group for FY2015 in October 2015.
An energy target has been set for the first time for FY2016, at a
2.5% reduction of total carbon dioxide equivalents (tCO2-e) against
base year FY2014.
Data for greenhouse gas emissions and energy consumption for the
year ended 30 June 2014 and the year ended 30 June 2013, were:
2014
2013
INDICATORS
Greenhouse gas
emissions tCO2-e
Energy
consumption MWh
PER PERSONNEL
MEMBER1
TOTAL2
PER PERSONNEL
MEMBER1
TOTAL2
2.85
101,415
2.54
101,085
7.18
255,738
7.25
288,601
1 Personnel includes employees and contractors.
2 Totals include gas emissions from, and energy consumed by, the Exmouth Power Station, Australia.
For the Reporting Period, the Group’s measurable objective for
increasing gender diversity was to increase the representation
of women at all levels of its organization over time. The Group’s
progress towards achieving that objective, along with the
proportion of women employees within the Group, women in senior
executive positions and women non-executive directors as at the
end of the Reporting Period, is set out in the table below:
MEASURES
Women employees1
Women senior
executives2
Women non-executive
directors3
2015
~24%
~18%
~25%
2014
~25%
2013
~25%
~18%
~15%
~25%
~22%
1 This includes both the Group’s employees and contractors.
2 For the 2015 and 2014 reporting periods, “senior executives” means all members of the
Group Leadership Team including the CEO and all executives reporting directly to a member
of that team. For the 2013 reporting period, “senior executives” means all members of the
Executive Committee (including the CEO) and all executives reporting directly to a member
of that committee.
3 The Company has chosen to report the percentage of women non-executive directors rather
than the percentage of women board members, because it has only one executive director, the
CEO, who is counted as a senior executive.
For future reporting periods, the Board has set the following
measurable objectives for achieving gender diversity:
MEASURES
OBJECTIVES
Women employees1
Increase the proportion of women employees to 30%
by 2020
Women senior
executives2
Increase the proportion of women senior executives to
25% by 2020
Women non-executive
Increase the number of women non-executive directors to
directors
three by 2020
1 This includes both the Group’s employees and contractors.
2 “Senior executives” comprise all employees at the CEO-1 CEO-2, CEO-3 and CEO-4 levels.
ASSURANCE
Independent assurance supports our commitment to transparency
and accountability. To provide confidence to our stakeholders in
our reporting: Ernst & Young has provided limited assurance, in
accordance with the ISAE3000 standard, over selected corporate
responsibility performance data in our 2015 Annual Report. You
can access this assurance statement at http://www.worleyparsons.
com/InvestorRelations/corporateresponsibility/Documents/
FY15AssuranceStatement.pdf.
WorleyParsons Annual Report 2015 33
CORPORATE RESPONSIBILITY CONTINUED
AWARDS
• In October 2014, WorleyParsons was recognized with a high commendation for ‘The Most Ambitious Company
in Gender Diversity’ category at the Engineers Australia Women in Engineering Gender Diversity Awards.
• In October 2014, WorleyParsons Canada was recognized for the second consecutive year by Mediacorp
Canada as one of the ‘Top 100 Employers in Canada’ for 2015. The advisory board compared WorleyParsons
to other organizations which offer progressive and forward-thinking programs. The award is based on best
practices in recruitment, engagement and retention.
• In November 2014, WorleyParsons United Kingdom was presented with the prestigious ‘Payroll Giving Silver
Award 2014’ for fostering a culture of philanthropy and committed giving in the workplace by making Payroll
Giving available to employees. The National Payroll Giving Excellence Awards showcase the best Payroll
Giving schemes in the UK.
• In December 2014, WorleyParsons Chile was recognized by the Australia-Chile Chamber of Commerce as
‘Company of the Year’. The Group was recognized for its ongoing participation and support of the chamber.
• In February 2015, WorleyParsons in Western Australia proudly received the Australian Red Cross Blood
Service Award for West Australia’s ‘Highest Total Corporate Blood Donations’ in 2014. The donations have
saved 426 lives.
• In February 2015, WorleyParsons Calgary in Canada was honored with a prestigious ‘Spirits of Gold Award’
from the United Way of Calgary and Area. The award was based on fundraising, participation, engagement
and education initiatives. WorleyParsons has supported United Way for more than 20 years and in 2014, the
office giving campaign raised more than $430,000, with an overall participation rate of 51%.
• In March 2015, WorleyParsons was awarded the status of a ‘National Community Partner’ with Australian Red
Cross. This collaboration is the first of its kind and demonstrates commitment to our communities and support
for skilled volunteering. It also showcases our global reach of knowledge, and should position WorleyParsons
as an industry leader amongst our peers in large scale ‘pro bono’ services, focusing on disaster recovery.
• In April 2015, WorleyParsons Europe received the GOLD MEDAL Award for its ‘approach to occupational
safety and health’ from the Royal Society for the Prevention of Accidents (RoSPA). Receiving this award for
a sixth consecutive year is testament to WorleyParsons commitment towards Health, Safety & Environment
and underpins our journey towards Zero Harm.
• In May 2015, WorleyParsons was rated at the level of ‘Leading’ for the 2014 financial reporting cycle by the
Australian Council of Superannuation Investors. The ‘Leading’ rating is the highest of the five categories and
demonstrates to investors that the Company takes investor issues seriously and gives investors valuable
information to better inform their investment decision.
34 WorleyParsons Annual Report 2015
CORPORATE RESPONSIBILITY
Developing local enterprises, South Africa
South Africa is in its third year of the Enterprise Development Program, which provides
mentoring and support for 10 young local businesses throughout the region. WorleyParsons
has provided this skills transfer on an ongoing basis through the availability of its technical
experts within South Africa.
The success of the initiative has seen a combined turnover growth of the 10 businesses by
204% and the creation of over 100 permanent and temporary jobs in South Africa.
“This program is a leading example amongst our peers and customers in the construction
and engineering industries. A great effort showcasing what corporate responsibility is
about at WorleyParsons.” Beulah Joseph, Broad Based Black Economic Empowerment and
Transformation Manager, WorleyParsons South Africa
The third year running for the Enterprise Development Program.
COMMUNITY PARTNERSHIPS/
SPONSORSHIPS
COMMUNITY PRO-BONO AND
VOLUNTEERING
Top contributions amounting to more than
$10,000 by Group business operations
through company matching, financial
support and sponsorships during the
Reporting Period were:
Top contributions by Group personnel
members amounting to more than $5,000
through fundraising campaigns, community
based and environmental projects during
the Reporting Period were:
• United Way and associated charities,
• United Way and associated charities,
Canada and United States
• Black Swan State Theatre Company,
Australia
• Ebola Containment Trust Fund, Nigeria
• Red Deer College Foundation, Canada
• Project Maya, Kelicha Pada village, India
• Robogals, Australia
• The Mustard Seed, Canada
• CareerTrackers Indigenous Internship
Canada and United States
• American Cancer Society, United States
• Alberta Cancer Foundation, Canada
• Movember Charities, Australia
• Red Cross, Global, Saudi Arabia
• Multiple Sclerosis Society of
Canada, Canada
• Stollery Children’s Hospital
Foundation, Canada
Top pro-bono and volunteering hours by
our personnel to community projects and
activities during the Reporting Period were:
• United Way and associated charities,
Canada and United States
• Oman Cancer Association, Oman
• American Cancer Society, United States
• Foodbanks, Australia, Canada, United
Kingdom and Spain
• Engineers Without Borders, Australia,
Singapore and Timor-Leste
• Red Cross Blood Service, Australia
and India
• Hospital bloodbanks, Brunei, China, Oman,
Qatar and United States
Program, Australia
• National Breast Cancer Foundation,
• Miller-Keystone Blood Center,
• American Heart Association, United States
• Australian Red Cross, Australia
• The Billion Child Foundation, South Africa
• Minerals Education Trust Fund,
South Africa
Australia
• Melbourne City Mission, Australia
• Woods Homes, Canada
• The Calgary Drop-In & Rehab
Centre, Canada
• Teleton, Chile
• Give Where You Live, Australia
• Prime Minister’s National Relief Fund, India
• Oman Cancer Association, Oman
• Beyond Blue, United Kingdom.
• Great Barrier Reef Foundation, Australia
• MS Society, United States
• Riverlea Primary School, South Africa
• Unity for Autism, Canada
• Engineers Without Borders, Australia,
Singapore and Timor-Leste
• Alberta Cancer Foundation, Canada
• Woods Homes, Canada
• Monash University, Australia
• Veterans Association of Atyrau Region,
Kazakhstan
• Habitat for Humanity, Canada and
United States
• Island of Queullín, Chile
• Devnar Foundation for the Blind, India.
United States
• Abu Dhabi Blood Bank,
United Arab Emirates
• Inn of the Good Shepherd, Canada
• The Calgary Drop-In & Rehab Centre,
Canada
• Junior Achievement of Southeast Texas,
United States
• Melbourne City Mission, Australia
• Habitat for Humanity, United States
• Project Maya, Kelicha Pada village, India
• Woods Homes, Canada
• MS Society, United States
• Give Where You Live, Australia
• Thusong Youth Centre, South Africa
• Boys & Girls Clubs of Calgary, Canada.
WorleyParsons Annual Report 2015 35
CORPORATE RESPONSIBILITY CONTINUED
The WorleyParsons Foundation and the Chilean office build a preschool
WorleyParsons Chile personnel have spent over 30 years volunteering in an isolated island
community of Queullín, in the south of Chile. Annual visits from the Chile leadership team
and WorleyParsons volunteers organize workshops and activities with the local community.
Gifts collected from the Chilean office are distributed to the community. This is an event the
children look forward to every year.
Recent financial support from the Australian Embassy and the WorleyParsons Foundation has
enabled construction of a Preschool that allows the youngest children to learn and to gather
in a common space.
“We as an embassy are very proud to be associated with the tremendous work you and your
colleagues have undertaken on the island over so many years.” Timothy Kane, the Australian
Ambassador to Chile, Colombia, Ecuador and Venezuela
Construction of a preschool will allow children to learn and to gather in a common space.
The WorleyParsons Foundation and the Mumbai office provide basic needs in India
WorleyParsons India began Project Maya in December 2014 in the rural village of Kelicha
Pada as a way to empower this disadvantaged community and help them transform the small
village to a model village for sustainable growth. Following a feasibility study in the village,
employees in Mumbai identified severe water shortages, inadequate access to power, and
education to be top priorities where WorleyParsons could help.
Collaboration between the WorleyParsons Foundation and WorleyParsons India offices
will ensure the success of this project. In addition to the $12,000 of local fundraising
by WorleyParsons staff, $22,000 of WorleyParsons Foundation support will allow for
construction to commence on school infrastructure, solar power systems and the digging of
bore wells for water infrastructure.
“The community is poor and State funds difficult to come by. We are so excited that through
the support of WorleyParsons India, the dream of a developed village will now be realized.”
Sanjay Bhoye, village head man, Kelicha Pada Village
WorleyParsons India and the WorleyParsons Foundation are supporting the development of Kelicha Pada village in
Maharashtra, India.
Robogals - boosting the number of girls studying science and engineering
As part of its commitment to increasing the number of women entering the engineering
profession, the WorleyParsons Foundation has pledged further financial and mentoring
support to Robogals - the student led organization encouraging the study of science and
engineering by high school girls.
Robogals, with its origins from the University of Melbourne, has expanded to a global network
of 31 chapters across six countries over the past seven years. To date, 34,200 students
have been introduced to the potential of careers in engineering and technology through the
Robogals programs.
Motivating Omani women in the workplace
Inspiring future female engineers.
WorleyParsons Oman organized the first Women in the Workplace program, inspired by
the response from the International Women’s Day 2015. The goal of the workshop was to
empower and instill confidence in participants to design and charter their own career.
24 women employees took part in the two-day program covering topics such as: examples
of successful Omani women, balancing home and work life, understanding communication
differences between men and women and short and long term goal setting.
“This course has built my confidence and showed me a way to develop my talent. I became
more self-motivated and empowered in order to keep on with building my career and achieve
my extreme goals.” Participant in the program.
Sabria Al-Balushi and Julia Calleja motivating women in the WorleyParsons Oman office.
36 WorleyParsons Annual Report 2015
WorleyParsons Russia ignites spirits through Paramusic Festival
The Paramusic Festival for Physically Challenged Children is an event described by its organizers
as ‘the triumph of talent and spirit of young artists, who have been able to cope well with
themselves and their situation’.
The festival took place over two full days in December 2014, with support from five
WorleyParsons staff from the Moscow office. In the months leading up to the event,
staff volunteered their time to assist with the preparation of the remarkable festival. The
WorleyParsons Moscow office also contributed financially towards the preparation of the event.
“WorleyParsons employees found it a privilege to create a once in a lifetime experience for these
special artists.” Ekaterina Nadezhdinskaya, WorleyParsons Russia employee
WorleyParsons Russia organized and funded the Paramusic Festival for Physically Challenged Children.
The right to sight campaign, South Africa
This initiative has been running for many years and has changed the lives of underprivileged
children throughout South Africa. Our most recent location was the Riverlea Primary School
in Johannesburg where 1,200 students and staff had their eyes tested, 308 of whom
needed spectacles.
These were funded by WorleyParsons and donated to the recipients free of charge. This life
changing initiative goes a long way towards removing the barriers to learning and reducing the
high South African pedestrian fatality rate.
“This is one of the many ways in which WorleyParsons demonstrates its commitment to safety
and uplifting communities in which we work.” Beulah Joseph, Broad Based Black Economic
Empowerment and Transformation Manager, WorleyParsons South Africa
Walking for cancer with WorleyParsons Oman
Uplifting communities through sight.
Every year, the Oman Cancer Association organizes the Cancer Walkathon to boost awareness
of their initiatives and to change lives. This year was the 10th annual Walkathon, and the
third year that WorleyParsons Oman has actively participated. With the overwhelming support
of management, staff walked to the motto of “Together let’s exemplify the WorleyParsons
values and walk for the cure”.
In October 2014, over a hundred WorleyParsons Oman employees and their families, including
the Managing Director Michael Dunn, participated in the Walkathon and donated over
$5,000 to the Oman Cancer Association. In recognition and appreciation of their support,
WorleyParsons Oman was presented with an award by the WorleyParsons Foundation.
“Each step all of us take is a step closer to a cure for all those with cancer.” Dr C
Radhakhrisnan, Corporate Responsibility Lead, WorleyParsons Oman
Walkathon for the Oman Cancer Association.
Building by women for women, Canada
The women of WorleyParsons were invited to participate in the first Habitat Sarnia Lambton
Women Build. A home built by women for women! This particular house will be home to two
Down syndrome adult clients of Lambton County Developmental Services.
Women Build is about empowering women to discover for themselves that they have what
it takes to build a Habitat home. Over 234 hours, 16 enthusiastic WorleyParsons women,
undertook the task of installing siding on the home. The team had to fundraise $3,750 in
order to participate in this build.
“The most rewarding moment of volunteering for the Habitat for Humanity Women’s Build
was realising that I physically helped make a house a home.” Lesley Pike, HSE Coordinator,
WorleyParsons Canada
Women Build is about empowering women.
WorleyParsons Annual Report 2015 37
OPERATING AND FINANCIAL REVIEW
Operating and Financial Review
1. Operations
1.1 Overview
WorleyParsons is a professional services provider to the resources,
energy and industrial sectors. During the year ended 30 June 2015
(FY2015), we reported along three business lines of Services, Major
Projects and Improve and three customer sectors, each of which
focused on customers involved in the following activities:
• Hydrocarbons – the extraction and processing of oil and gas;
• Minerals, Metals & Chemicals – the extraction and processing of
mineral resources and the manufacture of chemicals; and
• Infrastructure – projects related to water, the environment, transport,
ports and site remediation and decommissioning; and all forms of
power generation, transmission and distribution.
We also have a Development Group responsible for managing
investment for the Group including nurturing innovation and new
business ventures, and better management of internal investments
and improvements within the business lines. Advisian, currently
reported within the Development Group, will be a standalone business
line in FY2016 incorporating transferred consulting personnel and
their associated projects and the INTECSEA business from the
Services business line.
Our customers include multi-national oil and gas, resources and
chemicals companies as well as more regionally and locally focused
companies, national oil companies and government owned utilities
operating in the customer sectors described above.
The diversity of our business in terms of geography, industry
and service offering is a fundamental strength. We operate in
46 countries, with no country representing more than 30% of
aggregated revenue.
1.2 Business model
Our business is based on our people providing key services to our
customers from within our business lines. We strive to empower
our people to support our customers to be successful. We support
our people with our business procedures and systems and generate
earnings by charging their time spent performing professional
services, to our customers.
Aggregated revenue and profit: Our sources of revenue and profit
are diversified and revenue and profit are generated from a large
number of customers. As a result, we are not dependent on any
one of our customers for a significant portion of our revenue or
profit. Aggregated revenue excludes revenue that has nil margin
(this typically relates to procurement revenue where WorleyParsons
undertakes procurement on our customers’ behalf with no exposure
to financing costs or warranty obligations). We believe the disclosure
of revenue attributable to associates provides additional information
in relation to the financial performance of the Group and include this
revenue within aggregated revenue.
Assets and liabilities: The significant items on our balance sheet are
mainly project related, such as trade receivables, unbilled receivables,
provisions and borrowings. We also hold a number of intangible
assets generated through previous acquisitions. Our business is not
capital intensive. Our contract terms typically require our customers
to pay us within 30 days of date of invoice, while, in a number of
our locations, we must pay expenses (e.g. staff salaries) at shorter
intervals. This time differential makes up the majority of our working
capital requirements.
1.3 Review of operations
The statutory result for FY2015 was a loss of $54.9 million,
including the recognition of a non-cash impairment of goodwill of
$198.6 million (approximately 10% of total goodwill). Underlying
net profit after tax (NPAT)1 was $198.6 million for the 12 months to
30 June 2015, down 24.6% on the previous corresponding period.
Aggregated revenue has only modestly declined by 1.8%, against
a backdrop of significant declines in market activity. Sustained
low commodity prices and the fall in oil prices have resulted in our
customers reducing capital and operating expenditure.
We achieved increases in aggregated revenue in a number of our
markets that partially offset the declines in our Improve business in
Canada and our Services business in North America and Australia,
demonstrating the benefits of our geographic diversity and the
breadth of our service offerings.
We have been taking action since 2013 to reshape the business to
align it with market activity. These actions in Financial Year 2015
resulted in redundancy and onerous lease charges being recognized.
When combined with increased competition and concessions
negotiated with customers, this has led to a reduction in our margin.
The further deterioration in our markets since May has resulted in
us taking further action beyond those previously announced, the
cost impact of which has been recorded in the Financial Year 2015
earnings. We now employ 31,400 people operating out of 148 offices
across 46 countries, compared with 35,600 people across 157 offices
at 30 June 2014.
We have secured 105 significant awards this year compared with
90 in Financial Year 2014, including a recent significant long term
contract with a confidential customer in the power industry in North
America.
Our financial position remains sound with the Company’s gearing ratio
at 30 June 2015 of 28.0%, near the middle of the target range of 25%
to 35%.
The FY2014 segment result and segment margins shown in sections
1.3.1 and 1.3.2 have been restated to reflect the organization of the
Group and changed reporting effective 1 July 2014.
Costs: Our two largest costs are: staff costs; and administration costs,
which includes office lease costs. We also have a significant amount
of pass through costs that are reimbursed by our customers.
The reconciliation of the underlying earnings before interest and
tax (EBIT) and NPAT results to the EBIT and NPAT attributable to
members of WorleyParsons Limited is shown in the following table.
38 WorleyParsons Annual Report 2015
1 The Directors consider underlying profit information is important to understand the
sustainable peformance of the Company by excluding significant non-recurring items.
EBIT
Add: impairment of goodwill
Add: Arkutun-Dagi settlement
Add: restructuring costs
Less: net gain on revaluation of investments previously accounted for as associates
Underlying EBIT
NPAT attributable to members of WorleyParsons Limited
Add: impairment of goodwill
Add: Arkutun-Dagi settlement, post tax
Add: tax arising on reorganization of business in China
Add: restructuring costs, post tax
Less: net gain on revaluation of investments previously accounted for as associates
Underlying NPAT
FY2015
($’M)
FY2014
($’M)
87.1
198.6
70.0
–
–
355.7
(54.9)
198.6
49.0
5.9
–
–
198.6
428.2
–
–
35.4
(11.4)
452.2
249.1
–
25.7
(11.4)
263.4
THERE ARE THREE MEASURES THAT ARE KEY TO UNDERSTANDING OUR RESULTS:
1. Aggregated revenue;
2. EBIT (earnings before interest and tax)
3. NPAT (net profit after tax) attributable to shareholders
FY2015
$’M
FY2014
$’M Comments
Movement
1. Aggregated
revenue
7,227.5
7,363.7 We define aggregated
revenue as:
• our revenue and income
calculated in accordance with
relevant accounting standards;
• plus our share of revenue
earned by our associates; and
• less procurement at nil margin,
and interest income.
2. EBIT
87.1
428.2
EBIT means earnings before
interest and tax.
3. NPAT
(54.9)
249.1
NPAT means net profit after tax.
Our aggregated revenue decreased by 1.8% in FY2015
when compared with that for FY2014, due to the
decline in market activity in APAC (Australia, Pacific,
Asia, China) and North America regions which was
partially offset by foreign exchange benefits and
growth in our other markets.
Our EBIT decreased by 80% in FY2015 when compared
with that for FY2014, due primarily to the impact
of the impairment charge, redundancy and onerous
lease charges recognized in the second half and
customer concessions.
Our NPAT decreased by 122% in FY2015 when
compared with that for FY2014, due primarily to the
impact of the impairment charge, redundancy and
onerous lease charges recognized in the second half
and customer concessions.
WorleyParsons Annual Report 2015 39
OPERATING AND FINANCIAL REVIEW CONTINUED
1.3.1 Business line performance
Services
The Services business line delivers projects of all sizes across the full asset life cycle. It leverages our intimate understanding of our local
markets and customers’ expectations, combined with the best technical capability locally and globally.
The Services business line reported aggregated revenue of $5,501 million and segment result2 of $439 million (FY2014: aggregated
revenue of $5,618 million and segment result of $547 million). The segment margin declined to 8.0% from 9.7%.
Declines in earnings were experienced across all sectors. Declines in activity across our APAC and North American regions exceeded the
improved performance in our other regions. WorleyParsonsCord delivered improved performance when compared with FY2014.
Aggregated revenue
Contribution to Group
aggregated revenue
$’M
5,501.4
5,618.2
Variance %
(2)
%
76
76
Segment result
$’M
438.7
547.4
Variance %
(20)
Segment
margin
%
8.0
9.7
FY2015
FY2014 (restated)
Major Projects
The Major Project business line was established to better manage the risks associated with major projects and provides our customers with
specialization in the delivery of large complex projects.
The Major Projects business line reported aggregated revenue of $923 million and segment result of $46 million (FY2014: aggregated
revenue of $863 million and segment result of $68 million). The segment margin declined to 5.0% from 7.8%.
Revenue increased due to the rise in low margin reimbursable expenses as several projects approached completion or transitioned to the
field. Segment margin declined due to project cancellations and the effect of revenue mix as the proportion of low margin reimbursable
expenses increased relative to higher margin engineering services.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
Segment
margin
$’M
922.7
862.9
Variance %
7
%
13
12
$’M
46.3
67.5
Variance %
(31)
%
5.0
7.8
FY2015
FY2014 (restated)
Improve
The Improve business line was established to manage the risks associated with our major Improve contracts and provides our customers
with global best practice solutions to optimize the performance of their operating assets.
The Improve business line reported aggregated revenue of $649 million and segment result of $37 million (FY2014: aggregated revenue
of $786 million and segment result of $48 million). The segment margin declined to 5.7% from 6.1%.
The decline in revenue in Improve was primarily due to cuts to sustaining capital expenditure of oil sands customers. Segment margins
declined as a result of the lower project activity and the impact of concessions negotiated with customers.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
Segment
margin
$’M
649.0
785.6
Variance %
(17)
%
9
11
$’M
37.0
48.1
Variance %
(23)
%
5.7
6.1
FY2015
FY2014 (restated)
Development
The Development business line reported aggregated revenue of $154 million and segment result of $14.1 million (FY2014: aggregated
revenue of $97 million and segment result of $1.4 million).
The business line result included eight months contribution from the acquisition of MTG Limited. MTG Limited is a US based
management consulting firm in the oil and gas, petrochemicals and chemicals industries with operations in North America, the
United Kingdom and Australia.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
Segment
margin
FY2015
FY2014 (restated)
$’M
154.4
97.0
Variance %
59
%
2
1
$’M
14.1
1.4
Variance %
907
%
9.1
1.4
2 Segment result is segment revenue less segment expenses excluding the items listed in Note 3 (G) to the financial statements on page 78.
40 WorleyParsons Annual Report 2015
1.3.2 Sector performance
Hydrocarbons
The Hydrocarbons sector reported aggregated revenue of $5,332 million, and segment result of $475 million, with a margin of 8.9%
(FY2014: aggregated revenue $5,372 million, segment result $517 million, margin 9.6%). Hydrocarbons’ contribution to the Group’s
aggregated revenue was 74%, essentially the same as last year.
This represents a strong outcome against a backdrop of lower market activity, competitive pressures, concessions negotiated with
customers and the absorption of $44.6 million in redundancy and onerous lease charges.
The increased contribution from the Major Projects business line and the Development Group (due primarily to the recent acquisition of
MTG), partially offset the declines from the Services and Improve business lines.
The decline in Hydrocarbons earnings within the Services business line was primarily due to the APAC and North America regions.
The APAC impact was due to the decline in LNG project activity in Australia as the various developments entered the latter stages of
construction. In North America, the volume of new project opportunities has decreased with the sharp falls in oil price.
The Improve business line Hydrocarbon sector performance was impacted by customers in North America cutting back on sustaining capital expenditure.
Aggregated revenue
$’M
5,332.1
5,371.5
Variance %
(1)
Contribution to
Group aggregated
revenue
%
74
73
Segment result
$’M
475.1
517.2
Variance %
(8)
Segment
margin
%
8.9
9.6
FY2015
FY2014 (restated)
Minerals, Metals & Chemicals
The Minerals, Metals & Chemicals sector reported aggregated revenue of $904 million and segment result of $44 million with a margin of
4.9% (FY2014: aggregated revenue $1,066 million, segment result $108 million, margin 10.1%). Minerals, Metals & Chemicals contributed
12% to the Group’s aggregated revenue.
The Minerals & Metals contribution came under pressure within the Services business line, as project activity in this market segment
continued to decline in line with the sustained lower commodity prices. This is in contrast to the growing contribution made by our
Chemicals division with increased opportunities in North America, Middle East and Asia.
Within the Major Projects business line the decline in the contribution from this sector was primarily due to the completion of the Fairway
project and the cancellation of the Kami Iron Ore project.
Aggregated revenue
$’M
903.7
1,065.9
Variance %
(15)
Contribution to
Group aggregated
revenue
%
12
14
Segment result
$’M
44.1
108.0
Variance %
(59)
Segment
margin
%
4.9%
10.1%
FY2015
FY2014 (restated)
Infrastructure
The Infrastructure sector reported aggregated revenue of $992 million and segment result of $17 million with a margin of 1.7% (FY2014:
aggregated revenue $926 million, segment result $39 million, margin 4.2%). Infrastructure’s contribution to the Group’s aggregated
revenue was 14%.
Infrastructure revenue increased in the second half which combined with cost reduction initiatives undertaken improved the second half
margin to 3.2% from the first half breakeven result.
FY2015
FY2014 (restated)
Aggregated revenue
$’M
991.7
926.3
Variance %
7
1.4 Significant changes in operations
Contribution to
Group aggregated
revenue
Segment result
Segment
margin
%
14
13
$’M
16.9
39.2
Variance %
(57)
%
1.7
4.2
On 24 October 2014, the Group acquired 100% of the voting shares of MTG Limited (MTG) and its controlled entities. MTG is a US based
management consulting firm in the oil and gas, petrochemicals and chemicals industries with operations in North America, the United
Kingdom and Australia. The acquisition was made as a building block in the growth of Advisian, the Group’s advisory business. The Financial
Report for FY2015 includes the results of MTG for the eight month period from the acquisition date. On 2 December 2014 the Group
acquired 100% of the voting rights of Hadron Holdings Inc and its controlled entities comprising the Atlantic Nuclear business (ANI) which
provides services to the Canadian nuclear industry and internationally where CANDU nuclear technology is used.
WorleyParsons Annual Report 2015 41
OPERATING AND FINANCIAL REVIEW CONTINUED
2. Financial Position and Cash Flow
2.1 Matters relevant to understanding WorleyParsons’ financial position
Our financial capacity remains strong given our cash, gearing and debt positions.
FY2015
$’M
FY2014
$’M Comments
1. Operating cash
251.3
550.1 Our operating cash flow comprises the
flow
payments we receive from our customers
less the amount we pay our suppliers plus
related interest and tax paid. In our financial
statements, operating cash flow is called net
cash inflow from operating activities.
2. Gearing ratio
28.0%
18.7% Our gearing ratio is our net debt divided by the
sum of our net debt and our total equity, at the
end of the financial year. Refer to Note 12 to
the Financial Statements for the calculation of
gearing ratio.
3. Debt facility
utilization
59%
50% Our debt facility utilization is the percentage
of our debt facilities that we were using at the
end of the financial year.
Movement
Our operating cash flow for FY2015
represents a high cash conversion rate of
127% of underlying NPAT.
Our gearing ratio increased by 9
percentage points in FY2015 when
compared to FY2014, due to the impact of
the impairment charge on equity, foreign
exchange impacts and the additional
funding required for acquisitions and
working capital requirements.
This ratio is at the middle of our gearing
target of 25% to 35%.
Our debt facility utilization increased by
9 percentage points in FY2015 when
compared to FY2014, due to additional
funding requirements for acquisitions and
working capital.
2,087
1,783 Our loan and overdraft facilities are the
amount of our debt facilities at the end of
the financial year.
The amount of our loan and overdraft
facilities increased during FY2015, due to
foreign exchange impacts.
4. Loan and
overdraft
facilities
2.2 Dividends
2.4 Future commitments
There are two types of future commitments which do not
appear on our balance sheet and are relevant to understanding
our financial position:
• operating leases
• operating expenditure commitments.
These future commitments represent approximately 9.1% of
our expenses.
In general, we lease the various office buildings from which we
operate, rather than owning those buildings. Operating leases
refers to those leases.
In addition, we are generally licensed to use software and
also lease various items of computer hardware that we use in
operating our business, rather than owning the software or
computer hardware ourselves. We refer to our commitments to
pay software license and equipment lease fees as operating
expenditure commitments.
Our directors have resolved to pay a final dividend of 22.0 cents
per fully paid ordinary share unfranked. As a result, 69.7% of
our full year underlying NPAT for FY2015 will be distributed to
shareholders as a dividend.
2.3 Significant changes in WorleyParsons’ financial position
An assessment of asset carrying values was conducted as part of
the normal process of finalizing the accounts.
As a result of this assessment, an impairment of goodwill of
$198.6 million was recognized in the FY2015 accounts.
Significant changes in WorleyParsons’ financial position during
FY2015 also includes the sale of Exmouth Power Station that had
previously been recorded as assets and liabilities held for sale. A net
gain on sale was recognized and is included in other income.
42 WorleyParsons Annual Report 2015
3. Business Strategy, Outlook and Risks
3.1 Business strategy
We develop our business strategy using an iterative process at each
of the key levels of our business such that we have:
• a Group strategy
• sector strategies
• business plans to guide the implementation of our sector
strategies at a business line level.
Our Group strategy describes markets in which we intend to
invest to create sustainable competitive advantage (leading to
greater market share and/or higher margins) and deliver on our
corporate vision. Our sector level strategies are a detailed view of
these markets and are typically broken down by Hydrocarbons,
Minerals, Metals & Chemicals and Infrastructure sectors and
their corresponding major sub sectors (e.g. LNG, iron ore). At
the business line level, we translate our sector strategies into
business plans to deliver on the intent of the sector strategies as
applicable to each business line. Our business plans map specific
near and medium term opportunities or portfolios of opportunities
to the strategic themes, to provide clear and tangible targets
for the individual business leaders to pursue, win and execute.
Overall, our key markets continue to present challenges, including
increasing competition and customers delaying committing to
new developments. We believe we have taken appropriate steps
during FY2015 to realign and position the Group to address these
challenging market conditions.
Strategically, our immediate focus is on five strategic themes
which are:
• to build a world class consulting business and dominate the early
project phases
• to be the global project management consultant or “PMC”
provider of choice
• to build a leading major Improve business
• to be the smartest most agile local service provider
• to be the company that leapfrogs the competition in the use
of our global delivery center and applies digital technology to
revolutionize the delivery of our services.
Further details on the five strategic themes can be found on pages
16 to 25 of this Annual Report.
3.2 Outlook
The recent fall in oil price has caused Hydrocarbons customers
to maintain a cautious position with regard to investment plans
in the near term. The Company anticipates the benefits of the
restructuring actions already taken, and its continuing program of
overhead reductions, will temper the effect of this on earnings.
Conditions in the Minerals and Metals sector remain depressed, with
customers constraining capital expenditure on new developments,
whilst focusing on operational improvements within existing mines
and processing facilities. However, given the long term market
remains underpinned by growth in the emerging economies and
the associated trend of urbanisation, we remain confident in the
medium to long term prospects for this sector.
The short to medium term investment plans of customers in the
Chemicals sector remain sound. Outside the US, volatility in oil and
gas prices will continue to defer investment decisions within the
petrochemicals segment as feedstock supply and price implications
are evaluated by our customers.
Trading conditions are expected to remain difficult in the resource
Infrastructure market as both the Hydrocarbons and Minerals &
Metals sectors re-evaluate new project viability in an era of low
commodity prices. This decline in market activity will be partially
offset as opportunities are secured in the non-resource or
economic Infrastructure sector within the chosen markets of power
generation, ports, passenger rail and water.
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 of the business and improving returns to
shareholders as it adjusts the business for the subdued market
activity expected in Financial Year 2016.
The Company will continue to balance the long term sustainability
of the business with the need to align the business to market
conditions in the short term as it deploys the recently announced
strategy. WorleyParsons is well positioned to deliver its strategy
through Financial Year 2016 and beyond so it can realize its future.
3.3 Risks
Achievement of our medium and long term prospects could be
impacted by a number of risks. Those risks could, individually
or together, have an adverse effect on achievement of
those prospects.
Set out below is an overview of a number of key risks that we
face in seeking to achieve those prospects. The risks are not set
out in any particular order and do not comprise every risk we
encounter in conducting our business or every risk that may affect
the achievement of those prospects. Rather, they are the most
significant risks that we believe we should be monitoring and
seeking to mitigate or otherwise manage at this point in time.
The mitigating steps set out below are a sample of the steps we
take to seek to mitigate the various risks. However, the risk exists
that we may fail to implement or fully implement those steps or
that they may be entirely or partly ineffective.
3.3.1 Health and safety risk
Our business sometimes requires our people and those people we
manage to be in high risk geographies, travel long distances by
road, be in close proximity to complex operating equipment and be
engaged in construction and operating activities.
There is the risk of injury to, or the loss of life of, our people and
those people we manage.
To seek to mitigate this risk, we have a OneWay™ framework which
includes the expectations that every one of our people and those
people we manage must meet with respect to health and safety.
OneWay™ expectations are supported by our business processes
and we use them in assessing our performance.
3.3.2 Reputation risk
We rely on the strength of our reputation to help win and retain
work, attract and retain employees, secure lines of credit and gain
access to capital.
There is a risk that our reputation could be damaged including
through unethical business practices, poor project outcomes, health
and safety incidents and not meeting the market’s expectations of
our financial performance.
We use a range of strategies and actions to seek to mitigate this
risk including requiring all of our people to undertake various
training including on the Code of Conduct. In addition, other
mitigating steps, particularly those referred to in health and safety
risk, project delivery risk, and internal reporting risk, are relevant to
seeking to preserve our reputation.
WorleyParsons Annual Report 2015 43
We seek to mitigate this risk by reviewing and enhancing
those systems and seeking to adapt them to our dynamic
business environment.
3.3.5 Strategic risks
Strategy risk: We operate in a highly competitive and dynamic
environment. As a result, our ability to develop and implement
effective strategies will be a significant ongoing contributor to
our success.
Strategy risk is the risk of failing to develop and implement
effective strategies. Such failure may, over time, lead to a loss of
market share, and negatively impact our financial performance.
To seek to mitigate this risk, we have an annual strategy
development process utilizing both internally and externally
supplied market data and business knowledge.
The strategy involves five strategic themes executed as projects
and described in section 3.1 of this Operating and Financial Review.
3.4 Unreasonable prejudice
We have omitted information regarding: (1) our internal budgets
and internal forecasts; and (2) details of our business strategy, on
the basis that if we had included that information, doing so would
have been likely to result in unreasonable prejudice to us.
3.5 Forward looking statements
This report contains forward looking statements, including
statements of current intention, opinion and expectation regarding
the Company’s present and future operations, possible future
events and future financial prospects. While these statements
reflect expectations at the date of this report, they are, by their
nature, not certain and are susceptible to change. WorleyParsons
makes no representation, assurance or guarantee as to the
accuracy of or likelihood of fulfilling any such forward looking
statements (whether express or implied), and except as required by
applicable law or the Australian Securities Exchange Listing Rules,
disclaims any obligation or undertaking to publicly update such
forward looking statements.
OPERATING AND FINANCIAL REVIEW CONTINUED
3.3.3 Operating risks
Contract management risk: Effective contract management seeks
to ensure, among other things, appropriate project and customer
selection and the effective management of customer expectations.
There is a risk that we will fail to manage our contracts
appropriately and, as a result, find ourselves in disputes with our
customers regarding matters including payment of our fees and
liability for costs and delays. Those disputes may be costly, result in
liability and absorb significant amounts of management time.
We seek to mitigate this risk by implementing project delivery
processes and procedures, providing training and development to
our project staff and appropriate involvement of our legal staff in
the contract process.
Demand risk: The markets for our services are exposed to volatile
and cyclical commodity prices. Those prices impact demand for our
customers’ goods and services and, in particular, our customers’
preparedness to fund capital and operational expenditure. This may
markedly impact demand for our services such that, over relatively
short periods, we experience rapid and/or sustained changes in
that demand.
Responding to such changes may lead to reduced revenue and
increased costs. Our overheads may also need to change such that
they are efficient relative to our revenue and business size.
We have a number of strategies and processes in place to seek to
mitigate this risk including maintaining our diversified business
portfolio, retaining a proportion of our people on short notice
contracts, seeking contractual protection for project demobilization,
sharing work across locations and undertaking ongoing overhead
efficiency reviews and rationalizing overhead where necessary.
Project delivery risk: Our ability to achieve superior
shareholder returns is substantially influenced by our ability to
deliver significant and/or strategically important projects to our
customers’ satisfaction.
Project delivery risk is the risk that we fail to do so. The
consequences may include fewer awards of significant projects.
To seek to mitigate this risk, we use regularly reviewed project
delivery systems and processes and project peer reviews. We have
established the WorleyParsons Academy to further enhance the
capability of our people in project management and project delivery.
3.3.4 Financial risks
Working capital and cash risk: Our ability to maintain an
appropriate level of working capital, particularly through timely
conversion of unbilled contract revenue to cash, impacts returns to
shareholders.
There is a risk that given current market conditions, our customers
delay paying us or are unwilling or unable to do so.
We seek to mitigate this risk by focusing on more efficient billing
cycles, and closely monitoring both cash collection targets and
measures of debtor conversion.
Internal reporting risk: We operate a complex business which
provides a wide range of services in a dynamic environment, while
straddling multiple jurisdictions and regulatory frameworks.
There is a risk that our internal reporting systems may not
accurately reflect our business performance or prospects and may
therefore result in us not meeting forecasts provided to the market,
thereby adversely affecting investor confidence and the Company’s
share price.
44 WorleyParsons Annual Report 2015
FINANCIAL REPORT
For the financial year ended 30 June 2015
Directors’ Report
Statement of Financial Performance
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report to the Members of WorleyParsons Limited
Shareholder Information
Glossary
Corporate Information
NOTES TO THE FINANCIAL STATEMENTS
The notes include information which is required to understand the financial statements and is material and relevant to the operations, financial position and
performance of the Group. Information is considered material and relevant if, for example:
• the amount in question is significant because of its size or nature; or
• it is important for understanding the results of the Group.
The notes are organized into the following sections:
1. Corporate Information
2. Summary of Significant Accounting Policies
73
73
Key Numbers
Provide a breakdown of individual line items in the financial statements that the
directors consider the most relevant and summarizes the accounting policies
relevant to understanding these line items.
3. Segment Information
4. Revenue and Other Income
5. Expenses and Losses/(Gains)
6. Income Tax
7. Cash and Cash Equivalents
8. Trade and Other Receivables
9. Trade and Other Payables
10. Intangible Assets
11. Provisions
75
78
79
80
82
83
83
84
86
Capital
Provide information about the capital management practices of the Group and
shareholder returns for the year.
12. Capital Management
13. Interest Bearing Loans and Borrowings
14. Issued Capital
15. Reserves
16. (Loss)/Earnings Per Share
17. Dividends
88
89
90
92
92
93
Risk
Disclose the Group’s exposure to various financial risks, the potential impact on
the Group’s financial position and performance and the Group’s management of
these risks.
18. Financial Risk Management
19. Fair Values
93
99
Structure
Define the different aspects of the Group structure.
20. Investments in Controlled Entities
21. Equity Accounted Investments
22. Interests in Joint Operations
23. Assets and Liabilities Held for Sale
Unrecognized Items
Provide information about items that are not recognized in the financial
statements but could potentially have a significant impact on the Group’s
financial position and performance.
24. Commitments for Expenditure
25. Contingent Liabilities
26. Subsequent Events
Other
Notes required by Australian Accounting Standards and/or other regulatory
pronouncements.
27. Procurement
28. Property, Plant and Equipment
29. Deferred Tax
30. Related Parties
31. Remuneration of Auditors
32. Key Management Personnel
33. Parent Entity Disclosures
105
106
107
108
109
109
110
WorleyParsons Annual Report 2015 45
46
67
68
69
70
72
73
112
113
115
116
117
100
101
103
104
104
105
105
DIRECTORS’ REPORT
The directors present their report on the consolidated entity consisting of WorleyParsons Limited
(Company) and the entities it controlled (Group or consolidated entity) at the end of, or during, the year
ended 30 June 2015.
DIRECTORS’ NUMBER OF SHARES AND
PERFORMANCE RIGHTS
As at the date of this report, the relevant interests of the directors in the
shares and performance rights of the Company were:
DIRECTORS
John Grill
Ron McNeilly
Larry Benke
Jagjeet Bindra
Erich Fraunschiel
John M Green
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
Andrew Wood
NUMBER OF
NUMBER OF PERFORMANCE
RIGHTS
SHARES
25,372,173
17,811
418,984
1,133,383
19,000
198,755
891,869
11,945
13,000
11,000
–
–
–
–
–
–
–
–
849,065
211,226
Further details in relation to the rights issued by the Company are set out
in the Remuneration Report and notes 14(C) and 32 to the financial
statements.
PRINCIPAL ACTIVITIES
During the financial year, the principal activities of the Group consisted
of providing engineering design and project delivery services, including
providing maintenance, reliability support services and advisory services
to the following sectors:
• Hydrocarbons;
• Minerals, Metals & Chemicals; and
• Infrastructure.
DIRECTORS
The following persons were directors of the Company during the financial
year or were appointed as a director since the end of the financial year.
All were directors for the full financial year, except for Mr Jagjeet Bindra
who was appointed as a director of the Company with effect from 1 July
2015. All remain directors at the date of this report.
John Grill (Chairman)
Ron McNeilly (Deputy Chairman and Lead Independent Director)
Larry Benke
Jagjeet Bindra
Erich Fraunschiel
John M Green
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
Andrew Wood (Chief Executive Officer)
DIRECTORS’ MEETINGS
The number of Board and standing Board Committee meetings held during the financial year and the number of meetings attended by each of the
Company’s directors is set out below:
DIRECTORS
John Grill
Ron McNeilly
Larry Benke
Erich Fraunschiel
John M Green
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
Andrew Wood
BOARD
AUDIT AND RISK
COMMITTEE
NOMINATIONS
COMMITTEE
REMUNERATION
COMMITTEE
HEALTH, SAFETY AND
ENVIRONMENT COMMITTEE
MEETINGS
HELD WHILE
A DIRECTOR
MEETINGS
NUMBER HELD WHILE
A MEMBER
ATTENDED
MEETINGS
NUMBER HELD WHILE
A MEMBER
ATTENDED
MEETINGS
NUMBER HELD WHILE
A MEMBER
ATTENDED
MEETINGS
NUMBER HELD WHILE
A MEMBER
ATTENDED
NUMBER
ATTENDED
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
9
8
9
6
6
6
6
6
6
6
6
6
5
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
5
6
6
6
6
6
6
6
6
6
6
6
6
6
6
In addition to those meetings, three special purpose Board Committee meetings were held during the financial year. The Board also met informally
during the financial year by way of a Board briefing on nine occasions.
All non‑executive directors who are not members of the standing Board Committees are invited to, and generally attend, the standing Board Committee
meetings.
The independent non‑executive directors met separately on six occasions, during the financial year.
46 WorleyParsons Annual Report 2015
DIVIDENDS – WORLEYPARSONS LIMITED
Details of dividends paid in respect of the current financial year and
previous financial year are as follows:
Interim ordinary dividend for 2015 of 34.0 cents per
ordinary share paid on 2 April 2015 (2.7 cents franked)
Final ordinary dividend for 2014 of 51.0 cents per ordinary
share paid on 30 September 2014 (10.5 cents franked)
Interim ordinary dividend for 2014 of 34.0 cents per ordinary
share paid on 31 March 2014 (8.5 cents franked)
Final ordinary dividend for 2013 of 51.0 cents per ordinary
share paid on 20 September 2013 (51.0 cents unfranked)
Total dividends paid
2015
$’M
84.1
125.7
–
–
209.8
2014
$’M
–
–
83.9
125.7
209.6
Since the end of the financial year, the directors have resolved to pay
a dividend of 22.0 cents per fully paid ordinary share, including
exchangeable shares, unfranked (2014: 51.0 cents per share, partially
franked at 20.5%). In accordance with AASB 137 Provisions, Contingent
Liabilities and Contingent Assets, the aggregate amount of the proposed
final dividend of $54.4 million is not recognized as a liability as at
30 June 2015.
REVIEW OF OPERATIONS
A detailed review of the Group’s operations for the financial year and the
results of those operations is contained in the Operating and Financial
Review, which is incorporated into, and forms part of, this Directors’
Report. A summary of the consolidated revenue and results in respect of
the current financial year and previous financial year are as follows:
CONSOLIDATED
2015
$’M
2014
$’M
Revenue and other income
8,757.5
9,582.5
Depreciation
Amortization
Impairment of goodwill
Earnings before interest and tax (EBIT)
Net interest expense
Profit before income tax expense
Income tax expense
Statutory (loss)/profit after income tax expense
Non‑controlling interests
Statutory (loss)/profit after income tax expense attributable to:
Members of WorleyParsons Limited
Add: impairment of goodwill
Add: Arkutun‑Dagi project settlement costs
Less: tax on Arkutun‑Dagi project settlement costs
Add: tax arising on reorganization of business in China
Add: restructuring costs
Less: tax on restructuring costs
Less: net gain on revaluation of investments previously
accounted for as equity accounted associates
(24.6)
(85.4)
(198.6)
87.1
(55.4)
31.7
(70.7)
(39.0)
15.9
(54.9)
198.6
70.0
(21.0)
5.9
–
–
(27.1)
(82.4)
–
428.2
(59.6)
368.6
(100.0)
268.6
19.5
249.1
–
–
–
–
35.4
(9.7)
–
(11.4)
Underlying profit after income tax expense attributable to
members of WorleyParsons Limited1
198.6
263.4
1
The directors consider underlying profit information is important to understand the
sustainable performance of the Company by excluding significant non‑recurring items.
CONSOLIDATED
2015
$’M
2014
$’M
Revenue and other income
8,757.5
9,582.5
Less: procurement revenue at nil margin (including share of
revenue from associates)
Add: share of revenue from associates
Less: net gain on revaluation of investments previously
accounted for as equity accounted associates
Less: interest income
Aggregated revenue2
(2,038.0)
(2,726.1)
514.6
524.0
–
(6.6)
(11.4)
(5.3)
7,227.5
7,363.7
2
Aggregated revenue is defined as statutory revenue and other income plus share of
revenue from associates less procurement revenue at nil margin, interest income and
net gain on revaluation of investments previously accounted for as equity accounted
associates. The directors of the Company believe the disclosure of revenue attributable
to associates provides additional information in relation to the financial performance of
the Group.
AGGREGATED REVENUE
EBIT
EBIT MARGIN
2015
$’M
2014
$’M
2015
$’M
2014
$’M
2015
%
2014
%
Services
5,501.4
5,618.2
438.7
547.4
Major Projects
Improve
Development
922.7
649.0
154.4
862.9
785.6
97.0
46.3
37.0
14.1
67.5
48.1
1.4
7,227.5
7,363.7
536.1
664.4
Global support costs3
(151.9)
(181.3)
8.0
5.0
5.7
9.1
7.4
9.7
7.8
6.1
1.4
9.0
Interest and tax
for associates
Amortization of
acquired intangible
assets
Underlying EBIT1
(6.7)
(9.2)
(21.8)
(21.7)
355.7
452.2
4.9
6.1
3
Excluding global support‑related restructuring costs (refer note 3 to the financial
statements).
Aggregated revenue was $7,227.5 million, a decrease of 1.8% on the prior
financial year. Underlying EBIT of $355.7 million, was down 21.3% from
the prior financial year result of $452.2 million.
The underlying EBIT margin on aggregated revenue for the Group,
decreased to 4.9% compared with 6.1% in 2014. After tax, the members
of WorleyParsons Limited earned an underlying net margin, on
aggregated revenue of 2.7%, compared to the 2014 net margin of 3.6%.
The underlying effective tax rate 28.6% compared with 28.0% in 2014.
The Group retains a strong cash position $381.9 million
(2014: $365.8 million) with gearing (net debt/net debt plus total equity)
at financial year end of 28.0% (2014: 18.7%). Earnings before interest,
tax, depreciation and amortization (EBITDA) interest cover for 2015 was
6.4 times (2014: 8.3 times). EBITDA interest cover, excluding net gain on
revaluation of investments previously accounted for as equity accounted
associates, for 2015 was 6.4 times (2014: 8.1 times).
Operating cash inflow for the period was $251.3 million, compared to
$550.1 million in 2014. Cash outflow from investing activities was
$188.9 million (2014: $104.3 million).
WorleyParsons Annual Report 2015 47
(LOSS)/EARNINGS PER SHARE
Basic (loss)/earnings per share
Basic earnings per share excluding impairment of goodwill,
Arkutun‑Dagi project settlement costs, net of taxation, tax
arising on reorganization of business in China, net acquisition
gain on revaluation of investments previously accounted for
as equity accounted associates and restructuring costs
Diluted (loss)/earnings per share
Diluted earnings per share excluding impairment of goodwill,
Arkutun‑Dagi project settlement costs, net of taxation, tax
arising on reorganization of business in China, net acquisition
gain on revaluation of investments previously accounted for
as equity accounted associates and restructuring costs
2015
CENTS
2014
CENTS
(22.2)
101.0
80.4
(22.2)
106.8
100.3
79.9
106.1
Basic earnings per share, excluding impairment of goodwill, Arkutun‑
Dagi project settlement costs, net of taxation, tax arising on reorganization
of business in China, net gain on revaluation of investments previously
accounted for as equity accounted associates and restructuring costs, were
80.4 cents per share, a decrease of 24.7% from the previous financial year
result of 106.8 cents per share.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
As announced in April 2014 and effective 1 July 2014, the business
operations are managed and reported by business lines: Services, Major
Projects, Improve and Development. This represents a change to the
operating segments reported in the previous corresponding period.
The historical segment results for the financial year ended 30 June 2014
have been restated to be comparable with the revised segmentation
approach as required by AASB 8 Operating Segments.
On 24 October 2014, the Group acquired 100% of the voting shares of
MTG Limited (MTG) and its controlled entities. MTG is a US based
management consulting firm in the oil and gas, petrochemicals and
chemicals industries with operations in North America, the United
Kingdom and Australia. The acquisition was made as a building block in
the growth of Advisian, the advisory business of the Group. The Financial
Report includes the results of MTG for the eight month period from the
acquisition date. On 2 December 2014, the Group also acquired 100% of
the voting rights of Hadron Holdings Inc and its controlled entities
(comprising the Atlantic Nuclear business (ANI)).
MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
Since the end of the financial year, the directors have resolved to pay
a dividend of 22.0 cents per fully paid ordinary share, including
exchangeable shares, unfranked (2014: 51.0 cents per share, partially
franked at 20.5%). In accordance with AASB 137 Provisions, Contingent
Liabilities and Contingent Assets, the aggregate amount of the proposed
final dividend of $54.4 million is not recognized as a liability as at
30 June 2015.
No other matter or circumstance has arisen since 30 June 2015 that has
significantly affected, or may significantly affect:
• the consolidated entity’s operations in future financial years;
• the results of those operations in future financial years; or
• the consolidated entity’s state of affairs in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
OF OPERATIONS
The likely developments in the Group’s operations in future financial
years and the expected results of those operations are set out in
section 3.2 of the Operating and Financial Review on page 43.
ENVIRONMENTAL REGULATION
In the majority of the Group’s business operations, it does not have
responsibility for obtaining environmental licenses. The Group typically
48 WorleyParsons Annual Report 2015
assists its customers, who usually own or operate plant and equipment,
with the management of their environmental responsibilities, rather than
having those responsibilities itself. However, the Group has
environmental responsibilities in terms of compliance with environmental
controls and in exercising reasonable care and skill in its design,
construction management, operation and supervising activities. The risks
associated with environmental issues are managed through the Group’s
risk management and quality assurance systems.
It is the Group’s policy to comply with all environmental regulations
applicable to it and to the work it carries out. The Company confirms, for
the purposes of section 299(1)(f) of the Corporations Act 2001 (Act) that
it is not aware of any breaches by the Group of any environmental
regulations under the laws of the Commonwealth of Australia, or of a
State or Territory of Australia.
NON‑AUDIT SERVICES
During the financial year, Ernst & Young, the Group’s auditor, performed
certain other services in addition to its statutory audit duties. Total fees for
non‑audit services provided by the auditor amounted to $1,377,362.
The Board has adopted a policy governing the provision of non‑audit
services by the auditor. The Board has considered the position and,
in accordance with the advice received from the Audit and Risk
Committee, is satisfied that the provision of the non‑audit services is
compatible with the general standard of independence for auditors
imposed by the Act. The directors are satisfied that the provision of
non‑audit services by the auditor did not compromise the auditor
independence requirements of the Act for the following reasons:
• all non‑audit services have been reviewed by the Audit and Risk
Committee to ensure they do not impact the integrity and objectivity
of the auditor; and
• none of the services undermines the general principles relating to
auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants, including reviewing and auditing the
auditor’s own work, acting in a management or decision making
capacity for the Group, acting as advocate for the Group or jointly
sharing economic risk and rewards.
A copy of the auditor’s independence declaration as required under
section 307C of the Act is as follows:
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s Independence Declaration to the Directors of WorleyParsons
Limited
In relation to our audit of the financial report of WorleyParsons Limited for the financial year ended 30
June 2015, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional
conduct.
Ernst & Young
SJ Ferguson
Partner
26 August 2015
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended
30 June 2015 may be accessed from the Company’s website at
http://www.worleyparsons.com/InvestorRelations/Pages/
CorporateGovernance.aspx.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Directors’ report CONTINUED
INFORMATION ON DIRECTORS AND COMPANY SECRETARY
JOHN GRILL AO BSC, BENG (HONS), HON DENG (SYDNEY)
CHAIRMAN AND NON‑EXECUTIVE DIRECTOR – CHIEF EXECUTIVE
OFFICER AND DIRECTOR FROM LISTING IN NOVEMBER 2002 UNTIL
OCTOBER 2012 AND DIRECTOR OF THE COMPANY BEFORE LISTING
AND ITS PREDECESSOR ENTITIES FROM 1971
COUNTRY OF RESIDENCE – AUSTRALIA
John is Chairman of the Board and Chairman of the Nominations Committee
and a member of the Remuneration Committee and Health, Safety and
Environment Committee. He has over 40 years’ experience in the resources
and energy industry, starting his career with Esso Australia. In 1971, he
became Chief Executive of Wholohan Grill and Partners, the entity that
ultimately became WorleyParsons Limited. This specialized consulting
practice acquired the business of Worley Engineering Pty Limited in Australia
in 1987. It listed on the ASX in 2002 as Worley Group Limited following a
restructuring of that company. In 2004, Worley Group Limited acquired
Parsons E&C Corporation, a United States‑based global project services
company, and changed its name to WorleyParsons Limited. The Group then
acquired the Colt Group in Canada in 2007, substantially increasing its
capability in the upstream and downstream components of oil sands. John has
personal expertise in every aspect of project delivery in the resources and
energy industry. He has strong relationships with the Group’s major customers
and was closely involved at board level with the Group’s joint ventures. John
was awarded an honorary doctorate by The University of Sydney in 2010 in
recognition of his contribution to the engineering profession. He was
appointed an Officer of the Order of Australia in 2014 for distinguished
service to engineering and to business, to the minerals, energy and power
supply industries and as a supporter of advanced education and training. John
is on the board of Neuroscience Research Australia and of the Australian
Chamber Orchestra.
RON MCNEILLY BCOM, MBA, FCPA, FAICD
DEPUTY CHAIRMAN AND LEAD INDEPENDENT DIRECTOR –
DIRECTOR SINCE LISTING IN NOVEMBER 2002
COUNTRY OF RESIDENCE – AUSTRALIA
Ron is Deputy Chairman and Lead Independent Director of the Board and was
previously Chairman of the Board. He is a member of the Audit and Risk
Committee, Nominations Committee, Remuneration Committee and Health,
Safety and Environment Committee. Ron has over 30 years’ experience in the
resources industry. He joined BHP Billiton Limited in 1962 and held positions
with that company including executive director and President BHP Minerals,
Chief Operating Officer, Executive General Manager and Chief Executive
Officer BHP Steel, General Manager Transport, General Manager Long
Products Division and General Manager Whyalla Works. Ron is a former
Chairman of Ausmelt Limited and Melbourne Business School Limited and a
former Deputy Chairman of BlueScope Steel Limited previously BHP Steel.
He is a former director of Alumina Limited, BHP and BHP Billiton, QCT
Resources and Tubemakers of Australia.
Australian listed company directorships
LISTED
COMPANY NAME
NATURE OF
DIRECTORSHIP
DATE OF
COMMENCEMENT CESSATION
DATE OF
BlueScope
Steel Limited
Deputy Chairman
and non‑executive
director
10 May 2002
7 April 2015
LARRY BENKE BSC ENG (HONS)
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE JULY 2010
COUNTRY OF RESIDENCE – CANADA
Larry joined the Board as a non‑executive director on 1 July 2010 and is a
member of the Audit and Risk Committee, Nominations Committee and
Health, Safety and Environment Committee. Larry has extensive experience in
the engineering and construction industries including roles in engineering
design, project management and general management including President/
CEO of the Colt Group and Managing Director of WorleyParsons Canada until
his retirement in 2010. He successfully led Colt through a period of substantial
growth and expansion which continued with the integration of the company
into the Group’s Canada business. Larry is Chairman of Next Hydrogen, a
manufacturer of advanced electrolyzers for hydrogen production. He is a
director of the board of The Calgary Airport Authority, a not‑for‑profit
responsible for the operation and development of the Calgary International
Airport. He is also a director of Cervus Equipment Corporation, a Toronto
Stock Exchange listed company in the business of acquiring and operating
agricultural, transportation and construction equipment dealerships.
Larry graduated from the University of Alberta in 1973 with a Bachelor of
Science in Electrical Engineering (Honors).
JAGJEET BINDRA BTECH (CHEME), MS (CHEME), MBA (HONS)
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE JULY 2015
COUNTRY OF RESIDENCE – UNITED STATES
Jagjeet (Jeet) was appointed to the Board on 1 July 2015 and is a member of
the Nominations Committee. Jeet has over 35 years’ experience in the global
resources and energy industry including 32 years in senior leadership roles
within the Chevron Group of Companies, retiring from Chevron as President
of Chevron Global Manufacturing in 2009. The breadth of his executive
experience extends into oil and gas, chemicals, refinery engineering and
operations, design and construction, project management, engineering
technology and strategic and business planning. He also has extensive public
company board experience and is currently a member of the board of Edison
International/Southern California Edison Company and LyondellBasell
Industries N.V., both publicly listed companies on the New York Stock
Exchange. He was formerly Managing Director and Chief Executive Officer
of Caltex Australia Limited and a director of Transfield Services Limited, both
publicly listed companies on the ASX. Jeet is a Chemical Engineering
graduate of the Indian Institute of Technology in Kanpur, India and holds a
Master of Science degree in Chemical Engineering from the University of
Washington and an MBA degree from Saint Mary’s College of California.
ERICH FRAUNSCHIEL BCOM (HONS), FCPA, FAICD
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE MARCH 2003
COUNTRY OF RESIDENCE – AUSTRALIA
Erich is Chairman of the Audit and Risk Committee and a member of
the Nominations Committee. He is also a director of BWP Management
Limited, the responsible entity of the BWP Trust, an Australian real estate
investment trust listed on ASX. Erich’s early business career was in the
petroleum marketing and management consulting industries. In 1981,
he joined the Australian Industry Development Corporation where he was
involved in project lending, investment banking and venture capital
investment. In 1984, he joined Wesfarmers to start the company’s projects and
business development function. In 1988, he became General Manager of
Wesfarmers’ Commercial Division and from 1992 until his retirement in July
2002, was an executive director and Chief Financial Officer of Wesfarmers.
Since 2002, he has served as a non‑executive director on the boards of several
listed and unlisted companies.
Australian listed company directorships
LISTED
COMPANY NAME
NATURE OF
DIRECTORSHIP
DATE OF
COMMENCEMENT CESSATION
DATE OF
Woodside
Petroleum Limited
Non‑executive
director
BWP Trust
Non‑executive
director
1 December 2002
28 February 2013
1 February 2015
n/a
JOHN M GREEN BJURIS/LLB, FAICD, SFFIN
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE LISTING IN
NOVEMBER 2002
COUNTRY OF RESIDENCE – AUSTRALIA
John is Chairman of the Remuneration Committee and a member of the
Nominations Committee. He is a company director, a business writer and a
novelist. John is Deputy Chairman of QBE Insurance Group Limited and a
member of the Council of the National Library of Australia. John is co‑founder
of book publisher, Pantera Press. He was previously an investment banker at
Macquarie Bank, as an executive director. His career before banking was in
law, including as a partner at two major law firms.
Australian listed company directorships
LISTED
COMPANY NAME
NATURE OF
DIRECTORSHIP
DATE OF
COMMENCEMENT CESSATION
DATE OF
QBE Insurance
Group Limited
Deputy Chairman
and non‑executive
director
1 March 2010
n/a
CHRISTOPHER HAYNES OBE BSC (HONS), DPHIL, CENG,
FIMECHE, FIE AUST
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE JANUARY 2012
COUNTRY OF RESIDENCE – UNITED KINGDOM
Chris was appointed to the Board effective 1 January 2012. He is Chairman of
the Health, Safety and Environment Committee and a member of the
Nominations Committee. He is a non‑executive director of Woodside
WorleyParsons Annual Report 2015 49
Petroleum Limited. His appointment followed a 39 year career with the Shell
Group of Companies and their affiliates. He has lived in a large number of
countries, working in the oil and gas exploration and production, LNG and
chemicals businesses, primarily in project development and delivery and in
operations. Chris was seconded to Woodside from 1999 to 2002, where he was
General Manager of the North West Shelf Venture and was subsequently
Managing Director of Shell’s operations in Syria and of Nigeria LNG Limited.
In 2008, Chris assumed responsibility for the delivery of Shell’s major
upstream projects worldwide. He retired from Shell in August 2011. Chris
graduated from the University of Manchester with a Bachelor of Science with
Honors in Mechanical Engineering and obtained a Doctor of Philosophy
degree in Applied Sciences from the University of Sussex. He is a Chartered
Engineer and Fellow of the Institution of Mechanical Engineers in the United
Kingdom and also a Fellow of the Institution of Engineers, Australia. Chris
was appointed to the Order of the British Empire in June 2009 for his services
to the British oil and gas industry in Nigeria.
Australian listed company directorships
LISTED
COMPANY NAME
NATURE OF
DIRECTORSHIP
DATE OF
COMMENCEMENT CESSATION
DATE OF
Woodside
Petroleum Limited
Non‑executive
director
1 June 2011
n/a
CATHERINE LIVINGSTONE AO BA (HONS), HON DBUS
(MACQUARIE), HON DSC (MURDOCH), HON BBUD (UTS), FCA,
FAICD, FTSE
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE JULY 2007
COUNTRY OF RESIDENCE – AUSTRALIA
Catherine joined the Board on 1 July 2007 and is a member of the Audit and
Risk Committee and Nominations Committee. She is Chairman of Telstra
Corporation Limited and a director of Saluda Medical Pty Limited and the
George Institute for Global Health. Catherine is also the President of the
Business Council of Australia and the President of the Australian Museum
Trust. She was Chairman of CSIRO from 2001 to 2006 and has also served on
the boards of Macquarie Bank Limited, Macquarie Group Limited, Goodman
Fielder Limited and Rural Press Limited. Catherine was the Managing Director
of Cochlear Limited from 1994 to 2000, taking it through to an initial public
offer in 1995. In 2003, Catherine was awarded the Centenary Medal for service
to Australian Society in Business Leadership and in 2008 she was appointed an
Officer of the Order of Australia for service to the development of Australian
science, technology and innovation policies to the business sector. She has a
Bachelor of Arts (Honors) in Accounting, is a Chartered Accountant and was
the Eisenhower Fellow for Australia in 1999.
Australian listed company directorships
LISTED
COMPANY NAME
NATURE OF
DIRECTORSHIP
DATE OF
COMMENCEMENT CESSATION
DATE OF
Macquarie Bank
Limited
Non‑executive
director
Macquarie Group
Limited
Non‑executive
director
Telstra Corporation Non‑executive
Limited
director
19 November 2003
25 July 2013
30 August 2007
25 July 2013
30 November 2000
n/a
Chairman
8 May 2009
n/a
WANG XIAO BIN BCOM, CPA, GDIP APPLIED FINANCE AND
INVESTMENT
NON‑EXECUTIVE DIRECTOR – DIRECTOR SINCE DECEMBER 2011
COUNTRY OF RESIDENCE – HONG KONG, CHINA
Xiao Bin was appointed to the Board on 1 December 2011 and is a member of
the Audit and Risk Committee and Nominations Committee. She is based in
Hong Kong and is an executive director and Chief Financial Officer of China
Resources Power Holdings Company Limited. Prior to joining China
Resources Power in July 2003, she was a Director of Corporate Finance at
ING Investment Banking, responsible for execution of capital markets and
merger and acquisition transactions in the Asia Pacific region. Xiao Bin
worked for Price Waterhouse in Australia in the Audit and Business Advisory
Division for five years before joining ING. She is a member of CPA Australia
and holds a graduate diploma in Applied Finance and Investment from the
Securities Institute of Australia (now Finsia) and a Bachelor of Commerce
from Murdoch University in Australia.
50 WorleyParsons Annual Report 2015
ANDREW WOOD BENG, GDIP FIN MGMT, GDIP LAB RELATIONS,
FIE AUST
CHIEF EXECUTIVE OFFICER – EXECUTIVE DIRECTOR SINCE
OCTOBER 2012
COUNTRY OF RESIDENCE – AUSTRALIA
Andrew was appointed as Chief Executive Officer effective 23 October 2012.
With a tenure of over 21 years with the Group, and over 34 years’ experience
in the resources and energy industry, Andrew has extensive knowledge across
the Group. His previous roles include Group Managing Director – Finance/
CFO responsible for Group‑wide direction and support to the business
functions of finance, information management, internal procurement and
communications, legal and risk; Managing Director for the Australia/New
Zealand region; and Managing Director of Mergers and Acquisitions,
overseeing 15 business acquisitions including Parsons E&C Corporation in
November 2004 and the Colt Group in March 2007. He was also responsible
for the Group’s early expansion into Thailand and the Middle East, Canada
and Chile in his capacity as Managing Director for International Operations.
Andrew holds a Bachelor of Engineering and graduate diplomas in Financial
Management and Labour Management Relations. He is a Fellow of the
Institution of Engineers, Australia.
PETER JANU BEC, LLB, CA, FGIA
COMPANY SECRETARY AND GENERAL COUNSEL CORPORATE –
APPOINTED OCTOBER 2008
Peter joined WorleyParsons in 2008 in his current role. He is responsible for
corporate governance for the Board, and the senior executive team. He is also
responsible for legal and governance matters relevant to the listed entity, its
capital structure, and its regulatory obligations. Peter’s specific group
accountabilities include continuous disclosure, trade sanctions and compliance
with anti‑bribery laws. Peter has a background in corporate taxation, project
finance, legal, governance and company secretary roles. He has previously
worked in the professional services, investment banking, and construction and
mining services sectors. Peter holds degrees in Law and Economics from The
University of Sydney and is a Chartered Accountant and a Fellow of the
Governance Institute of Australia.
INDEMNITIES AND INSURANCE
Under the Company’s Constitution, the Company indemnifies each
current and former officer of the Group against certain liabilities and costs
incurred by them as an officer of the Group. The Company also
indemnifies each current and former officer of the Group against certain
liabilities and costs incurred when the officer acts as an officer of another
body corporate at the Company’s request and the liability or cost is
incurred in that capacity. Neither indemnity extends to liabilities or costs
from which the Company is prohibited from indemnifying current or
former officers under the Act.
In addition, the Company has entered into Deeds of Access, Indemnity
and Insurance with certain officers of the Group. Under those deeds, the
Company agrees (among other things) to:
• indemnify the officer to the extent permitted by law and the Company’s
Constitution;
• maintain a directors’ and officers’ insurance policy; and
• provide officers with access to Board papers.
The Company maintains a directors’ and officers’ insurance policy that,
subject to certain exemptions, provides insurance cover to former and
current officers of the Group. During the financial year, the Company
paid insurance premiums to insure those officers of the Group. The
contracts of insurance prohibit the disclosure of the amounts of premiums
paid and the nature of the liability covered.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in Class Order 98/0100 issued by
the Australian Securities and Investments Commission, relating to the
“rounding off” of amounts in the Directors’ Report and financial
statements. Unless otherwise expressly stated, amounts referred to in this
report have been rounded off to the nearest hundred thousand dollars in
accordance with that Class Order and amounts less than $50,000 that have
been rounded down are represented in this report by 0.0.
Directors’ report CONTINUED
REMUNERATION REPORT
The Company’s directors present the Remuneration Report prepared in accordance with section 300A of the
Corporations Act 2001 (Act) for the Company and the consolidated entity for financial year 2015 (FY2015). The
information provided in this Remuneration Report has been audited as required by section 308(3C) of the Act.
This Remuneration Report forms part of the Directors’ Report.
The Remuneration Report is presented in four sections:
SECTION
WHAT IT COVERS
1.
Letter from the Chairman
of the Remuneration
Committee
How Company performance was reflected in Executive remuneration during FY2015.
Key changes in remuneration during FY2016.
2. Remuneration Governance
The guiding principles adopted by the Board which underpin all remuneration decisions and actions.
Framework
How the Board, Nominations Committee and Remuneration Committee make remuneration decisions.
3.
Executive Remuneration
in Detail
The names and positions of the Executive Director and Group Executives (Executives) whose remuneration
details are disclosed.
A breakdown of the Executive remuneration structure, and summary of the key terms and performance
conditions for the “at risk” components (short and long term incentives) including a description of the Combined
Incentive Plan. It also includes details of the Clawback (Malus) provision.
How the Company’s performance over a five year period has impacted on remuneration outcomes.
The remuneration outcomes for Executives in accordance with the Australian Accounting Standards (accounting
standards), including total remuneration, vesting of at risk components and movements in equity holdings. It also
includes details of actual remuneration awarded during the year and actual remuneration received.
The key contract terms governing the employment arrangements of Executives. Details of termination
arrangements of exiting Key Management Personnel (KMP) and the equity allocation for Mr Abba.
4. Non‑Executive Director
The names and positions of the Non‑Executive Directors (NEDs) whose remuneration details are disclosed.
Remuneration
The guiding principles which govern the process and basis for setting NED remuneration.
An outline of the remuneration structure for NEDs, including current Board and Committee fees.
Details of NEDs’ total remuneration in FY2015 and FY2014.
PAGE
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65
65
65
65
GLOSSARY
Clawback (Malus) – provides the Board with discretion on the treatment of equity awards where an employee has acted fraudulently or dishonestly,
is in breach of that employee’s obligations to the Company, or has received awards based on financial accounts which are later restated.
Combined Incentive Plan – a variable component of total remuneration. Delivers an incentive based on Company achievement against budget Group
Net Profit After Tax (NPAT) and Executive achievement against agreed Key Performance Indicators (KPIs). Two thirds of the incentive value is paid as
cash and one third is deferred as an equity award subject to a three year service and performance requirement.
Earnings Per Share (EPS) – determined by dividing the Group NPAT by the weighted average number of the Company’s ordinary shares on issue
during the financial year.
Executive – as detailed on page 55, Executives include both Executive Directors and Group Executives and have authority and responsibility for
planning, directing and controlling the activities of the entity, directly or indirectly.
Group Net Profit After Tax (NPAT) – is the net profit earned by the Group after deducting all expenses including interest, depreciation and tax. From
time to time, in determining outcomes under the incentive plans, the Board may use its discretion to apply the underlying NPAT which in the Board’s
opinion reflects the Company’s operating results.
Key Management Personnel (KMP) – those persons having authority and responsibility for planning, directing and controlling the activities of the
entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. KMP comprise Executives and Non‑Executive
Directors and are detailed on pages 55 and 65.
Key Performance Indicators (KPIs) – performance targets agreed at the start of each financial year under the Combined Incentive Plan. KPIs include
both financial and non‑financial metrics, examples of which are detailed on page 56.
Long Term Incentive (LTI) Plan – a variable component of total remuneration. Performance rights are granted to Executives under the LTI Plan and
will vest and become available for exercise after four years, subject to Company achievement against prescribed long term performance requirements.
Non‑Executive Director (NED) – as detailed on page 65, directors of the entity have authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly.
Total Shareholder Return (TSR) – provides a measure of the change in the value of the Company’s share price over a period, including reinvested
dividends, expressed as a percentage of the opening value of the shares.
WorleyParsons Annual Report 2015 51
1. LETTER FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE
Dear Shareholders,
CHANGES TO KEY MANAGEMENT PERSONNEL
This year we welcomed two new Executives, Dennis Finn and Filippo Abba. Dennis commenced as Group Managing Director/Chief Executive Officer
(CEO) of our Advisory business (Advisian) on 1 September 2014 and has become Key Management Personnel (KMP) effective 1 July 2015 with the
launch of Advisian as a separate business line. Filippo commenced as Group Managing Director, Improve on 1 April 2015, succeeding Randy Karren
who retired on 31 March 2015.
PAY FOR PERFORMANCE IN FY2015
This year’s financial results fell below the Group NPAT gate opener threshold to trigger a payment, resulting in Executives receiving no short term
incentive payments.
Also, the benchmarks for shareholder return and earnings per share in our long term incentive scheme have not been met, resulting in equity grants not
vesting for the third year in a row.
CHANGES TO REMUNERATION FOR FY2016 AND BEYOND
These outcomes are consistent with our philosophy that our Executives’ incentives should reflect shareholder outcomes. However, the Remuneration
Committee has been considering the impact our remuneration outcomes are having on the motivation and retention of our key people, especially during
periods of great volatility in the markets for our services.
We concluded that while Company performance must remain the driving force in determining short term incentives, it is also important to appropriately
reward our people for significant achievements in delivering on our strategy.
With this in mind, the Board is revising the Executives’ remuneration structure for FY2016.
FIXED PAY AND PAY MIX
We have noted that many of our competitors give more weight to the incentive components in their remunerations structures. In this context, the
Company’s future remuneration reviews will have a bias to increasing the incentive components.
We have thus made no adjustments to our Executives’ Fixed Pay for FY2016, except to reflect the CEO’s request that his own Fixed Pay be reduced by
10% from 1 July 2015.
We have also made no changes to Non‑Executive Directors’ fees for FY2016.
LONG TERM INCENTIVES
No adjustments will be made to the Long Term Incentive (LTI) Plan for FY2016.
COMBINED INCENTIVE PLAN
A key aspect of aligning our Executives’ interests with shareholders, to ensure they have sufficient “skin in the game”, is our minimum shareholding
requirement of two times Fixed Pay (four times for the CEO). The FY2016 Combined Incentive Plan (CI Plan) will be amended to provide more
certainty of growth in Executive shareholdings, while retaining the overall target pay mix of short term cash and medium term deferred equity.
CASH PORTION OF THE CI PLAN
The cash component of the CI Plan retains a focus on both financial and non‑financial Key Performance Indicators (KPIs). For FY2016 and beyond, the
overall Group NPAT gate opener will be replaced by individual thresholds for each KPI to improve an Executive’s line of sight over achieving their
targets. The Board retains rigorous oversight of the KPIs set, and will continue to ensure they retain sufficient stretch, and appropriate thresholds. Group
NPAT remains one of the key financial KPIs, along with business line EBIT targets relevant to each business line leader, as well as cash collection
targets. The non‑financial KPIs are focused on our strategic imperatives.
From FY2016 a more leveraged model will apply to financial KPIs. We have extended the scale from 90% back to 80% in recognition that we are at a
very volatile point of our economic cycle and that notwithstanding the efforts of our Executives, the variability of outcomes has increased. At or below
80% of target (e.g. Group NPAT budget) no payment will be made.
A sliding scale will then apply with 5% of the target incentive awarded for each 1% achieved above 80% of budget up to a cap of 200% of target
incentive if 120% or more of budget is achieved. Non‑financial KPIs will have a 100% maximum score. As the minimum weighting for financials is
50%, the combined effect restricts the overall incentive to 150% of target.
The current scale provides, for example, 91% vesting at 91% performance. The new sliding scale provides for significantly reduced payouts for
performance above the threshold, but below the target. The Board considers this approach should give Executives greater incentive to overachieve.
EQUITY PORTION OF THE CI PLAN
The CI Plan will retain the deferred equity component, including a forfeiture provision if results are subsequently restated or any impropriety occurs.
The equity portion will continue to be granted annually as performance rights. The vesting period for this equity will be reduced from three to two
years. (The LTI remains a four year plan with no ability for re‑testing.)
The rights under the CI Plan will convert into a number of shares that depends on changes in the share price over a two year performance period. If the
share price doubles (or more than doubles) over that performance period, the rights convert into twice the number of shares. If the share price halves (or
more than halves), the rights do not convert into any shares and they lapse. In between double and half the share price, the rights vest on a proportionate
basis. However, given the variation in the share price, the value of the shares into which the rights convert will rise or fall more than proportionately.
In the US these kinds of performance rights are sometimes known as Market Stock Units (MSUs) but for greater clarity we call them Share Price
Performance Rights (SPPRs).
52 WorleyParsons Annual Report 2015
Directors’ report CONTINUED We provide the following four examples to help your understanding of how the SPPRs will work. Two examples are where the share price rises, and two
where it falls. The four examples are based on a notional grant of 1,000 SPPRs with a notional WorleyParsons share price of $8.00 at the time the
SPPRs are issued, i.e. a notional value to the executive of $8,000. In two years’ time:
Scenario 1: The opening share price rises to $20.00 (i.e. more than doubles). The 1,000 SPPRs convert to 2,000 shares and their total value = $40,000.
The executive’s incentive has delivered a $40,000 reward (in shares), i.e. $32,000 above the notional $8,000 value at the time of issue.
Scenario 2: The opening share price rises to $12.00. The 1,000 SPPRs convert to 1,000 x ($12/$8) = 1,500 shares and their total value = $18,000. The
executive’s incentive has delivered an $18,000 reward (in shares), i.e. $10,000 above the notional $8,000 value at the time of issue.
Scenario 3: The opening share price falls to $6.00. The 1,000 SPPRs convert to 1,000 x ($6/$8) = 750 shares and their total value = $4,500. The
executive’s incentive has delivered a $4,500 reward (in shares), i.e. $3,500 below the notional $8,000 value at the time of issue.
Scenario 4: The opening share price halves or more, then the SPPRs lapse and no shares are issued.
The Board has introduced SPPRs because they bring the Company closer to the remuneration practices of our global peers with higher weightings to
performance‑related pay. They:
•
•
•
provide our Executives with a clear goal – the increase in the Company’s share price – more closely aligning their interests with those of
shareholders;
have the potential to be a stronger executive incentive than the deferred equity component of prior years;
replace the previous Group NPAT threshold (or “gate‑opener”) with a threshold relating to share price, giving Executives stronger shareholder
alignment, while at the same time protecting shareholders on the downside by the reward cutting out if the share price halves. This cut out is not
typically a feature of this type of award in other companies, but we believe it strikes a better balance between rewarding effort and requiring
minimum short term outcomes which is more appropriate to current circumstances. Such a balance is important given the changes that the Company
is currently making to seek to better position itself for future growth and the need to ensure executive motivation and retention during this time; and
•
have the potential to increase executive shareholding “skin in the game” and shareholder alignment because, as SPPRs convert into shares in the
Company, executives will be required to hold the shares to comply with the Company’s minimum shareholding requirement.
I wish to reaffirm to shareholders that the Board is resolute in its focus on appropriate remuneration for our people and ensuring we strike the right
balances between short term performance and attracting and retaining the caliber of people we need to execute our strategy to “Realize our future”.
Kind regards
JOHN M GREEN
Chairman, Remuneration Committee
2. REMUNERATION GOVERNANCE FRAMEWORK
GUIDING REMUNERATION PRINCIPLES
The guiding principles that underpin the Company’s remuneration arrangements for Executives are driven from the Company beliefs. These beliefs
guide our actions, making it clear what we are accountable for and how we achieve success:
DELIVER WHAT WE
PROMISE
ZERO HARM
PRUDENTLY CONTAIN
COST AND ELIMINATE
WASTE
BUILD ENDURING
CUSTOMER
RELATIONSHIPS
DEVELOP AND REWARD
TEAMS WHO DELIVER
ON CUSTOMER
EXPECTATIONS
The Executive remuneration principles drive the behaviors and results to help us achieve our strategy and vision:
• provide a fair level of reward in order to retain and attract high caliber employees;
• build a culture of achievement by providing a transparent link between reward and performance;
• build long term employee commitment through continued WorleyParsons share ownership;
• promote mutually beneficial outcomes by aligning employee, customer and shareholder interests; and
• support the expectations of the Diversity and Inclusion Policy.
Putting the remuneration principles into practice, we:
• benchmark our roles against roles in the market. We benchmark fixed pay, variable pay and pay mix. Individual remuneration reflects the individual’s role,
responsibilities, performance, qualifications and experience;
• ensure the Board sets KPIs for Executives;
• reward subject to Company performance and individual performance;
• provide the opportunity to earn equity through the LTI Plan and the Combined Incentive Plan;
• have a minimum shareholding requirement; and
• ensure performance metrics are geared at focusing Executives on strong financial performance, while balancing long term interests of the Company.
WorleyParsons Annual Report 2015 53
REMUNERATION DECISIONS
The diagram below illustrates the process by which remuneration decisions are made within the Company, and explains the roles played by various
stakeholders who are involved in setting remuneration:
BOARD
• Ensures remuneration policies and structures are competitive, fair, and aligned with the long term interests of the Company.
• Sets and approves remuneration structures.
• Approves NED, Chief Executive Officer (CEO) and other Executive remuneration quantum.
NOMINATIONS COMMITTEE
REMUNERATION COMMITTEE
Reviews and assesses the CEO’s performance.
Advises the Board on the CEO’s remuneration, including:
• amount;
• structure; and
• applicable performance targets.
Assists/advises the Board in relation to:
• remuneration structuring and policies;
• NED remuneration;
• performance assessment and remuneration for Executives; and
• where required, engaging independent advisors for advice on
remuneration structure and quantum for Executives, including
the CEO, and NEDs.
MANAGEMENT
CEO recommends pay increases and incentive outcomes for the Executives, other than the CEO.
At the request of the Nominations and/or Remuneration Committee, management:
• provides information relevant to remuneration decisions; and
• where appropriate, liaises with independent advisors to assist the Nominations and/or
Remuneration Committee with factual information (subject to prior Board approval of the
provider).
All remuneration decisions relating to Executives are made by the Board. However, where
appropriate, management is included in Committee and Board discussions.
EXTERNAL MARKET DATA AND EXTERNAL CONSULTANTS
Market data is sourced from published reports and independent surveys. Where required, external consultants are engaged by the Board and Committees
to provide advice or information. Any advice or recommendations provided by external consultants are used as a guide. They are not a substitute for the
Board and Committee decision‑making process. There were no remuneration recommendations made by consultants in relation to KMP in FY2015.
Frederic W. Cook, an independent remuneration consulting firm, were engaged to provide analytical support on the collation of industry peer group data
and the increasing use of Market Stock Units (MSUs) in the US. No advice was provided. The cost of the support was not material for either party.
Orient Capital calculated the TSR for the purposes of vesting LTI. The amount paid to Orient Capital for TSR reporting is not material for either party.
54 WorleyParsons Annual Report 2015
Directors’ report CONTINUED 3. EXECUTIVE REMUNERATION IN DETAIL
EXECUTIVES
Set out below is a list of the Executives of the Company whose remuneration details are outlined in this Remuneration Report. Except where noted,
these Executives were employed for all of FY2015 in the positions noted below. The use of the term “Executives” throughout this report refers to the
Executives listed. These Executives, in addition to the NEDs listed on page 65 of the Annual Report, comprised the KMP of the Company for FY2015,
as defined under the accounting standards.
NAME
POSITION
COUNTRY OF RESIDENCE
KMP DURATION
Andrew Wood
Filippo Abba
Simon Holt
Chief Executive Officer
Group Managing Director – Improve
Chief Financial Officer
Christopher Parker
Group Managing Director – Major Projects
David Steele
Randy Karren1
Ian Wilkinson
Group Managing Director – Services
Group Managing Director – Improve
Group Managing Director – Services
1 Mr Karren retired effective 31 March 2015 and ceased to be an Executive on that date.
Australia
United Kingdom
Australia
United States
Australia
Canada
Australia
1 April 2015 (commenced)
30 June 2015 (ceased)
31 March 2015 (ceased)
6 February 2015 (ceased)
With the creation of Advisian Mr Finn becomes a KMP from 1 July 2015. Mr Parker ceased to be an Executive effective 30 June 2015. Mr Abba is
Group Managing Director – Major Projects and Improve from 1 July 2015.
REMUNERATION STRUCTURE – PUTTING POLICY INTO PRACTICE
Remuneration mix for Executives
Executive remuneration is structured to recognize an individual’s
responsibilities, qualifications and experience, as well as to drive
performance over the short and long term. The proportion of variable pay
is reflective of an Executive’s ability to influence Company performance
through their role. Executive remuneration comprises the following:
• fixed pay, which consists of cash (or base) salary, superannuation
contributions and any salary sacrificed components. It is set relative to
market, with the level of individual fixed pay aligned with the
Executive’s responsibilities, performance, qualifications and experience;
and
• incentives, if payable, are comprised of cash and equity.
The targeted mix of remuneration components shown in the graph refers
to the incentive that would be payable if all performance conditions are
satisfied and assumes vesting of the Combined Incentive Plan, comprised
of a cash and equity incentive and LTI awards at 100%. The elements of
remuneration that are at risk are the cash and equity incentive and LTI.
Allowances and benefits are for specific purposes and are excluded in
determining the mix. Actual incentive remuneration paid to the Executives
can vary for individuals depending on the extent that they meet or exceed
performance requirements.
Further details in relation to the Company’s incentive arrangements,
including the specific performance conditions imposed and the outcomes
of those arrangements (based on the Company’s performance over
FY2015 and prior years), are set out on page 59 under the Combined
Incentive Plan and LTI Plan sections.
Andrew Wood
30%
30%
15%
25%
Filippo Abba
40%
24%
12%
24%
Simon Holt
46%
23%
12%
19%
A
t
r
i
s
k
Christopher Parker
David Steele
40%
38%
24%
12%
24%
23%
11%
28%
Fixed
Cash Incentive
Equity Incentive
LTI
WorleyParsons Annual Report 2015 55
Combined Incentive Plan
By linking pay to performance via incentive plans, the Company focuses on total reward and provides motivation to Executives to achieve outcomes
beyond the standard expected in the normal course of ongoing employment.
The Combined Incentive Plan for Executives is made up of two thirds cash (Cash Incentive) and one third equity (Equity Incentive). The minimum
potential value of the Combined Incentive Plan is zero where applicable hurdles have not been met.
The value of the awards achieved can be viewed in the remuneration outcomes table on pages 60 and 61. This reflects both the Company achievement
against Group NPAT and individual performance against an Executive’s KPIs.
Outlined below is a summary of the Combined Incentive Plan utilized for the Executives:
INCENTIVE ELEMENT
Gate opener
Maximum payout
CASH INCENTIVE
(TWO THIRDS OF THE AWARD)
EQUITY INCENTIVE
(ONE THIRD OF THE AWARD)
Requires Group NPAT to be greater than 90% of Board approved budget for financial KPIs, and greater than 75% for
non‑financial KPIs.
Maximum payout is 110% of target. The maximum award is only achievable where the Company has achieved 110% or greater
of budgeted Group NPAT approved by the Board.
Incentive delivery and
payment timing
Payment of the award will be made as a gross cash amount at
the end of the performance period.
Performance and forfeiture
conditions (including
Malus)
See KPI summary table below.
Delivered through equity deferred for three years in the form
of performance rights granted under the WorleyParsons
Performance Rights Plan. The number of rights is determined
by dividing the dollar value of the award achieved by the face
value of shares.
The Equity Incentive is subject to the same performance
conditions as the Cash Incentive. In addition, the Executive
must maintain a satisfactory performance rating in the deferral
period. There are no further hurdles during the deferral period.
However, should the accounts be restated during the deferral
period or where an employee has acted fraudulently or
dishonestly or is in breach of their obligations to the Company,
the award may be forfeited. The performance outcomes that
resulted in the award will be reviewed to ensure that the award
is still appropriate at the time of vesting.
Dividends
Tenure
Not applicable to the Combined Incentive Plan.
To be eligible for an incentive payment, generally participants must have been employed for at least three months of the
financial year and remain in employment at the date of payment.
Performance targets are agreed at the start of the financial year. A summary of the KPIs, along with the weightings for Executives for FY2015, is
outlined below:
Financial KPIs
CEO – 60% weighting
CFO – 40% weighting
Other Executives – 50% weighting
KPIs
Group NPAT
Business line financial targets
Cash collection
Non‑Financial KPIs
CEO – 40% weighting
CFO – 60% weighting
Other Executives – 50% weighting
METHOD OF ASSESSMENT
KPIs
METHOD OF ASSESSMENT
Group NPAT is based upon audited
financial statements to ensure the
performance assessment for financial
KPIs is aligned with business
performance and the creation of
value for shareholders. The results
are adjusted at Board discretion, to
exclude abnormal items.
Financial goals specific to the
business line e.g. Earnings Before
Interest and Tax (EBIT).
Cash collection is measured via days
sales outstanding.
Health, safety and environment
performance
Cultural change
Reduction in the number of
reportable incidents and the
demonstration of personal and visible
leadership in support of the
Company’s goal of Zero Harm.
Demonstrable contribution to cultural
change program objectives.
Successful implementation of the
business plan and/or strategic
priorities for the business line
Targeted business growth, customer
retention, customer satisfaction and
acquisition1.
1
The specific goals for Executives relating to strategic imperatives are considered commercially sensitive.
56 WorleyParsons Annual Report 2015
Directors’ report CONTINUED
Long Term Incentive (LTI) Plan
The provision of LTI is assessed through two independent performance
targets that align an Executive’s interests with shareholder returns while
driving long term Company performance.
The Board has determined that the number of securities issued to
Executives and all other participants under the Company’s equity plans
should be capped at 5% of the issued share capital of the Company over a
five year time horizon. Currently, the number of securities issued and held
pursuant to the equity plans represents 1.71% of the Company’s issued
share capital (FY2014: 1.97%).
LTI grants for FY2015
LTI grants are delivered to Executives as rights that are issued under the
WorleyParsons Performance Rights Plan. After vesting, each right entitles
the holder to one fully paid ordinary share in the Company at a nil
exercise price (i.e. a zero exercise price option). The number of rights
issued is based on the Executive’s target LTI with reference to the
underlying share price when the rights are issued. Rights vest and are
automatically exercised (unless an Executive elects otherwise) after a four
year period, subject to defined performance hurdles being satisfied.
Where rights cannot be readily issued in certain overseas jurisdictions due
to differing securities laws and taxation treatments, the LTI Plan rules
ensure a participant can still be rewarded for their contribution, while
catering for the local restrictions on the issue of securities. All current
Executives are able to receive rights.
Rights granted under the LTI Plan carry no voting or dividend
entitlements. In addition, other than in relation to bonus issues and capital
reorganizations (when the number of rights may be adjusted by the Board
in accordance with the ASX Listing Rules, so as to ensure no advantage
or disadvantage to the Executive), the rights carry no entitlement to
participate in new share issues made by the Company.
Details of the rights granted to Executives as the LTI component of their
remuneration in FY2015 are outlined on pages 62 and 63.
The target measures are as follows:
• TSR relative to peer group (which applies to 50% of potential LTI for
FY2015); and
• EPS growth (which applies to 50% of potential LTI for FY2015).
Relative Total Shareholder Return (TSR) performance hurdle
The TSR measure represents the change in the value of the Company’s
share price over a period, including reinvested dividends, expressed as a
percentage of the opening value of the shares.
Relative TSR has been chosen as a performance hurdle because, in the
opinion of the Board, it provides the most direct measure of shareholder
return and reflects an investor’s choice to invest in this company or direct
competitors.
Executives will only derive value from the TSR component of the LTI
Plan if the Company’s TSR performance is at least at the median of the
companies in the peer comparison group over a four year period.
Executives are no longer provided an opportunity to retest under the TSR
measure.
The vesting schedule of the rights subject to the relative TSR hurdle is as
follows:
RELATIVE TSR PERCENTILE RANKING
PERCENTAGE OF RIGHTS THAT MAY
BE EXERCISED IF THE RELATIVE TSR
HURDLE IS MET
Less than 50th percentile
At 50th percentile
0%
25%
Greater than the 50th percentile
but less than the 75th percentile
Pro‑rated vesting between 25%
and 50%
At 75th percentile or greater
50% (i.e. maximum available under
the plan)
The peer comparison group comprises companies with similar business
profiles, with which the Company competes for capital and executive
talent.
For LTI grants made since FY2013, the peer comparison group comprises
the companies shown as follows:
AUSTRALIA AND ASIA
Cardno
CIMIC1
Downer EDI
JGC Corporation
Monadelphous Group
UGL
UNITED STATES
AND CANADA
AECOM2
Chicago Bridge & Iron
Company
Fluor Corporation
Jacobs Engineering
Group
KBR
McDermott International
SNC‑Lavalin
Stantec
Tetra Tech
EUROPE AND
UNITED KINGDOM
Aker Solutions
AMEC Foster Wheeler3
Arcadis
Atkins
Balfour Beatty
Fugro
Saipem
Serco Group
Technip
Tecnicas Reunidas
Wood Group
1
2
3
Formerly known as Leighton Holdings.
Due to the merger of AECOM and URS Corporation on 17 October 2014, URS
Corporation is no longer listed in the above table.
Due to the merger of AMEC and Foster Wheeler on 13 November 2014, Foster
Wheeler is no longer listed separately in the above table.
The Board has discretion to adjust the peer comparison group to take into
account events including, but not limited to, takeovers or mergers that
might occur during the performance period.
Earnings Per Share (EPS) performance hurdle
Basic EPS is determined by dividing the Group NPAT by the weighted
average number of the Company’s ordinary shares on issue during the
financial year. Growth in EPS will be measured by comparing the EPS in
the financial year immediately preceding the issue and the EPS in the
measurement year. EPS has been chosen as a performance hurdle because
it provides a clear line of sight between Executive performance and
Company performance. It is also a well‑recognized and understood
measure of performance both within and outside the organization.
The Group NPAT may be adjusted by the Board, where appropriate,
to better reflect operating performance.
Executives will only derive value from the EPS component of the grants
made in FY2015 if the Company achieves average compound growth in
EPS of at least 4% per annum above the increase in the Consumer Price
Index (CPI) over the four year performance period.
The vesting schedule of the rights subject to the EPS hurdle is as follows:
AVERAGE COMPOUND GROWTH IN EPS
OVER THE PERFORMANCE PERIOD
PERCENTAGE OF RIGHTS THAT MAY BE
EXERCISED IF THE EPS HURDLE IS MET
Less than 4% p.a. above the
increase in CPI
0%
4% p.a. above the increase in CPI
25%
More than 4% p.a. above the
increase in CPI but less than
8% p.a. above the increase in CPI
Pro‑rated vesting between 25%
and 50%
8% p.a. or greater above the
increase in CPI
50% (i.e. maximum available under
the plan)
Exercise of rights and allocation of shares
To the extent that the performance hurdles have been satisfied, rights are
automatically exercised (unless an Executive elects otherwise) and
participants acquire shares in the Company at a nil exercise price.
Shares allocated to participants upon exercise of rights rank equally with
all other ordinary shares on issue. Participants will have unencumbered
ownership of the shares, subject to compliance with the Company’s
Securities Dealing Policy and minimum shareholding requirement.
WorleyParsons Annual Report 2015 57
Executive minimum shareholding requirement
The Executive minimum shareholding requirement applies to Executives
to reinforce the Company’s objective of aligning their interests with the
interests of shareholders, and to foster an increased focus on building long
term shareholder value.
To satisfy the requirement, Executives must retain equity delivered via
incentive plans until they hold shares equivalent in value to two times
fixed pay (four times fixed pay for the CEO) and must subsequently
maintain that multiple.
Compliance with the requirement is assessed as at 30 June each year.
The table below provides a summary of the position of each Executive
against the requirement as at 30 June 2015:
WEIGHTED
NUMBER OF
SHARES
HELD AT
30 JUNE 20151
VALUE OF
SHARES
HELD AT
30 JUNE 20152
$
ANNUAL
PERCENTAGE
OF MINIMUM
FIXED PAY AT SHAREHOLDING
30 JUNE 20153 REQUIREMENT
ACHIEVED
$
EXECUTIVE DIRECTOR
Andrew Wood
962,178 11,147,948
1,600,000
>100%
GROUP EXECUTIVES
Filippo Abba4
Simon Holt
Christopher Parker
45,628
21,362
17,793
533,766
361,736
304,316
David Steele
181,362
2,494,240
661,335
550,000
607,471
900,000
40%
33%
25%
>100%
1
2
3
4
Includes shares held in the Company plus a 50% weighting of unvested performance
rights provided on page 62.
Calculated as the weighted number of shares held at 30 June 2015 multiplied by the
volume weighted average price of the Company’s shares for the five trading days up to
and including 30 June 2015 ($10.414) or the price at which performance rights were
allocated.
The Australian dollar equivalent of annual fixed pay as at 30 June 2015.
Mr Abba commenced in the role as an Executive effective 1 April 2015.
In addition, under the Company’s Securities Dealing Policy, directors and
Executives are not permitted to hedge unvested performance rights or
shares that count towards an Executive’s minimum holding requirement.
This ensures that Executives cannot “limit the risk” associated with these
instruments and are subject to the same impacts from fluctuations in the
share price as all other shareholders.
Clawback (Malus) provision
The Company maintains a Clawback provision within the Combined
Incentive Plan and the LTI Plan.
If in the Board’s opinion, an employee:
• acts fraudulently or dishonestly;
• is in breach of their obligations to the Company or another Group
company; or
• received awards based on financial accounts which are later restated,
the Board may determine that unvested performance rights lapse; this is
also known as a Malus provision. The Board may also deem any vested
but unexercised performance rights to have lapsed. Additionally, the
Board may seek to recover shares received from exercised rights.
Cessation of employment and change of control
Where an Executive leaves the Group, the Board may exercise its
discretion and allow a portion of any unvested rights to remain in the
plan. Rights will subsequently vest and be exercised in the ordinary
course, having regard to such factors as the Board determines relevant.
Such factors would include performance against applicable performance
hurdles, as well as the performance and contribution that the relevant
Executive has made. Generally, the Board only exercise discretion in
special circumstances, such as retirement.
In the event of a change of control of the Company (e.g. where a third
party unconditionally acquires more than 50% of the issued share capital
of the Company), the Board will exercise its discretion to determine
whether any or all unvested rights vest, having regard to pro‑rata
performance against applicable performance hurdles up to the date of the
change of control.
COMPANY PERFORMANCE OVER A FIVE YEAR PERIOD
The table below contains a snapshot of the Company’s performance against annual financial KPIs and shows how the Company’s performance has
impacted on remuneration outcomes for Executives under the Company’s incentive programs.
The remuneration arrangements for Executives ensure that remuneration outcomes are lower when the Company’s performance does not justify large
awards, and higher when Company performance is strong. As demonstrated by the table, LTI and Combined Incentive outcomes have moved in line
with the Company’s performance against relevant key metrics:
FINANCIAL YEAR ENDED 30 JUNE
FY2010
FY2011
FY2012
FY2013
FY2014
Closing share price ($)
Dividends paid1 (cents per share)
TSR portion of LTI
1 year TSR for the Company (%)
1 year TSR for median of peer group (%)
Vesting outcome of LTI (%)
EPS portion of LTI
Underlying EPS (cents per share)2
Vesting outcome of LTI (%)
Combined Incentive3
Underlying NPAT ($’m)4
Average % of maximum Combined Incentive
awarded to Executives (%)
22.21
75.5
(1.6)
(9.9)
82
118.5
nil
291.1
nil
28.24
86.0
37.4
40.8
nil
121.5
nil
298.5
27.1
25.10
91.0
(6.8)
(21.9)
70
140.6
nil
345.6
47.0
19.49
92.5
(19.6)
21.6
nil
130.8
nil
322.1
nil
17.41
85.0
(6.8)
1.4
nil
106.8
nil
263.4
nil
ANNUALIZED
GROWTH OVER
FIVE YEARS
FY2015
10.41
56.0
(36.4)
(23.6)
nil
80.4
nil
198.6
nil
(14.1%)
(5.8%)
(7.5%)
(7.4%)
1
2
3
4
The FY2015 final dividend has been announced and is scheduled to be paid on 30 September 2015.
Underlying EPS, which in the Board’s opinion reflects the Company’s operating results, has been used to calculate the outcomes.
The Combined Incentive Plan was introduced in FY2013; previously, this was the Short Term Incentive (STI) Plan.
Underlying NPAT, which in the Board’s opinion reflects the Company’s operating results, has been used for calculating the outcomes for FY2011, FY2012 and FY2014. Underlying
NPAT excludes net gain on revaluation of investments previously accounted for as equity accounted investments, restructuring costs (net of taxation) and other adjustments at the
Board’s discretion, being the difference between reported Group NPAT and underlying NPAT.
58 WorleyParsons Annual Report 2015
Directors’ report CONTINUED
REMUNERATION OUTCOMES IN FY2015
LTI outcomes
Combined Incentive outcomes
As outlined in the description of the Combined Incentive Plan on page 56,
reward outcomes for Executives are linked to performance against annual
financial and non‑financial KPIs.
In the five year table above and the following graph, the Company
performance is compared to variable pay outcomes for each 12 month
period.
Based on the Company’s financial performance and performance against
individual KPIs, the resulting Combined Incentive Plan payments are
detailed in the table on pages 60 and 61.
The graph below illustrates the average Combined Incentive as a
percentage of maximum awarded to Executives over each of the past five
years compared to Group NPAT. It demonstrates Executives have not
been rewarded during this difficult period:
Average % of maximum Combined Incentive awarded to Executives
compared to underlying NPAT
/
e
v
i
t
n
e
c
n
I
d
e
n
i
b
m
o
C
m
u
m
i
x
a
m
f
o
%
1
d
e
d
r
a
w
a
I
T
S
100%
80%
291.1
298.5
345.6
322.1
263.4
60%
40%
20%
0%
47.0%
198.6
27.1%
0.0%
0
1
0
2
Y
F
0.0%
0.0%
0.0%
1
1
0
2
Y
F
2
1
0
2
Y
F
3
1
0
2
Y
F
4
1
0
2
Y
F
5
1
0
2
Y
F
400
350
300
250
200
150
100
50
0
2
m
’
$
T
A
P
N
p
u
o
r
G
1
2
The average Combined Incentive as a percentage of maximum for any financial year
relates to amounts paid in the September following that financial year end.
Underlying NPAT figures are used for this graph. In 2010 and 2013, these are the same
as reported Group NPAT figures.
The graph below tracks the Company’s TSR over the last three years
against the median TSR of the peer comparison group used for the
LTI Plan:
TSR performance measured over the last three years
WorleyParsons
Limited
TSR
Analysis
1
July
2012
-‐
30
June
2015
2
1
l
u
J
2
1
t
c
O
3
1
n
a
J
3
1
r
p
A
3
1
l
u
J
3
1
t
c
O
4
1
n
a
J
4
1
r
p
A
4
1
l
u
J
4
1
t
c
O
5
1
n
a
J
5
1
r
p
A
5
1
l
u
J
80%
60%
40%
20%
0%
-‐20%
-‐40%
-‐60%
-‐80%
50th
Percen?le
75th
Percen?le
WorleyParsons
This graph illustrates that growth in the Company’s TSR was below
median, which has resulted in a nil vesting for Executives for TSR related
LTI granted in FY2012 (retest) and FY2013. As vesting was not achieved,
the TSR performance rights will lapse on 30 September 2015.
Over the same three year period, the Company’s EPS growth was below
the minimum required to trigger vesting against the EPS performance
hurdle for LTI granted in FY2013. EPS performance rights will lapse on
30 September 2015. No retest applies to either measure.
Summary of vested rights
The table below shows the recent history of vesting of Executives’ equity grants:
GRANT
PERFORMANCE PERIOD
FY2010
FY2011
FY20125
FY2013
01 Jul 09 – 30 Jun 12
01 Jul 10 – 30 Jun 13
01 Jul 11 – 30 Jun 14
01 Jul 12 – 30 Jun 15
TSR PERCENTILE
ACHIEVED1
RETESTED
TSR PERCENTILE
ACHIEVED2
% OF TOTAL
LTI GRANT
EPS ACHIEVED3 VESTED/EXERCISED
CHANGE IN
VALUE PER RIGHT
VESTED/EXERCISED4
$
VESTING DATE
60th
lowest
lowest
8th
10th
lowest
lowest
n/a
(4.4%)
3.3%
(4.2%)
(17.0%)
42%
0%
0%
0%
30 Sep 12
30 Sep 13
30 Sep 14
30 Sep 15
25.65
n/a
n/a
n/a
1
2
3
4
5
Represents the Company’s relative TSR ranking over the initial three year performance period compared to the relevant comparator group.
Represents the Company’s retested relative TSR ranking over a four year performance period compared to the relevant comparator group. Retesting is no longer allowed.
Change in EPS achieved is calculated as the compound annual growth rate of EPS over the performance period.
This amount is based on the volume weighted average price of the Company’s shares for the 10 trading days following the annual results announcement for the year in which the rights
vest (as there is no exercise price payable in respect of equity or cash settled rights).
Equity granted in FY2012 under the EPS measure had a nil vesting on 30 September 2014. Equity granted under the retest of the TSR measure is expected to have a nil vesting on
30 September 2015.
WorleyParsons Annual Report 2015 59
Total remuneration outcomes
Executive remuneration is detailed in the following table in accordance with accounting standards. Additional columns have been provided under Actual
Remuneration Outcomes. This shows a comparison between remuneration in accordance with accounting standards, actual remuneration awarded during
the year and actual remuneration received during the year.
Accounting standards require the value of equity based payments to be amortized over the relevant period of performance (or vesting period). The value
of equity based payments awarded during the year is determined as a percentage of fixed pay that the Company aims to deliver. This can be found in the
Equity Incentive and LTI columns under the remuneration awarded section of Actual Remuneration Outcomes. The full value that was received during
the year is determined as the number of performance rights vested times the share price at the end of the period of performance. This can be found under
the remuneration received section of Actual Remuneration Outcomes.
STATUTORY REMUNERATION OUTCOMES
SHORT TERM EMPLOYEE BENEFITS
BENEFITS TERM BENEFITS
SHARE BASED PAYMENTS
POST‑
EMPLOYMENT
OTHER
LONG
CASH
CASH SALARY ALLOWANCES1
$
$
CASH
INCENTIVE/
CASH STI2
$
NON‑
MONETARY
BENEFITS3
$
TOTAL
SHORT TERM
CASH AND
BENEFITS
$
SUPER‑ LONG SERVICE
LEAVE
$
ANNUATION
$
EQUITY
INCENTIVE/
STI EQUITY
SETTLED4
$
TOTAL
REMUNERATION
IN ACCORDANCE
WITH
LTI EQUITY ACCOUNTING
STANDARDS
SETTLED4
$
SHARE BASED
PAYMENTS % VARIABLE PAY
% OF TOTAL
$ REMUNERATION REMUNERATION
OF TOTAL
% OF
MAXIMUM
STI AWARD
FORFEITED
EXECUTIVE DIRECTORS
Andrew Wood
FY2015
1,581,217
FY2014
1,582,225
GROUP EXECUTIVES
Simon Holt
FY2015
531,217
FY2014
445,225
Filippo Abba10
FY2015
153,147
Christopher Parker
FY2015
563,704
FY2014
79,333
David Steele
FY2015
881,217
–
–
–
–
–
–
–
–
FY2014
877,005
18,690
FORMER GROUP EXECUTIVES
Randy Karren11
FY2015
459,525
FY2014
609,209
Ian Wilkinson12
FY2015
365,282
FY2014
99,336
Barry Bloch13
FY2014
585,386
Stuart Bradie14
FY2014
1,191,472
Iain Ross13
FY2014
943,156
Total
FY2015
4,535,309
–
–
–
–
–
–
–
–
remuneration
FY2014
6,412,347
18,690
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15,978
1,597,195
13,670
1,595,895
18,783
17,775
26,523
26,523
–
237,085
1,879,586
35,168
376,666
2,052,027
12.6%
20.1%
12.6%
20.1%
100.0%
100.0%
14,804
546,021
15,544
460,769
18,783
17,775
9,117
7,675
–
76,038
649,959
17,125
71,573
574,917
164,415
317,562
6,126
13,067
576,771
17,231
1,989
81,322
2,854
–
–
–
97,616
978,833
61,751
957,446
18,783
32,070
14,919
14,919
–
–
–
–
135,695
459,383
65,756
659,758
8,431
92,607
63,367
1,075,902
11.7%
15.4%
29.5%
10.0%
9.1%
5.9%
11.7%
15.4%
29.5%
100.0%
100.0%
N/A
10.0%
100.0%
9.1%
100.0%
5.9%
100.0%
31,206
208,696
1,244,337
19.3%
19.3%
100.0%
7,903
467,428
12,619
621,828
11,716
15,533
8,595
2,314
373,877
12,895
101,650
–
11,520
596,906
25,721
607,251
1,798,723
119,147
382,672
1,325,828
94,315
–
–
5,984
1,639
9,816
–
–
–
50,983
530,127
27,288
122,828
787,477
–
69,109
461,865
5,588
12,538
121,415
17,490
69,717
719,650
9.6%
19.1%
15.0%
14.9%
12.1%
9.6%
100.0%
19.1%
100.0%
15.0%
14.9%
100.0%
100.0%
12.1%
100.0%
(44,657)
(516,969) 1,356,244
(41.4%)
(41.4%)
100.0%
16,954
216,853
1,653,950
14.1%
14.1%
100.0%
322,378
4,857,687
104,317
56,543
–
698,033
5,716,580
1,109,330
7,540,367
325,190
60,572
106,162
570,333
8,602,624
These footnotes apply to the table on pages 60 and 61.
1
2
3
This includes assignment uplifts and market adjustments.
The amount relates to the Cash Incentive portion of the Combined Incentive Plan.
Non‑monetary benefits include benefits such as expatriate benefits (i.e. housing, home leave etc.), health insurance, car parking, company cars or car allowances, fringe benefits tax, tax
advisory services and life insurance. In some cases, these are at the election of the Executives i.e. they are salary sacrificed.
This remuneration includes a proportion of the fair value of equity compensation granted or outstanding during the year. The fair value of equity instruments is determined based on the
fair value at grant date and is expensed progressively over the vesting period. The amount included as remuneration is not indicative of the benefit (if any) that individual Executives
may ultimately realize should the equity instruments vest.
This is the total of superannuation received and long service leave benefits accrued during reporting period.
Remuneration awarded during reporting period but deferred for future periods includes equity awards granted under the Combined Incentive Plan and LTI Plans which may vest and
become available to Executives in future periods. A grant value based on fixed pay (as defined on page 55) multiplied by the incentive plan payout percentage approved by the Board
has been included; this is not indicative of the benefit (if any) that individual Executives may ultimately realize should the equity instruments vest.
The Employee Share Purchase Plan allows all permanent employees in select countries the opportunity to purchase up to $5,000 worth of shares per annum. The Company will provide
an additional share for every five shares purchased and held for three years.
The amount relates to the Equity Incentive portion of the Combined Incentive Plan.
Remuneration received in reporting period from previous periods includes equity awards granted under the incentive plans in previous years which vested during reporting period.
The Equity Incentive/Deferred STI and LTI value reflects the actual value realized by the Executive.
4
5
6
7
8
9
10 Remuneration is disclosed to the extent that it relates to Mr Abba’s employment in the capacity of an Executive, which commenced on 1 April 2015.
11 Mr Karren retired from the Company effective 31 March 2015 and ceased to be an Executive on that date. In addition to the amounts disclosed above, payment of annual leave on
cessation amounted to CAD118,778. No termination payments were made to Mr Karren. The Board exercised their discretion to allow him to retain a pro‑rata portion of unvested
equity subject to the original time and performance hurdles.
12 Remuneration is disclosed to the extent that it relates to Mr Wilkinson’s employment in the capacity of an Executive, which began 1 May 2014 and ceased on 6 February 2015.
Share based payments are disclosed to the extent they relate to his employment in the capacity of an Executive.
13 Remuneration is disclosed to the extent that it relates to Mr Bloch’s and Mr Ross’ employment in the capacity of an Executive, which ceased on 1 May 2014.
14 Remuneration is disclosed to the extent that it relates to Mr Bradie’s employment in the capacity of an Executive, which ceased on 8 April 2014.
60 WorleyParsons Annual Report 2015
Directors’ report CONTINUED
ACTUAL REMUNERATION OUTCOMES
AWARDED AND RECEIVED DURING
REPORTING PERIOD
AWARDED DURING REPORTING PERIOD
DEFERRED FOR FUTURE PERIODS6
RECEIVED DURING REPORTING PERIOD
DEFERRED FROM PREVIOUS PERIODS9
SHORT TERM
CASH AND BENEFITS
$
OTHER BENEFITS5
$
EMPLOYEE
SHARE
PURCHASE PLAN7
$
EQUITY INCENTIVE/
DEFERRED STI8
$
TOTAL
REMUNERATION
AWARDED DURING
LTI REPORTING PERIOD
$
$
EQUITY INCENTIVE/
DEFERRED STI
$
EXECUTIVE DIRECTORS
Andrew Wood
GROUP EXECUTIVES
Simon Holt
Filippo Abba10
Christopher Parker
David Steele
FY2015
FY2014
FY2015
FY2014
FY2015
FY2015
FY2014
FY2015
FY2014
FORMER GROUP EXECUTIVES
Randy Karren11
Ian Wilkinson12
Barry Bloch13
Stuart Bradie14
Iain Ross13
Total
remuneration
FY2015
FY2014
FY2015
FY2014
FY2014
FY2014
FY2014
FY2015
FY2014
1,597,195
1,595,895
546,021
460,769
317,562
576,771
81,322
978,833
957,446
467,428
621,828
373,877
101,650
596,906
1,798,723
1,325,828
4,857,687
7,540,367
45,306
44,298
27,900
25,450
6,126
17,231
2,854
33,702
46,989
11,716
15,533
18,879
1,639
35,537
119,147
94,315
160,860
385,762
–
–
–
–
–
–
–
–
–
–
149
–
–
–
–
–
–
149
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,360,011
1,360,018
3,002,512
3,000,211
220,002
185,196
793,923
671,415
1,067,531
1,391,219
369,039
–
675,005
674,989
238,858
248,945
443,925
–
283,621
903,616
786,815
963,041
84,176
1,687,540
1,679,424
718,002
886,455
836,681
103,289
916,064
2,821,486
2,206,958
4,374,371
9,392,918
–
59,264
–
28,858
–
–
–
–
52,588
–
45,446
–
32,346
37,203
2,544
1,942
–
4,443,200
12,369,478
260,191
TOTAL
REMUNERATION
RECEIVED DURING
LTI REPORTING PERIOD
$
$
–
–
1,642,501
1,699,457
29,585
–
–
33,968
–
–
–
63,282
–
56,932
–
–
–
–
183,767
–
603,506
515,077
323,688
627,970
84,176
1,012,535
1,057,023
542,426
682,807
449,688
135,635
669,646
1,920,414
1,422,085
5,202,314
8,186,320
WorleyParsons Annual Report 2015 61
Details of vested and outstanding rights over the last five years
PLAN
RIGHTS
DATE OF GRANT GRANTED1
DATE)2
$
FAIR
VALUE
PER RIGHT OF GRANT
NUMBER OF (AT GRANT (AT GRANT
FAIR
VALUE
VESTING
DATE/
FIRST
DATE)3 EXERCISE
DATE
$
VALUE
NUMBER OF RIGHTS
VALUE
NUMBER OF RIGHTS
VESTED4 OF RIGHTS EXERCISED4 OF RIGHTS
LAPSED5
VALUE
NUMBER OF RIGHTS
LAPSED6
$
$ EXERCISED
$
EXPIRY OF RIGHTS
VESTED
DATE
% OF
RIGHTS
LAPSED
EXECUTIVE DIRECTOR
Andrew Wood
LTI
30 Oct 14
83,232
8.62
717,460 30 Sep 18 30 Oct 21
24 Oct 13
60,688
13.59
824,750 30 Sep 17 24 Oct 20
23 Oct 12
53,084
15.76
836,604 30 Sep 16 18 Oct 19
17 Oct 11
23,702
17.69
419,288 30 Sep 14 17 Oct 18
15 Oct 10
25,387
16.93
429,802 30 Sep 14 15 Oct 17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.0%
0.0%
0.0%
9,480
154,902
40.0%
25,387
476,479
100.0%
Deferred Equity STI
01 Oct 12
01 Oct 12
2,947
2,947
27.70
27.70
81,632 30 Jun 13 30 Jun 19
81,632 30 Jun 14 30 Jun 19
2,947
2,947
57,741
50,606
2,947
2,947
57,741
50,606
GROUP EXECUTIVES
Filippo Abba
LTI
01 Apr 15
11,333
01 Apr 15
26,641
01 Apr 15
26,641
01 Apr 15
26,641
5.37
7.82
8.40
9.02
60,858 30 Sep 18 01 Apr 22
208,333 30 Sep 17 01 Apr 22
223,784 30 Sep 16 01 Apr 22
240,302 30 Sep 15 01 Apr 22
Simon Holt
LTI
30 Oct 14
13,464
8.62
116,060 30 Sep 18 30 Oct 21
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,436
1,435
–
–
–
28,136
24,642
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
–
–
–
–
–
–
–
–
–
–
–
–
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
13.59
112,308 30 Sep 17 24 Oct 20
74,813 30 Sep 15 18 Oct 19
24 Oct 13
08 Feb 13
17 Oct 11
15 Oct 10
Deferred Equity STI
01 Oct 12
01 Oct 12
8,264
4,337
2,842
3,268
1,436
1,435
17.25
19.14
16.93
27.70
27.70
54,396 30 Sep 14 17 Oct 18
2,842
46,438
2,842
46,438
55,327 30 Sep 14 15 Oct 17
39,777 30 Jun 13 30 Jun 19
39,750 30 Jun 14 30 Jun 19
–
1,436
1,435
–
28,136
24,642
–
3,268
61,335
100.0%
Christopher Parker7 LTI
30 Oct 147
18,522
8.62
159,660 30 Sep 18 30 Oct 21
30 Oct 147
08 Feb 13
17 Oct 11
15 Oct 10
4,063
4,310
3,263
1,821
11.42
17.25
19.14
16.93
46,399 30 Sep 17 30 Oct 21
74,348 30 Sep 15 18 Oct 19
30,830 30 Sep 14 15 Oct 17
62,454 30 Sep 14 17 Oct 18
3,263
53,317
3,263
53,317
David Steele
LTI
30 Oct 14
41,310
8.62
356,092 30 Sep 18 30 Oct 21
24 Oct 13
30,120
13.59
409,331 30 Sep 17 24 Oct 20
08 Feb 13
13,174
15.39
202,748 30 Sep 16 18 Oct 19
08 Feb 13
13,173
15.13
199,307 30 Sep 15 18 Oct 19
17 Oct 11
21,315
17.69
377,062 30 Sep 14 17 Oct 18
15 Oct 10
16,049
16.93
271,710 30 Sep 14 15 Oct 17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,821
29,755
100.0%
–
–
–
–
–
–
–
–
0.0%
0.0%
0.0%
0.0%
8,526
139,314
40.0%
16,049
301,217
100.0%
Deferred Equity STI
01 Oct 12
01 Oct 12
2,615
2,615
27.70
27.70
72,436 30 Jun 13 30 Jun 19
72,436 30 Jun 14 30 Jun 19
2,615
2,615
51,236
44,905
2,615
2,615
51,236
44,905
–
–
–
–
0.0%
0.0%
19.14
116,352 30 Sep 14 17 Oct 18
6,079
99,331
6,079
99,331
FORMER GROUP EXECUTIVES
Randy Karren9
LTI
30 Oct 14
14,618
8.62
126,007 30 Sep 18 30 Oct 21
24 Oct 13
11,102
13.59
150,876 30 Sep 17 24 Oct 20
08 Feb 13
08 Feb 13
17 Oct 11
15 Oct 10
Deferred Equity STI
01 Oct 12
Employee Share
Purchase Plan8
01 Oct 12
15 May 14
15 May 13
4,566
4,565
6,079
8,717
2,261
2,261
9
40
15.39
15.13
70,271 30 Sep 16 18 Oct 19
69,068 30 Sep 15 18 Oct 19
16.93
147,579 30 Sep 14 15 Oct 17
27.70
27.70
16.57
24.05
62,630 30 Jun 13 30 Jun 19
62,630 30 Jun 14 30 Jun 19
149 15 May 17 15 May 17
962 15 May 16 15 May 16
Ian Wilkinson7
LTI
30 Oct 147
22,032
8.62
189,916 30 Sep 18 30 Oct 21
11.42
17.25
58,653 30 Sep 17 30 Oct 21
99,119 30 Sep 15 18 Oct 19
30 Oct 147
08 Feb 13
17 Oct 11
15 Oct 10
Deferred Equity STI
01 Oct 12
5,136
5,746
5,469
2,802
1,686
62 WorleyParsons Annual Report 2015
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11,876
115,135
6,246
1,428
380
–
60,554
13,844
3,684
–
81.2%
56.3%
31.3%
8.3%
0.0%
–
8,717
163,603
100.0%
–
2,261
2,261
–
44,300
38,826
–
2,261
2,261
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
44,300
38,826
–
–
–
–
–
–
–
9
40
–
–
–
–
–
–
0.0%
0.0%
87
100.0%
388
100.0%
–
–
–
–
0.0%
0.0%
0.0%
0.0%
19.14
104,677 30 Sep 14 17 Oct 18
5,469
89,363
5,469
89,363
16.93
27.70
47,438 30 Sep 14 15 Oct 17
–
–
–
–
2,802
45,784
100.0%
46,702 30 Jun 14 30 Jun 19
1,686
28,952
1,686
28,952
–
–
0.0%
Directors’ report CONTINUED
PLAN
RIGHTS
DATE OF GRANT GRANTED1
DATE)2
$
FAIR
VALUE
PER RIGHT OF GRANT
NUMBER OF (AT GRANT (AT GRANT
FAIR
VALUE
VESTING
DATE/
FIRST
DATE)3 EXERCISE
DATE
$
VALUE
NUMBER OF RIGHTS
VALUE
NUMBER OF RIGHTS
VESTED4 OF RIGHTS EXERCISED4 OF RIGHTS
LAPSED5
VALUE
NUMBER OF RIGHTS
LAPSED6
$
$ EXERCISED
$
EXPIRY OF RIGHTS
VESTED
DATE
FORMER GROUP EXECUTIVES (continued)
Barry Bloch10
LTI
24 Oct 13
12,656
13.59
171,995 30 Sep 17 24 Oct 20
08 Feb 13
08 Feb 13
5,534
5,535
15.39
15.13
85,168 30 Sep 16 18 Oct 19
83,745 30 Sep 15 18 Oct 19
17 Oct 11
10,231
17.69
180,986 30 Sep 14 17 Oct 18
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
01 Oct 12
01 Oct 12
2,030
2,029
27.70
27.70
56,231 30 Jun 13 30 Jun 19
56,203 30 Jun 14 30 Jun 19
2,030
2,029
39,774
34,842
2,030
2,029
39,774
34,842
–
–
–
–
–
–
–
–
–
–
–
–
% OF
RIGHTS
LAPSED
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Stuart Bradie11
LTI
24 Oct 13
40,322
13.59
547,976 30 Sep 17 24 Oct 20
08 Feb 13
16,536
15.39
254,489 30 Sep 16 18 Oct 19
08 Feb 13
16,536
15.13
250,190 30 Sep 15 18 Oct 19
17 Oct 11
21,495
17.69
380,247 30 Sep 14 17 Oct 18
15 Oct 10
28,374
16.93
480,372 30 Sep 14 15 Oct 17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
40,322
613,334
100.0%
16,536
251,527
100.0%
16,536
251,527
100.0%
21,495
326,958
100.0%
28,374
254,357
100.0%
09 Oct 09
19,361
19.27
373,086 30 Sep 14 15 Oct 17
8,131
208,560
8,131
208,560
11,230
288,041
58.0%
Deferred Equity STI
01 Oct 12
01 Oct 12
2,557
2,556
27.70
27.70
70,829 30 Jun 13 30 Jun 19
2,557
50,100
2,557
50,100
–
–
0.0%
70,801 30 Jun 14 30 Jun 19
2,556
38,879
100.0%
Iain Ross10
LTI
24 Oct 13
35,110
13.59
477,145 30 Sep 17 24 Oct 20
08 Feb 13
14,398
15.39
221,585 30 Sep 16 18 Oct 19
08 Feb 13
14,399
15.13
217,857 30 Sep 15 18 Oct 19
17 Oct 11
19,922
17.69
352,420 30 Sep 14 17 Oct 18
15 Oct 10
26,324
16.93
445,665 30 Sep 14 15 Oct 17
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
09 Oct 09
19,316
19.27
372,219 30 Sep 14 15 Oct 17
8,113
208,098
8,113
208,098
11,203
287,348
Deferred Equity STI
01 Oct 12
01 Oct 12
1,952
1,951
27.70
27.70
54,070 30 Jun 13 30 Jun 19
54,043 30 Jun 14 30 Jun 19
1,952
1,951
38,246
33,503
NON‑EXECUTIVE DIRECTORS – EARNED WHILE AN EXECUTIVE
John Grill9
LTI
17 Oct 11
67,639
17.69 1,196,534 30 Sep 14 17 Oct 18
15 Oct 10
69,450
16.93 1,175,789 30 Sep 14 15 Oct 17
–
–
–
–
1,952
38,246
–
–
–
–
–
–
Deferred Equity STI
01 Oct 12
12,178
27.70
337,331 30 Jun 13 30 Jun 19
12,178
238,605
12,178
238,605
01 Oct 12
12,178
27.70
337,331 30 Jun 14 30 Jun 19
12,178
209,121
12,178
209,121
–
–
–
–
–
–
–
–
10,529
235,979
–
–
–
–
0.0%
0.0%
0.0%
0.0%
40.0%
58.0%
0.0%
0.0%
49,828 1,208,536
73.7%
69,450 1,429,617
100.0%
–
–
–
0.0%
0.0%
–
–
–
Total vested
Total lapsed
Total outstanding
Total
88,975
374,088
665,234
1,128,297
2,176,561
6,169,164
8,263,300
16,609,025
88,975 1,718,642
87,024 1,685,139
–
–
–
–
–
–
–
–
374,088 6,752,184
–
–
88,975 1,718,642
87,024 1,685,139
374,088 6,752,184
1
2
3
4
5
6
7
8
9
The service and performance criteria for the rights are discussed in the LTI Plan section on page 57. Each right entitles the holder to one fully paid ordinary share in the Company at a
nil exercise price (i.e. a zero exercise price option). Where rights were granted prior to commencement as Executives, the service and performance criteria are aligned with those
discussed in the Combined Incentive Plan section on page 56.
Fair value per right at grant date is independently determined using an appropriate option pricing model in accordance with AASB 2 Share‑based Payment that takes into account the
exercise price, the term of the right, the vesting and performance criteria, the impact of dilution, the non‑tradeable nature of the right, the share price at grant date and expected price
volatility of the underlying share, the expected dividend yield and the risk‑free interest rate for the term of the right. This amount represents the actual cost to the Company. A Monte
Carlo simulation is used for the relative TSR portion and a Black‑Scholes model is used for the EPS portion.
Total fair value at grant is calculated by multiplying the fair value per right by the number of rights granted. This does not represent the actual value the Executive will derive from the
grant, which will depend on the achievement of performance hurdles measured over the vesting period. The maximum value of the rights granted has been estimated based on the fair
value per right. The minimum total value of the rights granted, if the applicable performance hurdles are not met, is nil.
This amount is based on the volume weighted average price of the Company’s shares for the five or 10 trading days following the annual results announcement for the year in which
the rights vest (as there is no exercise price payable in respect of equity or cash settled rights) or following the end of the relevant financial year, as applicable.
The number of rights lapsed represents rights lapsed due to performance hurdles not being met (including those with a testing date of 30 June 2015) and/or rights lapsed on cessation
of employment.
Based on the measurement of the relevant performance hurdles, this total value may be an accumulation of values for rights lapsed over multiple periods.
The value of the rights issues to Mr Parker and Mr Wilkinson are disclosed on page 60 to the extent that they were granted during their term as an Executive. Mr Parker and
Mr Wilkinson were granted Rights in the Combined Incentive Plan prior to them becoming KMP.
The fair value at grant for matching bonus entitlements under the Employee Share Purchase Plan is calculated as the weighted average market price over the plan year.
Mr Grill and Mr Karren received rights as part of their employment with the Company prior to their retirement effective 23 October 2012 and 31 March 2015 respectively. Board
approval was received for retention of a pro‑rated number of rights under the original terms of the grant including performance measures and vesting dates. This is consistent with the
Company’s practice in relation to unvested LTI held by retiring employees. Full details are disclosed on page 58. Rights lapsed on Mr Grill’s and Mr Karren’s retirement have been
valued based on the volume weighted average price of the Company’s shares for the 10 trading days up to and including their retirement dates.
10 Mr Bloch’s and Mr Ross’ employment in the capacity of an Executive ceased on 1 May 2014.
11 Mr Bradie ceased employment with the Company on 30 May 2014, at which time all unvested equity awards lapsed.
All vested rights are exercisable. There are no vested and unexercisable rights.
WorleyParsons Annual Report 2015 63
EXECUTIVE INTERESTS IN SHARES AND PERFORMANCE RIGHTS
Executives’ beneficial interests in shares and performance rights granted as at 30 June 2015 are detailed in the below table. The service and performance
criteria for the rights are discussed in the Combined Incentive Plan and LTI Plan sections on pages 56 and 57.
NUMBER OF SHARES AND PERFORMANCE RIGHTS HELD IN WORLEYPARSONS LIMITED
EXECUTIVE DIRECTOR
Andrew Wood
GROUP EXECUTIVES
Filippo Abba1
Simon Holt
Christopher Parker
David Steele
TYPE
Shares
Rights
Shares
Rights
Shares
Rights
Shares
Rights
Shares
Rights
FORMER GROUP EXECUTIVES
Randy Karren2
Ian Wilkinson3
Grand Total
Shares
Rights
Shares
Rights
Shares
Rights
BALANCE AT
1 JULY 2014
GRANTED
PERFORMANCE
RIGHTS
2014/15
ON EXERCISE OF
PERFORMANCE
RIGHTS
CHANGE IN
STATUS
2014/15
OTHER
TRANSACTIONS
2014/15
BALANCE AT
30 JUNE 2015
838,618
155,654
–
–
5,487
17,404
1,977
9,394
121,879
87,412
77,620
33,853
69,538
14,017
1,115,119
317,734
n/a
83,232
n/a
91,256
n/a
13,464
n/a
22,585
n/a
41,310
n/a
14,618
n/a
27,168
n/a
293,633
2,947
(2,947)
–
–
2,842
(2,842)
3,263
(3,263)
–
–
8,340
(8,340)
7,155
(7,155)
24,547
(24,547)
–
–
–
–
–
–
–
–
(85,960)
(40,131)
(76,693)
(34,030)
(162,653)
(74,161)
15,000
(24,713)
–
–
–
(1,961)
(895)
(1,821)
4,200
(18,156)
–
–
–
–
856,565
211,226
–
91,256
8,329
26,065
4,345
26,895
126,079
110,566
–
–
–
–
18,305
(46,651)
995,318
466,008
1
2
3
Mr Abba commenced in the role as an Executive effective 1 April 2015.
Mr Karren received exchangeable shares as part of the Colt Group consideration. He retired from the Company effective 31 March 2015.
Mr Wilkinson ceased to be an Executive effective 6 February 2015.
EMPLOYMENT ARRANGEMENTS
The key aspects of Executive contracts are outlined below:
CONTRACT
DURATION
NON‑COMPETE
CLAUSES
NOTICE
PERIODS1
EXECUTIVE DIRECTOR
Andrew Wood
Unlimited
12 months
12 months
GROUP EXECUTIVES
Filippo Abba
Simon Holt
Christopher Parker
David Steele
Unlimited
Unlimited
Unlimited
Unlimited
12 months
12 months
12 months
12 months
6 months
6 months
6 months
6 months
1
Notice period required to be given by the KMP to the Group is the same as the notice
period required to be given by the Group to the KMP upon termination of employment.
The contracts include the components of remuneration which are to be
paid to Executives, and provide for an annual review, but do not prescribe
how remuneration levels are to be modified from year to year.
In the event of termination, all Executives are generally entitled to receive
their statutory leave entitlements. In relation to incentive plans upon
termination, where an Executive resigns, the Combined Incentive is paid
only if the Executive is employed on the date of payment (which is
subsequent to the performance year).
In accordance with the plan rules, the Board retains discretion on the
treatment of both vested and unvested equity in all instances of separation
as outlined in the Combined Incentive Plan and the LTI Plan details on
pages 56 and 57. In exercising such discretion, this is typically on a
pro‑rata basis and subject to the original performance requirements and
timing.
At the October 2013 Annual General Meeting (AGM), the Board sought
and received approval from shareholders, where discretion was applied
for the retention of LTI following cessation of employment for the value
of LTI to be disregarded when calculating the relevant participant’s cap
for the purposes of section 200F(2)(b) or section 200G(1)(c) of the Act.
Mr Karren ceased to be KMP of WorleyParsons following his retirement
from 31 March 2015. No benefit was payable to Mr Karren in connection
with his retirement as an employee of the Company. However, in
accordance with the LTI plan rules a pro‑ration of his unvested
Performance Rights was approved by the Board in December 2014, and
the pro‑rated unvested equity will remain in place subject to the original
performance and timing hurdles. Details are provided on page 62.
Mr Abba received hurdled performance rights as detailed on page 62
upon his commencement, recognizing benefits he was giving up with his
prior employer. The equity award was structured with specific targets
related to his personal performance and the ongoing performance of the
Improve business line.
64 WorleyParsons Annual Report 2015
Directors’ report CONTINUED
4. NON‑EXECUTIVE DIRECTOR REMUNERATION
NON‑EXECUTIVE DIRECTORS
From time to time, the Board may determine special fees for additional
duties undertaken by directors. No such fees were paid in FY2015.
This section outlines the remuneration arrangements in place for the
Company’s Non‑Executive Directors (NEDs). All directors held office for
the whole of FY2015, except where otherwise stated. The NEDs for
FY2015 are listed below:
NAME
John Grill
Ron McNeilly
Larry Benke
Erich Fraunschiel
John M Green
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
POSITION
Chairman
Deputy Chairman and
Lead Independent Director
Director
Director
Director
Director
Director
Director
COUNTRY OF RESIDENCE
Australia
Australia
Canada
Australia
Australia
United Kingdom
Australia
Hong Kong
GUIDING PRINCIPLES
The principles of fairness and shareholder alignment are reflected through
the Company’s commitment to setting NED fees at a level which remains
market competitive, while ensuring they reflect the caliber of directors
required to address the significant strategic and operational challenges
faced by the Company, domestically and abroad.
For the fourth consecutive year, there will be no increase in annual fees
for NEDs in FY2016.
The aggregate amount of fees (which include Board and Committee fees)
that may be paid to NEDs in any year is capped at the level approved by
shareholders. The current maximum aggregate amount of $3.25 million
per annum was approved by shareholders at the 2012 AGM. Of the
aggregate annual fee pool, 69% ($2.23 million) was utilized during
FY2015 (76% ($2.47 million) for FY2014). NEDs do not receive
performance related payments.
REMUNERATION STRUCTURE
Board and Committee fees
Board and Committee fees for FY2015 and FY2016 are set out below.
These amounts are inclusive of superannuation contributions made on
behalf of NEDs in accordance with the Company’s statutory obligations.
FY2015 AND FY2016 ANNUAL FEES
ROLE
Chairman1,2
Deputy Chairman and Lead Independent Director1
Other NED
Chairman of Audit and Risk Committee
Member of Audit and Risk Committee
Chairman of Remuneration Committee
Member of Remuneration Committee
Chairman of Health, Safety and Environment Committee
Member of Health, Safety and Environment Committee
Chairman/Member of Nominations Committee
$520,000
$312,000
$194,000
$47,000
$26,000
$37,000
$21,000
$30,000
$12,000
nil
1
2
The Chairman of the Board and Deputy Chairman and Lead Independent Director do
not receive additional fees for Committees, of which they may be a member.
Mr Grill agreed to a temporary decrease in the Chairman fee from $520,000 to
$460,000 per annum for FY2014 and FY2015.
Other benefits
NEDs are eligible to receive travel allowances of $5,000 per trip for
overseas business related travel including attendance at Board meetings
and site visits. NEDs are also entitled to be reimbursed for all business
related expenses, including travel, incurred in the discharge of their
obligations.
The Company does not pay retirement benefits to NEDs, except where
required by legislation.
REMUNERATION OUTCOMES
Remuneration of the NEDs for FY2015 and FY2014 is set out below:
SHORT TERM
EMPLOYEE
POST‑
EMPLOYMENT
BENEFITS
SHARE
BASED
PAYMENT
TRAVEL
FEES ALLOWANCES
$
$
SUPER‑
ANNUATION1
$
EQUITY
INCENTIVE
STI/CASH
SETTLED
$
TOTAL
$
John Grill
FY2015
FY2014
Ron McNeilly
FY2015
FY2014
Larry Benke
FY2015
FY2014
441,217
442,216
293,217
294,260
5,000
5,000
–
5,000
232,000
212,102
30,000
25,000
Erich Fraunschiel
FY2015
FY2014
John M Green
FY2015
FY2014
Christopher Haynes
222,342
224,264
212,282
214,405
5,000
5,000
–
5,000
FY2015
FY2014
224,000
223,996
30,000
30,000
Catherine Livingstone
18,783
17,775
18,783
17,734
–
–
18,658
16,732
18,718
16,591
–
–
FY2015
FY2014
JB McNeil3
FY2015
FY2014
Wang Xiao Bin
FY2015
FY2014
Total remuneration
201,726
203,560
–
5,000
18,274
16,436
–
–
182,600
20,000
–
–
201,726
203,560
20,000
35,000
18,274
16,436
–
32,8812
465,000
497,872
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
312,000
316,994
262,000
237,102
246,000
245,996
231,000
235,996
254,000
253,996
220,000
224,996
–
202,600
240,000
254,996
FY2015
FY2014
2,028,510
90,000
2,200,963
135,000
111,490
101,704
–
2,230,000
32,881
2,470,548
1
2
Superannuation contributions are made on behalf of the NEDs in accordance with the
Company’s statutory superannuation obligations. In some cases, the amounts in this
table are lower than the annualized superannuation guarantee cap (Cap). In FY2014,
NEDs were paid every second month and the legislation requires the Cap to apply
quarterly. The lower amount results from those quarters in which only one payment
was made and it is lower than the quarterly cap.
Mr Grill received Deferred Equity STI rights in 2012 half vested after 12 months and
half after 24 months. The plan provided dividend equivalent payments disclosed in
FY2014.
3 Mr McNeil retired as a director on 3 April 2014.
WorleyParsons Annual Report 2015 65
NED INTERESTS IN SHARES AND PERFORMANCE RIGHTS
NED beneficial interests in shares and performance rights of the Company as at 30 June 2015 are detailed in the below table. The service and
performance criteria for the rights are discussed in the LTI Plan section on page 57.
NUMBER OF SHARES AND PERFORMANCE RIGHTS HELD IN WORLEYPARSONS LIMITED
John Grill1
Ron McNeilly
Larry Benke2
Erich Fraunschiel
John M Green
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
TYPE
Shares
Rights
Shares
Shares
Shares
Shares
Shares
Shares
Shares
BALANCE AT 1 JULY 2014
ON EXERCISE OF
PERFORMANCE
RIGHTS
PURCHASE/
(SALE)
25,372,173
61,850
401,064
1,133,383
168,755
891,869
11,945
13,000
11,000
–
–
–
–
–
–
–
–
–
–
–
41,500
–
30,000
–
–
–
–
(LAPSES)
–
(44,039)
–
–
–
–
–
–
–
BALANCE AT
30 JUNE 2015
25,372,173
17,811
442,564
1,133,383
198,755
891,869
11,945
13,000
11,000
1
2
Mr Grill received rights as part of his employment with the Company prior to his retirement effective 23 October 2012. In 2011, shareholders approved that Mr Grill’s performance
rights should be cash settled.
Mr Benke received exchangeable shares as part of the Colt Group consideration upon acquisition in 2007.
NED minimum shareholding requirement
A minimum shareholding requirement exists to provide alignment between director and shareholder interests. Each NED must build a holding of
the Company’s ordinary shares equivalent in value to that director’s annual fee. For the purpose of this test, the value of shares is calculated using the
number of shares held at 30 June 2015 multiplied by the volume weighted average price of the Company’s shares up to and including 30 June 2015
($10.414) or purchase price if higher. NEDs are expected to comply with this requirement within their first full term of three years as a director. All
NEDs currently comply with the minimum shareholding requirement.
This Directors’ Report (including Remuneration Report) is made in accordance with a resolution of the directors.
JOHN GRILL AO
Chairman
Sydney, 26 August 2015
66 WorleyParsons Annual Report 2015
Directors’ report CONTINUED
STATEMENT OF FINANCIAL PERFORMANCE
For the financial year ended 30 June 2015
REVENUE AND OTHER INCOME
Professional services revenue
Procurement revenue
Construction and fabrication revenue
Interest income
Other
Total revenue and other income
EXPENSES
Professional services costs
Procurement costs
Construction and fabrication costs
Global support costs
Other
Borrowing costs
Total expenses
CONSOLIDATED
NOTES
2015
$’M
2014
$’M
5,517.9
2,370.9
857.9
6.6
4.2
5,715.6
2,956.2
888.7
5.3
16.7
4
8,757.5
9,582.5
(5,118.8)
(2,360.0)
(775.3)
(151.9)
(268.6)
(62.0)
(5,180.9)
(2,949.2)
(837.9)
(199.0)
–
(64.9)
(8,736.6)
(9,231.9)
5
Share of net profits of associates accounted for using the equity method
21(C)
Profit before income tax expense
Income tax expense
(Loss)/profit after income tax expense
(Loss)/profit after income tax expense attributable to:
Members of WorleyParsons Limited
Non‑controlling interests
Basic (loss)/earnings per share (cents)
Diluted (loss)/earnings per share (cents)
6(A)
16
16
The above Statement of Financial Performance should be read in conjunction with the accompanying notes.
10.8
31.7
(70.7)
(39.0)
(54.9)
15.9
(22.2)
(22.2)
18.0
368.6
(100.0)
268.6
249.1
19.5
101.0
100.3
WorleyParsons Annual Report 2015 67
STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 30 June 2015
(Loss)/profit after income tax expense
Items that may be reclassified in future periods to the Statement of Financial Performance
Net movement in foreign currency translation reserve
Net movement in hedge reserve
Total comprehensive income, net of tax
Total comprehensive income, net of tax, attributable to:
Members of WorleyParsons Limited
Non‑controlling interests
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
CONSOLIDATED
2015
$’M
(39.0)
95.9
(0.3)
56.6
32.3
24.3
2014
$’M
268.6
(26.5)
(5.9)
236.2
214.7
21.5
68 WorleyParsons Annual Report 2015
STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
ASSETS
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Income tax receivable
Prepayments
Derivatives
Assets held for sale
Total current assets
Non‑current assets
Intangible assets
Derivatives
Equity accounted associates
Property, plant and equipment
Deferred tax assets
Other non‑current assets
Total non‑current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Interest bearing loans and borrowings
Income tax payable
Derivatives
Liabilities held for sale
Total current liabilities
Non‑current liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Trade and other payables
Total non‑current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits
Parent entity interest
Non‑controlling interests
TOTAL EQUITY
CONSOLIDATED
NOTES
2015
$’M
2014
$’M
7
8
8
18
23
10
18
21(B)
28
29(A)
9
11
13
18
23
13
29(B)
11
9
14
15
381.9
1,918.1
224.8
60.8
113.3
0.9
–
365.8
1,883.7
193.1
1.4
86.3
1.6
30.9
2,699.8
2,562.8
2,090.3
2,029.2
73.6
116.2
107.2
212.3
1.7
2,601.3
5,301.1
1,350.1
487.9
25.5
13.4
2.9
–
26.8
115.5
115.7
195.6
3.9
2,486.7
5,049.5
1,331.7
426.5
4.2
47.8
5.6
19.4
1,879.8
1,835.2
1,210.4
115.7
48.1
29.5
1,403.7
3,283.5
2,017.6
1,255.0
(111.0)
873.0
2,017.0
0.6
2,017.6
871.8
122.3
35.3
–
1,029.4
2,864.6
2,184.9
1,239.7
(195.8)
1,137.7
2,181.6
3.3
2,184.9
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
WorleyParsons Annual Report 2015 69
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 30 June 2015
CONSOLIDATED
FOREIGN
CURRENCY
RETAINED TRANSLATION
RESERVE
$’M
PROFITS
$’M
ISSUED
CAPITAL
$’M
PERFORMANCE
HEDGE
RESERVE
$’M
RIGHTS ACQUISITION
RESERVE
$’M
RESERVE
$’M
PARENT
NON‑
ENTITY CONTROLLING
INTERESTS
$’M
INTEREST
$’M
TOTAL
$’M
As at 1 July 2014
1,239.7
1,137.7
(246.5)
11.0
49.3
(9.6)
2,181.6
3.3
2,184.9
(Loss)/profit after income
tax expense
Foreign exchange
movement on translation
of foreign controlled
entities and associates
Net investments hedged
Income tax on net
investments hedged
Net gain on foreign
exchange hedges
Income tax on net gain
on foreign exchange hedges
Fair value loss on
mark to market of
cross currency hedge
Income tax on fair value
loss on mark to market of
cross currency hedge
Disposal of interest
rate hedges
Total comprehensive
(loss)/income, net of tax
Transactions with owners
Share based payments
expense
Reversal of performance
rights expense associated with
rights which do not vest
based on earnings per share
(EPS) hurdles
–
–
–
–
–
–
–
–
–
–
–
Transfer to issued capital
on purchase and issuance
of shares to satisfy
performance rights
Acquisition of interest
from non‑controlling
interests
Dividends paid
15.3
–
–
–
(54.9)
–
–
–
–
–
0.7
(0.1)
(2.8)
0.8
1.1
–
–
–
–
–
–
–
–
94.0
(9.3)
2.8
–
–
–
–
–
(54.9)
87.5
(0.3)
–
–
–
–
–
–
–
–
–
–
–
(54.9)
15.9
(39.0)
–
–
–
–
–
–
–
–
–
94.0
(9.3)
2.8
0.7
(0.1)
(2.8)
0.8
1.1
8.4
102.4
–
–
–
–
–
–
–
(9.3)
2.8
0.7
(0.1)
(2.8)
0.8
1.1
32.3
24.3
56.6
–
–
–
13.6
–
13.6
–
13.6
–
–
–
(209.8)
–
–
–
–
–
(0.7)
–
(0.7)
–
(0.7)
–
(15.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
(209.8)
(27.0)
(236.8)
As at 30 June 2015
1,255.0
873.0
(159.0)
10.7
46.9
(9.6)
2,017.0
0.6
2,017.6
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
70 WorleyParsons Annual Report 2015
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 30 June 2015
CONSOLIDATED
FOREIGN
CURRENCY
RETAINED TRANSLATION
RESERVE
$’M
PROFITS
$’M
ISSUED
CAPITAL
$’M
PERFORMANCE
HEDGE
RESERVE
$’M
RIGHTS ACQUISITION
RESERVE
$’M
RESERVE
$’M
PARENT
NON‑
ENTITY CONTROLLING
INTERESTS
$’M
INTEREST
$’M
TOTAL
$’M
As at 1 July 2013
1,238.5
1,098.2
(218.0)
16.9
32.9
(9.6)
2,158.9
34.0
2,192.9
Profit after income
tax expense
Foreign exchange
movement on translation
of foreign controlled
entities and associates
Net investments hedged
Income tax on net
investments hedged
Net gain on foreign
exchange hedges
Income tax on net gain
on foreign exchange hedges
Fair value loss on
mark to market of
cross currency hedge
Income tax on fair value
loss on mark to market of
cross currency hedge
–
–
–
–
–
–
–
–
249.1
–
–
–
–
–
0.8
(0.3)
(9.1)
2.6
0.1
–
–
–
–
–
–
–
–
5.6
(48.7)
14.6
–
–
–
–
–
Net gain on interest rate hedges –
Total comprehensive income,
net of tax
–
249.1
(28.5)
(5.9)
–
–
–
–
–
–
–
–
–
–
–
249.1
19.5
268.6
–
–
–
–
–
–
–
–
–
5.6
(48.7)
14.6
0.8
(0.3)
(9.1)
2.6
0.1
2.0
–
–
–
–
–
–
–
7.6
(48.7)
14.6
0.8
(0.3)
(9.1)
2.6
0.1
214.7
21.5
236.2
Transactions with owners
Share based payments
expense
Reversal of performance
rights expense associated with
rights which do not vest
based on EPS hurdles
Transfer to issued capital
on purchase and issuance
of shares to satisfy
performance rights
Acquisition of interest
from non‑controlling
interests
Dividends paid
–
–
1.2
–
–
–
–
–
–
(209.6)
–
–
–
–
–
–
18.1
–
18.1
–
18.1
–
(0.5)
–
(0.5)
–
(0.5)
–
–
–
(1.2)
–
–
–
–
–
–
–
–
–
(35.5)
(35.5)
(209.6)
(16.7)
(226.3)
As at 30 June 2014
1,239.7
1,137.7
(246.5)
11.0
49.3
(9.6)
2,181.6
3.3
2,184.9
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
WorleyParsons Annual Report 2015 71
CONSOLIDATED
NOTES
2015
$’M
2014
$’M
9,010.3
(8,566.7)
9,633.2
(8,966.4)
7
20(B)
20(B)
443.6
15.8
4.1
(56.2)
(156.0)
251.3
(106.1)
4.2
(88.6)
1.6
666.8
23.5
5.3
(55.7)
(89.8)
550.1
(62.2)
11.1
(54.4)
1.2
(188.9)
(104.3)
(3,212.7)
3,347.6
(1,981.0)
1,826.9
(3.3)
(1.5)
19.0
(4.3)
(6.8)
–
(209.6)
(16.7)
(391.5)
54.3
320.0
(6.0)
368.3
STATEMENT OF CASH FLOWS
For the financial year ended 30 June 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Dividends received from associates
Interest received
Borrowing costs paid
Income taxes paid
Net cash inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of controlled entities
Cash balances in controlled entities acquired, net of bank overdraft
Payments for purchase of property, plant and equipment and computer software
Proceeds from sale of property, plant and equipment
Net cash outflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of borrowings
Proceeds from borrowings
Costs of bank facilities and proceeds from finance leases
Net loans to related parties
Cash received on close out of cross currency swap
Dividends paid to members of WorleyParsons Limited
17(B)
(209.8)
Dividends paid to non‑controlling interests
Net cash outflow from financing activities
Net (decrease)/increase in cash
Cash and cash equivalents at the beginning of the financial year
Effects of foreign exchange rate changes on cash
Cash and cash equivalents at the end of the financial year
7
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
(27.0)
(87.7)
(25.3)
368.3
37.8
380.8
72 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 30 June 2015
1. CORPORATE INFORMATION
The financial report of WorleyParsons Limited (Company or parent entity) for the financial year ended 30 June 2015 was authorized for issue in
accordance with a resolution of the directors on 26 August 2015.
WorleyParsons Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange
(ASX: WOR). WorleyParsons Limited is a for‑profit entity for the purposes of preparing the financial statements.
The nature of the operations and principal activities of the Company is described in note 3.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) BASIS OF ACCOUNTING
(i) Basis of preparation
This general purpose financial report has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards (AAS)
and other authoritative pronouncements of the Australian Accounting Standards Board.
The Group is of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission, relating to the
“rounding off” of amounts in the Directors’ Report and financial statements. Unless otherwise expressly stated, amounts have been rounded off
to the nearest hundred thousand dollars in accordance with that Class Order. Amounts shown as 0.0 represent amounts less than AUD 50,000
which have been rounded down.
(ii) Statement of compliance
The consolidated financial report complies with International Financial Reporting Standards and interpretations as issued by the International
Accounting Standards Board (IASB).
(iii) Historical cost convention
The financial report has been prepared on a historical cost basis, except for derivative financial instruments and available‑for‑sale financial
assets that have been measured at fair value. The carrying values of recognized assets and liabilities that are hedged with fair value hedges are
adjusted to record changes in the fair values attributable to the risks that are being hedged.
(iv) Critical accounting estimates
In the application of AAS, management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities.
The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under
the circumstances.
Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the
period of the revision and future periods if the revision affects both current and future periods.
Management has identified the following critical accounting policies for which significant judgments, estimates and assumptions are made:
• revenue recognition, refer note 4;
• goodwill and intangible assets with identifiable useful lives, refer note 10;
• project, warranty and other provisions, refer note 11;
• share based payments, refer note 5; and
• recovery of deferred taxes, refer note 29.
Actual results may differ from these estimates under different assumptions and conditions and may materially affect financial results or the
financial position reported in future periods.
(v) Adoption of new and amended accounting standards
The Group has adopted the following new amendments and interpretation from 1 July 2014:
• AASB 2013‑4 Novation of Derivatives and Continuation of Hedge Accounting [AASB 139];
• AASB 2012‑3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities [AASB 132];
• AASB 2014‑1 Amendments to Australian Accounting Standards – Part A Annual Improvements 2010‑2012 and 2011‑2013 Cycles;
• AASB 2015‑2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101 [AASB 7, AASB 101,
AASB 134 & AASB 1049]; and
• IFRIC 21 Levies.
Adoption of these amendments and interpretation did not have any material effect on the Statement of Financial Performance, Statement of
Comprehensive Income and Statement of Financial Position of the Group.
WorleyParsons Annual Report 2015 73
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(vi) New accounting standards not yet applicable
The following new accounting standards have been issued or amended but are not yet effective and have not been adopted by the Group for the
annual reporting period ended 30 June 2015:
Effective 1 July 2016:
AASB 2014‑3 Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations
[AASB 1 & AASB 11]
AASB 2014‑3 provides guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business to
apply, to the extent of its share, all the principles in AASB 3 Business Combinations and other AAS except for those principles that conflict with
the guidance in AASB 11. Furthermore, entities are required to disclose the information required by AASB 3 and other AAS for business
combinations. The impacts of this amendment are not expected to be material for the Group’s financial statements.
AASB 2014‑4 Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation
[AASB 116 & AASB 138]
AASB 116 Property Plant and Equipment and AASB 138 Intangible Assets both establish the principle for the basis of depreciation and
amortization as being the expected pattern of consumption of the future economic benefits of an asset. The IASB has clarified that the use of
revenue based methods to calculate the depreciation of an asset is not appropriate because revenue generated by an activity that includes the use
of an asset generally reflects factors other than the consumption of the economic benefits embodied in the asset. The amendment also clarified
that revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an
intangible asset. This presumption, however, can be rebutted in certain limited circumstances. The amendment is not expected to impact the
Group’s financial statements.
AASB 2014‑9 Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements
AASB 2014‑9 amends AASB 127 Separate Financial Statements, and consequentially amends AASB 1 First‑time Adoption of Australian
Accounting Standards and AASB 128 Investments in Associates and Joint Ventures, to allow entities to use the equity method of accounting for
investments in subsidiaries, joint ventures and associates in their separate financial statements. AASB 2014‑9 also makes editorial corrections to
AASB 127. The amendment is not expected to impact the Group’s financial statements.
AASB 2014‑10 Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture
AASB 2014‑10 amends AASB 10 Consolidated Financial Statements and AASB 128 Investments in Associates and Joint Ventures to address an
inconsistency between the requirements in AASB 10 and those in AASB 128, in dealing with the sale or contribution of assets between an
investor and its associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that
constitute a business, as defined in AASB 3 Business Combinations, between an investor and its associate or joint venture, is recognized in full.
However, any gain or loss resulting from the sale or contribution of assets that do not constitute a business is recognized only to the extent of
unrelated investors’ interests in the associate or joint venture. The impacts of this amendment are not expected to be material to the Group’s
financial statements.
Effective 1 July 2017:
AASB 15 Revenue from Contracts with Customers and AASB 2014‑5 Amendments to Australian Accounting Standards arising from AASB 15
AASB 15 addresses how revenue is recognized and will require the Group to identify contracts and performance obligations, determine the
transaction price, allocate the transaction price to each performance obligation and recognize revenue when each performance obligation is
satisfied. AASB 2014‑5 incorporates the consequential amendments to a number of Australian Accounting Standards (including interpretations)
arising from the issuance of AASB 15. The Group has not finalized its assessment of how changes to the rules for revenue recognition will
impact the Group’s financial statements.
Effective 1 July 2018:
AASB 9 Financial Instruments
AASB 9 is the AASB’s replacement for AASB 139 Financial Instruments: Recognition and Measurement. The standard includes requirements
for classification, recognition and measurement, impairment, derecognition and general hedge accounting. The Group has not yet finalized its
assessment of how changes to the rules for financial instruments will impact the Group’s financial statements.
(vii) Basis of presentation and classification
During the financial year ended 30 June 2015, the Group voluntarily changed the presentation of its notes to the financial statements. Relevant
accounting policies have been presented together with the associated numerical information. The Group has determined that presentation of its
financial information in this manner will enhance the readability of the financial statements for its users.
(B) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by WorleyParsons Limited as at 30 June 2015
and the results of all controlled entities for the financial year then ended. WorleyParsons Limited and its controlled entities together are referred to
in this financial report as the consolidated entity or the Group. Investments in associates are equity accounted and are not part of the consolidated
entity (refer note 21).
The impact of all transactions between entities in the consolidated entity are eliminated in full. Non‑controlling interests in the results and equity
of controlled entities are shown separately in the Statement of Financial Performance, Statement of Comprehensive Income and Statement of
Financial Position.
74 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
Non‑controlling interests not held by the Company are allocated their share of net profit after tax in the Statement of Financial Performance and of
total comprehensive income net of tax in the Statement of Comprehensive Income, and are presented within equity in the Statement of Financial
Position, separately from parent entity interest.
(C) FOREIGN CURRENCY TRANSLATION
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in
which the entity operates (functional currency). The consolidated financial statements are presented in Australian dollars, which is the Group’s
presentation currency.
Translation of foreign currency transactions
Transactions denominated in a foreign currency are converted at the foreign exchange rate at the date of the transaction. Foreign currency
receivables and payables at balance date are translated at foreign exchange rates at balance date. Foreign exchange gains and losses are brought to
account in determining the profit and loss for the financial year.
(D) OTHER ACCOUNTING POLICIES
Significant and other accounting policies that summarize the measurement basis used and are relevant to the understanding of the financial
statements are provided throughout the notes to the financial statements.
3. SEGMENT INFORMATION
(A) OPERATING SEGMENTS
Revenue
SERVICES
MAJOR PROJECTS
IMPROVE
DEVELOPMENT
TOTAL
2015
$’M
2014
$’M
2015
$’M
2014
$’M
2015
$’M
2014
$’M
2015
$’M
2014
$’M
2015
$’M
2014
$’M
Professional services revenue
4,322.2
4,471.5
881.5
827.1
645.7
777.0
142.9
91.2
5,992.3
6,166.8
Construction and fabrication revenue
Procurement revenue at margin
Other income
857.9
317.1
4.2
888.7
252.7
5.3
Total segment revenue1
5,501.4
5,618.2
Segment result2
Segment margin
Other segment information
Depreciation and amortization expense
Impairment of goodwill
Share of net profits of associates
accounted for using the equity method
Equity accounted associates
Purchase of non‑current assets
(B) CUSTOMER SECTOR GROUPS
438.7
8.0%
547.4
9.7%
75.5
59.4
(2.9)
70.6
53.8
75.6
–
8.1
76.9
59.7
Revenue
Professional services revenue
Construction and fabrication revenue
Procurement revenue at margin
Other income
Total segment revenue1
Segment result2
Segment margin
–
41.2
–
922.7
46.3
5.0%
4.0
56.2
2.6
3.2
3.4
–
35.8
–
862.9
67.5
7.8%
4.3
–
0.3
2.1
7.7
–
3.3
–
649.0
37.0
5.7%
4.9
60.4
11.1
42.0
4.5
–
8.6
–
785.6
48.1
6.1%
6.2
–
9.6
36.3
6.4
–
11.5
–
154.4
14.1
9.1%
3.8
22.6
–
0.4
2.4
–
5.8
–
857.9
373.1
4.2
888.7
302.9
5.3
97.0
7,227.5
7,363.7
1.4
1.4%
536.1
7.4%
664.4
9.0%
1.7
–
–
0.2
4.6
88.2
198.6
10.8
116.2
64.1
87.8
–
18.0
115.5
78.4
HYDROCARBONS
MINERALS,
METAL & CHEMICALS
INFRASTRUCTURE
TOTAL
2015
$’M
2014
$’M
2015
$’M
2014
$’M
2015
$’M
2014
$’M
2015
$’M
2014
$’M
4,196.2
4,255.1
894.3
1,042.4
901.8
869.3
5,992.3
6,166.8
857.9
277.8
0.2
888.7
227.4
0.3
–
9.3
0.1
–
23.1
0.4
5,332.1
5,371.5
903.7
1,065.9
475.1
8.9%
517.2
9.6%
44.1
4.9%
108.0
10.1%
–
86.0
3.9
991.7
16.9
1.7%
–
52.4
4.6
857.9
373.1
4.2
888.7
302.9
5.3
926.3
7,227.5
7,363.7
39.2
4.2%
536.1
7.4%
664.4
9.0%
1
2
Segment revenue represents aggregated revenue, which is defined as statutory revenue and other income plus share of revenue from associates less procurement revenue at nil margin,
interest income and net gain on revaluation of investments previously accounted for as equity accounted associates. The directors believe the disclosure of revenue attributable to
associates provides additional information in relation to the financial performance of the Group.
Segment result is segment revenue less segment expenses excluding the items listed in note 3(G) and is the key financial measure that is presented to the chief operating decision
makers.
WorleyParsons Annual Report 2015 75
3. SEGMENT INFORMATION (continued)
(C) RECONCILIATION OF SEGMENT REVENUE TO TOTAL REVENUE AND OTHER INCOME PER THE
STATEMENT OF FINANCIAL PERFORMANCE
Segment revenue
Procurement revenue at nil margin (including share of
revenue from associates)
Share of revenue from associates
Net gain on revaluation of investments previously accounted
for as equity accounted associates
Interest income
Total revenue and other income per the Statement of
Financial Performance
(D) RECONCILIATION OF SEGMENT RESULT TO PROFIT AFTER INCOME TAx ExPENSE PER THE
STATEMENT OF FINANCIAL PERFORMANCE
Segment result
Global support costs1
Interest and tax for associates
Amortization of acquired intangible assets
Total underlying EBIT
Underlying EBIT margin on aggregated revenue for the Group
Impairment of goodwill
Arkutun‑Dagi project settlement costs
Net gain on revaluation of investments previously accounted
for as equity accounted associates
Restructuring costs
Tax on restructuring costs
Net borrowing costs
Income tax expense
(Loss)/profit after income tax expense per the
Statement of Financial Performance
1 Reconciliation of global support costs to the Statement of Financial Performance:
Global support costs per segment information
Total restructuring costs
Restructuring costs attributable to professional services costs
Global support costs per the Statement of Financial Performance
TOTAL
2015
$’M
2014
$’M
7,227.5
7,363.7
2,038.0
2,726.1
(514.6)
(524.0)
–
6.6
11.4
5.3
8,757.5
9,582.5
536.1
664.4
(151.9)
(181.3)
(6.7)
(21.8)
355.7
4.9%
(198.6)
(70.0)
–
–
–
(55.4)
(70.7)
(9.2)
(21.7)
452.2
6.1%
–
–
11.4
(35.4)
9.7
(59.6)
(109.7)
(39.0)
268.6
151.9
–
–
151.9
181.3
35.4
(17.7)
199.0
76 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(E) GEOGRAPHIC SEGMENTS1
Revenue from external customers2
2015
Australia, Pacific, Asia and China
Europe, Middle East and North Africa
Sub‑Saharan Africa
Americas
Total
Other income
Interest income
AGGREGATED
REVENUE
$’M
ADD:
PROCUREMENT
REVENUE AT
NIL MARGIN
$’M
1,599.0
1,965.9
389.3
3,273.3
7,227.5
15.2
251.8
–
1,771.0
2,038.0
Total revenue and other income per the Statement of Financial Performance
2014
Australia, Pacific, Asia and China
Europe, Middle East and North Africa
Sub‑Saharan Africa
Americas
Total
Other income
AGGREGATED
REVENUE
$’M
ADD:
PROCUREMENT
REVENUE AT
NIL MARGIN
$’M
1,750.1
1,714.1
391.3
3,508.2
7,363.7
48.9
943.2
–
1,734.0
2,726.1
Net gain on revaluation of investments previously accounted for as
equity accounted associates
Interest income
Total revenue and other income per the Statement of Financial Performance
Non‑current assets by geographical location:3
Australia, Pacific, Asia and China
Europe, Middle East and North Africa
Sub‑Saharan Africa
Americas
Non‑current assets by geographical location
1
2
3
Geographic locations have been aligned to internal reports presented to the chief operating decision makers.
Revenue is attributed to the geographic location based on the entity providing the services.
Excludes goodwill, derivative financial instruments and deferred tax assets.
LESS:
SHARE OF
REVENUE
FROM
ASSOCIATES
$’M
(176.6)
(153.5)
(93.8)
(90.7)
(514.6)
LESS:
SHARE OF
REVENUE
FROM
ASSOCIATES
$’M
(232.4)
(80.7)
(120.1)
(90.8)
(524.0)
LESS:
OTHER
INCOME
$’M
(3.2)
(1.0)
1.0
(1.0)
(4.2)
LESS:
OTHER
INCOME
$’M
(3.3)
(0.4)
(1.5)
(0.1)
(5.3)
2015
$’M
126.0
81.5
54.6
146.5
408.6
TOTAL
REVENUE
FROM
EXTERNAL
CUSTOMERS
$’M
1,434.4
2,063.2
296.5
4,952.6
8,746.7
4.2
6.6
8,757.5
TOTAL
REVENUE
FROM
EXTERNAL
CUSTOMERS
$’M
1,563.3
2,576.2
269.7
5,151.3
9,560.5
5.3
11.4
5.3
9,582.5
2014
$’M
112.6
85.0
68.4
138.0
404.0
WorleyParsons Annual Report 2015 77
3. SEGMENT INFORMATION (continued)
(F) IDENTIFICATION OF REPORTABLE SEGMENTS
The Group has identified its operating segments based on the monthly internal reports that are reviewed and used by the Chief Executive Officer (CEO),
Chief Financial Officer and Group Managing Directors (the chief operating decision makers) in assessing performance and in determining the allocation
of resources. As announced in April 2014 and effective 1 July 2014, the business operations are managed and reported by business lines: Services,
Major Projects, Improve and Development. This represents a change to the operating segments reported in the previous corresponding period.
The historical segment results for the financial year ended 30 June 2014 have been restated to be comparable with the revised segmentation approach as
required by AASB 8 Operating Segments. The Group has also included information using the prior segment basis (customer sector groups).
(G) ACCOUNTING POLICIES AND INTER‑SEGMENT TRANSACTIONS
Segment revenues and expenses are those that are directly attributable to a segment and the relevant portion that can be allocated to the segment on a
reasonable basis.
Segment revenues, expenses and results include transactions between segments incurred in the ordinary course of business. These transactions are priced
on an arm’s length basis and are eliminated on consolidation.
The accounting policies used by the Group in reporting segments internally are the same as those contained in these financial statements and are
consistent with those in the prior period.
The segment result includes the allocation of overhead that can be directly attributed to an individual business segment. The following items and
associated assets and liabilities are not allocated to segments as they are not considered part of the core operations of any segment:
• impairment of goodwill;
• global support costs;
• Arkutun‑Dagi project settlement costs;
• net gain on revaluation of investments previously accounted for as equity accounted associates;
• restructuring costs incurred in FY2014 relating to the business reorganization;
• interest and tax for associates;
• amortization of acquired intangible assets;
• net borrowing costs; and
• income tax expense.
(H) MAJOR CUSTOMERS
The most significant customer accounts for 6.4% (2014: 9.3%) of aggregated revenue and is within the Services, Major Projects and Improve business
lines and Hydrocarbons customer sector group.
4. REVENUE AND OTHER INCOME
Professional services revenue
Procurement revenue
Construction and fabrication revenue
Interest income
Revenue
Net gain on sale of Exmouth Power Station
Net gain on revaluation of investments previously accounted for as equity accounted associates
Other
Total revenue and other income
CONSOLIDATED
2015
$’M
2014
$’M
5,517.9
2,370.9
857.9
6.6
8,753.3
1.3
–
2.9
5,715.6
2,956.2
888.7
5.3
9,565.8
–
11.4
5.3
8,757.5
9,582.5
During the financial year ended 30 June 2014, the Group acquired an additional net interest in entities which had previously been accounted for as
equity accounted associates. This resulted in $11.4 million net gain on revaluation of investments previously accounted for as equity accounted
associates. There was no such transaction during the financial year ended 30 June 2015.
RECOGNITION AND MEASUREMENT
Amounts disclosed as revenue are net of trade allowances, duties and taxes paid. Revenue is recognized and measured at the fair value of the
consideration received or receivable to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. Revenues are recognized net of the amount of goods and services tax (GST). The following specific recognition criteria must be met before
revenue is recognized:
Professional services and construction and fabrication
Revenue from cost plus contracts is recognized by reference to the recoverable costs incurred during the reporting period plus the percentage of
fees earned.
Contract revenue and costs are recognized in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably
estimated. Where it is probable that a loss will arise from a contract, the excess of total costs over revenue is recognized as an expense immediately.
78 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
Where the outcome of a contract cannot be reliably estimated, contract costs are recognized as an expense as incurred, and where it is probable that the
costs will be recovered, revenue is recognized to the extent of costs incurred. Incentive payments on contracts are recognized as part of total contract
revenue where it is probable that specified performance standards are met or exceeded and the amount of the incentive payment can be reliably measured.
For fixed price contracts, the stage of completion is measured by reference to costs incurred to date as a percentage of estimated total costs for
each contract.
Procurement
Revenue is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be
incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of
delivery of the goods to the customer.
Interest
Interest income is recognized as it accrues using the effective interest rate method.
Dividends
Revenue is recognized when the Group’s right to receive the payment is established.
KEY ESTIMATES
Percentage of completion
The percentage of completion is estimated by qualified internal professionals. The Group considers the terms the of the contract, internal models and
other sources when estimating the projected total cost and the stage of completion.
5. EXPENSES AND LOSSES/(GAINS)
Profit before income tax expense includes the following specific expenses and losses/(gains):
EXPENSES AND LOSSES
Short term employee benefits
Post‑employment benefits
Share based payments
Total staff costs
Impairment of goodwill
Arkutun‑Dagi project settlement costs
Total other costs
Operating lease rentals – minimum lease payments
Amortization
Depreciation
MOVEMENTS IN PROVISIONS
Employee benefits
Onerous leases
Warranties
Insurance
Other
CONSOLIDATED
2015
$’M
2014
$’M
4,119.3
138.0
12.9
4,270.2
198.6
70.0
268.6
210.6
85.4
24.6
4,195.6
135.7
17.6
4,348.9
–
–
–
208.7
82.4
27.1
204.7
194.3
20.2
9.8
(2.9)
25.3
0.9
1.3
(3.0)
20.2
RECOGNITION AND MEASUREMENT
Employee benefits
Employee benefits expenses are charged against profit on a net basis in their respective categories.
(i) Share based payments – performance rights
Performance rights (rights) over the ordinary shares of WorleyParsons Limited are granted to executive directors and other executives of the
consolidated entity for nil consideration in accordance with performance guidelines approved by the Board. The fair values of the rights are amortized
on a straight line basis over their performance period. For share settled rights, the fair value of the rights is the share price at grant date adjusted for
the impact of performance hurdles and other vesting or exercise criteria attached to the right. For cash settled rights, the fair value of the rights is
recalculated at the end of each reporting period and amortized on a straight line basis over their vesting period. The accounting estimates and
assumptions relating to rights would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but
may impact expenses and equity.
Fair value per right at grant date is independently determined using an appropriate option pricing model that takes into account the exercise price,
the term of the right, the vesting and performance criteria, the impact of dilution, the non‑traded nature of the right, the share price at grant date and
expected price volatility of the underlying share, the expected dividend yield and the risk‑free interest rate for the term of the right. This amount
represents the actual cost to the Company.
WorleyParsons Annual Report 2015 79
5. EXPENSES AND LOSSES/(GAINS) (continued)
A Monte Carlo simulation is applied to fair value the total shareholder return (TSR) element. For the EPS, EBIT and “continuous employment condition”,
the Black‑Scholes model is utilized. Total fair value at grant is calculated by multiplying the fair value per right by the number of rights granted. This
does not represent the actual value the executive will derive from the grant, which will depend on the achievement of performance hurdles measured over
the vesting period. The maximum value of the rights granted has been estimated based on the fair value per right. The minimum total value of the rights
granted, if the applicable performance hurdles are not met, is nil.
(ii) Employee share plan
Employees in eligible countries are invited to participate in an employee share plan. Shares purchased under the employee share plan are subject to
dealing restrictions until the restriction end date. The Group will grant one bonus entitlement to a share for every five shares purchased through the
employee share plan which vests on the restriction end date at which point it will convert to an ordinary share. The Group accounts for the bonus
entitlements as equity settled share based payments.
Borrowing costs
Borrowing costs are recognized as expenses in the period in which they are incurred, except when they are included in the costs of qualifying assets.
Borrowing costs include:
• interest on bank overdrafts, and short term and long term loans and borrowings;
• amortization of discounts or premiums relating to loans and borrowings; and
• finance lease charges.
Operating lease rentals – minimum lease payments
The minimum lease payments of operating leases, where the lessor effectively retains substantially all of the risks and rewards of ownership of the
leased item, are recognized as an expense on a straight line basis. Lease incentives are recognized in the Statement of Financial Performance as part of
the total lease expense.
Depreciation and amortization
Property, plant and equipment
Depreciation is calculated on a straight line basis to write off the net cost of each item of property, plant and equipment (excluding land) over its
expected useful life to the consolidated entity. The expected useful lives for plant and equipment range from three to 10 years. The estimated useful
lives, residual values and depreciation method are reviewed at the end of each annual reporting period.
The cost of improvements to or on leasehold properties is amortized over the unexpired period of the lease or the estimated useful life of the
improvement to the consolidated entity, whichever is the shorter.
Identifiable intangible assets
The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortized over the useful life and
tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortization period for an intangible asset with a
finite useful life is reviewed at least each financial year end. Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are accounted for prospectively by changing the amortization period. The amortization expense on intangible
assets with finite lives is recognized in the Statement of Financial Performance on a straight line basis over the following periods:
• customer contracts and relationships
• trade names
• computer software
• other
Goods and Services Tax (GST)
3‑15 years;
5‑10 years;
5 years; and
3‑10 years.
Expenses are recognized net of the amount of GST except where the GST incurred is not recoverable from the taxation authority. In these
circumstances, GST is recognized as part of the expense.
6. INCOME TAX
(A) INCOME TAx ExPENSE
Current tax
Deferred tax
Overprovision in previous financial periods
Income tax expense
Deferred income tax expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
Decrease in deferred tax liabilities
Deferred tax
80 WorleyParsons Annual Report 2015
CONSOLIDATED
2015
$’M
2014
$’M
81.0
(8.1)
(2.2)
70.7
10.6
(18.7)
(8.1)
147.0
(37.5)
(9.5)
100.0
(20.0)
(17.5)
(37.5)
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(B) RECONCILIATION OF PRIMA FACIE TAx PAYABLE TO INCOME TAx ExPENSE
Profit before income tax expense
Prima facie tax expense at the Group’s statutory income tax rate of 30% (2014: 30%)
Tax effect of amounts which are non‑deductible/(non‑taxable) in calculating taxable income:
Non‑deductible impairment of goodwill
Non‑deductible performance rights
Non‑taxable gain on acquisitions
Share of net profits of associates accounted for using the equity method
Tax losses not previously recognized
Overprovision in previous financial periods
Difference in overseas tax rate1
Other
Income tax expense
1
Represents income tax expense for foreign tax rate differential and international withholding taxes.
(C) AMOUNTS RECOGNIZED DIRECTLY IN EQUITY
Aggregate amount of tax arising in the reporting period and not recognized in profit after income tax expense
but directly credited to equity:
Deferred tax – credited directly to equity
(D) TAx LOSSES
The Group has tax losses for which no deferred tax asset is recognized on the Statement of Financial Position:
Unused tax losses for which no deferred tax asset has been recognized
Potential tax benefit at 30%
The benefit for tax losses will only be recognized if:
CONSOLIDATED
2015
$’M
31.7
9.5
59.6
3.8
–
(3.2)
(0.7)
(2.2)
(6.0)
9.9
70.7
2014
$’M
368.6
110.6
–
5.3
(3.4)
(5.4)
(0.7)
(9.5)
(4.1)
7.2
100.0
(3.5)
(16.9)
48.6
14.6
42.6
12.8
• the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the
losses to be realized; or
• the losses are transferred to an eligible entity in the consolidated entity; and
• the consolidated entity continues to comply with conditions for deductibility imposed by tax legislation; and
• no changes in legislation adversely affect the consolidated entity in realizing the benefit from the deductions for the losses.
RECOGNITION AND MEASUREMENT
Income tax
The income tax expense for the period is the tax payable on the current period’s taxable income based on the income tax rate for each jurisdiction
adjusted by changes in deferred tax assets and liabilities as well as any adjustments required between prior periods’ current tax expense and income tax
returns and any relevant withholding taxes.
Current and deferred tax amounts relating to items recognized directly in equity are recognized in equity and not in the Statement of Financial
Performance.
Tax consolidation
WorleyParsons Limited and its wholly owned Australian entities elected to form a tax consolidated group from 1 July 2003. On formation of the tax
consolidated group, the entities in the tax consolidated group entered into a tax sharing agreement which, in the opinion of the directors, limits the joint
and several liability of the wholly owned entities in the case of a default by the head entity, WorleyParsons Limited.
The entities have also entered into a tax funding agreement under which the wholly owned entities fully compensate WorleyParsons Limited for any
current tax liability assumed and are compensated by WorleyParsons Limited for any current tax loss, deferred tax assets and tax credits that are
transferred to WorleyParsons Limited under the tax consolidation legislation.
WorleyParsons Annual Report 2015 81
7. CASH AND CASH EQUIVALENTS
Balance per Statement of Financial Position
The above figures are reconciled to cash at the end of the financial year as shown in the
Statement of Cash Flows as follows:
Cash at bank and on hand
Cash and cash equivalents
Less: bank overdraft
Add: cash and cash equivalents classified as held for sale
Balance per Statement of Cash Flows
Reconciliation of profit after income tax expense to net cash inflow from operating activities:
(Loss)/profit after income tax expense
NON‑CASH ITEMS
Impairment of goodwill
Amortization
Depreciation
Share based payments expense
Doubtful debts expense
Share of associates’ net profits in excess of dividends received
Net gain on revaluation of investments previously accounted for as equity accounted associates
Other
Cash flow adjusted for non‑cash items
CHANGES IN ASSETS AND LIABILITIES ADJUSTED FOR EFFECTS OF PURCHASE OF CONTROLLED ENTITIES
Increase in trade and other receivables
(Increase)/decrease in prepayments and other assets
Increase in deferred tax assets
(Increase)/decrease in net derivatives
(Increase)/decrease in income tax receivable
Increase in trade and other payables
Increase in billings in advance
(Decrease)/increase in income tax payable
Decrease in deferred tax liabilities
Increase/(decrease) in provisions
Net cash inflow from operating activities
RECOGNITION AND MEASUREMENT
CONSOLIDATED
NOTES
2015
$’M
2014
$’M
13
23
381.9
365.8
381.9
381.9
(1.1)
–
380.8
365.8
365.8
(0.4)
2.9
368.3
(39.0)
268.6
198.6
85.4
24.6
12.9
13.9
5.0
–
1.3
302.7
(14.5)
(26.9)
(11.5)
(67.8)
(41.2)
92.3
11.3
(22.7)
(12.6)
42.2
251.3
–
82.4
27.1
17.6
9.8
5.5
(11.4)
1.5
401.1
(17.4)
19.5
(33.5)
4.9
1.6
87.5
62.4
63.0
(22.0)
(17.0)
550.1
Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and in hand and short term deposits with an original maturity of
three months or less that are readily convertible to known amounts of cash.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding
bank overdrafts. Bank overdrafts are included within interest bearing loans and borrowings in current liabilities on the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a gross basis. The GST component of cash flows arising from investing and financing
activities is classified as an operating cash flow.
Where cash and cash equivalents held by the Group are subject to external restrictions, the nature of the restrictions and value of cash subject to these
restrictions are disclosed below.
PROCUREMENT AND RESTRICTED CASH AND CASH EQUIVALENTS
Included within cash and cash equivalents is $107.5 million (2014: $87.1 million) which has been identified as for procurement ($91.6 million) or
restricted, but available for use under certain circumstances by the Group ($15.9 million).
Procurement cash is held in relation to procurement activities undertaken by the Group on behalf of its customers (refer note 27). Restricted cash is held
in relation to guarantees (refer note 25(A)) and financing activities.
82 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
CONSOLIDATED
NOTES
2015
$’M
2014
$’M
949.5
952.4
65.7
(49.5)
889.2
1,009.4
21.5
(36.4)
1,918.1
1,883.7
36.4
13.9
(3.7)
2.9
49.5
30.5
9.8
(3.4)
(0.5)
36.4
148.5
44.6
193.1
8. TRADE AND OTHER RECEIVABLES
TRADE RECEIVABLES
Trade receivables
Unbilled contract revenue
Retentions
Allowance for doubtful debts
Allowance for doubtful debts
Balance at the beginning of the financial year
Net charge to the Statement of Financial Performance
Amounts written off against the opening allowance
Differences arising on translation of foreign operations
Balance at the end of the financial year
The Group’s exposure to credit, currency and interest rate risk for trade receivables and unbilled contract revenue is disclosed in note 18.
OTHER RECEIVABLES
Other receivables
Amounts owing by associates and related parties
30(B)
164.6
60.2
224.8
RECOGNITION AND MEASUREMENT
All trade and other receivables are recognized at the original amounts less an allowance for any uncollectible debts. An allowance for doubtful debts is
made when there is objective evidence that the Group will not be able to collect debts. The recoverable amount of trade and other receivables is
reviewed on an ongoing basis. Receivables are stated with the amount of GST included.
Unbilled contract revenue is stated at the aggregate of contract costs incurred to date plus recognized profits less recognized losses and progress billings.
Contract costs include all costs directly related to specific contracts, costs that are specifically chargeable to the customer under the terms of the contract
and an allocation of overhead expenses incurred in connection with the consolidated entity’s activities in general.
CONSOLIDATED
NOTES
2015
$’M
2014
$’M
9. TRADE AND OTHER PAYABLES
Current
Trade payables
Accruals
Payables to associates and related parties
30(B)
Billings in advance
Accrued staff costs
Other payables
Non‑current
Other payables
499.0
449.0
11.0
177.0
203.0
11.1
481.4
467.2
8.1
165.7
209.3
–
1,350.1
1,331.7
29.5
29.5
–
–
The Group’s exposure to currency and interest rate risk for trade and other payables is disclosed in note 18.
RECOGNITION AND MEASUREMENT
Liabilities for trade and other payables amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and
services received, whether or not billed to the Group. Payables are stated with the amount of GST included.
WorleyParsons Annual Report 2015 83
10. INTANGIBLE ASSETS
Goodwill
At cost
Accumulated impairment
Customer contracts and relationships
At cost
Accumulated amortization
Trade names
At cost
Accumulated amortization
Computer software
At cost
Accumulated amortization
Other
At cost
Accumulated amortization
Total intangible assets
RECONCILIATIONS
Reconciliations of intangible assets at the beginning and end of the current and previous financial years are set out below:
CONSOLIDATED
CUSTOMER
CONTRACTS AND
RELATIONSHIPS
$’M
GOODWILL
$’M
TRADE NAMES
$’M
COMPUTER
SOFTWARE
$’M
1,860.3
106.6
–
(198.6)
–
138.5
1,906.8
1,873.2
39.4
–
(8.6)
–
(43.7)
1,860.3
42.6
13.1
–
–
(16.8)
1.4
40.3
50.9
9.4
–
–
(16.0)
(1.7)
42.6
20.8
–
–
–
(5.0)
(0.5)
15.3
26.9
–
–
–
(5.7)
(0.4)
20.8
86.3
–
58.4
–
(31.8)
0.4
113.3
85.0
0.3
36.8
–
(35.7)
(0.1)
86.3
Balance at 1 July 2014
Additions due to the acquisition of entities
Additions
Impairment
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2015
Balance at 1 July 2013
Additions due to the acquisition of entities
Additions
Disposals
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2014
RECOGNITION AND MEASUREMENT
Goodwill
CONSOLIDATED
2015
$’M
2014
$’M
2,107.0
(200.2)
1,906.8
1,861.9
(1.6)
1,860.3
189.3
(149.0)
40.3
84.8
(69.5)
15.3
244.7
(131.4)
113.3
24.5
(9.9)
14.6
171.1
(128.5)
42.6
83.6
(62.8)
20.8
199.1
(112.8)
86.3
24.2
(5.0)
19.2
2,090.3
2,029.2
OTHER
$’M
19.2
–
–
–
(4.8)
0.2
14.6
14.4
–
9.5
–
(2.4)
(2.3)
19.2
TOTAL
$’M
2,029.2
119.7
58.4
(198.6)
(58.4)
140.0
2,090.3
2,050.4
49.1
46.3
(8.6)
(59.8)
(48.2)
2,029.2
Goodwill represents the excess of the purchase consideration over the fair value of identifiable net assets acquired at the time of acquisition of a
business or shares in controlled entities or associates. Goodwill on acquisition of controlled entities is included in intangible assets and goodwill on
acquisition of associates is included in investments in associates. Gains and losses on the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
84 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
Identifiable intangible assets
Intangible assets acquired separately or in a business combination have finite useful lives and are initially measured at cost. The cost of an intangible
asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost
less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets are not capitalized and expenditure is
recognized in the profit and loss in the year in which the expenditure is incurred.
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognized only when the
Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and
its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the
ability to measure reliably the expenditure attributable to the intangible asset during its development.
Impairment of assets
Goodwill is not amortized; instead, it is tested annually, unless impairment is indicated. Goodwill is carried at cost less accumulated impairment losses.
For the purposes of impairment testing, goodwill acquired in a business combination is allocated to groups of cash generating units (CGUs) that are
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those groups
of CGUs. Goodwill is allocated to seven CGUs. These CGUs represent the lowest level within the entity at which the goodwill is monitored for internal
management purposes. Each material CGU is set out below.
Impairment is determined by assessing the recoverable amount of the groups of CGUs to which the goodwill relates. When the recoverable amount of
the groups of CGUs is less than the carrying amount, an impairment loss is recognized.
Impairment losses recognized for goodwill are not subsequently reversed.
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell, and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs).
Impairment testing calculations use cash flow projections based on financial forecasts of how the business is expected to operate based on current
performance consistent with previous experience and external data, excluding any benefit expected to arise from future restructuring or from improved
asset performance.
The estimation of future cash flows requires assumptions to be made regarding future uncertain events. Management have risk‑adjusted the future cash
flows to recognize challenging market conditions. The risk adjusted growth rates for the Services CGUs range from 1% to 5%. The risk adjusted growth
rates for the Major Projects CGU and Improve CGU are 1% and 5% respectively.
A risk premium is included in determining each CGUs discount rate, reflecting the level of forecasting, size, country and financing risks for that CGU.
KEY ESTIMATES
The goodwill allocated to the material CGUs and the key assumptions used for the value in use impairment testing are as follows:
2015
Opening balance
Closing balance
Risk‑weighted pre‑tax discount rate
Risk‑adjusted growth rate beyond five years1
1. The 3.0% risk‑adjusted growth rate remains unchanged from FY14.
SERVICES –
AMERICAS
$’M
SERVICES – AUSTRALIA,
PACIFIC, ASIA
AND CHINA
$’M
SERVICES – EUROPE,
MIDDLE EAST,
NORTH AFRICA
$’M
MAJOR PROJECTS
$’M
527.7
571.8
11.9%
3.0%
505.1
550.2
12.1%
3.0%
430.2
420.1
11.9%
3.0%
189.2
145.9
10.5%
3.0%
Improve
$’M
168.4
119.5
12.1%
3.0%
Prior to the business reorganization on 1 July 2014 the Group’s CGUs were its Customer Sector Groups. The goodwill allocated to the groups of CGUs
and the key assumptions used for the value in use impairment testing were as follows:
2014
Hydrocarbons
Minerals, Metals & Chemicals
Infrastructure
SENSITIVITY ANALYSIS
GOODWILL
$’M
PRE‑TAX DISCOUNT
% PA
1,439.5
190.3
230.5
10.3
12.1
10.9
The combined fair value in the Services – Americas and Services – Australia, Pacific, Asia and China CGUs exceed the carrying value by over
$500 million. Management recognize that the cash flow projections, discount and growth rates used to calculate the value in use may vary from what
has been estimated.
Management notes that the value in use estimate is particularly sensitive to the long‑term EBIT growth rates and discount rates.
It is estimated that a 2.5% increase in post‑tax discount rates or an 8.5% decrease in long‑term growth rates would result in an impairment in the
combined Services – Americas and Services – Australia, Pacific, Asia and China CGUs.
The Services – Europe, Middle East and North Africa, Major Projects and Improve CGUs have been written down to their recoverable amount at
30 June 2015 and any future adverse changes in key assumptions will result in further impairment. The impairment charge of $198.6 million is
recognized in other costs in the Statement of Financial Performance and reflects the expected ongoing challenging market conditions.
WorleyParsons Annual Report 2015 85
11. PROVISIONS
Current
Employee benefits
Deferred revenue and project provisions
Insurance
Onerous leases
Warranties
Deferred consideration
Other
Non‑current
Employee benefits
Onerous leases
Warranties
Deferred consideration
Other
RECONCILIATIONS
CONSOLIDATED
2015
$’M
2014
$’M
266.2
109.6
22.6
23.3
31.0
23.7
11.5
270.5
106.0
19.8
2.3
19.7
–
8.2
487.9
426.5
40.0
–
0.3
6.0
1.8
48.1
32.6
0.9
0.3
–
1.5
35.3
Reconciliations of the carrying amounts of each class of current and non‑current provisions at the beginning and end of the current and previous
financial years are set out below:
CURRENT
Carrying amount at 1 July 2014
Provision from entities acquired
Additional provisions
Release of unused provision
Amounts utilized
Differences arising from translation
of foreign operations
Carrying amount at 30 June 2015
Carrying amount at 1 July 2013
Provision from entities acquired
Additional provisions
Release of unused provision
Amounts utilized
Differences arising from translation
of foreign operations
Carrying amount at 30 June 2014
CONSOLIDATED
EMPLOYEE
BENEFITS
$’M
DEFERRED
REVENUE
AND PROJECT
PROVISIONS
$’M
INSURANCE
$’M
ONEROUS
LEASES
$’M
DEFERRED
WARRANTIES CONSIDERATION
$’M
$’M
OTHER
$’M
270.5
3.2
231.7
(43.5)
(222.8)
27.1
266.2
290.5
3.5
236.4
(40.4)
(215.8)
(3.7)
270.5
106.0
1.7
124.3
(36.7)
(94.9)
9.2
109.6
94.3
–
60.3
(34.7)
(12.2)
(1.7)
106.0
19.8
–
–
(2.9)
–
5.7
22.6
25.0
–
3.0
(6.0)
(4.9)
2.7
19.8
2.3
–
21.0
–
–
–
23.3
6.0
–
–
–
(3.7)
–
2.3
19.7
–
22.0
(12.2)
–
1.5
31.0
16.7
0.2
3.5
(2.5)
–
1.8
19.7
–
–
23.9
–
–
(0.2)
23.7
12.2
–
–
–
(12.2)
–
–
8.2
–
1.5
(0.2)
–
2.0
11.5
23.4
0.6
1.3
(1.5)
(16.1)
0.5
8.2
86 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
NON‑CURRENT
Carrying amount at 1 July 2014
Additional provisions
Release of unused provision
Amounts utilized
Differences arising from translation of foreign operations
Carrying amount at 30 June 2015
Carrying amount at 1 July 2013
Additional provisions
Release of unused provision
Amounts utilized
Differences arising from translation of foreign operations
Carrying amount at 30 June 2014
RECOGNITION AND MEASUREMENT
CONSOLIDATED
EMPLOYEE
BENEFITS
$’M
ONEROUS
LEASES
$’M
DEFERRED
WARRANTIES CONSIDERATION
$’M
$’M
OTHER
$’M
32.6
16.5
–
(12.2)
3.1
40.0
43.0
2.4
(4.1)
(8.2)
(0.5)
32.6
0.9
0.1
(0.9)
–
(0.1)
–
–
0.9
–
–
–
0.9
0.3
–
–
–
–
0.3
–
0.3
–
–
–
0.3
–
6.0
–
–
–
6.0
–
–
–
–
–
–
1.5
0.6
(0.7)
–
0.4
1.8
0.2
1.4
(0.2)
–
0.1
1.5
Provisions are recognized when the consolidated entity has a legal, equitable or constructive obligation to make a future sacrifice of economic benefits
to other entities as a result of past transactions or other past events, it is probable that a future sacrifice of economic benefits will be required and a
reliable estimate can be made of the amount of the obligation.
Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages
and salaries, annual leave, sick leave, severance pay and long service leave.
Liabilities arising in respect of wages and salaries, annual leave, sick leave and any other employee benefits expected to be settled within 12 months
of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled.
All other employee benefits or liabilities are measured at the present value of the estimated future cash outflows to be made in respect of services
provided by the employees up to the reporting date. In determining the present value of future cash outflows, the market yield as at the reporting date
on national government bonds, which have terms to maturity approximating the terms of the related liability, is used.
Deferred revenue
The Group at times receives payment for services prior to revenue being recognized in the financial statements. Revenue is classified as deferred due
to the criteria required for its recognition not being met as at the reporting date, in line with the accounting policy set out in note 4. It is expected this
revenue will be earned within two years of balance date.
Project provisions
Where the outcome for a services contract is expected to result in an overall loss over the life of the project, this loss is provided for when it first
becomes known that a loss will be incurred.
Insurance
Provision for insurance liabilities is recognized in line with actuarial calculations of unsettled insurance claims, net of insurance recoveries.
The provision is based on the aggregate amount of individual claims incurred but not reported that are lower in value than the insurance deductible of
the consolidated entity. It is based on the estimated cost of settling claims and consideration is given to the ultimate claim size, future inflation as well
as the levels of compensation awarded through the courts.
Onerous leases
Provisions for onerous leases are recognized when the unavoidable costs of meeting the lease obligations under the contract exceed the economic
benefits expected to be received under it.
Warranties
Provision is made for the estimated liability on all products and services still under warranty at balance date. This provision is estimated having regard
to prior service warranty experience. In calculating the liability at balance date, amounts were not discounted to their present value as the effect of
discounting was not material. It is expected that these costs will be incurred within two years of balance date.
In determining the level of provision required for warranties, the Group has made judgments in respect of the expected performance and the costs of
fulfilling the warranty. Historical experience and current knowledge have been used in determining this provision.
WorleyParsons Annual Report 2015 87
11. PROVISIONS (continued)
Deferred consideration
Deferred consideration arising from a business combination is initially measured at fair value at the date of acquisition. Subsequently, it is measured in
accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets. Where settlement of any part of the consideration for a business
combination is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the
Group’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable
terms and conditions.
Dividends payable
Provision is made for the amount of any dividends declared, determined, announced or publicly recommended by the directors before or at the end
of the financial year but not distributed at balance date.
12. CAPITAL MANAGEMENT
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of
the business. The Board monitors the return on equity, which the Group defines as profit after income tax expense divided by the average total
shareholders’ equity, excluding non‑controlling interests. The Board also determines the level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and
security afforded by a sound capital position.
The Board monitors this through the gearing ratio (net debt/net debt plus total equity), the size of available banking facilities and the assessment
of the outlook for the Group operations. The target for the Group’s gearing ratio is between 25% and 35%. The gearing ratio at 30 June 2015 and
30 June 2014 was as follows:
Total interest bearing loans and borrowings1
Less: derivatives2
Less: cash and cash equivalents3
Net debt
Total equity
Gearing
1 Excluding capitalized borrowing costs and including amounts classified as held for sale.
2
3
Including mark‑to‑market of cross currency swaps.
Including amounts classified as held for sale.
There were no changes in the Group’s approach to capital management during the financial year.
Neither the Group nor any of its subsidiaries is subject to externally imposed capital requirements.
CONSOLIDATED
2015
$’M
1,240.1
73.6
381.9
784.6
2,017.6
28.0%
2014
$’M
896.6
26.8
368.7
501.1
2,184.9
18.7%
88 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
13. INTEREST BEARING LOANS AND BORROWINGS
Current
Notes payable
Unsecured bank loans
Finance lease liability
Bank overdraft
Capitalized borrowing costs
Non‑current
Notes payable
Unsecured bank loans
Finance lease liability
Capitalized borrowing costs
CONSOLIDATED
2015
$’M
2014
$’M
12.9
8.6
3.0
1.1
(0.1)
25.5
1,048.1
163.4
3.0
(4.1)
–
0.3
3.6
0.4
(0.1)
4.2
871.2
–
5.2
(4.6)
1,210.4
871.8
RECOGNITION AND MEASUREMENT
Interest bearing loans and borrowings
Loans and borrowings are initially recognized at fair value, net of transaction costs incurred. Loans and borrowings are subsequently measured at
amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in the Statement of Financial
Performance over the period of the loan using the effective interest rate method.
Finance lease liability
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalized at the
inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are recognized as an expense in the Statement of Financial Performance.
Borrowing costs
Borrowing costs are recognized as expenses in the period in which they are incurred, except when they are included in the costs of qualifying assets.
Borrowing costs include:
• interest on bank overdrafts, and short term and long term loans and borrowings;
• amortization of discounts or premiums relating to loans and borrowings; and
• finance lease charges.
TERMS AND CONDITIONS
Notes payable
Unsecured notes payable were issued in the United States private debt capital market in May 2007, April 2008, March 2011 and September 2012.
The issue in September 2012 comprised USD 205.0 million maturing in September 2022 with a fixed coupon of 4.00% per annum, USD 75.0 million
maturing in September 2019 with a fixed coupon of 3.45% per annum and USD 20.0 million maturing in September 2017 with a fixed coupon of
3.09% per annum. The issue in March 2011 comprised USD 175.0 million maturing in March 2021 with a fixed coupon of 5.56% per annum,
USD 22.0 million maturing in March 2018 with a fixed coupon of 4.86% per annum and USD 10.0 million maturing in March 2016 with a fixed coupon
of 4.16% per annum. The issue in April 2008 comprised USD 144.5 million maturing in April 2018 with a fixed coupon of 6.50% per annum. The issue
in May 2007 comprised USD 140.5 million which matured in May 2014 with a fixed coupon of 5.61% per annum and USD 169.5 million maturing in
May 2017 with a fixed coupon of 5.76% per annum.
In accordance with the Group’s financial risk management policy, cross currency swaps have been entered into, swapping USD 299.3 million
(2014: USD 371.5 million) of notes payable into, at balance date exchange rates, CAD 369.1 million (2014: CAD 347.7 million). This represents 57.1%
of the notes issued in 2008, 2011 and 2012.
Finance lease liability
The Group leases various plant and equipment under finance leases with terms of three to eight years.
Unsecured bank loans
Unsecured bank loans are floating interest rate debt facilities. These facilities, denominated in various currencies, are subject to negative pledge
arrangements which require the Group to comply with certain minimum financial requirements.
WorleyParsons Annual Report 2015 89
14. ISSUED CAPITAL
Ordinary shares, fully paid1,2
Special voting share
CONSOLIDATED
2015
NUMBER OF
SHARES
2014
NUMBER OF
SHARES
$’M
$’M
247,263,344
1,255.0
246,531,761
1,239.7
1
–
1
–
247,263,345
1,255.0
246,531,762
1,239.7
1
2
Included in ordinary shares are 3,121,064 (2014: 3,318,214) exchangeable shares. The issuance of the exchangeable shares and the attached special voting share replicate the economic
effect of issuing ordinary shares in the Company. Accordingly, for accounting purposes, exchangeable shares are treated in the same single class of issued capital as ordinary shares.
In addition, the Australian Securities Exchange (ASX) treats these exchangeable shares to have been converted into ordinary shares of the Company at the time of their issue for the
purposes of the ASX Listing Rules. Ordinary shares have no par value and the Company does not have a limited amount of authorized capital.
The WorleyParsons Limited Plans Trust holds 267,173 (2014: 267,173) shares in the Company, which have been consolidated and eliminated in accordance with the accounting
standards.
(A) MOVEMENTS IN SHARES
2015
NUMBER OF
SHARES
2014
NUMBER OF
SHARES
$’M
$’M
Balance at the beginning of the financial year
246,531,762
1,239.7
246,480,560
1,238.5
Ordinary shares issued on redemption of exchangeable shares
Exchangeable shares exchanged for ordinary shares
Transfer from performance rights reserve on purchase and issuance of shares
197,150
(197,150)
731,583
5.3
(5.3)
15.3
276,453
(276,453)
51,202
7.4
(7.4)
1.2
247,263,345
1,255.0
246,531,762
1,239.7
RECOGNITION AND MEASUREMENT
Issued and paid up capital is recognized at the fair value of the consideration received by the Group. Any transaction costs arising on the issue of
ordinary shares are recognized directly in equity as a reduction of the share proceeds received.
(B) TERMS AND CONDITIONS OF ISSUED CAPITAL
Ordinary shares
Ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the Company, to participate in the proceeds from
the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares entitle their holder to one vote, either in
person or by proxy, at a meeting of the Company.
Exchangeable shares
The exchangeable shares were issued by WorleyParsons Canada SPV Limited as part of the consideration for the acquisition of the Colt Group.
Exchangeable shares may be exchanged into ordinary shares of the Company on a one for one basis (subject to adjustments) at any time by the
exchangeable shareholders.
Exchangeable shares have the right to receive the same cash dividends or cash distributions as declared on the ordinary shares into which they are
convertible. In the event of the winding up of the Company, the exchangeable shares would convert to ordinary shares, which would participate in the
proceeds from the sale of all surplus assets pro‑rata with other ordinary shares.
The exchangeable shares, through a voting trust which holds a special voting share in the Company, entitle their holders to vote at the Company’s
general meetings as though they hold ordinary shares. During the financial year ended 30 June 2015, 197,150 (2014: 276,453) exchangeable shares were
exchanged.
Special voting share
The special voting share was issued to Computershare Trust Company of Canada Limited (Trustee) as part of the consideration for the acquisition of the
Colt Group. The special voting share does not have the right to receive dividends as declared, and in the event of the winding up of the Company is
unable to participate in the proceeds from the sale of all surplus assets. The special voting share has a right to vote together as one class of share with
the holders of ordinary shares in the circumstances in which shareholders have a right to vote, subject to the Company’s Constitution and applicable law.
The Trustee must vote in the manner instructed by an exchangeable shareholder in respect of the number of votes that would attach to the ordinary
shares to be received by that exchangeable shareholder on exchange of its exchangeable shares. The special voting share has an aggregate number of
votes equal to the number of votes attached to ordinary shares into which the exchangeable shares are retracted or redeemed.
90 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
NUMBER OF
PERFORMANCE RIGHTS
2015
2014
2,891,244
1,042,685
(731,583)
(975,567)
3,134,294
658,301
(51,202)
(850,149)
2,226,779
2,891,244
864
$nil
19,427
$nil
(C) PERFORMANCE RIGHTS
The policy in respect of performance rights is outlined in note 5.
Balance at the beginning of the financial year
Rights granted
Rights exercised
Rights lapsed or expired
Balance at the end of the financial year
Exercisable at the end of the financial year
Weighted average exercise price
Performance rights
The outstanding balance as at 30 June 2015 is represented by:
• 11,333 performance rights, vesting on 30 September 2018 and expiring on 1 April 2022;
• 181,302 performance rights, vesting on 30 September 2018 and expiring on 30 October 2021;
• 26,641 performance rights, vesting on 30 September 2017 and expiring on 30 October 2021;
• 724,328 performance rights, vesting on 30 September 2017 and expiring on 30 October 2021;
• 139,038 performance rights, vesting on 30 September 2017 and expiring on 24 October 2020;
• 26,641 performance rights, vesting on 30 September 2016 and expiring on 1 April 2022;
• 373,803 performance rights, vesting on 30 September 2016 and expiring on 24 October 2020;
• 83,794 performance rights, vesting on 30 September 2016 and expiring on 18 October 2019;
• 26,641 performance rights, vesting on 30 September 2015 and expiring on 1 April 2022;
• 593,429 performance rights, vesting on 30 September 2015 and expiring on 18 October 2019;
• 38,965 performance rights, vesting on 30 September 2015 and expiring on 30 September 2016; and
• 864 performance rights, vested on 30 September 2012 and expiring on 30 September 2015.
KEY ESTIMATES
Weighted average remaining contractual life
The weighted average remaining life for the rights outstanding as at 30 June 2015 is 5.4 years (2014: 4.7 years).
Weighted average fair value
The weighted average fair value of rights granted during the financial year was $10.60 (2014: $15.76).
Pricing model
The following table lists the inputs to the models used for the financial years ended 30 June 2015 and 30 June 2014:
Dividend yield (%)
Expected volatility (%)
Risk‑free interest rate (%)
Expected life of rights (years)
Rights exercise price ($)
PERFORMANCE RIGHTS
PLAN 2015
TSR AND EPS
PERFORMANCE RIGHTS
PLAN 2014
TSR AND EPS
CEO
6.43
30
2.85
4
nil
OTHERS
6.43‑7.34
30‑35
1.75‑2.85
0.5‑4
nil
CEO
4.46
30
3.48
4
nil
OTHERS
4.46
30
2.91
3‑4
nil
Weighted average share price at measurement date ($)
13.70
9.34 & 13.70
21.55
21.55
The expected volatility was determined based on the historical share price volatility of the Company. The resulting expected volatility therefore reflects
the assumption that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome.
WorleyParsons Annual Report 2015 91
15. RESERVES
Foreign currency translation reserve
Hedge reserve
Performance rights reserve
Acquisition reserve
CONSOLIDATED
2015
$’M
2014
$’M
(159.0)
(246.5)
10.7
46.9
(9.6)
11.0
49.3
(9.6)
(111.0)
(195.8)
(A) FOREIGN CURRENCY TRANSLATION RESERVE
The foreign currency translation reserve is used to record foreign exchange differences arising from the translation of the financial statements of foreign
controlled entities and associates, and the net investments hedged in their entities.
(B) HEDGE RESERVE
The hedge reserve is used to record gains or losses on hedging instruments used in the cash flow hedges that are recognized directly in equity. Amounts
are recognized in the Statement of Financial Performance when the associated hedged transaction affects the profit and loss.
The total amount recognized in the Statement of Financial Performance was a loss of $0.0 million (2014: $0.6 million). This amount is included in
professional services costs.
RECOGNITION AND MEASUREMENT
Specific hedges
Hedging is undertaken to avoid or minimize potential adverse financial effects of movements in foreign currency exchange rates. Gains or losses arising
upon entry into a hedging transaction intended to hedge the purchase or sale of goods or services, together with subsequent foreign exchange gains or
losses resulting from those transactions, are deferred up to the date of the purchase or sale and included in the measurement of the purchase or sale.
Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither
planned nor likely in the foreseeable future, are considered to form part of a net investment in a foreign operation and are recognized directly in equity
in the foreign currency translation reserve.
At each balance date, the Group measures the effectiveness of its cash flow hedges. The effective portion of the gain or loss on the hedging instrument
is recognized directly in equity, while the ineffective portion is recognized in the profit and loss.
(C) PERFORMANCE RIGHTS RESERVE
The performance rights reserve is used to recognize the fair value of performance rights issued but not vested.
(D) ACQUISITION RESERVE
The acquisition reserve is used to record differences between the carrying value of non‑controlling interests before acquisition and the consideration
paid upon acquisition of an additional shareholding, where the transaction does not result in a loss of control. The reserve is attributable to the equity of
the parent entity.
16. (LOSS)/EARNINGS PER SHARE
ATTRIBUTABLE TO MEMBERS OF WORLEYPARSONS LIMITED
Basic (loss)/earnings per share (cents)
Diluted (loss)/earnings per share (cents)
The following reflects the income and security data used in the calculation of basic and diluted (loss)/earnings per share:
(A) RECONCILIATION OF (LOSS)/EARNINGS USED IN CALCULATING (LOSS)/EARNINGS PER SHARE
(Loss)/earnings used in calculating basic and diluted (loss)/earnings per share
(B) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
Weighted average number of ordinary securities used in calculating basic (loss)/earnings per share
Performance rights which are considered dilutive1
CONSOLIDATED
2015
2014
(22.2)
(22.2)
$’M
(54.9)
101.0
100.3
$’M
249.1
247,078,995
246,528,865
–
1,828,215
Adjusted weighted average number of ordinary securities used in calculating diluted (loss)/earnings per share
247,078,995
248,357,080
1
Performance rights which could be considered dilutive are 1,204,233. In the current reporting period they are considered antidilutive.
The weighted average number of converted, lapsed or canceled potential ordinary shares used in calculating diluted (loss)/earnings per share
was nil (2014: 189,104). In the current reporting period 308,430 of such potential ordinary shares were considered antidilutive.
92 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
MEASUREMENT
Basic (loss)/earnings per share
Basic (loss)/earnings per share is determined by dividing the (loss)/profit attributable to members of WorleyParsons Limited by the weighted average
number of ordinary shares outstanding during the financial year.
Diluted (loss)/earnings per share
Diluted (loss)/earnings per share is calculated as (loss)/profit attributable to members of WorleyParsons Limited adjusted for:
• costs of servicing equity (other than dividends);
• the after‑tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognized as expenses; and
• other non‑discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares, divided by
the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
17. DIVIDENDS
(A) FINAL DIVIDEND PROPOSED
Dividend in respect of the six months to 30 June 2015:
22.0 cents per share, unfranked1
Dividend in respect of the six months to 30 June 2014:
51.0 cents per share (10.5 cents franked1)
CONSOLIDATED
2015
$’M
2014
$’M
54.4
–
–
125.7
1
The Group has sufficient credits in its foreign income account to ensure that there should be no Australian dividend withholding tax withheld on dividends paid to non‑resident
shareholders. The unfranked portion of the dividend represents conduit foreign income.
The directors have resolved to pay a final dividend of 22.0 cents per share, unfranked (2014: 51.0 cents per share, partially franked at 20.5%). Combined
with the half year (interim) dividend, the Company will make total dividend payments of 56.0 cents per share for the financial year (2014: 85.0 cents per
share). The dividend will be paid on 30 September 2015 for shareholders on the register at the record date, being 2 September 2015.
In accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the aggregate amount of the proposed final dividend of
$54.4 million is not recognized as a liability as at 30 June 2015.
(B) DIVIDENDS PAID DURING THE FINANCIAL YEAR
Dividend in respect of the six months to 31 December 2014:
34.0 cents per share (2.7 cents franked)
Dividend in respect of the six months to 30 June 2014:
51.0 cents per share (10.5 cents franked)
Dividend in respect of the six months to 31 December 2013:
34.0 cents per share (8.5 cents franked)
Dividend in respect of the six months to 30 June 2013:
51.0 cents per share (unfranked)
(C) IMPUTATION CREDIT BALANCE OF THE PARENT ENTITY
The amount of imputation credits available on a tax paid basis for future tax distributions is:
Imputation credits balance as at the end of the financial year at the corporate tax rate of 30% (2014: 30%)
Imputation (debits)/credits arising from the payments of refunds of income tax provided in this financial report
Imputation credits available for distribution
Imputation debits that will arise from the payment of the final dividend
Imputation credits available for future dividends
18. FINANCIAL RISK MANAGEMENT
(A) OVERVIEW
84.1
125.7
–
–
209.8
5.2
(5.2)
–
–
–
–
–
83.9
125.7
209.6
10.2
0.8
11.0
(11.0)
–
The Group’s principal financial instruments comprise receivables, payables, bank loans and overdrafts, finance leases, cash and short term deposits and
derivatives. The Group has exposure to the following risks from its use of financial instruments:
• credit risk;
• liquidity risk; and
• market risk.
This note presents information about the Group’s exposure to each of the above risks, its objectives, policies and processes for measuring and managing
risk, and the management of capital. Quantitative disclosures are included throughout this financial report.
WorleyParsons Annual Report 2015 93
18. FINANCIAL RISK MANAGEMENT (continued)
The Board has overall responsibility for the establishment and oversight of the risk management framework. The Audit and Risk Committee assists the
Board in overseeing the integrity of the Group’s financial reporting risk management framework and internal controls.
Risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor
risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s
activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
The Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls
and procedures, the results of which are reported to the Committee.
(B) CREDIT RISK
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
The financial assets of the Group comprise cash and cash equivalents, trade and other receivables, and derivative financial instruments and off Statement
of Financial Position guarantees and letters of credit. The Group’s maximum exposure to credit risk is equal to the carrying amount of these instruments.
Exposure at balance date is addressed in each applicable note. Credit exposure of derivatives is considered to be any positive market value.
Trade and other receivables
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The profiles of the Group’s customer base,
including the default risk of the industry and country in which customers operate, have less of an influence on credit risk. Geographically and on a
customer basis, there is no concentration of credit risk.
The Group has a credit policy under which each new customer is analyzed for creditworthiness before the Group’s standard payment and delivery terms
and conditions are offered. The Group’s review includes external ratings, when available, and in some cases bank references.
The Group has established an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables.
This allowance comprises only those components that are individually significant.
Guarantees
Details of outstanding guarantees are provided in note 25(A). The Group is, in the normal course of business, required to provide guarantees and letters
of credit on behalf of controlled entities, associates and related parties in respect of their contractual performance related obligations.
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk at the
reporting date was:
Cash and cash equivalents
Trade receivables, unbilled contract revenue and retentions
Other receivables
Amounts owing by associates and related parties
Derivatives
The ageing of the Group’s trade receivables, unbilled contract revenue and retentions at the reporting date was:
Unbilled contract revenue
0‑30 days
Past due 31‑60 days
Past due 61‑90 days
Past due 91‑120 days
More than 121 days
GROSS
2015
$’M
952.4
517.4
206.8
50.1
53.3
187.6
1,967.6
IMPAIRMENT
2015
$’M
–
(14.3)
(0.1)
(0.9)
(0.2)
(34.0)
(49.5)
CARRYING AMOUNT
CONSOLIDATED
2015
$’M
381.9
1,918.1
164.6
60.2
74.5
2014
$’M
365.8
1,883.7
148.5
44.6
28.4
2,599.3
2,471.0
GROSS
2014
$’M
1,009.4
701.7
67.5
21.7
11.3
108.5
1,920.1
IMPAIRMENT
2014
$’M
–
(4.3)
(0.3)
–
–
(31.8)
(36.4)
Based on historic default rates, the Group believes that no impairment allowance is necessary in respect of receivables not past due or past due by up to
30 days other than for specifically identified accounts. The Group’s typical payment terms are 30 days from date of invoice.
The allowance amounts in respect of trade receivables are used to record impairment losses unless the Group is satisfied that no recovery of the amount
owing is possible; at that point, the amount is considered irrecoverable and is written off against the financial asset directly.
Counterparties with receivables neither past due nor impaired are assessed as creditworthy.
94 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(C) LIQUIDITY RISK
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is
to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses including the servicing of financial obligations;
this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
The Group has unrestricted access at balance date to the following lines of credit:
SECURED FACILITIES
Total facilities available:
Loan facilities
Finance lease facilities
Facilities utilized at balance date:
Loan facilities
Finance lease facilities
The maturity profile in respect of the Group’s secured loan facilities is set out below:
Due within one year
Due between one and four year(s)
Due after four years
UNSECURED FACILITIES
Total facilities available:
Loan facilities
Overdraft facilities
Bank guarantees and letters of credit
Facilities utilized at balance date:
Loan facilities
Overdraft facilities
Bank guarantees and letters of credit
Facilities available at balance date:
Loan facilities
Overdraft facilities
Bank guarantees and letters of credit
The maturity profile in respect of the Group’s total unsecured loan and overdraft facilities is set out below:
Due within one year
Due between one and four year(s)
Due after four years
CONSOLIDATED
2015
$’M
2014
$’M
–
6.0
6.0
–
6.0
6.0
3.0
3.0
–
6.0
1,950.8
130.0
1,196.1
3,276.9
1,233.0
1.1
753.6
15.9
8.8
24.7
15.9
8.8
24.7
5.3
10.9
8.5
24.7
1,635.6
122.3
979.3
2,737.2
871.5
0.4
692.4
1,987.7
1,564.3
717.8
128.9
442.5
764.2
121.9
286.9
1,289.2
1,173.0
173.6
1,319.1
588.1
2,080.8
280.3
443.0
1,034.6
1,757.9
WorleyParsons Annual Report 2015 95
18. FINANCIAL RISK MANAGEMENT (continued)
The table below analyzes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from balance date to the
contractual maturity date. As the amounts disclosed in the table are the contractual undiscounted cash flows, their balances will not necessarily agree
with the amounts disclosed in the Statement of Financial Position.
TRADE
PAYABLES TO
AND OTHER ASSOCIATES AND
PAYABLES RELATED PARTIES
$’M
$’M
CONSOLIDATED
INTEREST
BEARING
LOANS AND
BORROWINGS
$’M
EXPECTED
FUTURE
INTEREST
PAYMENTS
$’M
DERIVATIVES
$’M
TOTAL
FINANCIAL
LIABILITIES
$’M
As at 30 June 2015
Due within one year
Due between one and four year(s)
Due after four years
As at 30 June 2014
Due within one year
Due between one and four year(s)
Due after four years
(D) MARKET RISK
510.1
29.5
–
539.6
481.4
–
–
481.4
11.0
–
–
25.6
626.4
588.1
11.0
1,240.1
8.1
–
–
8.1
5.9
399.3
491.4
896.6
0.5
145.8
162.6
308.9
0.3
76.0
158.5
234.8
2.9
–
–
2.9
5.6
–
–
5.6
550.1
801.7
750.7
2,102.5
501.3
475.3
649.9
1,626.5
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, will affect the Group’s income or
the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimizing the return. The Group enters into derivatives, and also incurs financial liabilities, in order to manage market
risk. Generally, the Group seeks to apply hedge accounting in order to reduce volatility in the profit and loss.
(i) Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional
currencies of Group entities. In the ordinary course of business, the Group structures its contracts to be in the functional currency of the country where
the work is performed and costs incurred.
The Group uses forward exchange contracts and foreign currency options to hedge its currency risk, most with a maturity of less than one year from the
reporting date. When necessary, forward exchange contracts are rolled over at maturity.
Interest on borrowings is denominated in currencies that match the cash flows generated by the underlying operations for the Group resulting in an
economic hedge. Interest is primarily AUD, CAD, GBP and USD.
A number of the Group controlled entities have a functional currency other than AUD. The exchange gains or losses on the net equity investment of
foreign operations are reflected in the foreign currency translation reserve within the parent entity’s equity. Currency exposure arising from the net assets
of the Group’s foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.
(1) CROSS CURRENCY SWAPS
The Group uses cross currency swaps to hedge its foreign currency interest rate risk, most with a maturity of greater than one year from the
reporting date.
At balance date, the details of cross currency swaps were:
Contracts to buy USD and sell CAD
Maturing 24 March 2016
Maturing 24 March 2018
Maturing 30 April 2018
Maturing 13 September 2019
Maturing 24 March 2021
WEIGHTED AVERAGE
EXCHANGE RATE
AMOUNT
RECEIVABLE/(PAYABLE)
AMOUNT
RECEIVABLE/(PAYABLE)
2015
2014
2015
M
2015
M
2014
M
2014
M
0.99
0.99
1.00
1.01
0.99
0.99
0.99
1.00
1.01
0.99
USD 10.0
CAD (9.9)
USD 10.0
CAD (9.9)
USD 22.0
CAD (21.7)
USD 22.0
CAD (21.7)
USD 72.3
CAD (72.3)
USD 144.5
CAD (144.5)
USD 75.0
CAD (76.0)
USD 75.0
CAD (76.0)
USD 120.0
CAD (118.3)
USD 120.0
CAD (118.3)
The following gains and losses have been deferred at balance date:
Fair value gain on cross currency hedge
Foreign exchange loss on hedge relationship
Net gain pre‑tax in hedge relationship
96 WorleyParsons Annual Report 2015
CONSOLIDATED
2015
$’M
73.6
(74.4)
(0.8)
2014
$’M
26.8
(24.9)
1.9
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(2) FORWARD EXCHANGE CONTRACTS
The Group is exposed to foreign exchange rate transaction risk on foreign currency sales, purchases, and loans to and from related entities. The most
significant foreign exchange risk is US dollar receipts by Australian and other non‑US entities. When required, hedging is undertaken through
transactions entered into in the foreign exchange markets. Forward exchange contracts have been used for hedging purposes. Forward exchange
contracts are generally accounted for as cash flow hedges.
At balance date, the details of significant outstanding contracts were:
WEIGHTED AVERAGE
EXCHANGE RATE
AMOUNT
RECEIVABLE/(PAYABLE)
AMOUNT
RECEIVABLE/(PAYABLE)
2015
2014
2015
M
2015
M
2014
M
2014
M
Maturing in the next 6 months to 31 December 2015
Buy AUD and Sell USD
Buy AUD and Sell ZAR
Buy CAD and Sell USD
Buy CNY and Sell AUD
Buy CNY and Sell CAD
Buy CNY and Sell USD
Buy EUR and Sell AUD
Buy EUR and Sell KRW
Buy EUR and sell PLN
Buy GBP and Sell AUD
Buy GBP and Sell EUR
Buy GBP and Sell RUB
Buy GBP and Sell USD
Buy INR and Sell USD
Buy MYR and Sell AUD
Buy NOK and Sell AUD
Buy NZD and Sell AUD
Buy SGD and Sell AUD
Buy USD and Sell AUD
Buy USD and Sell GBP
Buy ZAR and Sell USD
Maturing in the next 7‑12 months to 30 June 2016
Buy AUD and Sell USD
Buy EUR and Sell KWD
Buy EUR and Sell PLN
Buy GBP and Sell EUR
Buy GBP and Sell RUB
Maturing in the next 13‑18 months to 31 December 2016
Buy EUR and Sell PLN
1.15
–
1.24
–
5.08
–
0.69
2.97
–
0.49
0.77
0.01
–
–
2.86
5.92
1.12
1.04
0.77
1.57
–
1.31
2.95
–
0.80
–
–
1.11
0.10
–
5.34
5.49
6.20
0.68
–
0.23
–
–
–
0.59
67.64
–
5.46
1.10
1.14
–
–
10.64
1.12
–
0.23
–
0.02
0.23
AUD 9.1
USD (7.9)
–
–
CAD 40.0
USD (32.3)
AUD 4.7
AUD 9.3
–
–
–
CNY 50.0
CNY 2.5
CAD (0.5)
CNY 16.0
USD (4.2)
ZAR (90.0)
–
AUD (9.4)
CAD (2.9)
–
EUR 0.3
EUR 1.4
–
GBP 3.5
GBP 1.9
GBP 0.6
–
–
–
CNY 97.6
USD (15.8)
AUD (0.4)
KRW (0.5)
EUR 2.0
AUD (3.0)
–
–
–
EUR 1.1
PLN (4.9)
AUD (7.1)
EUR (2.4)
–
–
–
–
RUB (37.8)
GBP 14.3
RUB (857.7)
–
–
GBP 7.7
USD (12.9)
INR 15.7
USD (0.2)
MYR 10.0
AUD (3.5)
–
–
NOK 179.0
AUD (30.2)
NOK 256.0
AUD (46.9)
NZD 5.5
SGD 2.6
AUD (4.9)
NZD 19.0
AUD (17.3)
AUD (2.5)
SGD 5.3
AUD (4.6)
USD 10.0
AUD (13.0)
USD 5.6
GBP (3.6)
–
–
–
–
–
–
ZAR 24.5
USD (2.3)
AUD 3.0
EUR 0.7
–
USD (2.3)
AUD 3.3
USD (2.9)
KWD (0.2)
–
–
–
EUR 2.0
PLN (8.9)
GBP 0.4
EUR (0.5)
–
–
–
–
–
–
GBP 1.9
RUB (122.0)
EUR 0.6
PLN (2.6)
As these contracts are hedging anticipated future receipts and sales to the extent that they satisfy hedge accounting criteria, any unrealized gains and
losses on the contracts, together with the cost of the contracts, are deferred and will be recognized in the measurement of the underlying transaction
provided the underlying transaction is still expected to occur as originally designated. Included in the amounts deferred are any gains and losses on
hedging contracts terminated prior to maturity where the related hedged transaction is still expected to occur as designated.
The gains and losses deferred in the Statement of Financial Position were:
Effective hedge – unrealized gains
Effective hedge – unrealized losses
Net unrealized gains/(losses), pre‑tax
CONSOLIDATED
2015
$’M
0.9
(2.9)
(2.0)
2014
$’M
1.6
(5.6)
(4.0)
WorleyParsons Annual Report 2015 97
18. FINANCIAL RISK MANAGEMENT (continued)
(3) FOREIGN CURRENCY RISK EXPOSURE
The Group’s year‑end Statement of Financial Position exposure to foreign currency risk was as follows, based on notional amounts. The following are
financial assets and liabilities (unhedged amounts) in currencies other than the functional currencies of the entity in which they are recorded:
AS AT 30 JUNE 2015
Cash and cash equivalents
Trade receivables and unbilled contract revenue
Trade payables
Gross Statement of Financial Position exposure
AS AT 30 JUNE 2014
Cash and cash equivalents
Trade receivables and unbilled contract revenue
Derivative assets
Trade payables
Gross Statement of Financial Position exposure
1 Represents in AUD currency millions as indicated.
(4) CURRENCY SENSITIVITY ANALYSIS
CAD1
$’M
0.5
0.8
(0.2)
1.1
1.3
0.3
–
(1.0)
0.6
CONSOLIDATED
GBP1
$’M
4.7
2.8
(0.7)
6.8
1.7
1.6
–
(1.9)
1.4
USD1
$’M
87.7
83.1
(60.6)
110.2
60.2
71.6
0.3
(51.6)
80.5
OTHER1
$’M
26.8
78.4
(86.6)
18.6
13.6
41.8
0.4
(16.6)
39.2
A 10% weakening of the Australian dollar against the following currencies at 30 June 2015 in relation to the preceding foreign currency exposures
would have increased/(decreased) equity and profit by the amounts shown below. This analysis assumes that all other variables, in particular interest
rates, remain constant. The analysis is performed and shown on the same basis for 2014.
CONSOLIDATED
2015
2014
EFFECTS IN MILLIONS OF AUD
EQUITY
PROFIT
EQUITY
PROFIT
CAD
GBP
USD
Other
–
–
–
–
0.1
1.1
11.1
1.3
–
–
–
–
–
0.2
6.6
2.7
A 10% strengthening of the Australian dollar against the above currencies at 30 June 2015 would have had the equal but opposite effect on the above
currencies to the amounts shown above, on the basis that all other variables remain constant.
The following significant exchange rates against the AUD applied during the financial year:
CAD
GBP
USD
AVERAGE
EXCHANGE RATE
REPORTING DATE
SPOT EXCHANGE RATE
2015
2014
2015
0.9774
0.5305
0.8370
0.9830
0.5655
0.9186
0.9542
0.4914
0.7737
2014
1.0069
0.5531
0.9424
98 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(ii) Interest rate risk
Interest rate risk is the risk that changes in interest rates will affect the Group’s income or the value of its holdings of financial instruments.
The Group enters into interest rate swaps to manage interest rate risk. The Group adopts a policy of ensuring that the majority of its exposure to interest
rates on borrowings is on a fixed rate basis.
(1) INTEREST RATE RISK EXPOSURES
The Group’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods are set out in the following table:
AS AT 30 JUNE 2015
Cash and cash equivalents
Bank loans
Notes payable
Finance lease liabilities
AS AT 30 JUNE 2014
Cash and cash equivalents
Bank loans
Notes payable
Finance lease liabilities
Interest rate swaps
WEIGHTED
AVERAGE
INTEREST
RATE
% PA
FLOATING
INTEREST
RATE
$’M
1 YEAR
OR LESS
$’M
1 TO
2 YEAR(S)
$’M
2 TO
3 YEARS
$’M
3 TO
4 YEARS
$’M
4 TO MORE THAN
5 YEARS
$’M
5 YEARS
$’M
NON‑
INTEREST
BEARING
$’M
1.5
2.0
5.1
2.1
1.5
5.9
5.1
2.0
–
381.9
–
–
–
365.8
0.2
–
–
(15.5)
–
9.7
12.9
3.0
–
2.3
–
3.6
1.6
–
163.4
219.1
2.8
–
1.8
–
–
240.9
0.2
–
1.9
–
–
–
–
–
2.0
10.6
179.9
197.9
2.9
1.7
2.1
1.9
0.2
2.0
–
–
–
–
96.9
491.2
–
–
–
–
–
2.2
–
–
8.4
482.8
–
6.1
–
–
–
–
–
–
–
–
–
TOTAL
$’M
381.9
173.1
1,061.0
6.0
365.8
16.6
871.2
8.8
–
As the largest component of interest bearing liabilities, being notes payable, are at fixed interest rates, the effect of changes in interest rates on equity
and profit and loss of the Group is negligible. All other financial assets and financial liabilities are non‑interest bearing.
19. FAIR VALUES
DETERMINATION OF FAIR VALUES
The Group’s accounting policies and disclosures require the determination of fair value, for both financial and non‑financial assets and liabilities.
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information
about the assumptions used in determining fair values is disclosed in the notes specific to that asset or liability.
Derivatives
The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price for the residual maturity
of the contract using a risk‑free interest rate (based on government bonds). The fair value of interest rate swaps is based on broker quotes. Those quotes
are tested for reasonableness by discounting estimated cash flows based on the terms and maturity of each contract and using market interest rates for
similar instruments at the measurement date.
Non‑derivative financial liabilities
Fair value, which is determined for disclosure purposes, is the price that would be paid to transfer a liability in an orderly transaction between market
participants at the measurement date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.
FAIR VALUES COMPARED TO CARRYING AMOUNTS
The fair values of financial assets and liabilities approximate their carrying values with the exception of interest bearing loans and borrowings which
have a fair value of $1,385.5 million (2014: $951.0 million) and a carrying value of $1,240.1 million (2014: $896.6 million).
The Group uses the following hierarchy for determining the fair value of a financial asset or liability:
• Level 1 – the fair value is calculated using quoted prices in active markets; and
• Level 2 – the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices).
Derivative instruments including interest rate swaps and forward exchange contracts are restated to fair values at each reporting date based on market
observable inputs such as foreign exchange spot and forward rates, interest rate curves and forward rates curves.
Fair values of the Group’s interest bearing loans and borrowings are determined by discounting future cash flows using period‑end borrowing rates on
loans and borrowings with similar terms and maturity.
There were no transfers between Level 1 and 2, and no financial instruments were measured at Level 3 (where fair value is measured using
unobservable inputs for the asset or liability) for the periods presented in this report.
WorleyParsons Annual Report 2015 99
ENTITY
COUNTRY OF INCORPORATION
20. INVESTMENTS IN CONTROLLED ENTITIES
(A) SIGNIFICANT ENTITIES
Worley No 2 Pty Limited1
WorleyParsons Canada Services Ltd
WorleyParsonsCord Limited
WorleyParsons Engineering Pty Limited1
WorleyParsons Europe Limited
WorleyParsons Financial Services Pty Limited1
WorleyParsons Group Inc
WorleyParsons International Inc
WorleyParsons Oman Engineering LLC
WorleyParsons Services Pty Limited1
Rosenberg WorleyParsons AS
Beijing MaisonWorleyParsons Engineering & Technology Co Limited
WorleyParsons Kazakhstan LLP
Acquired during the year
MTG Limited
Hadron Holdings Inc
Australia
Canada
Canada
Australia
United Kingdom
Australia
USA
USA
Oman
Australia
Norway
China
Kazakhstan
USA
USA
BENEFICIAL
INTEREST HELD BY
CONSOLIDATED ENTITY
2015
%
100
100
100
100
100
100
100
100
51
100
100
80
100
100
100
2014
%
100
100
100
100
100
100
100
100
51
100
100
80
100
–
–
1 Entities subject to Australian Securities and Investments Commission Class Order 98/1418 relief.
In accordance with the accounting standards, the Group discloses only significant entities identified on the basis of materiality.
(B) ACQUISITION OF CONTROLLED ENTITIES
On 24 October 2014, the Group acquired 100% of the voting shares of MTG Limited (MTG) and its controlled entities. MTG is a US based
management consulting firm in the oil and gas, petrochemicals and chemicals industries with operations in North America, the United Kingdom and
Australia. The acquisition was made as a building block in the growth of Advisian, the advisory business of the Group. The financial report includes the
results of MTG for the eight month period from the acquisition date. On 2 December 2014, the Group also acquired 100% of the voting rights of
Hadron Holdings Inc and its controlled entities (comprising the Atlantic Nuclear business (ANI)). The financial report includes the results of ANI for the
seven month period from the acquisition date.
During the financial year, the Group increased its shareholding in Beijing Maison WorleyParsons Engineering & Technology Co Ltd. The change in
ownership percentage did not result in a change in control and has therefore being treated in accordance with AASB 3 Business Combinations.
In the prior year, WorleyParsons Engineering Pty Limited, a wholly owned subsidiary of the Company, acquired an additional 50% net interest in
Transfield Worley Limited, currently known as WorleyParsons New Zealand Limited, which had previously been accounted for as equity accounted
associate, resulting in the change in the classification of the investment from equity accounted associate to subsidiary of the Group.
There were no changes to the acquisition values recognized in the 30 June 2014 financial statements.
RECOGNITION AND MEASUREMENT
Controlled entities
Where control of an entity is obtained during a financial year, its results are included in the Statement of Financial Performance and the Statement of
Comprehensive Income from the date on which control commences. Where control of an entity ceases during a financial year, its results are included for
that part of the year during which control existed.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction.
Acquisition of assets and business combinations
The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are
acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken or assumed at the date of acquisition.
Transaction costs directly attributable to the acquisition are expensed as incurred. Where equity instruments are issued in a business combination,
the value of the instruments is their market price as determined by market valuation at the acquisition date. Transaction costs arising on the issue of
equity instruments are recognized directly in equity.
If the business combination is achieved in stages, the acquisition date fair value of the Group’s previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date through the profit and loss.
100 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
Except for non‑current assets or disposal groups classified as held for sale (which are measured at fair value less costs to sell), all identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any non‑controlling interest. The excess of the cost of the business combination over the net fair value of the Group’s share
of the identifiable net assets acquired is recognized as goodwill. If the cost of acquisition is less than the Group’s share of the net fair value of the
identifiable net assets of the subsidiary, the difference is recognized as a gain in the Statement of Financial Performance, but only after a reassessment of
the identification and measurement of the net assets acquired.
Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of
exchange. The discount rate used is the Group’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
OWNERSHIP INTEREST
CONSOLIDATED
CARRYING AMOUNT
CONSOLIDATED
ENTITY
PRINCIPAL
PLACE OF
BUSINESS
PRINCIPAL ACTIVITY
2015
%
2014
%
2015
$’M
2014
$’M
21. EQUITY ACCOUNTED INVESTMENTS
(A) DETAILS OF EQUITY ACCOUNTED INVESTMENTS ARE AS FOLLOWS:
The Group’s largest equity accounted investments are listed below. None is considered individually material to the Group.
Significant investments
DeltaAfrik Engineering Limited
Nigeria
Hydrocarbons
Transfield Worley Power Services Pty Limited
Australia
Infrastructure
Ranhill WorleyParsons Sdn Bhd
Malaysia
Hydrocarbons
Cegertec WorleyParsons Inc
Canada
Minerals, Metals & Chemicals
Other investments
49
50
49
50
49
50
49
50
(B) CARRYING AMOUNT OF EQUITY ACCOUNTED INVESTMENTS
Carrying amount at the beginning of the financial year
Share of net profits of investments accounted for using the equity method
Dividends declared by equity accounted investments
Change in nature of investment and investment acquired
Movement in foreign currency translation reserve of equity accounted investments
Carrying amount at the end of the financial year
(C) NET PROFITS ATTRIBUTABLE TO EQUITY ACCOUNTED INVESTMENTS
Profits before income tax expense
Income tax expense
Net profits of equity accounted investments
(D) REVENUE ATTRIBUTABLE TO EQUITY ACCOUNTED INVESTMENTS
Share of revenue from equity accounted investments
(E) RESERVES ATTRIBUTABLE TO EQUITY ACCOUNTED INVESTMENTS
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at the beginning of the financial year
Change in nature of investment
Movement in reserve
Balance at the end of the financial year
22.9
22.4
20.3
12.7
37.9
12.2
23.0
30.2
21.6
28.5
116.2
115.5
CONSOLIDATED
2015
$’M
115.5
10.8
(15.8)
–
5.7
116.2
14.8
(4.0)
10.8
2014
$’M
131.4
18.0
(23.5)
(8.0)
(2.4)
115.5
27.4
(9.4)
18.0
514.6
524.0
(17.4)
–
5.7
(11.7)
(15.0)
(1.3)
(1.1)
(17.4)
WorleyParsons Annual Report 2015 101
21. EQUITY ACCOUNTED INVESTMENTS (continued)
(F) RETAINED PROFITS ATTRIBUTABLE TO EQUITY ACCOUNTED INVESTMENTS
Balance at the beginning of the financial year
Share of net profits of investments accounted for using the equity method
Change in nature of investment
Dividends declared
Balance at the end of the financial year
(G) SHARE OF EQUITY ACCOUNTED INVESTMENTS’ CONTINGENT LIABILITIES
Performance related guarantees issued
(H) SHARE OF EQUITY ACCOUNTED INVESTMENTS’ ExPENDITURE COMMITMENTS
Operating lease commitments
(I) SUMMARY OF FINANCIAL POSITION OF EQUITY ACCOUNTED INVESTMENTS
The consolidated entity’s share of aggregate assets and liabilities of equity accounted investments is:
Current assets
Non‑current assets
Current liabilities
Non‑current liabilities
Net assets
Goodwill
Carrying amount at the end of the financial year
RECOGNITION AND MEASUREMENT
CONSOLIDATED
2015
$’M
2014
$’M
111.4
10.8
–
(15.8)
106.4
7.4
0.6
165.4
90.2
(131.9)
(15.4)
108.3
7.9
116.2
123.6
18.0
(6.7)
(23.5)
111.4
11.4
2.8
220.5
68.6
(157.2)
(23.7)
108.2
7.3
115.5
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under this method, the
consolidated entity’s share of the post‑acquisition profits or losses after tax of associates is recognized in the Statement of Financial Performance and the
Statement of Comprehensive Income, and its share of post‑acquisition movements in reserves is recognized in consolidated reserves. The cumulative
post‑acquisition movements are adjusted against the cost of the investment. Associates are those entities over which the consolidated entity exercises
significant influence, but not control.
102 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
JOINT OPERATION
PRINCIPAL ACTIVITY
22. INTERESTS IN JOINT OPERATIONS
The Group’s largest joint operation is listed below. It is not individually material to the Group.
OWNERSHIP INTEREST
CONSOLIDATED
2015
%
2014
%
Kazakh Projects Joint Venture Limited
Hydrocarbons
50
50
The consolidated entity’s interests in the assets and liabilities employed in all joint operations are included in the Statement of Financial Position under
the following classifications:
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total current assets
Non‑current assets
Property, plant and equipment
Total non‑current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non‑current liabilities
Other non‑current liabilities
Total non‑current liabilities
TOTAL LIABILITIES
NET ASSETS/(LIABILITIES)
CONSOLIDATED
2015
$’M
2014
$’M
7.7
41.2
4.6
53.5
0.1
0.1
53.6
50.6
–
50.6
–
–
50.6
3.0
13.2
44.1
5.1
62.4
2.0
2.0
64.4
62.9
8.7
71.6
1.3
1.3
72.9
(8.5)
RECOGNITION AND MEASUREMENT
The Group recognizes its proportionate interest in the assets, liabilities, revenues and expenses of any joint operations. These balances are incorporated
in the financial statements under the appropriate headings.
WorleyParsons Annual Report 2015 103
23. ASSETS AND LIABILITIES HELD FOR SALE
The Exmouth Power Station previously recorded as assets and liabilities held for sale was sold during the financial year and is derecognized as at
30 June 2015. A net gain on sale of $1.3 million was recognized and included in other income (refer note 4). For comparative purposes, the details of
the assets and liabilities held for sale as at 30 June 2014, and the associated recognition and measurement criteria have been disclosed below.
Cash and cash equivalents
Trade and other receivables
Finance lease receivable
Deferred tax assets
Assets held for sale
Trade and other payables
Interest bearing loans and borrowings
Deferred tax liabilities
Derivatives
Liabilities held for sale
CONSOLIDATED
2015
$’M
–
–
–
–
–
–
–
–
–
–
2014
$’M
2.9
1.5
26.0
0.5
30.9
1.2
15.9
0.7
1.6
19.4
The above assets and liabilities were reported in the Services business line and in the Infrastructure customer sector group.
RECOGNITION AND MEASUREMENT
Non‑current assets and disposal groups are classified as held for sale and measured at the lower of their carrying value, and fair value less costs to sell,
if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or amortized. For an asset or disposal group to
be classified as held for sale, it must be available for immediate sale in its present condition and its sale must be highly probable.
An impairment loss is recognized for any initial or subsequent write‑down of the asset (or disposal group) to fair value less costs to sell. A gain is
recognized for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment
loss previously recognized. A gain or loss not previously recognized by the date of the sale of the non‑current asset (or disposal group) is recognized at
the date of derecognition.
The assets and liabilities are presented separately on the face of the Statement of Financial Position.
24. COMMITMENTS FOR EXPENDITURE
(A) OPERATING LEASES
Commitments for minimum lease payments in relation to non‑cancelable operating leases are payable as follows:
Within one year
Later than one year and not later than five years
Later than five years
Commitments not recognized in the financial statements
(B) OPERATING ExPENDITURE COMMITMENTS
Estimated commitments for operating expenditure in relation to software and information technology are payable as follows:
Within one year
Later than one year and not later than five years
Commitments not recognized in the financial statements
Commitments are disclosed net of the amount of GST payable to the taxation authority.
CONSOLIDATED
2015
$’M
2014
$’M
201.0
403.2
65.4
669.6
110.6
14.1
124.7
215.7
487.0
96.0
798.7
14.2
10.8
25.0
104 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
25. CONTINGENT LIABILITIES
(A) GUARANTEES
The Company is, in the normal course of business, required to provide guarantees and letters of credit on behalf of controlled entities, associates and
related parties in respect of their contractual performance related obligations.
These guarantees and letters of credit only give rise to a liability where the entity concerned fails to perform its contractual obligation.
Bank guarantees outstanding at balance date in respect of contractual performance
Commitments not recognized in the financial statements
CONSOLIDATED
2015
$’M
753.6
753.6
2014
$’M
692.4
692.4
Contingencies are disclosed net of the amount of GST recoverable from or payable to the taxation authority.
(B) ACTUAL AND PENDING CLAIMS
The Company is subject to various actual and pending claims arising in the normal course of business. The Company has regular claims reviews,
including updates from corporate and outside counsel, to assess the need for accounting recognition or disclosure of these contingencies. The directors
are currently of the view that the consolidated entity is adequately provided in respect of these claims in accordance with the accounting policy set out
in note 11.
(C) ASBESTOS
Certain subsidiaries acquired as part of the Parsons acquisition (Parsons E&C), have been, and continue to be, the subject of litigation relating to the
handling of, or exposure to, asbestos. Due to the continuation and extension of the existing indemnity and asbestos claims administration arrangements
between Parsons Corporation and Parsons E&C Corporation, the Group is not aware of any circumstance that is likely to lead to a residual contingent
exposure for the Group in respect of asbestos liabilities.
26. SUBSEQUENT EVENTS
Since the end of the financial year, the directors have resolved to pay a final dividend of 22.0 cents per fully paid ordinary share, including exchangeable
shares, unfranked (2014: 51.0 cents per share, franked at 20.5%).
In accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets, the aggregate amount of the proposed final dividend of
$54.4 million is not recognized as a liability as at 30 June 2015.
Unless disclosed elsewhere in the financial statements, no other material matter or circumstance has arisen since 30 June 2015 that has significantly
affected, or may significantly affect:
• the consolidated entity’s operations in future financial years;
• the results of those operations in future financial years; or
• the consolidated entity’s state of affairs in future financial years.
27. PROCUREMENT
In certain situations, the Group will enter into contracts with its customers which require the Group to procure goods and services on behalf of the
customer.
Where the risks and rewards associated with the procurement activities are assumed by the Group, the revenues and expenses, and assets and liabilities
are recognized on a gross basis in the Statement of Financial Performance and Statement of Financial Position.
The following procurement revenues and costs, and assets and liabilities have been recognized on a gross basis in the Statement of Financial
Performance and Statement of Financial Position:
REVENUE AND ExPENSES¹
Procurement revenue at margin
Procurement costs at margin
Procurement revenue at nil margin
Procurement costs at nil margin
ASSETS AND LIABILITIES
Cash and cash equivalents
Trade and other receivables
Trade and other payables
1 Revenue and expenses exclude procurement revenue and expenses from associates.
CONSOLIDATED
2015
$’M
2014
$’M
336.0
(325.1)
2,034.9
(2,034.9)
91.6
171.2
(123.0)
242.9
(235.9)
2,713.3
(2,713.3)
70.0
197.1
(192.0)
WorleyParsons Annual Report 2015 105
28. PROPERTY, PLANT AND EQUIPMENT
Land and buildings
At cost
Accumulated depreciation
Leasehold improvements
At cost
Accumulated amortization
Plant and equipment
At cost
Accumulated depreciation
Computer equipment
At cost
Accumulated depreciation
Total property, plant and equipment
RECONCILIATIONS
CONSOLIDATED
2015
$’M
2014
$’M
9.8
(0.5)
9.3
196.2
(149.8)
46.4
190.3
(145.0)
45.3
79.8
(73.6)
6.2
107.2
1.7
(0.5)
1.2
176.8
(116.3)
60.5
169.4
(123.1)
46.3
77.3
(69.6)
7.7
115.7
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current and previous financial
years are set out below:
Balance at 1 July 2014
Additions due to the acquisition of entities
Additions
Disposals
Depreciation
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2015
Balance at 1 July 2013
Additions due to the acquisition of entities
Additions
Disposals
Depreciation
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2014
RECOGNITION AND MEASUREMENT
CONSOLIDATED
LAND AND
BUILDINGS
$’M
LEASEHOLD
IMPROVEMENTS
$’M
PLANT AND
EQUIPMENT
$’M
COMPUTER
EQUIPMENT
$’M
1.2
–
8.2
–
(0.3)
–
0.2
9.3
1.4
–
0.1
–
(0.2)
–
(0.1)
1.2
60.5
–
9.8
(0.6)
–
(27.0)
3.7
46.4
72.4
0.4
13.4
(2.3)
–
(22.6)
(0.8)
60.5
46.3
0.2
16.2
(1.1)
(19.8)
–
3.5
45.3
56.4
0.4
14.7
(2.8)
(21.4)
–
(1.0)
46.3
7.7
0.2
2.4
(0.4)
(4.5)
–
0.8
6.2
9.4
0.4
3.9
(0.2)
(5.5)
–
(0.3)
7.7
TOTAL
$’M
115.7
0.4
36.6
(2.1)
(24.6)
(27.0)
8.2
107.2
139.6
1.2
32.1
(5.3)
(27.1)
(22.6)
(2.2)
115.7
Property, plant and equipment are stated at cost less accumulated depreciation, amortization and impairment, if any.
106 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
29. DEFERRED TAX
(A) DEFERRED TAx ASSETS
The balance comprises temporary differences attributable to:
Amounts recognized in the Statement of Financial Performance:
Allowance for doubtful debts
Employee benefits provisions
Warranty provisions
Project provisions
Other provisions
Fixed assets
Sundry accruals
Recognized tax losses
Unused foreign tax credits
Unrealized foreign exchange losses
Lease incentives
Other
Amounts recognized directly in equity:
Foreign exchange losses
Deferred tax assets
Balance at the beginning of the financial year
Acquisition of controlled entities
Credited to the Statement of Financial Performance
(Charged)/credited to equity
Disposal of subsidiary/transfer to assets held for sale
Differences arising on translation of foreign operations
Balance at the end of the financial year
CONSOLIDATED
2015
$’M
2014
$’M
7.2
45.1
4.4
17.2
41.7
14.6
17.0
16.2
11.7
–
2.4
12.9
190.4
21.9
212.3
195.6
6.6
(10.6)
(4.9)
(0.5)
26.1
212.3
6.7
58.1
1.8
11.5
31.0
10.9
13.1
13.5
2.7
9.8
3.4
6.3
168.8
26.8
195.6
160.5
1.6
20.0
15.1
(0.5)
(1.1)
195.6
WorleyParsons Annual Report 2015 107
29. DEFERRED TAX (continued)
(B) DEFERRED TAx LIABILITIES
The balance comprises temporary differences attributable to:
Amounts recognized in the Statement of Financial Performance:
Identifiable intangible assets and goodwill
Unbilled contract revenue
Fixed assets
Unrealized foreign exchange gains
Prepayments
Other
Amounts recognized directly in equity:
Other
Deferred tax liabilities
Balance at the beginning of the financial year
Acquisition of controlled entities
Credited to the Statement of Financial Performance
Credited charged to equity
Disposal of subsidiary/transfer to liabilities held for sale
Differences arising on translation of foreign operations
Balance at the end of the financial year
RECOGNITION AND MEASUREMENT
CONSOLIDATED
2015
$’M
2014
$’M
69.1
20.7
0.1
13.7
1.3
6.7
53.4
41.7
1.5
18.4
1.1
0.7
111.6
116.8
4.1
115.7
122.3
4.7
(18.7)
(1.4)
(0.4)
9.2
115.7
5.5
122.3
141.6
2.6
(17.5)
(1.8)
(0.7)
(1.9)
122.3
Deferred tax assets and liabilities are recognized for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities
are settled, based on those tax rates which are enacted or substantially enacted for each jurisdiction. The relevant tax rates are applied to the cumulative
amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognized in relation to these temporary
differences if they arose in a transaction, other than a business combination, that at the time did not affect either accounting profit or taxable profit
and loss.
Deferred tax assets and liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in controlled
entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not
reverse in the foreseeable future.
Current and deferred tax amounts relating to items recognized directly in equity are also recognized in equity and not in the Statement of Financial
Performance.
KEY ESTIMATES
Deferred tax assets are recognized for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be
available to utilize those temporary differences.
30. RELATED PARTIES
(A) DIRECTORS
The names of persons who were directors of the Company at any time during the financial year were as follows:
John Grill (Chairman)
Ron McNeilly (Deputy Chairman and Lead Independent Director)
Larry Benke
Erich Fraunschiel
John M Green
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
Andrew Wood (Chief Executive Officer).
108 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(B) OTHER RELATED PARTIES
Aggregate amounts brought to account in relation to other transactions with each class of other related parties were as follows:
Loans advanced to:
Associates and related parties
Loan repayments from:
Associates and related parties
Dividends received from:
Dividend revenue from associates
Aggregate amounts, receivable from, and payable to, each class of other related parties at balance date were as follows:
Current receivables
Associates and related parties
Current payables
Associates and related parties
CONSOLIDATED
2015
$’M
2014
$’M
0.3
1.2
16.0
60.2
11.0
11.0
4.2
23.5
44.6
8.1
Related entities provide specific advisory services to controlled entities in the normal course of business. These transactions are made on normal terms
and conditions and at market rates.
(C) CONTROLLING ENTITIES
WorleyParsons Limited is the ultimate Australian parent company.
31. REMUNERATION OF AUDITORS
Remuneration for audit or review of the financial reports of the parent entity or any other entity in the Group:
Auditor of the parent entity – Ernst & Young
Other auditors of controlled entities
Amounts received for other services:
Tax related services
Acquisition related assurance services
Other non‑audit services
32. KEY MANAGEMENT PERSONNEL
Short term employee benefits
Post‑employment benefits
Other long term benefits
Share based payments
Total compensation
CONSOLIDATED
2015
$
2014
$
3,571,935
3,516,744
149,839
250,955
3,721,774
3,767,699
757,757
52,240
567,365
350,230
30,000
893,174
1,377,362
1,273,404
5,099,136
5,041,103
CONSOLIDATED
2015
$
2014
$
6,976,197
9,876,330
215,807
56,543
698,033
426,894
60,572
709,376
7,946,580
11,073,172
WorleyParsons Annual Report 2015 109
33. PARENT ENTITY DISCLOSURES
(A) PARENT ENTITY
WorleyParsons Limited parent entity financial statements include investments in the following entities:
ENTITY
COUNTRY OF INCORPORATION
Engineering Securities Pty Limited atf The Worley Limited Trust
WorleyParsons Canada Callco Ltd
WorleyParsons Canada Holdings Pty Limited
WorleyParsons Financial Services Pty Limited
Australia
Canada
Australia
Australia
The parent entity’s summary financial information as required by the Corporations Act 2001 is as follows:
STATEMENT OF FINANCIAL PERFORMANCE
Profit before income tax expense
Income tax expense
Profit after income tax expense
Profit attributable to members of WorleyParsons Limited
Retained profits at the beginning of the financial year
Dividends paid1
Retained profits at the end of the financial year
STATEMENT OF COMPREHENSIVE INCOME
Profit after income tax expense
Total comprehensive income, net of tax
STATEMENT OF FINANCIAL POSITION
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Performance rights reserve
Retained profits
Total equity
2015
$’M
94.7
121.0
197.9
440.1
853.7
2014
$’M
94.7
121.0
197.9
440.1
853.7
2015
$’M
2014
$’M
159.6
(21.2)
138.4
138.4
199.3
(207.0)
130.7
138.4
138.4
1,006.4
1,990.0
527.9
557.4
1,432.6
1,255.0
46.9
130.7
1,432.6
272.5
–
272.5
272.5
133.7
(206.9)
199.3
272.5
272.5
977.7
1,939.0
449.7
449.7
1,489.3
1,239.7
50.3
199.3
1,489.3
Parent entity has bank guarantees in respect of contractual performance outstanding at 30 June 2015 for the amount of $484.2 million
(2014: $395.5 million). These commitments have not been recognized in the financial statements.
The parent entity has no commitments for expenditure.
1 Dividends paid by the parent entity exclude dividends paid to holders of exchangeable shares.
110 WorleyParsons Annual Report 2015
NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015
(B) CLOSED GROUP
Pursuant to Australian Securities and Investments Commission Class Order 98/1418, relief has been granted to Worley No 2 Pty Limited, WorleyParsons
Engineering Pty Limited, WorleyParsons Financial Services Pty Limited and WorleyParsons Services Pty Limited, from the Corporations Act 2001
requirements for preparation, audit and lodgment of their financial reports. As a condition of the Class Order, WorleyParsons Limited together with the
parties noted entered into a Deed of Cross Guarantee on 26 May 2003. The effect of the deed is that WorleyParsons Limited has guaranteed to pay any
deficiency in the event of the winding up of the abovementioned controlled entities. The controlled entities have also given a similar guarantee in the
event that WorleyParsons Limited is wound up. The Statement of Financial Performance and Statement of Financial Position of the entities which are
parties to the Deed of Cross Guarantee and The Worley Limited Trust (Closed Group) are as follows:
STATEMENT OF FINANCIAL PERFORMANCE
Profit before income tax expense
Income tax expense
Profit after income tax expense
Profit attributable to members of WorleyParsons Limited
Retained profits at the beginning of the financial year
Dividends paid1
Retained profits at the end of the financial year
1 Dividends paid by the Closed Group exclude dividends paid to holders of exchangeable shares.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other current assets
Total current assets
Non‑current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Other non‑current assets
Total non‑current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non‑current liabilities
Trade and other payables
Interest bearing loans and borrowings
Deferred tax liabilities
Total non‑current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits
TOTAL EQUITY
CLOSED GROUP
2015
$’M
2014
$’M
147.2
(12.5)
134.7
134.7
184.4
(207.0)
112.1
186.2
(17.1)
169.1
169.1
222.2
(206.9)
184.4
–
1,776.5
29.1
1,805.6
0.3
64.9
74.4
1,047.2
1,186.8
2,992.4
1,328.2
0.3
1,328.5
29.5
190.9
16.2
236.6
1,565.1
1,427.3
1,255.0
60.2
112.1
1,427.3
9.6
1,604.5
15.3
1,629.4
0.3
64.9
56.5
1,042.4
1,164.1
2,793.5
1,145.9
3.9
1,149.8
–
155.5
10.9
166.4
1,316.2
1,477.3
1,239.7
53.2
184.4
1,477.3
WorleyParsons Annual Report 2015 111
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of WorleyParsons Limited, I state that:
1.
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on
that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2(A);
(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
(d) as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in note 33 will be able
to meet any obligations or liabilities to which they are or may become subject, by virtue of the Deed of Cross Guarantee.
2.
This declaration has been made after receiving the declarations required to be made to the Directors from the chief executive officer and chief
financial officer in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2015.
On behalf of the Board
JOHN GRILL AO
Chairman
Sydney, 26 August 2015
112 WorleyParsons Annual Report 2015
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor's report to the members of WorleyParsons Limited
Report on the financial report
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
We have audited the accompanying financial report of WorleyParsons Limited (“the Company”), which
comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement
of financial performance, the consolidated statement of comprehensive income, the consolidated
Independent auditor's report to the members of WorleyParsons Limited
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information, and the
directors' declaration of the consolidated entity comprising the company and the entities it controlled at
Report on the financial report
the year's end or from time to time during the financial year.
We have audited the accompanying financial report of WorleyParsons Limited (“the Company”), which
Directors' responsibility for the financial report
comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement
of financial performance, the consolidated statement of comprehensive income, the consolidated
The directors of the company are responsible for the preparation of the financial report that gives a true
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
notes comprising a summary of significant accounting policies and other explanatory information, and the
such internal controls as the directors determine are necessary to enable the preparation of the financial
directors' declaration of the consolidated entity comprising the company and the entities it controlled at
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also
the year's end or from time to time during the financial year.
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements comply with International Financial Reporting Standards.
Directors' responsibility for the financial report
Auditor's responsibility
The directors of the company are responsible for the preparation of the financial report that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
such internal controls as the directors determine are necessary to enable the preparation of the financial
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
reasonable assurance about whether the financial report is free from material misstatement.
financial statements comply with International Financial Reporting Standards.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
Auditor's responsibility
financial report. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
presentation of the financial report in order to design audit procedures that are appropriate in the
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
reasonable assurance about whether the financial report is free from material misstatement.
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
presentation of the financial report.
financial report. The procedures selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
audit opinion.
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
Independence
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
In conducting our audit we have complied with the independence requirements of the Corporations Act
presentation of the financial report.
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
WorleyParsons Annual Report 2015 113
Ernst & Young
680 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Independent auditor's report to the members of WorleyParsons Limited
Report on the financial report
We have audited the accompanying financial report of WorleyParsons Limited (“the Company”), which
comprises the consolidated statement of financial position as at 30 June 2015, the consolidated statement
of financial performance, the consolidated statement of comprehensive income, the consolidated
Opinion
statement of changes in equity and the consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory information, and the
In our opinion:
directors' declaration of the consolidated entity comprising the company and the entities it controlled at
the year's end or from time to time during the financial year.
the financial report of WorleyParsons Limited is in accordance with the Corporations Act 2001,
including:
a.
Directors' responsibility for the financial report
i
giving a true and fair view of the consolidated entity's financial position as at 30 June 2015
The directors of the company are responsible for the preparation of the financial report that gives a true
and of its performance for the year ended on that date; and
and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal controls as the directors determine are necessary to enable the preparation of the financial
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the
the financial report also complies with International Financial Reporting Standards as disclosed in
financial statements comply with International Financial Reporting Standards.
Note 2.
b.
ii
Auditor's responsibility
Report on the remuneration report
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
We have audited the Remuneration Report included in pages 51 to 66 of the directors' report for the year
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
ended 30 June 2015. The directors of the company are responsible for the preparation and presentation
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
reasonable assurance about whether the financial report is free from material misstatement.
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor's judgment, including the assessment of
Opinion
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
In our opinion, the Remuneration Report of WorleyParsons Limited for the year ended 30 June 2015,
risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair
complies with section 300A of the Corporations Act 2001.
presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's
internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
Ernst & Young
audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
SJ Ferguson
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
Partner
copy of which is included in the directors’ report.
Sydney
26 August 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
114 WorleyParsons Annual Report 2015
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
SHAREHOLDER INFORMATION
TOP 20 HOLDINGS OF FULLY PAID ORDINARY SHARES AS AT 19 AUGUST 2015
NAME
SHARES
% OF ISSUED CAPITAL
RANK
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Wilaci Pty Limited
Serpentine Foundation Pty Limited
Mr John Michael Grill
BNP Paribas Noms Pty Ltd
Haju Pty Limited
Juha Pty Limited
Taylor Square Designs Pty Ltd
Citicorp Nominees Pty Limited
Warbont Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
UBS Bank Canada TR Chalet Holdings Inc
Argo Investments Limited
Inmac Engineering Pty Ltd
Netwealth Investments Limited
Lujeta Pty Ltd
Dubotu Pty Ltd
Total
Total number of current holders for all named classes is 25,571.
86,780,652
33,385,121
20,003,800
18,283,675
11,778,006
4,844,825
2,569,342
2,059,836
1,500,000
1,500,000
1,423,641
1,358,864
1,280,002
1,257,880
1,077,475
972,336
880,000
846,650
828,500
800,000
193,430,605
35.06
13.49
8.08
7.39
4.76
1.96
1.04
0.83
0.60
0.60
0.58
0.55
0.52
0.51
0.44
0.39
0.35
0.34
0.33
0.32
78.14
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
The table above includes exchangeable shares. The ASX treats these shares as having been converted into ordinary shares of the Company at the time of
their issue for the purposes of the ASX Listing Rules.
SUBSTANTIAL HOLDERS OF 5% OR MORE OF FULLY PAID ORDINARY SHARES AS AT 19 AUGUST 2015*
NAME
NOTICE DATE
John Grill and associated companies
Veritas Asset Management LLP
Blackrock Group and subsidiaries
Franklin Resources, Inc, and affiliates
* As disclosed in substantial shareholder notices received by the Company.
RANGE OF FULLY PAID ORDINARY SHARES AS AT 19 AUGUST 2015
31 May 2010
31 October 2014
20 March 2015
22 July 2015
SHARES
25,313,786
14,393,694
14,813,070
13,126,866
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
UNMARKETABLE PARCELS
Minimum $500 parcel at $7.92 per unit
HOLDERS
SHARES % OF ISSUED CAPITAL
18,007
6,361
655
471
77
25,571
7,463,965
14,124,037
4,879,941
11,707,050
209,355,523
247,530,516
MINIMUM PARCEL SIZE
64
HOLDERS
1,809
3.02
5.70
1.97
4.73
84.58
100.00
SHARES
60,824
The table above includes exchangeable shares. The ASX treats these exchangeable shares to have been converted into ordinary shares of the Company
at the time of their issue for the purposes of the ASX Listing Rules. In addition to the shares set out in the table there is one special voting share issued
to Computershare Trust Company of Canada Limited as part of the consideration for the acquisition of the Colt Group.
VOTING RIGHTS
All ordinary shares carry one vote per share without restriction. In the case of the exchangeable shares, voting rights are provided through the special
voting share which carries an aggregate number of votes equal to the number of votes attached to the ordinary shares into which the exchangeable
shares are exchangeable.
WorleyParsons Annual Report 2015 115
GLOSSARY
TERM
Americas
APAC
Brownfield project
Downstream
EBIT
EcoNomicsTM
EDS
EPC
EPC contract
EPCM
EPCM contract
EPS
EURMENA
DEFINITION
Services business line region encompassing sub‑regions of North America and Latin America.
Services business line region encompassing Australia, Pacific, Asia and China.
A project which is constrained by prior work. Such projects very often involve rebuilding or re‑engineering a facility
from an existing facility. Such a project may be contrasted with a greenfield project which is a project that lacks
constraints imposed by prior work – for example, a project that, apart from a small number of interfaces with existing
facilities, is a standalone project.
The refining of petroleum crude oil and the processing and purifying of raw natural gas, as well as the marketing and
distribution of products derived from crude oil and natural gas.
Earnings before interest and tax.
Our framework for integrating sustainability into our customers’ projects and operations. That framework assists them
in making decisions where trade‑offs exist between technical, social, environmental and financial performance.
Engineering Design Systems.
Engineering, Procurement and Construction.
Under an EPC contract, we will generally be responsible for the design of, the procurement of equipment and materials
for, and the construction and commissioning of an asset, such as a power station. This will generally require us to
ensure that the completed asset meets certain specified performance targets. To do so, we will generally procure
the necessary equipment and materials and engage various subcontractors ourselves.
Engineering, Procurement and Construction Management.
Under an EPCM contract, we will generally be responsible for providing our professional services, but unlike an EPC
contract, will not be responsible for delivering a completed asset to our customer. Instead, we will provide engineering
and design services to our customer, procure equipment but only as agent for our customer and manage our customer’s
other suppliers as the customer’s representative. We will generally be paid an hourly rate for the services we provide.
Earnings per share.
Services business line region encompassing Europe, Middle East and North Africa.
Front end engineering design Basic engineering design providing owners and their financiers with information enabling them to determine whether
(FEED)
or not, and if so how, to commit resources to a proposed project to maximize its projected returns.
GDC
Greenfield project
HSE
LAM
Midstream
NOC
OE
OneWayTM
PMC
Reimbursable EPC
Global Delivery Center.
A project that lacks constraints imposed by prior work – for example, a project that, apart from a small number of
interfaces with existing facilities, is a standalone project. A greenfield project can be contrasted with a ‘brownfield
project’ which is a project constrained by prior work. Such projects very often involve rebuilding or re‑engineering a
facility from an existing facility.
Health, Safety and Environment.
Services business line region encompassing Latin America.
The transport (by pipeline, rail, barge or truck), storage, and wholesale marketing of crude or refined petroleum
products.
National Oil Company.
Owner’s engineer.
Our enterprise‑wide integrity management framework which establishes our corporate expectations for Zero Harm to
our business.
Project Management Consultant/Consultancy.
Arrangements under which we are reimbursed for the costs we incur plus a margin in meeting our obligations under an
EPC contract.
SSA
Services business line region encompassing countries in Sub‑Saharan Africa.
Unconventional oil and gas
Types of oil and gas that were traditionally thought of as being difficult and/or expensive to locate and extract.
They include shale gas, shale oil, basin‑centred gas, gas hydrates and coal seam gas.
Upstream
The searching for potential underground or underwater crude oil and natural gas fields, drilling of exploratory wells,
and the subsequent drilling and operation of the wells that recover and bring the crude oil and/or raw natural gas to
the surface.
116 WorleyParsons Annual Report 2015
Corporate InformatIon
WorleyParsons Limited
ACN 096 090 158
Directors
John Grill (Chairman)
Ron McNeilly (Deputy Chairman and Lead Independent Director)
Larry Benke
Jagjeet (Jeet) Bindra
Erich Fraunschiel
John M Green
Christopher Haynes, OBE
Catherine Livingstone, AO
Wang Xiao Bin
Andrew Wood (Chief Executive Officer)
company secretary
Peter Janu
registereD office
Level 12
141 Walker Street
North Sydney NSW 2060
auDitors
Ernst & Young
Bankers
Bank of America Merrill Lynch
BNP Paribas
Commonwealth Bank of Australia
HSBC
JPMorgan Chase
National Australia Bank
Royal Bank of Canada
Standard Chartered Bank
UBS
Wells Fargo
Westpac Banking Corporation
Lawyers
Herbert Smith Freehills
share registry
Computershare Investor Services Pty Limited
Level 4, 60 Carrington Street
Sydney NSW 2000
Australia
Phone: 1300 850 505