Annual Report 2017
We help our customers
meet the world’s changing
resources and energy needs
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.
Annual General Meeting
WorleyParsons Limited 2017 Annual
General Meeting will be held on Friday
27 October 2017 commencing at 2.00pm
(AEDT) at The Westin Sydney,
1 Martin Place, Sydney.
Contents
Group Financial Highlights
Chairman’s Report
Board of Directors
Chief Executive Officer’s Review
Group Leadership Team
Corporate Responsibility
Operating and Financial Review
Directors’ Report
Remuneration Report
Financial Statements
Shareholder Information
Glossary
Corporate Information
1
2
5
7
15
17
23
31
37
55
109
111
113
Our Values
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
Relationships
• Open and respectful
• A trusted supplier, partner and
customer
• Collaborative approach to business
• Enduring customer relationships
Agility
• Smallest assignment to
world-scale developments
• Comprehensive geographic presence
• Global expertise delivered locally
• Responsive to customer preferences
• Optimum customized solutions
• Advice to action
Leadership
• Energy and excitement
• Integrity in all aspects of business
• Minimum bureaucracy
• Committed, empowered and
innovative people
• Delivering profitable sustainability
• Innovation delivering value for our
customers
We have created our 2017 shareholder
results microsite, which offers our 2017
results documents and detailed
information on our business operations.
Visit us online
annualreport2017.worleyparsons.com
Front Cover Hebron Platform at Bull Arm, NL, Canada.
Group Financial Highlights
Five year performance at a glance
Aggregated revenue
$4,377.0m
EBIT
$129.6m
Net profit after tax
$33.5m
Cash flow from operations
$78.9m
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EBIT
NPAT
Underlying EBIT
Underlying NPAT
$m
2013
2014
2015
2016
2017
% change
Aggregated revenue1
7,627.0
7,363.7
7,227.5
5,725.9
EBIT
EBIT margin
Net profit after tax
Net profit margin
Cash flow from operations
Return on equity
Basic EPS normalized (cents)2
Basic EPS (cents)
Dividends (cents per share)
527.0
6.9%
322.1
4.2%
443.5
16.2%
137.8
130.8
92.5
428.2
5.8%
249.1
3.4%
550.1
12.5%
108.5
101.0
85.0
87.1
1.2%
(54.9)
(0.8%)
251.3
9.2%
(14.7)
(22.2)
56.0
128.9
2.3%
23.5
0.4%
192.0
6.9%
16.3
9.5
–
4,377.0
129.6
3.0%
33.5
0.8%
78.9
6.9%
20.3
13.5
–
(23.6)
0.5
0.7pp
42.6
0.4pp
(58.9)
0.0pp
24.5
42.1
–
1 Aggregated revenue is defined as statutory revenue and other income plus share of revenue from associates, less procurement revenue at nil margin, pass-through
revenue at nil margin, interest income and net gain on revaluation of investments previously accounted for as equity accounted associates and joint operations. The
directors believe the disclosure of revenue attributable to associates provides additional information in relation to the financial performance of the Group.
2 Before amortization of intangibles including tax effect of amortization expense.
WorleyParsons Annual Report 2017
1
Chairman’s Report
Welcome to the WorleyParsons
Annual report for financial
year 2017.
Your business has improved in many ways over the last
12 months. Gross margin and EBIT Margins have increased,
chargeability is on target, cash collection is improving and
importantly, backlog for new work has increased. This
improvement has been driven by the Realize our Future
initiatives that have reshaped and resized the business
to meet the changing market dynamics.
Resizing the business
Significant effort has been placed on resizing the business over
the last 18 months. Overheads have significantly reduced with
some $500 million being removed from the business over the
last 18 months. We have closed or divested a further 14 offices
around the world and we are now active in 42 countries with 106
offices. I am pleased to say that we have also added two offices,
one in Germany and the other in Azerbaijan – both at the specific
request of two of our key global customers.
Our staff numbers have stabilized, with our workforce now at
22,800. We are meeting our targeted staff utilization rates. We
have embedded processes into the Company to drive ongoing
operational improvement and share best practices. We have
changed the Company’s cultural mindset to where change is
now a constant with a continuous improvement expectation.
Reshaping the business
Over the last three years the business has been reshaped and
resized. We have reorganized into four business lines: Advisian,
Major Projects, Integrated Solutions and Services. We are now
more closely aligned with our customers with an ability to offer
full range and value of services from advisory to implementation
to asset optimization. Key business development activities have
been contained in a new Global Sales and Marketing function
to ensure global responses to global opportunities, and all our
capabilities are brought to all our customers.
As the resource and energy markets have worked through
structural changes in commodity pricing, fuel choice and other
fundamentals, your company has developed a new strategic
architecture to respond more dynamically to a changing world.
This will provide a greater ability to capture revenue growth
opportunities, systematically improve business performance and
address the dramatic changes in the industry.
The three pillars of the new architecture focus on operational
excellence, offering all of our value to all of our customers and
positioning the business as a key player in the new resource
and energy world. Andrew Wood discusses progress against
these pillars on page 12.
2 WorleyParsons Annual Report 2017
Market Dynamic - Inflexion point
The resources and energy markets are at an interesting
inflexion point. Our customers are now indicating that they are
returning to capital and operational expenditure growth.
Population growth and economic development are driving up
world energy demand. At the same time, technological advances
are increasing energy efficiency, driving down costs for a variety
of technologies, and making more unconventional energy
resources economically viable.
The results are rapidly changing global trends in energy
production, consumption, and trade flows. Most forecasters are
indicating a modest growth in oil demand, with gas growing more
rapidly than oil.
Underinvestment in energy markets is creating a projected
supply-demand gap. The recent cuts in upstream oil investment
have re-shaped the outlook for oil markets. If suppressed
investment continues, it is unlikely supply and demand can be
matched without a rapid increase in investment in the near
future.
This emerging supply-demand gap will likely be filled by
production from conventional crude oil projects that are yet to be
approved. We believe more investment is needed in oil production
capacity to avoid the risk of an under supply towards the end of
2022. We are now starting to see early signs of that investment.
John Grill AO
Chairman and Non-Executive Director
“
WorleyParsons’ unyielding stand on safety
continues to deliver industry leading results.
“
People
I am pleased to say that our staff numbers are now stabilising,
at around 22,800. Again our people have had to withstand
another difficult year as our customers faced challenging
market conditions. Our workforce has had to adapt to a rapidly
changing environment as we adjust to the shifting dynamics of
our markets. We believe we have the right structure in place to
manage through the transition to growing customer demand.
During this period we will remain vigilant and ensure adjustments
are made when necessary to ensure we can maximize market
opportunities as they arise.
Let me be clear – this has been a very difficult period for our
staff. WorleyParsons staff have demonstrated commitment
above and beyond all reasonable expectations in supporting the
significant change undertaken during the last 3 years. The Board
acknowledges that commitment and contribution and expresses
their deep appreciation to all of our people.
Financial performance
The Group reported an underlying net profit after tax of
$123.2 million (which excludes $89.7 million of one off costs)
down 19.5% on the 2016 underlying result. Significantly, as a
result of our cost out program, a total of approximately $500m
in sustainable costs has been removed from the business in the
last 18 months, allowing EBIT and NPAT margins to increase
from 2016.
The Group delivered a positive operating cash flow of $78.9m
(cash conversion at 236% of NPAT). Our gearing at 29.1% remains
within our target range, and leverage has reduced to 2.4 times.
The Board has resolved not to pay a final dividend for financial
year 2017 as the Company continues to ensure the strength of
its balance sheet.
Health, Safety and Environment (HSE)
WorleyParsons’ unyielding stand on safety continues to deliver
industry leading results. We are one of the few companies
in our industry that has been able to deliver improved safety
performance during this period of disruption. This year, for our
employees we had fewer recordable incidents leading to a flat
Total Recordable Case Frequency Rate (TRCFR) compared to last
year. For the broader coverage of employees and contractors we
had a significant improvement of the TRCFR from 0.17 to 0.14
during the period.
WorleyParsons Annual Report 2017
3
Chairman’s Report
“
The Company fulfils its corporate
responsibilities across all the parts
of the world where we do business.
“
Board changes
John Green retired as a director after the 2016 Annual General
Meeting and we thank him for his strong guidance and leadership
since joining WorleyParsons in 1993, first as Chairman and then a
member of our Board through listing in 2002 until his retirement.
Larry Benke also retired effective from the 2016 Annual General
Meeting and I would like to offer our thanks for his six years of
service and wise counsel over his period on the Board. Larry was
the CEO of the Colt group of companies when we merged in 2007
and remained a key member of our executive committee until he
retired in 2010.
I would also like to announce that Ron McNeilly will be retiring
from the Board at the 2017 Annual General Meeting. Ron has
been a member of the Board since listing in 2002, including
many years as Chairman and Deputy Chairman. We thank Ron
for his enormous contribution to the growth and development of
WorleyParsons during his tenure.
Our objective is to resize the Board to a total of seven directors,
with six being non-executive. The Company has undergone
significant restructure, and renewal of the Board will be part
of that process.
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, partners and our agents, are required to
maintain the standard of ethical behaviour outlined in our Code of
Conduct and as expected by our customers and shareholders.
The Company fulfils its corporate responsibilities across all the
parts of the world where we do business. We ensure that our
programs are as effective and efficient as possible in delivering
value to the communities we support. The WorleyParsons
Foundation continues to grow, supporting an even more diverse
range of activities and projects across the globe. The willingness
of our personnel to volunteer their time and money in support of
their local activities is a key driver to this year’s achievements.
We have a continued commitment to environmental
sustainability and improving the transparency of our own
environment performance via robust reporting and disclosure
practices. We note that in June 2017 the Financial Stability
Board’s Taskforce on Climate-related Financial Disclosures (TCFD)
released its final recommendations for reporting climate-related
financial information. We will be working with industry to review
its impact, what disclosures are appropriate and how we can help
our customers address climate risk.
For the second year in a row, The Australian Council of
Superannuation Investors awarded WorleyParsons the rating
of “Leading” in corporate responsibility reporting practices. The
target set for greenhouse gas emissions for FY16 was achieved
and we have seen progress towards gender diversity with the
2020 measurable objective for women senior executives met this
year. The Corporate Responsibility section of this Annual Report
provides detail of 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 special areas of interest, but also provides assurance
annually to the Audit and Risk Committee on the adequacy and
effectiveness of the Group’s internal controls.
The Corporate Governance Statement 2017 can be found on the
Company’s website.
Conclusion
I would like to thank the directors, the Group Leadership Team,
and all of our people for their contribution in what has been
another difficult year as we transition to meet the challenges
ahead. I 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
4 WorleyParsons Annual Report 2017
Board of Directors
John Grill AO
Chairman and Non-Executive
Director
John is a member of the
Health, Safety and
Environment Committee,
Chairman of the Nominations
Committee and a member of
the Remuneration Committee.
Catherine
Livingstone AO
Non-Executive Director
Catherine is Chair of the
Audit and Risk Committee
and a member of the
Nominations Committee.
Wang Xiao Bin
Non-Executive Director
Xiao Bin is a member
of the Audit and Risk
Committee, and a member
of the Nominations
Committee.
Christopher Haynes
OBE
Non-Executive Director
Chris is Chairman of the
Health, Safety and
Environment Committee,
member of the
Nominations Committee
and a member of the
Remuneration
Committee.
Nuala O’Leary
Group Company Secretary
Andrew Wood
Chief Executive Officer
Jagjeet Bindra
Non-Executive Director
Jagjeet (Jeet) is a member of
the Health, Safety and
Environment Committee,
member of the Nominations
Committee and Chairman of
the Remuneration Committee.
Ron McNeilly
Deputy Chairman and
Lead Independent Director
Ron is a member of the
Health, Safety and
Environment Committee,
member of the Audit and Risk
Committee and a member of
the Nominations Committee.
Erich Fraunschiel
Non-Executive Director
Erich is a member of the
Audit and Risk Committee
and a member of the
Nominations Committee.
For detailed information on Directors and the
Group Company Secretary see pages 34 to 35.
WorleyParsons Annual Report 2017
5
We completed
the Lake Turkana
Wind Power Project
in Kenya; 365 turbines
installed in 362 days
6 WorleyParsons Annual Report 2017
Chief Executive Officer’s Review
“
We are beginning to see
positive signs on the horizon as our
customers are now indicating that
they are returning to capital and
operational expenditure growth.“
We believe we are in one of the biggest energy and
resource industry transitions in 40 years. This has
required significant adjustments to our Company to
ensure we remain a viable and sustainable business
and return to growth.
As I look back on the 2017 financial year, I reflect on the
many outstanding outcomes delivered by our people in one
of the toughest periods in our history. This commitment and
performance is what makes WorleyParsons special and gives me
confidence in the future of our Company. I would like to outline
some of our achievements.
Safety performance
Our unyielding stand on safety continues to deliver industry
leading results. As outlined in the Chairman’s Report, we are one
of the few companies in our industry that has been able to deliver
improved safety performance during this period of disruption.
Project work
Work was completed on the Hebron Topside, one of our largest
ever EPC contracts. TANAP, one of the world’s largest pipelines,
continues its1800 km journey from Georgia through Turkey to
Europe. The Tengizchevroil project (TCO) achieved the go ahead
during the period committing our team to deliver the largest,
and one of the most complex, oil and gas developments in the
world today. We completed the Lake Turkana Wind Power Project
in Kenya; 365 turbines installed in 362 days in one of the most
remote places on the planet with full support and engagement
of the local community. It will now deliver 310MW of power for
a million Kenyan households which truly fulfils our purpose of
helping our customers meet the world’s changing resources and
energy needs.
Andew Wood
Chief Executive Officer
Company reshaping and resizing initiatives
Our overhead reduction target, driven by our Realize our Future
program, has delivered approximately $500m in reduced
overhead costs making us much more competitive. Whilst many
parts of the Realize our Future program are now complete, it will
continue to support the organization in maintaining sustainable
performance in line with company strategy.
Whilst we have been very internally focused in driving the
changes inside the business, we have also ensured that we are
optimizing our ability to grow revenue. We established the Global
Sales and Marketing team (GSM) which has lived up to its promise
of driving focus and discipline into the sales and marketing
process. We’re seeing an improvement in our win rate across
large and strategically important contracts.
We opened two new offices to support key customers –
Ludwigshafen in Germany to support BASF and Baku in
Azerbaijan to support BP. In Saudi Arabia, one of our strategic
priorities, we saw significant new wins and growth from our
existing customers including the extension of the Saudi Aramco
GES+ contract and the Southern Gas contract.
Advisian has established a global brand presence in the market.
Advisian’s differentiated offering is beginning to strike a chord
with customers.
In the 2017 financial year we created the New Energy group to
help our customers navigate the rapidly changing energy world.
I am excited about the opportunity this represents as we seek to
bring the resources and energy of our team to claim our position
as a key player in this new world.
WorleyParsons Annual Report 2017
7
Chief Executive Officer’s Review
Global Operations and
Significant Contract Awards
Anchorage
Anchorage
Fort St. John
Fort St. John
Cold Lake
Cold Lake
Kitimat
Burnaby
Edmonton
Blackfalds
Kitimat
Burnaby
Edmonton
Blackfalds
Saskatoon
Calgary
Calgary
Saskatoon
Markham
Markham
Billings
Bismarck
Billings
Sudbury
Bismarck
Sudbury
Vancouver, WA
Folsom
Vancouver, WA
Folsom
Arcadia/Monrovia
Costa Mesa
Arcadia/Monrovia
Costa Mesa
Sarnia
Sarnia
Reading
Reading
Infrastructure 26
Houston
Bayport
Houston
Bayport
Chattanooga
Atlanta
Chattanooga
Atlanta
Jacksonville
Jacksonville
Hydrocarbons 48
Port of Spain
Port of Spain
Infrastructure 7
Lima
Bogotá
Europe, Middle East
& Africa
Bogotá
86Significant
Lima
Awards
28
Significant
Awards
Stavanger
Stavanger
Leeds
Teesside
Ludwigshafen
Teesside
Ludwigshafen
Moscow
Moscow
Delft
Delft
Plzenˇ
Plzenˇ
Warsaw
Warsaw
Aksai
Aksai
Atyrau
Atyrau
Leeds
Manchester
Gloucester
Bristol
Manchester
Gloucester
Bristol
Farnborough
Farnborough
Woking
London
Woking
London
Madrid
Madrid
Baku
Baku
Sofia
Sofia
Almaty
Almaty
Tashkent
Tashkent
Hydrocarbons 48
Cairo
Basrah
Cairo
Ahmadi
Basrah
Manama
Ahmadi
Manama
Al Khobar
Al Khobar
Dubai
Dubai
Yanbu
Riyadh
Yanbu
Riyadh
Muscat
Muscat
Doha
Doha
Abu Dhabi
Abu Dhabi
Europe, Middle East
& Africa
Mumbai
Infrastructure 7
Hyderabad
Hyderabad
Mumbai
Chennai
Bangkok
Chennai
Bangkok
Ulaanbaatar
Ulaanbaatar
Beijing
Beijing
Tianjin
Tianjin
Chengdu
Nanjing
Chengdu
Nanjing
Shanghai
Shanghai
Hong Kong
Hong Kong
Accra
Lagos
Accra
Lagos
Kuala Belait
Kuala Belait
Hydrocarbons 15
Luanda
Luanda
Hydrocarbons 15
Kuala Lumpur
Kerteh
Kuala Lumpur
Duri
Duri
Singapore
Singapore
Kerteh
Kuantan
Kuantan
Jakarta
Jakarta
Dili
Dili
28
Significant
Awards
Mackay
Mackay
Gladstone
Gladstone
Brisbane
Brisbane
Perth
Perth
Bunbury
Bunbury
Adelaide
Sydney
Adelaide
Newcastle
Sydney
Newcastle
Geelong
Geelong
Melbourne
Melbourne
New Plymouth
Auckland
Auckland
New Plymouth
Hastings
Wellington
Hastings
Wellington
Christchurch
Christchurch
São Paulo
São Paulo
Rio de Janeiro
Rio de Janeiro
Minerals, Metals
Pretoria
Pretoria
& Chemicals 6
Minerals, Metals
& Chemicals 12
Minerals, Metals
& Chemicals 6
Santiago
Santiago
Johannesburg
Johannesburg
Cape Town
Cape Town
Infrastructure 14
Americas
Australia, Pacific, Asia and China
Hydrocarbons 25
Infrastructure 5
Minerals, Metals
& Chemicals 1
Hydrocarbons 8
40Significant
Awards
18
Significant
Awards
Minerals, Metals
& Chemicals 5
Australia, Pacific, Asia and China
Infrastructure 5
Hydrocarbons 8
18
Significant
Awards
Minerals, Metals
& Chemicals 5
Infrastructure 26
Minerals, Metals
& Chemicals 12
86Significant
Awards
Americas
Infrastructure 14
Hydrocarbons 25
42 Countries
106 Offices
40Significant
22,800 Employees
Awards
Minerals, Metals
& Chemicals 1
8 WorleyParsons Annual Report 2017
Infrastructure 26
Minerals, Metals
& Chemicals 12
86Significant
Awards
Anchorage
Anchorage
Fort St. John
Fort St. John
Cold Lake
Cold Lake
Edmonton
Blackfalds
Edmonton
Blackfalds
Saskatoon
Saskatoon
Calgary
Calgary
Kitimat
Burnaby
Kitimat
Burnaby
Billings
Infrastructure 14
Bismarck
Billings
Markham
Markham
Americas
Sudbury
Sudbury
Bismarck
Vancouver, WA
Vancouver, WA
Folsom
Folsom
Arcadia/Monrovia
Arcadia/Monrovia
Costa Mesa
Costa Mesa
Sarnia
Sarnia
Reading
Reading
Chattanooga
Chattanooga
Atlanta
Atlanta
Jacksonville
Jacksonville
Houston
Bayport
Houston
Bayport
40Significant
Awards
Lima
Lima
Hydrocarbons 48
Europe, Middle East
& Africa
Infrastructure 7
Hydrocarbons 15
28
Significant
Awards
Minerals, Metals
& Chemicals 6
Stavanger
Stavanger
Teesside
Leeds
Manchester
Gloucester
Bristol
Farnborough
Woking
London
Leeds
Manchester
Gloucester
Bristol
Farnborough
Infrastructure 26
Woking
London
Delft
Ludwigshafen
Teesside
Ludwigshafen
Moscow
Moscow
Delft
Plzenˇ
Warsaw
Warsaw
Plzenˇ
Aksai
Aksai
Atyrau
Atyrau
Ulaanbaatar
Ulaanbaatar
Hydrocarbons 25
Madrid
Australia, Pacific, Asia and China
Baku
Sofia
Sofia
Madrid
Baku
Almaty
Almaty
Tashkent
Tashkent
Hydrocarbons 48
Beijing
Beijing
Tianjin
Tianjin
Infrastructure 5
Minerals, Metals
& Chemicals 1
Port of Spain
Port of Spain
Bogotá
Bogotá
Accra
Lagos
Accra
Lagos
Hydrocarbons 8
Basrah
Manama
Ahmadi
Basrah
Cairo
Ahmadi
Manama
Al Khobar
Riyadh
Yanbu
Al Khobar
Riyadh
Dubai
Dubai
Muscat
Muscat
Doha
Abu Dhabi
Cairo
18
Yanbu
Significant
Awards
Doha
Abu Dhabi
86Significant
Minerals, Metals
& Chemicals 5
Chengdu
Nanjing
Chengdu
Nanjing
Shanghai
Shanghai
Infrastructure 7
Hong Kong
Hong Kong
Europe, Middle East
& Africa
Mumbai
Mumbai
Hyderabad
Chennai
Hyderabad
Bangkok
Chennai
Bangkok
Kuantan
Kuantan
Kuala Belait
Kuala Belait
Kerteh
Kuala Lumpur
Duri
Singapore
Kerteh
Kuala Lumpur
Duri
Singapore
Jakarta
Jakarta
Dili
Minerals, Metals
Dili
& Chemicals 6
Hydrocarbons 15
28
Significant
Awards
Luanda
Luanda
Awards
São Paulo
São Paulo
Rio de Janeiro
Rio de Janeiro
Minerals, Metals
& Chemicals 12
Pretoria
Pretoria
Santiago
Santiago
Johannesburg
Johannesburg
Cape Town
Cape Town
Perth
Perth
Bunbury
Bunbury
Adelaide
Sydney
Adelaide
Geelong
Geelong
Melbourne
Mackay
Mackay
Gladstone
Gladstone
Brisbane
Brisbane
Newcastle
Sydney
Newcastle
Auckland
New Plymouth
Melbourne
Auckland
New Plymouth
Hastings
Wellington
Hastings
Wellington
Christchurch
Christchurch
Infrastructure 14
Americas
40Significant
Awards
Minerals, Metals
& Chemicals 1
Hydrocarbons 25
Australia, Pacific, Asia and China
Hydrocarbons 8
Infrastructure 5
18
Significant
Awards
Minerals, Metals
& Chemicals 5
WorleyParsons Annual Report 2017
9
Chief Executive Officer’s Review
The Future
“
We are beginning to see positive signs on the horizon as
our customers are now indicating that they are returning
to capital and operational expenditure growth. This is on
the back of increasing demand for energy and resources
while investment to meet that demand has been
declining in recent years.
“
Administration and OPEC) and oil majors currently see global
oil and gas demand peaking before 2040. Expectations are for
global oil demand to grow on average by 1.2 million barrels per
day each year to at least 2022 in all credible scenarios, including
those with aggressive growth of electric and autonomous
vehicles. Customers will continue to force very disciplined use
of their capital, and as such we expect to see it directed towards
lower cost production and upgrades to existing facilities. We
are focusing on our strategic priorities of onshore conventional
(including in Saudi Arabia), offshore, heavy oil and oil sands.
In terms of the 15 largest spending global hydrocarbons
operators, eight are key customers of WorleyParsons supported
through formal long term service agreements. During the year we
secured new enterprise framework agreements with a number
of these customers to allow us to support them globally for years
to come. We will continue to sharpen our focus on maintenance,
modifications and operations (MMO) activities and on national
oil companies that increasingly own available reserves, to
build a greater share of the international energy and resources
expenditure.
Power
The power market is experiencing rapid change and we continue
to provide thought leadership to our customers with their energy
challenges. Electricity use continues to grow on a global basis,
but demand has peaked in developed nations. In countries where
there is an abundance of gas and coal, fossil energy remains an
attractive generating source and we are capturing the full-scope
of these services, from facilitating front-end project sanction
right through to operations and maintenance. In regions such as
Asia where power demand growth is high, power from LNG is
becoming more prolific and we are seeing growing opportunities
in this area.
New energy continues to be a strategic priority for WorleyParsons
as the unstoppable trend of decarbonization challenges the
energy industry. We discuss more about what we are doing in this
sector on page 13.
Hydrocarbons
Power
Minerals & Metals
Chemicals
Infrastructure
Trends in our core markets
Energy
Hydrocarbons
Our largest sector is hydrocarbons, representing over 70% of
our aggregated revenue. The market remains attractive into the
future during a period where the global energy sector is changing
rapidly. Population growth and economic development are driving
up world energy demand while at the same time technological
advances are increasing energy efficiency, driving down costs
for a variety of technologies, and making more unconventional
energy resources economically viable. This results in rapidly
changing global trends in energy production, consumption,
and trade flows. As a result, while long term energy outlooks
differ between a number of organizations all outlooks indicate
a modest growth in oil demand, with gas growing more rapidly
than both oil and coal. There are some significant differences
among the outlooks, at both the regional and fuel level, which
reflect differences on key assumptions, such as the availability
and cost of oil and gas supplies, the speed of deployment of
new technologies, the pace of structural change in China and
the impact of energy and environmental policies. However, none
of the central scenarios from the main energy agencies (such
as the International Energy Agency, the US Energy Information
10 WorleyParsons Annual Report 2017
Resources
Minerals & Metals
Global mining expansion capital expenditure is expected to
increase in the coming years. Recovery in commodity prices, the
need to protect market share and maintain low cost production
rates are all pointing to renewed investment and spend in the
mining sector. Many of our customers are now in a strong cash
position and are expected to progress cautiously with capital
spend growth and to continue to invest in sustaining capital and
operational improvements. Improved recoveries and maintaining
their social license to operate remain the focus areas for many
producers.
The fundamentals for copper are strong with the commodity
remaining central to the world’s largest developing economies
including China and India. A supply side deficit is predicted in
the next two to four years while investment is also necessary
to replenish existing supply. We are seeing renewed spend in
exploration and Tier 1 miners are all retaining copper as part of
their core business.
It is expected the dominant iron ore producers will continue to
develop mines. The driving force for these investments by the
major players is the need to bring new ore bodies on line to
maintain low cost production rates and market share.
Global population growth and urbanization are unstoppable
trends driving the demand for mined fertilizer products. This
is being reflected in renewed study activity and a wave of
investment centered on the Middle East and North Africa.
Chemicals
The chemicals market is expanding with long term demand driven
by the unstoppable trends including urbanization, sustainability
and population growth. Geographically North America, Middle
East, South East Asia and China will be the main drivers of growth.
Demand for agrichemicals is driven by the need for food surety
and world population growth. There is a major shift in this sector
with industry consolidation resulting in significant activity across
this industry segment.
Geographically, investment hot spots move over time and this
trend is expected to continue. In recent years we have seen this
occur in America as a result of access to low cost feedstock.
The fall in oil price saw many of our customers redirect their
investments. In the Middle East there has been a move to higher
value products and activity in the region is expected to continue,
particularly in petrochemicals.
In North America high levels of investment activity remain. The
first phase of major petrochemicals assets are starting to come
on stream increasing supply of bulk feedstocks to drive successive
waves of polymer and specialty chemicals investments. A second
wave of larger petrochemicals projects are also being developed,
many with a significant foreign investment component.
Shagaya Renewable Energy Park, Kuwait. Owner’s
Engineer and Project Manager, Advisian Madrid.
Construction PMC WorleyParsons Kuwait.
Photo courtesy of the Kuwait Institute for Scientific
Research.
We have increased our presence in Europe with the
establishment of the Germany office. This brings us closer to the
many European based Chemicals customers and strengthens our
position with customers such as BASF, providing access to new
opportunities both locally and globally.
Infrastructure
The largest share of our infrastructure business continues to be
with our energy and resources customers, where we have a deep
understanding of their infrastructure needs.
With capability across all modes of transport; ports, rail,
roads and airports, our transport division understands how to
optimize transport and logistics across the entire supply chain.
Our core business focuses on ‘outside the battery limit’ energy
and resource infrastructure as well as supporting government
transport investment.
Asia-Pacific, the Belt & Road Initiative and the provision of
logistics solutions to the energy and resources sectors remain
attractive focus areas. Investment in transport infrastructure
in Asia Pacific is projected to almost double to 2025. Advisian
is experiencing growth in government-related transactional
services, supporting the development of business cases
and procurement models to attract private-partnership. Our
Middle East transport business growth continues supporting
energy and resource infrastructure expansions and the
development of economic and industrial zones throughout
UAE, Qatar, Oman and Saudi Arabia.
We are investing in nurturing and growing our China relationships
to support Belt & Road-related opportunities across all regions.
Global pressures on water resources for both domestic and
industrial uses are likely to continue into the foreseeable future.
Our water business is differentiated in servicing our traditional
customers and utilities in industrial water as customers seek the
transfer of non-core water assets off their balance sheet.
WorleyParsons Annual Report 2017 11
Chief Executive Officer’s Review
New strategic architecture
During the year we developed a new strategic architecture to allow
us to respond more dynamically to the changing world.
The architecture is a framework that integrates all the strategic
processes at WorleyParsons, describing how they interact over
the course of the financial year. It defines how they allow us
to improve our collective performance, accelerate our revenue
growth and address the dramatic change in our industry in a
systematic way.
The objective is to balance strategic thinking with a bias for action
by translating strategic conversations into real practical actions
in the field. This will create a scheduled regular set of actions
over the year for both strategic conversations and the review
of strategic initiatives. The intent is that this will increase our
ability to spot market and customer shifts early and to seize the
opportunity or take corrective action in a timely manner.
The architecture is built around the following three pillars:
1. Operational excellence ensuring that we always
maintain a viable and competitive business.
2. Grow the business in the near term by offering all
of our value to all of our customers.
3. Position the business to grow as a key player in the
new world.
We have distilled our strategy into a number of priority areas,
which will be reviewed on a regular basis as part of the cadence
of strategy review. The current priority areas are indicated
on page 13.
Pillar 1
Viable and competitive business
Pillar 2
All our value to all our customers
Pillar 3
Key player in the new world
We need every single part of our business
to pull its weight to ensure our overall
collective performance. To this end we
have adopted a more granular lens of
approximately 80 units for reviewing
performance. This will help us address
previously hidden areas of potential
underperformance.
We look to areas that are performing
below average on a range of financial
and non-financial metrics and help
them lift their performance to at least
average. As these performance metrics
are achieved new and higher level targets
are introduced. This is a much more highly
structured and disciplined approach to
unit performance than we have adopted
in the past.
Current performance = future business
The greatest way to ensure future work
is to deliver superior performance on our
existing projects. This involves ensuring
that we have the best problem solving
talent in the organization and that we
work in smarter ways to exceed our
customers’ expectations.
Pillar 2 seeks to provide an action
orientated framework for delivering all
of our value to all of our customers.
In the first half of this financial year we
brought all of our business development
under new leadership, establishing our
Global Sales and Marketing team (GSM).
We recognized the need to ensure our
customers were being offered the best
of our global capabilities at all times.
While we have been very focused on cost
control in the business we have been also
making sure that we are optimizing our
ability to win work.
As part of this shift we needed to become
much more systematic, particularly
in our bids on large bespoke projects.
We introduced our Swarm processes
to ensure we were putting our best
collective foot forward with every major
bid and to raise our win-rate.
We also introduced our Sprint programs
to take our proven offerings to known
customers who are likely to need those
offerings. This will ensure we take the best
of WorleyParsons to all our customers.
12 WorleyParsons Annual Report 2017
There are several unstoppable trends
in the world that will demand a new
approach to the use of resources and
sources of energy. Pillar 3 ensures that we
are shaping the business for the outcomes
of those trends including participating
in the emerging resources and energy
arenas, and enhancing how we work
through automation and digitization of
core processes for both WorleyParsons
and our customers. As we automate
our traditional activities, we will move
more and more toward being a solution
provider. This will require the development
of alternate commercial models beyond
tolling the man-hours that we provide to
commercial models that reward us for the
value that we bring to our customers.
We are positioning the business to be
relevant and thrive in this new world.
Strategic priorities
Horizon 3
Emerging markets
& products
New Energy
Digital
(Internal and External)
Belt & Road Initiative
Horizon 2
Growth Potential
Chemicals & Petrochemicals
(Europe)
Minerals & Metals
Power – Fossil
(Middle East, Africa and SE Asia)
Saudi Arabia
Maintenance, Modifications
and Operations (MMO)
Horizon 1
Core growth
Onshore Conventional
Offshore
Heavy Oil & Oil Sands
Investing in New Energy
The world is in transition as new technologies and business
models challenge traditional energy sectors. Whilst we expect our
core hydrocarbons markets to continue to grow, we are already
participating in this New Energy market. This includes renewable
electricity generation, new technology enablers such as battery
energy storage, and the rise of data management as a core
integration tool.
The soon-to-be-completed Shagaya Renewable Energy Project
in Kuwait includes a 50 MW Concentrated Solar Power plant with
molten salt energy storage, a 10 MW Photovoltaic Solar plant,
and a 10 MW Wind Farm. WorleyParsons and Advisian have
combined to provide overall Precinct Project Management, as
well as engineering specialists to ensure the projects meet the
demanding specification and operational performance required.
Our progress to date shows that we are perfectly placed to
leverage our deep technical expertise in the power and energy
markets to support our existing and new customers as they
embrace New Energy. We have developed centres of excellence
in Brazil, Spain, Australia and the United States which in turn
support New Energy projects across the globe.
The recently completed Lake Turkana Wind Power Project in
northern Kenya delivered 365 wind turbines with a combined
generating capacity of 300 MW. WorleyParsons provided the
complete Project Management and Owner’s Engineer services.
Advisian is a consortium partner for The Energy Storage for the
Commercial Renewable Integration Project in South Australia.
This project aims to prove that large scale battery storage can
assist with the integration of large quantities of renewable
energy into electricity markets. Advisian has provided technical
and procurement specialists, and once the project is completed
will be monitoring the asset’s performance.
Advisian also continued The New Energy Future
series of thought leadership white papers with
a detailed assessment of electric vehicles and
their impact on the energy mix.
We are expanding our efforts in New Energy as
a strategic priority for us. Investments will see
us broadening our capabilities in response to the
markets we seek to address.
The
New
Energy
Future
the global transition
WorleyParsons Annual Report 2017 13
Chief Executive Officer’s Review
Digital Enterprise
The energy and resources industries are also undergoing significant retooling as a result of digital disruption. WorleyParsons through
our Digital Enterprise is embracing this opportunity with our customers. The following are a few examples of how we are developing
and applying digital solutions for real world industry problems.
Advisian Digital Enterprise
Success of a project or operation is often compromised or made
less efficient by a lack of timely access to reliable information.
Advisian Digital Enterprise
Our digital asset offerings build fit-for purpose information
assets that reflect the physical asset in the real world laying a
foundation for a more data-centric (and efficient) operation.
WorleyParsons understands that in the future our customers will be building and operating dynamic
and intelligent digital operations that can interact and suggest ways to improve their performance.
These intelligent operations, powered by their software and hardware ecosystems will be connected
seamlessly, enabling real-time decision-making and reliable prediction opportunities.
Advisian Digital Enterprise, leveraging our domain knowledge of the engineered asset takes our
clients into the future of an advanced industry in which data and digital transformation brings energy,
resilience and economies that have already revolutionized shareholder returns in other industries
Operating assets face many external environmental factors that
impact their physical and economic performance. The challenge is
providing real-time and actionable information that cuts through
the data noise. We use advanced sensing, machine learning and
information sharing technology to collect, interpret and distribute
information to the front line, so people have the right information
at the right time to deliver better results.
WorleyParsons understands that in the future our customers will be building and operating dynamic
and intelligent digital operations that can interact and suggest ways to improve their performance.
These intelligent operations, powered by their software and hardware ecosystems will be connected
seamlessly, enabling real-time decision-making and reliable prediction opportunities.
Evolve is our proprietary asset data remediation platform; a field-
tested product that creates a reliable digital copy of critical assets
in a facility and keeps the digital and physical in-sync.
Results in Action
Success of a project or operation is often
compromised or made less efficienct by a
Advisian Digital Enterprise, leveraging our domain knowledge of the engineered asset takes our
lack of timely access to reliable information.
clients into the future of an advanced industry in which data and digital transformation brings energy,
Our digital asset offerings build fit-for-
resilience and economies that have already revolutionized shareholder returns in other industries
purpose information assets that reflect the
physical asset in the real world laying a
foundation for a more data-centric (and
efficient) operation.
For a confidential customer we collated, structured and
remidated gaps and conflicts in their asset data across multiple
systems and facilities using the Evolve platform. The project
collected and structured 32 million data attributes across
disparate data sets. 12.5 million attributes across more than
10 facilities were deemed operation critical and required
Results in Action
remediation.
Fugitive Emission Control We are currently in field testing
phase of an advanced technology configuration that can detect
leakage remotely using drones equiped with advanced sensors.
Using the sensor data our proprietary machine learning platform
then quantifies the volume and velocity of emission leak.
Confidential customers in USA and Canada are participating
in field pilot programs with the expectation that the solution
will prioritize asset repairs , minimize product loss, drastically
reduce monitoring costs and assist in meeting environmental
regulations.
Evolve is our proprietary asset data
remediation platform; a field-tested
product that creates a reliable digital copy
of critical assets in a facility and keeps the
digital and physical in-sync.
For a confidential customer we collated, structured and
remidated gaps and conflicts in their asset data across multiple
systems and facilities using the Evolve platform. The project
collected and structured 32 million data attributes across
disparate data sets. 12.5 Million attributes across 10+ facilities
were deemed operation critical and required remediation.
After our data science algortihm rectified the data integrity
issues, the data was transfered back to 1000+ personnel
restoring confidence in the information they use every day.
Eliminating costly manual data processes, reduced
maintainence spend, identifying redundant spare equipment
were some of the operating cost reductions the customer
realized which returned a program payback of months.
For a confidential customer we collated, structured and
SaltGrid HSE combines powerful data analytics with automation
remidated gaps and conflicts in their asset data across multiple
systems and facilities using the Evolve platform. The project
concepts of artificial intelligence and machine learning. Deploying
collected and structured 32 million data attributes across
this new platform allows an organization to break new ground
disparate data sets. 12.5 Million attributes across 10+ facilities
by moving away from HSE data analysis as a means of reporting
were deemed operation critical and required remediation.
past events towards creating a meaningful and granular forecast
After our data science algortihm rectified the data integrity
about future state risks so that those safety risks can be targeted
issues, the data was transfered back to 1000+ personnel
and mitigated in a focused way.
restoring confidence in the information they use every day.
Eliminating costly manual data processes, reduced
maintainence spend, identifying redundant spare equipment
were some of the operating cost reductions the customer
realized which returned a program payback of months.
In partnership with leading platform developers, we are seeing the
transformational effects e-commerce platforms can achieve in the
enterprise world by connecting buyers and sellers together without
the need of intermediaries or undue process.
Requis represents a paradigm shift in for industrial projects and
operations where equipment inventory is always in imbalance.•
Equipment Surplus is capital inefficient as cash remains stuck in
redundant physical assets and deficits are an operational risk so speed
to market mechanism at competitive pricing is critical. Requis brings
buyers and sellers together on a global online industrial equipment
and material marketplace . At the end of a construction job, a major
IOC customer of WorleyParsons had a range of surplus equipment in
their inventory. Using Requis to divest the surplus, the operator
achieved 10x expected value with little to no downside risk.
After our data science algortihm rectified the data integrity
issues, the data was transfered back to over 1000 personnel
Success of a project or operation is often
compromised or made less efficienct by a
restoring confidence in the information they use every day.
lack of timely access to reliable information.
Eliminating costly manual data processes, reduced maintainence
Our digital asset offerings build fit-for-
spend, identifying redundant spare equipment were some of the
purpose information assets that reflect the
operating cost reductions the customer realized which returned a
physical asset in the real world laying a
foundation for a more data-centric (and
program payback of months.
efficient) operation.
In partnership with leading platform developers, we are seeing
the transformational effects e-commerce platforms can achieve
Evolve is our proprietary asset data
remediation platform; a field-tested
in the enterprise world by connecting buyers and sellers together
product that creates a reliable digital copy
without the need of intermediaries or undue process.
of critical assets in a facility and keeps the
Requis represents a paradigm shift for industrial projects and
digital and physical in-sync.
operations where equipment inventory is always in imbalance.
Equipment surplus is capital inefficient as cash remains stuck in
redundant physical assets and deficits are an operational risk.
Requis brings buyers and sellers together on a global online
In partnership with leading platform developers, we are seeing the
transformational effects e-commerce platforms can achieve in the
industrial equipment and material marketplace. At the end of a
enterprise world by connecting buyers and sellers together without
construction job, a major IOC customer of WorleyParsons had a
the need of intermediaries or undue process.
range of surplus equipment in their inventory. Using Requis to
Requis represents a paradigm shift in for industrial projects and
divest the surplus, the operator achieved 10 times expected value.
operations where equipment inventory is always in imbalance.•
Equipment Surplus is capital inefficient as cash remains stuck in
redundant physical assets and deficits are an operational risk so speed
to market mechanism at competitive pricing is critical. Requis brings
buyers and sellers together on a global online industrial equipment
and material marketplace . At the end of a construction job, a major
IOC customer of WorleyParsons had a range of surplus equipment in
their inventory. Using Requis to divest the surplus, the operator
achieved 10x expected value with little to no downside risk.
Advisian Digital Enterprise
WorleyParsons understands that in the future our customers will be building and operating dynamic
and intelligent digital operations that can interact and suggest ways to improve their performance.
These intelligent operations, powered by their software and hardware ecosystems will be connected
seamlessly, enabling real-time decision-making and reliable prediction opportunities.
Operating assets face many external environmental factors that impacts its physical and economic performance. The challenge is providing real-time
and actionable information that cuts through the data noise. We use advanced sensing, machine learning and information sharing technology to
collect, interpret and distribute information to the front line, so people have the right information at the right time to deliver better results.
Fugitive Emission Control We are currently in
Advisian Digital Enterprise, leveraging our domain knowledge of the engineered asset takes our
clients into the future of an advanced industry in which data and digital transformation brings energy,
field testing phase of cutting-edge technology
resilience and economies that have already revolutionized shareholder returns in other industries
configuration that can detect leakage remotely
using drones equiped with advanced sensors.
Using the sensor data our proprietary machine
learning platform then quantifies the volume and
velocity of emission leak. Confidential customers in
USA and Canada are participating in field pilot
programs with the expectation that the solution
will prioritize asset repairs , minimize product loss,
drastically reduce monitoring costs and adhere to
environmental regulations.
Operating assets face many external environmental factors that impacts its physical and economic performance. The challenge is providing real-time
and actionable information that cuts through the data noise. We use advanced sensing, machine learning and information sharing technology to
collect, interpret and distribute information to the front line, so people have the right information at the right time to deliver better results.
For a confidential customer we collated, structured and
remidated gaps and conflicts in their asset data across multiple
systems and facilities using the Evolve platform. The project
collected and structured 32 million data attributes across
disparate data sets. 12.5 Million attributes across 10+ facilities
were deemed operation critical and required remediation.
Success of a project or operation is often
compromised or made less efficienct by a
lack of timely access to reliable information.
Our digital asset offerings build fit-for-
purpose information assets that reflect the
physical asset in the real world laying a
foundation for a more data-centric (and
efficient) operation.
Results in Action
After our data science algortihm rectified the data integrity
issues, the data was transfered back to 1000+ personnel
restoring confidence in the information they use every day.
Eliminating costly manual data processes, reduced
maintainence spend, identifying redundant spare equipment
were some of the operating cost reductions the customer
realized which returned a program payback of months.
Evolve is our proprietary asset data
remediation platform; a field-tested
product that creates a reliable digital copy
of critical assets in a facility and keeps the
digital and physical in-sync.
SaltGrid HSE combines powerful data
analytics with automation concepts of
artificial intelligence and machine learning.
Deploying this new platform allows an
organization to break new ground by
moving away from HSE data analysis as a
means of reporting past events towards
creating a meaningful and granular forecast
about future state risks so that those safety
risks can be targeted and mitigated in a
focused way.
WorleyParsons Annual Report 2016 16
14 WorleyParsons Annual Report 2017
Fugitive Emission Control We are currently in
field testing phase of cutting-edge technology
configuration that can detect leakage remotely
using drones equiped with advanced sensors.
Using the sensor data our proprietary machine
In partnership with leading platform developers, we are seeing the
transformational effects e-commerce platforms can achieve in the
enterprise world by connecting buyers and sellers together without
the need of intermediaries or undue process.
learning platform then quantifies the volume and
velocity of emission leak. Confidential customers in
USA and Canada are participating in field pilot
programs with the expectation that the solution
will prioritize asset repairs , minimize product loss,
drastically reduce monitoring costs and adhere to
Requis represents a paradigm shift in for industrial projects and
operations where equipment inventory is always in imbalance.•
Equipment Surplus is capital inefficient as cash remains stuck in
redundant physical assets and deficits are an operational risk so speed
to market mechanism at competitive pricing is critical. Requis brings
buyers and sellers together on a global online industrial equipment
and material marketplace . At the end of a construction job, a major
IOC customer of WorleyParsons had a range of surplus equipment in
their inventory. Using Requis to divest the surplus, the operator
achieved 10x expected value with little to no downside risk.
environmental regulations.
SaltGrid HSE combines powerful data
analytics with automation concepts of
artificial intelligence and machine learning.
Deploying this new platform allows an
organization to break new ground by
moving away from HSE data analysis as a
means of reporting past events towards
creating a meaningful and granular forecast
about future state risks so that those safety
risks can be targeted and mitigated in a
focused way.
Operating assets face many external environmental factors that impacts its physical and economic performance. The challenge is providing real-time
and actionable information that cuts through the data noise. We use advanced sensing, machine learning and information sharing technology to
collect, interpret and distribute information to the front line, so people have the right information at the right time to deliver better results.
WorleyParsons Annual Report 2016 16
Fugitive Emission Control We are currently in
field testing phase of cutting-edge technology
configuration that can detect leakage remotely
using drones equiped with advanced sensors.
Using the sensor data our proprietary machine
learning platform then quantifies the volume and
velocity of emission leak. Confidential customers in
USA and Canada are participating in field pilot
programs with the expectation that the solution
will prioritize asset repairs , minimize product loss,
drastically reduce monitoring costs and adhere to
environmental regulations.
SaltGrid HSE combines powerful data
analytics with automation concepts of
artificial intelligence and machine learning.
Deploying this new platform allows an
organization to break new ground by
moving away from HSE data analysis as a
means of reporting past events towards
creating a meaningful and granular forecast
about future state risks so that those safety
risks can be targeted and mitigated in a
focused way.
WorleyParsons Annual Report 2016 16
CHIEF EXECUTIVE OFFICER’S REVIEW Group Leadership Team
The Group Leadership Team is the senior leadership
team for WorleyParsons. It comprises the leaders of our
business lines (Advisian, Major Projects, Integrated
Solutions and Services in the US West and Latin America,
Canada and US East, APAC, Europe and Middle East and
Africa regions), of Finance and People and Assurance.
The Group Leadership Team advises the Chief Executive
Officer with regard to the effective and efficient
functioning of the global business of WorleyParsons.
Our business lines
Full asset lifecycle
Advisian
Major Projects
Integrated Solutions
Services
Australia Pacific
Asia China
Middle East &
Africa
Europe
US West &
Latin America
Canada &
US East
Andrew Wood
Chief Executive
Officer
Tom Honan
Group Managing
Director Finance/
CFO
Dennis Finn
Group Managing
Director & CEO,
Advisian
Neil Robertson
Regional Managing
Director - Services,
US West and Latin
America
Denis Lucey
Regional Managing
Director – Services,
APAC
Alan Gordon
Regional Managing
Director - Services,
Europe
Marian McLean
Group Managing
Director - People and
Assurance
Nuala O’Leary
Group Company
Secretary
Chris Ashton
Group Managing
Director - Major
Projects and
Integrated Solutions
Krishnaswamy
(Krish) Iyer
Regional Managing
Director - Services,
Middle East and
Africa
Karen Sobel
Regional Managing
Director - Services,
Canada and US East
Detailed information on the Group Leadership Team can be found on the website
www.worleyparsons.com/investorrelations/pagesexecutivecommittee.aspx
WorleyParsons Annual Report 2017 15
Chief Executive Officer’s Review
“
Our challenge moving
forward is to leverage
growth in market activity
while ensuring key
overhead areas remain
right sized.
“
Meeting the challenges ahead
Our challenge moving forward is to leverage growth in market
activity while ensuring key overhead areas remain right sized.
To meet this challenge, we have focused business development
on priority areas, implemented flexible work models, optimized
our property portfolio, simplified and standardized IT,
introduced a regional pooled resources model and a streamlined
management structure.
These are significant changes, some structural, some process,
involving the whole organization. We will ensure that these
changes are sustained within the business.
Conclusion
In summary, we are a much leaner and more agile business that
is able to take advantage of the current market conditions. We
have reshaped our business to maximize opportunities as they
arise while at the same time ensuring we can translate those
opportunities into solid margins and returns.
I would like to acknowledge the extraordinary efforts of all our
people who have worked through a very difficult period to reach
the point at which we are today. We still have a lot more to do
but I believe we are in a better position to be able to execute our
strategies and harness the opportunities that are before us.
We could not have achieved all that we have without significant
sacrifice and commitment of all of our people. I thank all of them
for their support.
To our shareholders, I would like to thank you for your patience
as we have managed our way through very difficult market
conditions and I look forward to successfully leading your
Company through the next phase of our growth.
Andrew Wood
Chief Executive Officer
16 WorleyParsons Annual Report 2017
Corporate Responsibility
The Group aims to be recognized as an industry leader in
corporate responsibility and to this end is committed to
continuous improvement.
The Group continues to maintain its strong commitment to
corporate responsibility despite the difficult conditions in our
operating environment and the changes to our employee base.
Contributions to developing our local communities via local
employment and enterprise development are providing support to
our aims of long term sustainability. The willingness of our
personnel to volunteer their time and make donations in support of
their local corporate responsibility activities is a key driver to the
success of our corporate responsibility achievements for the
financial year ended 30 June 2017 (FY2017).
The target set for greenhouse gas emissions for FY2016 was
achieved and we have seen progress towards gender diversity
with the FY2020 measurable objective for woman senior
executives met in FY2017.
For FY2017, we saw a decline in volunteering hours, contributions
by operations and personnel members in line with the reduction in
our people numbers and challenging trading conditions.
The Group’s commitment to our people remains strong with
significant investments in our online and instructor led training, the
WorleyParsons Academy and other innovative ways to engage
work between locations. We remain staunch in our support of
diversity including indigenous participation and human rights with
a number of key initiatives supporting gender equality.
The WorleyParsons Foundation continues to grow, supporting an
even more diverse range of activities and projects across the globe,
providing the Group with larger scale opportunities to deliver
tangible positive outcomes and enhance the Group’s social impact.
“We are a partner in delivering sustained economic and social progress,
creating opportunities for individuals, companies and communities to
find and realize their own futures.”
- WorleyParsons Purpose Statement
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.
21 newly recruited female engineers in WorleyParsons Saudi Arabia.
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
employees for their personal contribution in activities that help
promote our key corporate responsibility themes.
The Foundation Awards are now entering their fifth year.
In FY2017, awards were given to 373 individuals responsible
for 153 outstanding corporate responsibility activities
across 21 countries.
The Foundation continues to grow with nine projects granted
funding in FY2017:
• expanding accommodation at Jeevadaan HIV/AIDS housing
shelter for abandoned women and children, India;
• supporting water and sanitation workshops with the Centre
of Affordable Waste and Sanitation Technology, Colombia;
• collaborating with the Red Cross for disaster recovery and
sanitation projects, the Philippines;
• sponsoring 15 WorleyParsons’ employees to attend the
Pollinate Energy Fellowship Program, India;
• contributing towards mine clearing activities with the Mines
Advisory Group (MAG), Angola;
• supporting the Cystic Fibrosis Foundation via the 20th Annual
Breath of Life Golf Tournament, Houston;
• developing and growing local and indigenous businesses in
our Enterprise Development Program, South Africa;
• supporting STEM engagement in high schools through
Power of Engineering across Australia and other
selected offices; and
• partnering with World Vision and Asia P3 Hub to improve
sanitation, Papua New Guinea.
A further two projects continued to progress during FY2017:
• selection and provision of Kangaroo Mother Care support
chairs for the National Hospital, Timor Leste; and
• installation of water facilities and solar power and
refurbishment of school facilities across a number of
villages, India.
WorleyParsons Annual Report 2017 17
CORPORATE RESPONSIBILITY
Milestones
In FY2017, the Group reached a number of corporate
responsibility milestones, including:
• making significant investment in the training and
development of our employees with the launch of our
revamped WorleyParsons Academy and a campus opening in
Saudi Arabia;
• delivering non-financial performance commitments,
exceeding our environmental emissions targets and
measurable objective for women senior executives;
• continuing as a member of the Dow Jones Sustainability Index
and participating in the Corporate Sustainability Assessment
for the second time;
• developing our own set of social impact key performance
indicators aligned to the UN Sustainable Development Goals;
• continuing to be a leader for championing human rights
and gender equality (through our Women of WorleyParsons)
globally with some significant highlights in the
Middle East and India;
• further expanding the WorleyParsons Foundation by
• launching a Women of WorleyParsons chapter in Saudi
supporting the largest number of community partners since
launching the Foundation;
• extending our strategic partnerships and collaborations for
skilled volunteering opportunities for our people by being a
key founder of the first community of practice for pro bono
engineering in Australia;
• fulfilling the Group’s fifth year obligations as a signatory to
the United Nations (UN) 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;
Arabia;
• supporting local content and indigenous minorities through
enterprise development in the supply chain, education support
and home nation employment initiatives globally; and
• since tracking our corporate responsibility contributions in
2012, our operations and people have now contributed:
• by operations: about $13 million for corporate
responsibility themed initiatives;
• by our people: an additional $9 million for corporate
responsibility themed initiatives; and
• by our people: over 115,000 volunteering hours.
Activity highlights
In addition to supporting our customers on their sustainability
programs through our project delivery and consulting services,
the Group undertook various corporate responsibility activities
across our operations in FY2017, including:
• participating directly in and reporting over 350 corporate
responsibility activities across 22 countries, involving over
6,800 Group personnel;
• supporting local communities through the network of
corporate responsibility champions across 65 offices as
well as ongoing participation in the Group’s own programs:
DeltaAfrik Foundation in Nigeria and UnitedWay program
in North America;
• launching a tool to quickly and easily connect volunteering
opportunities with our employees;
• reducing carbon emissions across a number of offices
through office consolidation, LED lighting replacement,
behavioral change programs, encouraging the use of public
transport, flexible work options from home, recycling and
smart printing;
• demonstrating responsible attitudes to water and sanitation
including a recognized stewardship program in Singapore and
rainwater recycling in South Africa;
• participating in and contributing to various workshops and
forums on diversity, anti-corruption, indigenous issues,
ethical supply chain and human rights issues; and
• supporting local employment and enterprise
development initiatives.
Diversity and inclusion highlights
The Group undertook various diversity and inclusion activities in
FY2017, including:
• continuing to implement the Diversity and Inclusion
Expectations and support for locations to achieve visible
traction for local priorities with a leadership statement
and videos;
• continuing the global Diversity and Inclusion Working Group
champion forums to provide guidance and support for
diversity and inclusion initiatives and promote engagement
with local networks;
• developing and maintaining an internal diversity scorecard to
monitor and review progress across the expectations for
discussion and action by leaders;
• cascading delivery of ‘Check Yourself, Bias Awareness’
workshops and developing diversity-related training for
WorleyParsons Academy informal discussions targeted at
middle management across a number of offices;
• launching a global ‘Be Bold for Change’ campaign for
International Women’s Day 2017, which engaged 890 of our
people across 20 countries and 40 locations;
• addressing gender pay gaps through annual pay reviews and
conducting analysis of global gender pay gaps;
• supporting diversity and Women of WorleyParsons
networks across 20 regions, prompting local activities and
progress; and
• offering, in the context of UN World Day for Cultural Diversity
practical training to all employees and managers via
‘CultureWizard’, providing feedback across cultural contexts.
18 WorleyParsons Annual Report 2017
CHIEF EXECUTIVE OFFICER’S REVIEW Corporate responsibility indicators
Contributions by Group personnel and the 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 FY2017 were:
Indicators1
2017
2016
2012-2017
The Board has set measurable objectives for achieving gender
diversity. FY2017 shows encouraging progress, and the Group is
focused on improving our female representation with the
proportion of women employees within the Group, women in
senior executive positions and women non-executive directors,
to achieve our target. The Group’s progress over time is included
in the 2017 Corporate Governance Statement and progress
towards achieving the objectives in FY2017 is set out in the
table below:
MEASURES
OBJECTIVES
2017
2016
Contributions by operations2
$1.00 million
$1.72 million
$12.98 million
Women employees1
Increase the proportion of women
~21%
~23%
Contributions by personnel2
$0.69 million $0.85 million $8.73 million
employees to 30% by 2020
Volunteer hours by personnel
14,728 hours 26,257 hours 115,378 hours
Women senior
Increase the proportion of women
~26%
~22%
(community/internal)2
executives2
senior executives to 25% by 2020
TRCFR
LWCFR
0.08
0.02
0.07
0.03
n/a
n/a
Online training hours
18,354 hours 19,968 hours n/a
1 Definitions and clarifications, refer: http://www.worleyparsons.com/
InvestorRelations/corporateresponsibility/Documents/CRDefinitions.pdf
2 For corporate responsibility activities. Personnel include employees and
contractors.
The Group completed a response for the Carbon Disclosure
Project (CDP) for FY2016 which was reported in June 2017. 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 FY2016.
We are aware of the growing expectations for climate related
financial disclosures as a result of the Paris Climate Agreement.
We will work with industry, including our customers, to collectively
develop clarity on reporting disclosure. We will progress our Global
Energy Efficiency Program as well as supporting our customers to
adopt diverse and sustainable energy futures.
Our energy target for FY2016 was set at 2.5% reduction of total
carbon dioxide equivalents (tCO2-e) against base year FY2014.
In FY2016, a reduction of 31% was achieved well above the two
year target. Business downsizing and subsequent consolidation
of office area have contributed to this reduction.
The Group is now deregistered under the Australian National
Greenhouse and Energy Reporting Act 2007 as the corporate
threshold was not exceeded in FY2016 due to the sale of
Exmouth Power Station in July 2015.
Data for greenhouse gas emissions and energy consumption for
FY2015 and FY2016 were:
2016
2015
Indicators
Per personnel
Total Per personnel
Total
Greenhouse gas
emissions tCO2-e
2.35
57,534
2.68
84,091
Energy consumption
2.33
57,089
7.84
246,043
MWh
Women non-
Increase the number of women
2
2
executive directors
non-executive directors to 3 by 2020
1 This includes both the Group’s employees and contractors.
2 Senior executives comprise all employees and contractors at the CEO-1, CEO-2,
CEO-3 levels.
Broader measures for diversity are also tracked internally, with
improved diversity in leadership teams, with 44% of the senior
executive group (Group Leadership Team and those reporting to
a Group Leadership Team member) having at least one diversity
flag for age, culture or gender diversity.
Corporate responsibility materiality assessment
A corporate responsibility materiality assessment was conducted
to prioritize current economic, social and environmental issues
that are most important to our business and stakeholders (our
people, customers and investors).
Further information on our corporate responsibility materiality
assessment and the associated materiality matrix is included in
the 2016 and 2017 Corporate Responsibility Performance Report.
Assurance
Independent assurance supports our commitment to
transparency and accountability. To provide confidence to our
stakeholders in our reporting, Ernst & Young provided limited
assurance, in accordance with the ISAE 3000 standard, over
selected corporate responsibility performance data in our
2015 Annual Report.
We continued to apply these reporting processes in the 2017
Annual Report. Access the assurance statement at http://www.
worleyparsons.com/InvestorRelations/corporateresponsibility/
Documents/FY15AssuranceStatement.pdf
Corporate Responsibility Performance Report
A more comprehensive analysis of our corporate responsibly
program and progress made is shared in the Corporate Respon-
sibility Performance Report. The Report is published annually
via the Company website: http://www.worleyparsons.com/
InvestorRelations/Pages/CorporateGovernance.aspx and the
Annual Report microsite for corporate responsibility reporting
http://annualreport2017.worleyparsons.com/
corporate-responsibility/
WorleyParsons Annual Report 2017 19
CORPORATE RESPONSIBILITY
Awards
20 WorleyParsons Annual Report 2017
WorleyParsons retained the status of a National Community Partner with Australian Red Cross. This
collaboration 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
among our peers in large scale pro bono services, focusing on disaster recovery.
WorleyParsons was recognized as the third most attractive company in our sector and Australia's 24th
most attractive employer at this year's 2017 Randstad Awards. Out of the 150 of Australia's largest
companies surveyed, WorleyParsons was also one of the leading contenders for offering stimulating
and challenging work.
WorleyParsons was awarded with the 2016 United Way Campaign - Outstanding Workplace Campaign
Award for the Engineering Sector. For this award, we were recognized for our strong management
support, increase in employee involvement, and taking fresh and innovative approaches to our United
Way campaign. Through joint collaboration in supporting the local community, our Calgary and Edmonton
offices collectively raised over $300,000 for local agencies and programs.
WorleyParsons Canada received a Supplier Recognition Award for its work on ConocoPhillips’ Surmont
SAGD project in the Fort McMurray oil sands. “WorleyParsons consistently challenged the status quo,
ultimately delivering a fit-for-purpose design well below the targeted cost,” ConocoPhillips said in a
statement. “Their full integration into the project team supported open communication and transparency
throughout the project, reducing review cycles and encouraging collaborative decision making.
WorleyParsons United Arab Emirates (UAE) won an award at the 2016 ADMA-OPCO & ZADCO HSE
Awards Ceremony. The annual award ceremony recognizes teams that have been most successful in
setting new standards of excellence in the areas of occupational health, safety, environment &
sustainability and energy. The efforts of an integrated ADMA-OPCO and WorleyParsons team were
recognized for identifying and rectifying the process safety-related performance issues of the existing
Knock-Out Drum on the Habshan Platform within the Umm Shaif Super Complex. The successful
outcome was largely due to the collaborative efforts of the WorleyParsons Advanced Analysis Group in
Perth and the WorleyParsons Abu Dhabi project team.
At the Offshore Technology Conference, Exploration and Production magazine awarded WorleyParsons
INTECSEA a 2017 Special Meritorious Award for Engineering Innovation in the category of floating
systems and rigs. The award was for our industry leading innovation in low-motion floating production
storage and offloading.
The Superior Technical Achievement Recognition (STAR) Award recognizes the personal contributions of
Fiatech members who have given immensely of their own time and energy to help Fiatech achieve its
vision. At the 2017 Fiatech Technology Conference & Showcase, Advisian Digital Enterprise’s Jim Purvis
was awarded the STAR Award for his effort over the past year, helping Fiatech merge with its parent
organization the Construction Industry Institute.
WorleyParsons Canada was named in the Forbes top 100 employers in Canada for 2017. 8,000
employees of Canada's largest employers were surveyed anonymously to determine the rankings.
WorleyParsons was also in the top 5 within its industry, representing yet further evidence of our
commitment and support to our people.
Abu Dhabi Blood Bank organized a ceremony honoring their valuable donors, leading establishments and
companies on 14 June 2017, World Blood Donor Day. Abu Dhabi Blood Bank acknowledged the efforts of
WorleyParsons and during the ceremony WorleyParsons received an award from the blood bank.
Case studies
The WorleyParsons Foundation Supports the Pollinate Energy Fellowship Program, India
Many of our people want to make a social impact. Opportunities for skilled volunteering have been made
available with Pollinate Energy, a not-for-profit social business which through its network of micro-
distributors, supplies solar powered home lighting systems to India’s poor living without electricity. The
aim of the Pollinate Energy Fellowship is to bring fantastic professionals with diverse skill-sets, ideas and
perspectives together to resolve challenging hurdles. The program runs in India, delivering sustainable
micro-financed renewable energy solutions.
A significant number of applications were received from our passionate volunteers across 20 countries of
operation, in a competitive selection process where 15 have been selected. The successful candidates
have shared their journeys via their photo blogs on our internal communications channels contributing to
broader employee engagement.
Powering Kenya’s Future with Africa’s Premier Wind Power Project, Kenya
WorleyParsons was contracted by the Lake Turkana Wind Power (LTWP) consortium to provide overall
project management, engineering review and construction management services for the LTWP project,
which will be the largest wind farm in Africa, and in the world, when completed. When operating at full
capacity, LTWP will add 310 MW of renewable generation capacity to Kenya’s grid. This output from the
wind farm will be enough to power more than 1 million Kenyan households.
As part of the Company’s localization philosophy, 43% of the 33-strong team is from WorleyParsons’
South African office, 33% from the Nairobi office, and the balance of 24% comprises the support staff
from Kenya. WorleyParsons contribution to this project made a difference to the lives of Kenyans
and specifically local tribes. We had a strong focus on localization and social upliftment to ensure
that the surrounding communities benefitted from this project, and placed particular emphasis on
health and safety awareness as most of the local workforce has not been exposed to any health
and safety practices.
Saving Lipuko Beach, Papua New Guinea
A WorleyParsons’ customer was undertaking several community obligation projects at Lihir,
Papua New Guinea. One such project was to seal a road between two villages located near their
site operations on the island.
WorleyParsons’ site team reconsidered the initial (typical) design for corrosion prevention along the
coastline on a section of the road and brainstormed a better solution, utilizing concrete and expired mine
truck tyres. In further consultation with the local villagers, they also realigned the road in another section
to recover access to an historical cemetery that had become inaccessible under the old road.
WorleyParsons fellows in Lucknow.
WorleyParsons’ project management team is an
integrated team, with international project leaders
and local professional personnel from Kenya.
What appeared to be a picturesque Papua New Guinea coastline disappearing to erosion is now an area
to be enjoyed by the local community.
Lipuko Beach after expired mine truck tyres were
used to protect the coastline from erosion.
Women of WorleyParsons Launches, Saudi Arabia
Women of WorleyParsons (WoW) is a global network that brings together men and women to focus on
locally defined opportunities to support and inspire women to advance their careers. The Al Khobar office
in Saudi Arabia is a recent addition to WoW with participation of over 65 females. An inaugural event was
held to coincide with International Women’s Day 2017 and featured a learning session with a
presentation by one of Saudi Aramco’s senior female executives, who shared knowledge and expertise to
empower and inspire local females who pursue professional development and advance in their careers.
“The thing we most enjoyed as we celebrated International Women’s Day 2017 WorleyParsons Saudi Arabia,
was to see a room full of positive vibes and overwhelming energy which I never thought we would have. As they
say, some leaders are born women.” Sarah Alsubaie, Al Khobar office, Saudi Arabia.
Women of WorleyParsons in Al Khobar
celebrating International Women’s Day 2017.
WorleyParsons Invites Saudi Customer to Host a Cultural Awareness Day, USA
To celebrate ethnic diversity, the WorleyParsons Los Angeles office implemented cultural awareness
days. The events are planned by WorleyParsons and their customers were invited. One customer, Saudi
Aramco, showed so much interest that they hosted a cultural awareness day. They provided home
cooked Arabian dishes and a coffee bar, and gave a presentation about their culture as well as
demonstrations. Over 300 people attended with significant increases in relationship building and
comradery between WorleyParsons and their customer. Further cultural awareness days are planned
with a focus on The Philippines and Armenia.
Saudi nationals from Saudi Aramco describing
their culture and country to engaged attendees.
WorleyParsons Annual Report 2017 21
CORPORATE RESPONSIBILITY
Case studies
WorleyParsons Upped the Game for People with Disabilities for Casual Day, South Africa
Casual Day, South Africa’s foremost fundraising campaign for persons with disabilities, is the flagship project of
the National Council of Persons with Physical Disabilities. Led by the Graduate Development Organization in
South Africa, local employees made a difference this year for Casual Day.
Our Shondoni project team made a difference in 2015 with a similar initiative, raising funds that enabled them
to buy two wheelchairs and upgrade a computer lab for the Merietjie Special School in Secunda. This year, the
team identified Basizeni Special School as the recipient for this year’s donations.Basizeni Special School is
situated in a small township called Embalenhle, near where the Sasol Shondoni mine project is being executed.
“The visit was warm, emotional and a wonderful experience for all of us, we had a chance to interact with the
educator’s students and to attend classes with the ever smiling and welcoming learners,” commented Candice Mack
after the visit.
Fundraisers from the WorleyParsons RSA GDO.
Global Diversity Campaign for International Women’s Day 2017
A global campaign was held for International Women’s Day 2017 inviting our people to participate in a
local challenge to ‘Be Bold for Change’. Participants were invited to submit a photo of their local challenges
and initiatives. The competition attracted a large response of inspiring and powerful photos from 28 locations.
Initiatives included yoga challenges, panel discussions, walking and fitness challenges, diversity and inclusion
themed events, raising of funds for local causes and other team activities. Over 3,000 people in our organization
shared their support for this campaign via internal newsfeed. Our CEO, Andrew Wood, participated in a local
fitness challenge in our Beijing office.
“WorleyParsons Dubai celebrated International Women’s Day 2017 by getting the whole office together for a
fun and challenging diversity and inclusion themed quiz and some team activities. We learned a bit more about
each other and that championing diversity is everyone’s responsibility.” Nicola O’Hara, Dubai office,
United Arab Emirates.
Volunteers Upgrade Kids’ Outdoor Facilities for United Way Day of Caring, Canada
The Engineering Challenge Day of Caring was created 11 years ago by three of Edmonton’s largest engineering
firms: Colt Engineering (now WorleyParsons), CoSyn Technology and Stantec. Over the period, this annual event
has grown to include participation from more than a dozen Edmonton engineering firms.
This year, 17 engineering firms and 52 staff volunteers came together to fix up the outdoor facilities at KARA,
which is a not-for-profit that provides parents the opportunity to learn and interact with their pre-school
children. The United Way is a core funder of KARA’s programs.
In addition to replacing the grass with artificial turf, the team built a reading corner complete with a chalkboard
affixed to the fence, a child-sized market/theatre playhouse, a bench and an awning shelter for the staff. It was
a very ambitious project to take on in one day.
CEO, Andrew Wood participating in
Beijing’s International Women’s Day
Be Bold for Change challenge.
“We hit a few snags right off the bat, starting with the supplies being delivered late to the site,” Heather Toepfer, Lead
Mechanical Engineer stated. “We had a few scope changes along the way which also set us back.” As a result, the
day extended into several, but the end result was well worth the hard work.
Volunteers from WorleyParsons Edmonton office
utilizing tools provided by WorleyParsonsCord.
Recognition from Global Industry Bodies for HSE Success by the DeltaAfrik Joint Venture, Nigeria
The WorleyParsons and DeltaAfrik joint venture (JV) in Nigeria has produced a strong HSE performance,
receiving international recognition. The American Society of Safety Engineers (ASSE) presented the outstanding
service award to DeltaAfrik’s Principal HSE Engineer, Kamildeen Abiodun, at the ASSE global professional
development conference ‘Safety 2016’ held in Atlanta, USA.
The Nigeria Safety Award for Excellence, Hall of Fame (known as the NaijaSAFE Awards) is Nigeria’s first-ever
independent award that recognizes outstanding HSE initiatives and is endorsed by several large global industry
bodies such as the World Safety Organization and ASSE. This year, Agharese Lucia Ojelede, Project HSE
Manager and Niyi Oladimeji, HSE Manager once again put DeltaAfrik on the honor list at the Naija Safe Awards.
DeltaAfrik was one of the two joint winners of the Chairman’s HSE Award for the Bay Atlantic project’s
achievement of 2.3 million hours without a recordable incident.
DeltaAfrik JV Team Award winners.
22 WorleyParsons Annual Report 2017
OPERATING AND FINANCIAL REVIEW
Operating and Financial Review
1. OPERATIONS
1.1 OVERVIEW
WorleyParsons is a professional services provider to the resources
and energy sectors. We operate in four business lines of Advisian,
Major Projects, Integrated Solutions and Services. Major Projects
and Integrated Solutions have been combined into a single segment
providing coverage of all construction and fabrication yard activity,
easy access to Global Delivery Center resources and a shared
management team in one group. This strengthens our capability
and reputation in integrated EPC with the aim of extending this
offering to existing and new customers.
As a result, during the financial year ended 30 June 2017 (FY2017),
we reported along three segments of Advisian, Major Projects and
Integrated Solutions, and Services and three customer sectors, each
of which is 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.
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. We offer a range
of services from small studies to the delivery of mega projects.
The diversity of our business in terms of geography, industry and
service offering is a fundamental strength. We operate in 42
countries, with no country individually representing more than
21% 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 position of the Group and
include this revenue within aggregated revenue.
Costs: Our two largest costs are: staff costs, and administration
costs, which include office lease costs. We also have a
significant amount of pass-through costs reimbursed by our
customers.
Assets and liabilities: The significant items on our balance sheet
are mainly project related, such as trade receivables, unbilled
contract revenue, provisions and borrowings. We also hold a
number of intangible assets generated through previous
acquisitions. Our business is not capital intensive. Our customers
pay us at longer intervals than our payments of expenses (e.g. staff
salaries). This time differential, along with the time from incurring
the costs, to invoicing the customer, makes up the majority of our
working capital requirements.
1.3 REVIEW OF OPERATIONS
The statutory result for FY2017 was a net profit after tax (NPAT) of
$33.5 million, compared with $23.5 million in FY2016. Underlying
NPAT1 was $123.2 million for FY2017, down 19.5% on the previous
corresponding period.
Aggregated revenue declined by 23.6%, against a backdrop of
ongoing declines in market activity. Sustained low commodity
prices and the fall in oil prices have resulted in our customers
continuing to reduce capital and operating expenditure. The decline
in revenue was arrested during the year, with revenue growing
2.1% from the first half to second half.
Aggregated revenue declined across all of our business lines,
geographies and customer sectors.
We have been taking action since 2013 to reshape and resize the
business to align it with market activity and customer operating
preferences. During FY2017, generally subdued commodity prices
across the energy and resources sectors resulted in a further
contraction of our customers’ capital and operating expenditure,
project cancellations and deferrals. However, this contraction
showed signs of abatement during the year, with indications that
customer activity has now bottomed out. In FY2016 we
commenced the Realize our Future transformation program to
deliver on our objectives to improve our financial performance by
delivering $300 million in overhead savings and $300 million
reduction in net debt. We have exceeded our initial expectations in
cost out, with $500 million of sustainable savings implemented.
The actions taken in FY2017 resulted in the recognition of a series of
charges related to redundancy, onerous leases, onerous contracts
and other restructuring costs in the statutory result.
We now employ 22,800 people and still maintain a presence in 106
offices across 42 countries, compared with 24,500 people across 118
offices at 30 June 2016.
We secured 86 significant awards this year compared with 85 in
FY2016. Backlog at 30 June 2017 was $5.1 billion, compared to $4.2
billion at 30 June 2016, with $3.0 billion relating to FY2018.
Our financial position remains sound with the Company’s gearing
ratio of 29.1% at 30 June 2017, in the middle of the target range of
25% to 35%.
The FY2016 segment result and segment margins shown in sections
1.3.1 and 1.3.2 of this review have been restated to reflect a change
in definition of aggregated revenue to exclude pass-through
revenue at nil margin. The reconciliation of the underlying earnings
before interest and tax (EBIT) and underlying NPAT results to the
EBIT and NPAT attributable to members of WorleyParsons Limited
is shown in the following table:
1 The directors consider underlying profit information is important to
understand the sustainable performance of the Company by excluding
selected significant items.
WorleyParsons Annual Report 2017 23
WorleyParsons Annual Report 2017 23
OPERATING AND FINANCIAL REVIEW CONTINUED
EBIT
Add: staff restructuring costs
Add: onerous lease contracts
Add: onerous engineering software licenses
Add: other restructuring costs
Add: impairment of associate intangible assets
Add: net loss on sale of assets held for sale
Less: net gain on revaluation of investments previously accounted for as joint operations
Less: certain functional currency related foreign exchange gains
Underlying EBIT
NPAT attributable to members of WorleyParsons Limited
Add: staff restructuring costs, post tax
Add: onerous lease costs, post tax
Add: onerous engineering software licenses, post tax
Add: other restructuring costs, post tax
Add: net loss on sale of assets held for sale
Less: certain functional currency related foreign exchange gains, post tax
Add: impairment of associate intangible assets
Underlying NPAT
FY2017
$’M
129.6
59.2
24.2
3.2
38.9
2.3
0.4
-
-
257.8
33.5
41.4
17.0
2.2
27.2
0.3
-
1.6
123.2
FY2016
$’M
128.9
76.8
86.4
14.3
4.6
-
12.1
(4.5)
(15.9)
302.7
23.5
56.3
63.4
10.5
3.4
12.1
(11.6)
(4.5)
153.1
THERE ARE THREE MEASURES THAT ARE KEY TO UNDERSTANDING OUR RESULTS:
1. AGGREGATED REVENUE;
2. EBIT (EARNINGS BEFORE INTEREST AND TAX); AND
3. NPAT (NET PROFIT AFTER TAX) ATTRIBUTABLE TO MEMBERS OF WORLEYPARSONS LIMITED.
FY2017
$’M
FY2016
$’M Comments
Movement
1. Aggregated revenue
4,377.0
5,725.9 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;
• less procurement revenue at nil
margin, pass-through revenue at
nil margin, net gain on
revaluation of investments
previously reported as joint
operations and interest income.
Our aggregated revenue decreased by 23.6% in FY2017 when
compared with that for FY2016, due to several large projects
progressing to completion, while potential new project work was
cancelled or deferred due to reduced customer capital and
operating expenditure.
2.
EBIT
(statutory)
129.6
128.9
EBIT means earnings before
interest and tax.
(underlying)
257.8
302.7
Our statutory EBIT increased by 0.5% in FY2017 when compared
with that for FY2016, due primarily to the benefit of a reduction
in overhead costs with increased margins, offsetting reduced
volume.
Underlying EBIT has decreased by 14.8% when compared with
that for FY2016. This reduction is due to reduced volume more
than offsetting improved gross margin and decreased overheads.
24 WorleyParsons Annual Report 2017
24 WorleyParsons Annual Report 2017
OPERATING AND FINANCIAL REVIEW
FY2017
$’M
FY2016
$’M Comments
Movement
3. NPAT
(statutory)
33.5
23.5 NPAT means net profit after tax.
(underlying)
123.2
153.1
Our statutory NPAT increased to $33.5 million in FY2017,
compared with $23.5 million for FY2016, due primarily to the
benefit of reduced restructuring costs.
Underlying NPAT has decreased by 19.5% when compared with
that for FY2016, primarily due to reduced volumes more than
offsetting improved margins as well as additional interest costs
during the year.
1.3.1 BUSINESS LINE PERFORMANCE
SERVICES
The Services business line effectively combines local service, knowledge, relationships and capability to deliver projects of all sizes across the
asset lifecycle. It is the local partner for companies and communities to deliver sustained economic and social progress. Working closely
with WorleyParsons other three business lines; Major Projects, Integrated Solutions, and Advisian, Services brings together the local
knowledge and global expertise to deliver all our value to all our customers.
The Services business line reported aggregated revenue of $2,681.1 million and segment result of $242.8 million (FY2016 restated: aggregated
revenue of $3,630.8 million and segment result of $265.9 million). The segment margin improved to 9.1% from 7.3%.
Aggregated revenue was lower across all regions due to projects completing or moving into construction, reduced customer spending and
project deferrals and cancellations. The Middle East operations continued to perform well growing their contribution to the business.
Segment margins increased due to overhead reductions and improved project performance.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
FY2017
FY2016 (restated)
$’M
2,681.1
3,630.8
Variance %
(26)
%
61
63
$’M
242.8
265.9
Variance %
(9)
Segment
margin
%
9.1
7.3
MAJOR PROJECTS AND INTEGRATED SOLUTIONS
Major Projects are specialists in full project delivery of large, complex, strategically important projects wherever they are in the world.
Integrated Solutions delivers maintenance, modification, operations, engineering, fabrication, construction, hook-up and commissioning in
support of greenfield and brownfield assets globally. The Major Projects and Integrated Solutions business lines reported aggregated
revenue of $1,213.4 million and segment result of $119.5 million (FY2016 restated: aggregated revenue of $1,434.2 million and segment result
of $127.6 million). The segment margin improved to 9.8% from 8.9%.
Aggregated revenue declined as a result of project completions and other projects moving into construction during FY2017, together with
reduced customer spending. Segment margins increased through the improved performance of our portfolio of major projects and
integrated solutions contracts.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
FY2017
FY2016 (restated)
$’M
1,213.4
1,434.2
Variance %
(15)
%
28
25
$’M
119.5
127.6
Variance %
(6)
Segment
margin
%
9.8
8.9
ADVISIAN
Advisian is a global consulting firm that provides strategic advice, integrated with deep technical expertise to clients in the energy, resources
and infrastructure sectors. Advisian reported aggregated revenue of $482.5 million and segment result of $12.5 million (FY2016 restated:
aggregated revenue of $660.9 million and segment result of $45.7 million). The segment margin declined to 2.6% from 6.9%.
Aggregated revenue and margin decreases were primarily associated with the decline in the Hydrocarbons consulting business in the
Americas and investment associated with development of business in the new energy sector and Digital Enterprise. The Company will
continue to invest in this business to build a globally significant consulting and advisory business.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
FY2017
FY2016 (restated)
$’M
482.5
660.9
Variance %
(27)
%
11
12
$’M
12.5
45.7
Variance %
(73)
Segment
margin
%
2.6
6.9
WorleyParsons Annual Report 2017 25
WorleyParsons Annual Report 2017 25
OPERATING AND FINANCIAL REVIEW CONTINUED
1.3.2 SECTOR PERFORMANCE
HYDROCARBONS
The Hydrocarbons sector reported aggregated revenue of $3,105.6 million and segment result of $311.3 million with a margin of 10.0%
(FY2016 restated: aggregated revenue of $4,099.9 million, segment result of $339.4 million and segment margin of 8.3%). Hydrocarbons’
contribution to the Group’s aggregated revenue was 71%, slightly down on that for last year.
Aggregated revenue declined due to projects reaching completion combined with customers’ reduced capital and operating expenditure.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
FY2017
FY2016 (restated)
$’M
3,105.6
4,099.9
Variance %
(24)
%
71
72
$’M
311.3
339.4
Variance %
(8)
Segment
margin
%
10.0
8.3
MINERALS, METALS & CHEMICALS
The Minerals, Metals & Chemicals sector reported aggregated revenue of $441.4 million and segment result of $16.7 million with a margin of
3.8% (FY2016 restated: aggregated revenue of $642.5 million, segment result of $39.9 million and segment margin of 6.2%). Minerals, Metals
& Chemicals contributed 10% to the Group’s aggregated revenue. Chemicals now represents more than 50% of this sector's contribution.
The Minerals & Metals contribution declined as project activity continued to decrease in line with sustained lower commodity prices.
Chemicals also declined as the increased activity in the United States only partially offset lower in activity in China.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
FY2017
FY2016 (restated)
$’M
441.4
642.5
Variance %
(31)
%
10
11
$’M
16.7
39.9
Variance %
(58)
Segment
margin
%
3.8
6.2
INFRASTRUCTURE
The Infrastructure sector reported aggregated revenue of $830.0 million and segment result of $46.8 million with a margin of 5.6% (FY2016
restated: aggregated revenue of $983.5 million, segment result of $59.9 million and segment margin of 6.1%). Infrastructure’s contribution to
the Group’s aggregated revenue increased to 19%.
The Infrastructure sector aggregated revenue included growth in the Middle East somewhat offsetting declines in Australia. Margins
declined primarily due to the tighter competition in the global markets.
Aggregated revenue
Contribution to Group
aggregated revenue
Segment result
FY2017
FY2016 (restated)
$’M
830.0
983.5
Variance %
(16)
%
19
17
$’M
46.8
59.9
Variance %
(22)
Segment
margin
%
5.6
6.1
1.4 SIGNIFICANT CHANGES IN OPERATIONS
From 1 July 2016, WorleyParsons operations have been managed and reported through the following business lines: Services, Major Projects,
Integrated Solutions and Advisian.
Major Projects and Integrated Solutions have been combined into a single segment providing coverage of all construction and fabrication
yard activity, easy access to Global Delivery Center resources and a shared management team in one group. This strengthens our capability
and reputation in integrated EPC with the aim of extending this offering to existing and new customers.
Improve integrated services relationships and opportunities became part of the Integrated Solutions business line, including O&M and full
delivery EPC relationships.
To remove duplication of engineering activities and to provide single points of contact to our customers, Improve engineering only
relationships and businesses have been moved into the Services business line.
26 WorleyParsons Annual Report 2017
26 WorleyParsons Annual Report 2017
OPERATING AND FINANCIAL REVIEW
2. FINANCIAL POSITION AND CASH FLOW
2.1 MATTERS RELEVANT TO UNDERSTANDING WORLEYPARSONS’ FINANCIAL POSITION
OUR FINANCIAL CAPACITY REMAINS STRONG BASED ON CASH, GEARING AND DEBT
POSITIONS.
FY2017
$’M
FY2016
$’M Comments
1. Operating
cash flow
78.9
192.0 Our operating cash flow comprises the 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.
Movement
Our operating cash flow for FY2017
represents a decrease from FY2016, due
largely to reduced volume, increased cash
restructuring costs and reduced
procurement assets and liabilities at year
end.
2. Gearing ratio
29.1%
29.2% 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 the
gearing ratio.
Our gearing ratio slightly decreased by 0.1
percentage point in FY2017 when compared
with that for FY2016.
This ratio is within our gearing target of
25% to 35%.
3. Debt facility
utilization
60%
57% Our debt facility utilization is the percentage of
our debt facilities that we were using at the end
of the financial year.
4. Loan,
1,835
2,182 Our loan, overdraft and lease facilities are the
overdraft and
lease
facilities
amount of our debt facilities at the end of
the financial year.
Our debt facility utilization increased in
FY2017 when compared with that for
FY2016, due to a reduction in facilities
available due to a maturing private
placement note.
The amount of our loan, overdraft and lease
facilities decreased during FY2017, due to
the repayment of a US private placement
note.
2.2 DIVIDENDS
Our directors resolved not to pay a final dividend. The total
dividend with respect to FY2017 is nil cents per share.
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.
During FY2017, we divested our South African public infrastructure
business and our interest in Cegertec in Quebec. We also acquired
an additional 14% of WorleyParsons Oman and the remaining 6% of
WorleyParsons Chile.
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; and
• operating expenditure commitments.
These future commitments represent approximately 11.6% of
our expenses.
In general, we lease the space in 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.
3. BUSINESS STRATEGY, OUTLOOK AND RISKS
3.1 BUSINESS STRATEGY
During the year we developed a new strategic architecture to allow
us to respond more dynamically to the changing world. The
architecture is a framework that integrates all the strategic processes
at WorleyParsons, describing how they interact over the course of
the financial year and how they systematically allow us to improve
our collective performance, accelerate our revenue growth and
address the dramatic change in our industry.
The architecture is built around the following three pillars:
1. Operational excellence ensuring we always maintain a viable and
competitive business.
2. Grow the business in the near term by offering all of our value to
all of our customers.
3. Position the new business to grow as a key player in the new
world.
The three pillars combine to provide a holistic view of strategy and
all three are needed for our strategy to stand.
Further details on the three strategic pillars can be found on page 12
of this Annual Report.
3.2 OUTLOOK
We are beginning to see increased activity from our energy and
resources customers despite the constrained resource price
environment. While increased backlog provides support for the
near term, the medium term revenue outlook remains uncertain.
Our focus on costs will continue, while ensuring the sustainability
of the cost savings already achieved. It is expected the benefits of
the overhead savings achieved in FY2017 will be reflected in FY2018
WorleyParsons Annual Report 2017 27
WorleyParsons Annual Report 2017 27
OPERATING AND FINANCIAL REVIEW CONTINUED
earnings. We also expect our balance sheet metrics to continue to
improve.
3.3 RISKS
Achievement of our medium and long term objectives could be
impacted by a number of risks. Those risks could, individually or
together, have an adverse effect on achievement of those objectives.
Set out below is an overview of a number of key risks that we face
in seeking to achieve those objectives. 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 objectives. 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 risk management measures 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 SAFETY ENVIRONMENT RISK
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.
3.3.3 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.
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 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.
There is the risk of injury to, or the loss of life of, our people and
those people we manage.
The nature of our work may give rise to environmental risk. We
identify environmental aspects of our work and their potential
impact and put in place controls and monitoring to address them.
We continue to implement emissions reduction strategies and to
support our customers in their efforts.
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 safety
and environment. OneWay™ expectations are supported by our
business processes and we use them in assessing our performance.
3.3.2 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 operating 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
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 seek to
preserve our reputation.
3.3.4 FINANCIAL RISKS
Liquidity risk: Our ability to maintain an appropriate level of
liquidity, 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 effective working capital
management 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 objectives and may
therefore result in us not meeting forecasts provided to the market,
thereby adversely affecting investor confidence and the Company’s
share price.
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.
28 WorleyParsons Annual Report 2017
28 WorleyParsons Annual Report 2017
OPERATING AND FINANCIAL REVIEW The strategy involves three strategic pillars with a number of
priority areas reviewed on a regular schedule and described in
section 3.1 of this review.
3.4 UNREASONABLE PREJUDICE
We have omitted from the review 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 review 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 review, 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.
WorleyParsons Annual Report 2017 29
WorleyParsons Annual Report 2017 29
Financial Report
FINANCIAL REPORT
For the financial year ended 30 June 2017
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
31
55
56
57
58
60
61
101
102
109
111
113
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
61
61
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
63
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
66
67
68
70
71
72
73
75
Capital
Provide information about the capital management practices of the Group and
shareholder returns for the year.
12. Capital Management
77
13. Interest Bearing Loans and Borrowings
14. Issued Capital
15. Reserves
16. Earnings Per Share
17. Dividends
78
79
81
81
82
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
82
19. Fair Values
Structure
Define the different aspects of the Group structure.
20. Investments in Controlled Entities
21. Equity Accounted Associates
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
88
89
90
92
92
93
93
94
Other
Notes required by Australian Accounting Standards and/or other regulatory
pronouncements.
27. Procurement
94
28. Property, Plant and Equipment
29. Deferred Tax
30. Related Parties
31. Remuneration of Auditors
32. Key Management Personnel
33. Parent Entity Disclosures
95
96
97
98
98
99
30 WorleyParsons Annual Report 2017
30 WorleyParsons Annual Report 2017
Directors’ Report
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 2017.
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 and, unless otherwise noted, all were directors for the full
financial year and until the date of this report.
• John Grill (Chairman)
• Ron McNeilly (Deputy Chairman and Lead Independent Director)
• Larry Benke (retired on 25 October 2016)
DIRECTORS’ 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
Jagjeet Bindra
Erich Fraunschiel
Christopher Haynes
Catherine Livingstone
Wang Xiao Bin
Andrew Wood
NUMBER OF
SHARES
25,372,173
418,984
19,000
198,755
11,945
13,000
11,000
849,065
NUMBER OF
PERFORMANCE
RIGHTS
–
–
–
–
–
–
–
656,518
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.
• Jagjeet Bindra
• Erich Fraunschiel
• John M Green (retired on 25 October 2016)
• 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
directors is set out below:
DIRECTORS
John Grill
Ron McNeilly
Larry Benke1
Jagjeet Bindra
Erich Fraunschiel
John M Green1
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
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A MEMBER
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A MEMBER
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A MEMBER
NUMBER
ATTENDED
MEETINGS
HELD WHILE
A MEMBER
NUMBER
ATTENDED
10
10
3
10
10
3
10
10
10
10
10
10
3
10
10
3
10
10
10
10
6
2
6
6
6
6
2
6
6
6
6
6
2
6
6
2
6
6
6
6
6
2
6
6
2
6
6
6
7
2
7
2
5
7
2
7
2
5
6
6
2
6
6
6
6
2
6
6
1 Larry Benke and John M Green retired on 25 October 2016.
In addition to those meetings, special purpose Board Committee meetings were held during the financial year. The Board also attended regular
informal Board briefings during the financial year.
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.
WorleyParsons Annual Report 2017 31
WorleyParsons Annual Report 2017 31
DIRECTORS’ REPORT CONTINUED
DIVIDENDS – WORLEYPARSONS LIMITED
DIVIDENDS – WORLEYPARSONS LIMITED
DIVIDENDS – WORLEYPARSONS LIMITED
Details of dividends paid in the current financial year and previous
Details of dividends paid in the current financial year and previous
Details of dividends paid in the current financial year and previous
financial year are as follows:
financial year are as follows:
financial year are as follows:
2017
Final ordinary dividend for 2015 of 22.0 cents per ordinary
share paid on 30 September 2015 (unfranked)
Final ordinary dividend for 2015 of 22.0 cents per ordinary
Final ordinary dividend for 2015 of 22.0 cents per ordinary
share paid on 30 September 2015 (unfranked)
share paid on 30 September 2015 (unfranked)
Total dividends paid
Total dividends paid
Total dividends paid
$’M
2017
2017
$’M
$’M
–
–
–
–
–
–
2016
$’M
2016
2016
$’M
$’M
54.4
54.4
54.4
54.4
54.4
54.4
Since the end of the financial year, the directors have resolved not to
Since the end of the financial year, the directors have resolved not to
Since the end of the financial year, the directors have resolved not to
pay a dividend (2016: 0 cents per share).
pay a dividend (2016: 0 cents per share).
pay a dividend (2016: 0 cents per share).
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
REVIEW OF OPERATIONS
A detailed review of the Group’s operations for the financial year and
A detailed review of the Group’s operations for the financial year and
A detailed review of the Group’s operations for the financial year and
the results of those operations is contained in the Operating and
the results of those operations is contained in the Operating and
the results of those operations is contained in the Operating and
Financial Review, which is incorporated into, and forms part of, this
Financial Review, which is incorporated into, and forms part of, this
Financial Review, which is incorporated into, and forms part of, this
Directors’ Report. A summary of the consolidated revenue and results
Directors’ Report. A summary of the consolidated revenue and results
Directors’ Report. A summary of the consolidated revenue and results
in respect of the current financial year and previous financial year are as
in respect of the current financial year and previous financial year are as
in respect of the current financial year and previous financial year are as
follows:
follows:
follows:
CONSOLIDATED
CONSOLIDATED
CONSOLIDATED
2017
2016
Revenue and other income
Revenue and other income
Revenue and other income
Depreciation
Depreciation
Depreciation
Amortization
Amortization
Amortization
Write down of investment in equity accounted associates
Write down of investment in equity accounted associates
Write down of investment in equity accounted associates
Impairment of goodwill
Impairment of goodwill
Impairment of goodwill
Earnings before interest and tax (EBIT)
Earnings before interest and tax (EBIT)
Earnings before interest and tax (EBIT)
Net interest expense
Net interest expense
Net interest expense
Profit before income tax expense
Profit before income tax expense
Profit before income tax expense
Income tax expense
Income tax expense
Income tax expense
Statutory profit after income tax expense
Statutory profit after income tax expense
Statutory profit after income tax expense
Non-controlling interests
Non-controlling interests
Non-controlling interests
Net profit after income tax expense attributable to
members of WorleyParsons Limited:
Net profit after income tax expense attributable to
Net profit after income tax expense attributable to
members of WorleyParsons Limited:
members of WorleyParsons Limited:
Add: Staff restructuring costs
Add: Staff restructuring costs
Add: Staff restructuring costs
Add: Onerous lease contracts
Add: Onerous lease contracts
Add: Onerous lease contracts
Add: Other restructuring costs
Add: Other restructuring costs
Add: Other restructuring costs
Add: Onerous engineering software licenses
Add: Onerous engineering software licenses
Add: Onerous engineering software licenses
Add: Net loss on the sale of assets held for sale
Add: Net loss on the sale of assets held for sale
Add: Net loss on the sale of assets held for sale
Add: Impairment of associate intangible assets
Add: Impairment of associate intangible assets
Add: Impairment of associate intangible assets
Less: Certain functional currency related foreign
exchange gains
Less: Certain functional currency related foreign
Less: Certain functional currency related foreign
exchange gains
exchange gains
Less: Net gain on revaluation of investments previously
accounted for as joint operations
Less: Net gain on revaluation of investments previously
Less: Net gain on revaluation of investments previously
accounted for as joint operations
accounted for as joint operations
Less: Net tax expense on staff and other restructuring
costs, onerous lease contracts, onerous engineering
Less: Net tax expense on staff and other restructuring
Less: Net tax expense on staff and other restructuring
software licences and certain functional currency related
costs, onerous lease contracts, onerous engineering
costs, onerous lease contracts, onerous engineering
foreign exchange gains
software licences and certain functional currency related
software licences and certain functional currency related
foreign exchange gains
foreign exchange gains
Underlying net profit after income tax expense
attributable to members of WorleyParsons Limited 1
Underlying net profit after income tax expense
Underlying net profit after income tax expense
attributable to members of WorleyParsons Limited 1
attributable to members of WorleyParsons Limited 1
$’M
2017
2017
$’M
$’M
5,220.6
5,220.6
5,220.6
(18.0)
(18.0)
(18.0)
(62.8)
(62.8)
(62.8)
(1.3)
(1.3)
(1.3)
–
–
–
129.6
129.6
129.6
(68.8)
(68.8)
(68.8)
60.8
60.8
60.8
(4.6)
(4.6)
(4.6)
56.2
56.2
56.2
22.7
22.7
22.7
33.5
33.5
33.5
59.2
59.2
59.2
24.2
24.2
24.2
38.9
38.9
38.9
3.2
3.2
3.2
0.4
0.4
0.4
2.3
2.3
2.3
–
–
–
–
–
–
(38.5)
(38.5)
(38.5)
123.2
123.2
123.2
$’M
2016
2016
$’M
$’M
7,790.1
7,790.1
7,790.1
(25.1)
(25.1)
(25.1)
(65.0)
(65.0)
(65.0)
(12.1)
(12.1)
(12.1)
–
–
–
128.9
128.9
128.9
(60.0)
(60.0)
(60.0)
68.9
68.9
68.9
(20.3)
(20.3)
(20.3)
48.6
48.6
48.6
25.1
25.1
25.1
23.5
23.5
23.5
76.8
76.8
76.8
86.4
86.4
86.4
4.6
4.6
4.6
14.3
14.3
14.3
12.1
12.1
12.1
–
–
–
(15.9)
(15.9)
(15.9)
(4.5)
(4.5)
(4.5)
(44.2)
(44.2)
(44.2)
153.1
153.1
153.1
CONSOLIDATED
CONSOLIDATED
CONSOLIDATED
2017
2016
Revenue and other income
Revenue and other income
Revenue and other income
Less: Procurement revenue at nil margin (including share
of revenue from associates)
Less: Procurement revenue at nil margin (including share
Less: Procurement revenue at nil margin (including share
of revenue from associates)
of revenue from associates)
Less: Pass-through revenue at nil margin
Less: Pass-through revenue at nil margin
Less: Pass-through revenue at nil margin
Add: Share of revenue from associates
Add: Share of revenue from associates
Add: Share of revenue from associates
Less: Net gain on revaluation of investments previously
accounted for as joint operations
Less: Net gain on revaluation of investments previously
Less: Net gain on revaluation of investments previously
accounted for as joint operations
accounted for as joint operations
Less: Interest income
Less: Interest income
Less: Interest income
Aggregated revenue 2
Aggregated revenue 2
Aggregated revenue 2
$’M
2017
2017
$’M
$’M
5,220.6
5,220.6
5,220.6
(826.2)
(826.2)
(826.2)
(229.0)
(229.0)
(229.0)
218.7
218.7
218.7
–
–
–
(7.1)
(7.1)
(7.1)
4,377.0
4,377.0
4,377.0
$’M
2016
2016
$’M
$’M
7,790.1
7,790.1
7,790.1
(2,226.4)
(2,226.4)
(2,226.4)
(167.0)
(167.0)
(167.0)
342.5
342.5
342.5
(4.5)
(4.5)
(4.5)
(8.8)
(8.8)
(8.8)
5,725.9
5,725.9
5,725.9
AGGREGATED REVENUE
AGGREGATED REVENUE
AGGREGATED REVENUE
2017
2016
EBIT
EBIT
EBIT
2017
$’M
2017
2017
$’M
2016
2016
$’M
2017
2017
2016
$’M
2016
2016
EBIT MARGIN
EBIT MARGIN
EBIT MARGIN
2017
2016
%
2017
2017
%
2016
2016
Services
Services
Services
Major Projects and
Integrated Solutions
Major Projects and
Major Projects and
Integrated Solutions
Integrated Solutions
Advisian
Advisian
Advisian
$’M
$’M
$’M
$’M
2,681.1 3,630.8
2,681.1 3,630.8
2,681.1 3,630.8
1,434.2
1,213.4
1,434.2
1,213.4
1,434.2
1,213.4
660.9
482.5
660.9
482.5
660.9
482.5
4,377.0 5,725.9
4,377.0 5,725.9
4,377.0 5,725.9
%
%
9.1
9.1
9.1
9.8
9.8
9.8
2.6
2.6
2.6
8.6
8.6
8.6
%
%
7.3
7.3
7.3
8.9
8.9
8.9
6.9
6.9
6.9
7.7
7.7
7.7
$’M
$’M
242.8
242.8
242.8
119.5
119.5
119.5
12.5
12.5
12.5
374.8
374.8
374.8
(96.7)
(96.7)
(96.7)
(3.5)
(3.5)
(3.5)
$’M
$’M
265.9
265.9
265.9
127.6
127.6
127.6
45.7
45.7
45.7
439.2
439.2
439.2
(109.0)
(109.0)
(109.0)
(8.3)
(8.3)
(8.3)
5.3
5.3
5.3
5.9
5.9
5.9
(19.2)
(19.2)
(19.2)
302.7
302.7
302.7
(16.8)
(16.8)
(16.8)
257.8
257.8
257.8
Global support costs 3
Global support costs 3
Global support costs 3
Interest and tax for
associates
Interest and tax for
Interest and tax for
associates
associates
Amortization of
acquired intangible
Amortization of
Amortization of
assets
acquired intangible
acquired intangible
assets
assets
Underlying EBIT1
Underlying EBIT1
Underlying EBIT1
Aggregated revenue was $4,377.0 million, a decrease of 23.6% on the
Aggregated revenue was $4,377.0 million, a decrease of 23.6% on the
Aggregated revenue was $4,377.0 million, a decrease of 23.6% on the
prior financial year. Underlying EBIT of $257.8 million was down 14.8%
prior financial year. Underlying EBIT of $257.8 million was down 14.8%
prior financial year. Underlying EBIT of $257.8 million was down 14.8%
from the prior financial year result of $302.7 million.
from the prior financial year result of $302.7 million.
from the prior financial year result of $302.7 million.
The underlying EBIT margin on aggregated revenue for the Group,
The underlying EBIT margin on aggregated revenue for the Group,
The underlying EBIT margin on aggregated revenue for the Group,
increased to 5.9% compared with 5.3% in 2016. After tax, the members
increased to 5.9% compared with 5.3% in 2016. After tax, the members
increased to 5.9% compared with 5.3% in 2016. After tax, the members
of WorleyParsons Limited earned an underlying net margin, on
of WorleyParsons Limited earned an underlying net margin, on
of WorleyParsons Limited earned an underlying net margin, on
aggregated revenue of 2.8%, compared to the 2016 net margin of 2.7%.
aggregated revenue of 2.8%, compared to the 2016 net margin of 2.7%.
aggregated revenue of 2.8%, compared to the 2016 net margin of 2.7%.
The underlying effective tax rate of 22.4% compared with 26.6% in 2016.
The underlying effective tax rate of 22.4% compared with 26.6% in 2016.
The underlying effective tax rate of 22.4% compared with 26.6% in 2016.
The Group retains a strong cash position of $244.3 million
The Group retains a strong cash position of $244.3 million
The Group retains a strong cash position of $244.3 million
(2016: $373.1 million) with gearing (net debt/net debt plus total equity)
(2016: $373.1 million) with gearing (net debt/net debt plus total equity)
(2016: $373.1 million) with gearing (net debt/net debt plus total equity)
at financial year end of 29.1% (2016: 29.2%).
at financial year end of 29.1% (2016: 29.2%).
at financial year end of 29.1% (2016: 29.2%).
Operating cash inflow for the period was $78.9 million, compared to
Operating cash inflow for the period was $78.9 million, compared to
Operating cash inflow for the period was $78.9 million, compared to
$192.0 million in 2016. Cash outflow from investing activities was
$192.0 million in 2016. Cash outflow from investing activities was
$192.0 million in 2016. Cash outflow from investing activities was
$62.5 million (2016: $79.9 million).
$62.5 million (2016: $79.9 million).
$62.5 million (2016: $79.9 million).
2 Aggregated revenue is defined as statutory revenue and other income plus share
of revenue from associates less procurement revenue at nil margin, pass-
2 Aggregated revenue is defined as statutory revenue and other income plus share
2 Aggregated revenue is defined as statutory revenue and other income plus share
through revenue at nil margin, interest income and net gain on revaluation of
of revenue from associates less procurement revenue at nil margin, pass-
of revenue from associates less procurement revenue at nil margin, pass-
investments previously accounted for as joint operations. The directors of the
through revenue at nil margin, interest income and net gain on revaluation of
through revenue at nil margin, interest income and net gain on revaluation of
Company believe the disclosure of revenue attributable to associates provides
investments previously accounted for as joint operations. The directors of the
investments previously accounted for as joint operations. The directors of the
additional information in relation to the financial performance of the Group.
Company believe the disclosure of revenue attributable to associates provides
Company believe the disclosure of revenue attributable to associates provides
additional information in relation to the financial performance of the Group.
additional information in relation to the financial performance of the Group.
financial statements).
financial statements).
financial statements).
3 Excluding global support related restructuring costs (refer to note 3 to the
3 Excluding global support related restructuring costs (refer to note 3 to the
3 Excluding global support related restructuring costs (refer to note 3 to the
1 The directors consider underlying profit information is important to understand
the sustainable performance of the Company by excluding selected significant
1 The directors consider underlying profit information is important to understand
1 The directors consider underlying profit information is important to understand
items.
the sustainable performance of the Company by excluding selected significant
the sustainable performance of the Company by excluding selected significant
items.
items.
32 WorleyParsons Annual Report 2017
32 WorleyParsons Annual Report 2017
32 WorleyParsons Annual Report 2017
32 WorleyParsons Annual Report 2017
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
2017
2016
CENTS
CENTS
13.5
13.4
9.5
9.5
Underlying basic earnings per share was 49.6 cents per share, a decrease
of 19.7% from the previous financial year result of 61.8 cents per share.
Underlying basic earnings per share is determined by dividing the
underlying profit attributable to members of WorleyParsons Limited (as
set out on page 32) by the weighted average number of ordinary shares
outstanding during the financial year (as set out in note 16 to the
financial statements).
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
From 1 July 2016, WorleyParsons operations are managed and reported
through the following business lines: Services, Major Projects,
Integrated Solutions and Advisian.
Major Projects and Integrated Solutions have been combined into a
single segment providing coverage of all construction and fabrication
yard activity, easy access to Global Delivery Center resources and a
shared management team in one group. This strengthens our capability
and reputation in integrated EPC with the aim of extending this offering
to existing and new customers. Improve integrated services relationships
and opportunities became part of the Integrated Solutions business line,
including O&M and full delivery EPC relationships.
To remove duplication of engineering activities and to provide single
points of contact to our customers, Improve engineering only
relationships and businesses have been moved into the Services
business line.
As a result, during the financial year ended 30 June 2017, the Group
reported along three segments of Services, Major Projects and
Integrated Solutions, and Advisian and three customer sectors, each of
which is 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.
This represents a change to the operating segments reported in the
previous corresponding period. The previously reported segment
results for the year ended 30 June 2016 have been restated to be
comparable with the revised segmentation approach as required by
AASB 8 Operating Segments.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL
YEAR
Since the end of the financial year, the directors have resolved not to
pay a final dividend (2016: 0 cents per share).
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
$521,692.
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
200 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
As lead auditor for the audit of WorleyParsons Limited for the financial year ended 30 June 2017, I
declare to the best of my knowledge and belief, there have been:
a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of WorleyParsons Limited and the entities it controlled during the financial
year.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
OF OPERATIONS
Ernst & Young
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
of the Operating and Financial Review on page 27.
ENVIRONMENTAL REGULATION
In the majority of the Group’s business operations, it does not have
responsibility for obtaining environmental licenses. The Group typically
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
S J Ferguson
Partner
23 August 2017
WorleyParsons Annual Report 2017 33
WorleyParsons Annual Report 2017 33
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
DIRECTORS’ REPORT CONTINUED
DIRECTORS’ REPORT CONTINUED
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations (Rounding
in Financial/Directorsʹ Reports) Instrument 2016/191 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 Instrument and amounts less than
$50,000 that have been rounded down are represented in this report by
0.0.
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended
30 June 2017 may be accessed from the Company’s website at
http://www.worleyparsons.com/InvestorRelations/Pages/
CorporateGovernance.aspx
INFORMATION ON DIRECTORS AND GROUP 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 Australian
Securities Exchange (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 Chairman of Neuroscience Research
Australia. He has served as Chairman of the Growth Centre Advisory
Board for the Department of Industry, Innovation and Science since
February 2015.
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 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
34 WorleyParsons Annual Report 2017
34 WorleyParsons Annual Report 2017
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
DATE OF
CESSATION
BlueScope
Steel Limited
Deputy Chairman
and non‐executive
director
10 May 2002
7 April 2015
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. He is Chairman
of the Remuneration Committee and a member of the Health, Safety
and Environment Committee and 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
LyondellBasell Industries N.V., and was previously a member of the
board of Edison International/Southern California Edison Company,
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 Broadspectrum Limited, both
publicly listed companies on the ASX at the time. 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 a member of the Audit and Risk Committee and
the Nominations Committee. He is Chairman of BWP Management
Limited, the responsible entity of the BWP Trust, an Australian real
estate investment trust listed on the 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
DATE OF
CESSATION
BWP Trust
Non‐executive
director
Chairman
1 February 2015
n/a
2 December 2015
n/a
CHRISTOPHER HAYNES OBE FRENG, 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 Remuneration Committee and Nominations Committee.
He is a non-executive director of Woodside Petroleum Limited and
Honorary President of the Energy Industries Council, UK. 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
DATE OF
CESSATION
Woodside
Petroleum Limited
Non-executive
director
1 June 2011
n/a
CATHERINE LIVINGSTONE AO BA (HONS), HON DBUS
(MACQUARIE), HON DSC (MURDOCH), HON DBUS (UTS), HON
DSC (UOW), HON DLITT (SYD), FCA, FAICD, FTSE
NON-EXECUTIVE DIRECTOR – DIRECTOR SINCE JULY 2007
COUNTRY OF RESIDENCE – AUSTRALIA
Catherine joined the Board on 1 July 2007 and is Chair of the Audit and
Risk Committee and a member of the Nominations Committee. She is
Chair of the Commonwealth Bank of Australia and a director of Saluda
Medical Pty Limited and the George Institute for Global Health and is
the President of the Australian Museum Trust and Chancellor of
University of Technology Sydney. Catherine was the President of the
Business Council of Australia from 2014 to 2016 and the Chair of Telstra
Corporation Limited from May 2009 to April 2016 and of CSIRO from
2001 to 2006. She 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
DATE OF
CESSATION
Commonwealth
Bank of Australia
Non-executive
director
1 March 2016
n/a
Chair
1 January 2017
n/a
Telstra Corporation
Limited
Non-executive
director
Chair
30 November 2000 27 April 2016
8 May 2009
27 April 2016
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.
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 23 years with the Group, and over 35 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.
NUALA O'LEARY LLB, BA
GROUP COMPANY SECRETARY – APPOINTED AUGUST 2016
COUNTRY OF RESIDENCE – AUSTRALIA
Nuala joined the Group in 2002. She is responsible for corporate
governance for the Board and the Group Leadership Team and
governance matters relevant to the listed entity, its capital structure, and
its regulatory obligations. Nuala’s specific Group accountabilities
include continuous disclosure. Nuala has a background in corporate
litigation, legal, governance and company secretary roles. She has
previously worked in private legal practice. Nuala holds degrees in Law
and Arts from The University of Sydney and a Graduate Diploma of
Applied Corporate Governance. Nuala is a Solicitor of the Supreme
Court of NSW.
Peter Janu held the role of Company Secretary during the financial year
until the date of Nuala O'Leary's appointment in August 2016.
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.
WorleyParsons Annual Report 2017 35
WorleyParsons Annual Report 2017 35
DIRECTORS’ REPORT CONTINUED
DIRECTORS’ REPORT CONTINUED
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.
36 WorleyParsons Annual Report 2017
36 WorleyParsons Annual Report 2017
Remuneration Report
REMUNERATION REPORT
KEY MESSAGES FROM THE CHAIRMAN OF THE REMUNERATION COMMITTEE
Dear Shareholders
I am pleased to present the WorleyParsons Remuneration Report for FY2017.
As announced during the 2016 Annual General Meeting, we undertook a review of our remuneration arrangements in FY2017 and we continue
to be comfortable that the makeup of our executives' remuneration aligns to our remuneration principles and strategy. In this year's report, we
have provided a simple explanation of each component of remuneration and the pay mix (fixed versus variable pay), and have included the
objectives for using each of the cash and equity instruments. These enhancements are intended to give clarity for our shareholders on why our
pay structure is appropriate for the Company at this time (see page 42).
WORLEYPARSONS' PERFORMANCE AND THE IMPACT ON REMUNERATION OUTCOMES IN FY2017
Our Company’s leadership has delivered improvements in our performance in a year where we saw significant changes in the industry with the
consolidation of a number of our peers, a very competitive business environment and, more recently, indications of an improvement in external
market conditions.
As highlighted last year, these dynamics have resulted in the need to reshape and resize our business to reflect our renewed strategy of being a
key player in the new world through a focus on maximizing value to our customers and thereby a viable and increasingly attractive company
with which to do business.
The focus of our executives during FY2017 has resulted in greater than forecast delivery of our cost out program, making positive progress
toward the targets set for earnings and liquidity levels, continued emphasis on customer delivery and significant headway on business
development.
Notwithstanding the progress made in the areas outlined above, we acknowledge the impact felt by shareholders and employees through this
period due to the downturn in overall business activity. Noting this, the outcomes of the executives’ challenging FY2017 key performance
indicators based mainly on key financial targets for this period, resulted in your Board determining that the executives should receive a partial
cash payment as part of their variable pay.
Following a review of the external market, we decided not to increase the fixed pay of our executives for FY2017.
For the sixth consecutive year, the Non-Executive Director annual fees remained unchanged. In addition, Mr Grill waived his full Chairman fee
for FY2017.
The FY2014 long term equity performance hurdles of relative total shareholder return (TSR) and earnings per share (EPS) growth have not been
achieved, resulting in zero vesting for that grant.
REMUNERATION FOR FY2018
As we look to the future, the focus on building long term employee commitment through share ownership (as highlighted in our remuneration
principles) continues to be important. The ongoing use of the share price performance rights (SPPRs) and long term equity vehicles supports this
focus.
Constructive feedback received from shareholders last year on the SPPR minimum share price ‘floor’ was considered and we have addressed this
through a higher ‘floor’ which will be implemented for the first time for the upcoming grants. This change is intended to address the previous
concerns from shareholders (see page 45 for details).
Further, the strategic targets used as one of the two performance hurdles (in addition to TSR) for the FY2017 long term equity grant is a one-off
performance condition that was introduced to motivate executives as we undertake our transition and will not be used as an ongoing hurdle.
For FY2018, we will return to using our previous long term equity performance hurdles of relative TSR and EPS growth. We will retain the
overall four year vesting period, with no ability to retest. However, in order to better align our long term equity provisions with that of our peers
and the generally accepted broader Australian market practice, the performance hurdles will be measured over a three year period plus an
additional one year restriction period will apply to the vested shares (see page 40).
Your Board is appreciative of the ongoing support and feedback from shareholders. We continue to ensure the focus of our executives is on
helping our customers meet the world’s changing resources and energy needs.
Kind regards
Jeet Bindra
Chairman, Remuneration Committee
WorleyParsons Annual Report 2017 1
WorleyParsons Annual Report 2017 37
DIRECTORS’ REPORT CONTINUED
DIRECTORS’ REPORT CONTINUED
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 the financial year ended 30 June 2017 (FY2017). 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 FIVE SECTIONS:
SECTION
1. Remuneration in Brief - Key Management Personnel Covered in This Report, Key Shareholder Questions
2. Executive Remuneration in Detail - Guiding Remuneration Principles, Executive Remuneration Structure, Remuneration
Outcomes in FY2017, Company Performance over a Five Year Period, Variable Pay in Detail, Employment Arrangements
3. Non-Executive Director Remuneration - Guiding Principles, Remuneration Structure, Remuneration Outcomes, Non-
Executive Director Interests in Shares
4. Remuneration Governance Framework - Remuneration Decision Making, Executive Minimum Shareholding Requirement,
Hedging, Clawback (Malus) Provision, Cessation of Employment and Change of Control
5. Remuneration Tables - Statutory and Actual Remuneration Outcomes, Executive Minimum Shareholding Requirement,
Executive Interests in Shares and Performance Rights, Non-Executive Director Remuneration Outcomes, Non-Executive
Director Interests in Shares
PAGE
38
41
47
48
50
1. REMUNERATION IN BRIEF
This section outlines the director and executive arrangements in place for the Company.
KEY MANAGEMENT PERSONNEL COVERED IN THIS REPORT
Set out below is a list of the Key Management Personnel (KMP) of the Company whose remuneration details are outlined in this Remuneration
Report. The use of the term “Executives” throughout this report refers to the Executives listed. These Executives and the Non-Executive
Directors comprised the KMP of the Company for FY2017, as defined under the Accounting Standards.
All KMP were employed/held office for the whole of FY2017, except where otherwise stated.
NAME
POSITION
Non-Executive Directors
John Grill
Ron McNeilly
Jagjeet S Bindra
Chairman
Deputy Chairman and Lead Independent Director
Non-Executive Director
Erich Fraunschiel
Non-Executive Director
Christopher Haynes
Non-Executive Director
Catherine Livingstone
Non-Executive Director
Wang Xiao Bin
Non-Executive Director
Former Non-Executive Directors
Larry Benke1
John M Green1
Executives
Former Non-Executive Director
Former Non-Executive Director
Andrew Wood
Chief Executive Officer
COUNTRY OF
RESIDENCE
Australia
Australia
United States
Australia
United Kingdom
Australia
Hong Kong, China
Canada
Australia
Australia
Robert (Chris) Ashton2
Group Managing Director – Major Projects and Integrated Solutions
United States
Dennis Finn
Group Managing Director/Chief Executive Officer, Advisian
Thomas Honan
Group Managing Director Finance/CFO
Australia
Australia
Previously Reported Executives
Filippo Abba3
Denis Lucey3
Christopher Parker3
Regional Managing Director – Americas
Regional Managing Director – Asia Pacific
Former Group Managing Director – Improve and Major Projects
United Kingdom
Indonesia
United States
1 Mr Benke and Mr Green retired effective 25 October 2016.
2 Mr Ashton changed roles effective 1 December 2016, his previous role was Regional Managing Director - Europe, Africa & Middle East.
3 Following Mr Abba notifying the Company of his resignation, the Chief Executive Officer (CEO) resumed responsibility for the strategic planning and direction of the Services business line. This change
impacted Mr Abba, Mr Lucey and Mr Parker who all ceased to be KMP effective 1 December 2016.
38 WorleyParsons Annual Report 2017
2 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
KEY SHAREHOLDER QUESTIONS
QUESTION
ANSWER
How is performance
reflected in the
remuneration of
Executives in FY2017?
The Company’s FY2017 financial outcomes have resulted in a decision being made by the Board that a
partial cash payment based on achievement of key performance indicators (KPIs) will be provided through
the cash component of the Executives’ variable pay. The cash payout for FY2017 as a portion of each
Executive's target through the variable plan is between 21-22%.
DETAILS
See
pages 42,
43
Have any changes been
made to the remuneration
of the Non-Executive
Directors (NEDs)?
What changes have been
made to remuneration
components during
FY2017?
Are there provisions in
place for Clawback of
variable pay?
Are there minimum
shareholding
requirements in place for
the KMP?
Has Executives' fixed pay
been reviewed in FY2017?
No equity vested during FY2017 for the Executives as at 30 June 2017. The relative TSR and EPS growth
minimum performance hurdles required for the FY2014 long term equity awards to vest were not achieved.
For the sixth consecutive year, there have been no increases to NED annual fees. In addition, Mr Grill
offered to waive his full Chairman fee for FY2017 and will also waive his full fee for FY2018.
See page
48
With the exception of the use of the strategic performance hurdle as part of the long term equity grant made
during FY2017 (which was disclosed in the 2016 Annual Report), no further changes have been made to any
of the remuneration components for FY2017.
See
pages 42,
45
Yes, the Company maintains Clawback/Malus provisions across all variable pay plans.
Yes, mandatory for both Executives and NEDs.
Executives must retain equity until they hold shares equivalent in value to two times fixed pay (or four
times fixed pay for the CEO) and must subsequently maintain that multiple.
NEDs are required to build a holding equivalent in value to their annual fee. The minimum shareholding
requirements are assessed each year. All NEDs currently comply with the requirement.
There have been no fixed pay increases for Executives in FY2017.
The Executive remuneration framework is reviewed annually and in doing so, the Board considers the pay
practices of the industry and markets in which the Company currently operates, so as to provide
competitive remuneration (which includes fixed pay) that will attract and retain suitably qualified
executives.
In regards to the CEO, a 10% reduction which he offered to be applied to his FY2015 fixed pay continued to
apply for both FY2016 and FY2017.
See page
49
See
pages 48,
49 and 52
See page
49
How is variable pay
delivered to Executives?
Variable pay (or pay at risk) is delivered to Executives through a mix of cash and equity (both medium and
long term performance rights subject to specific performance hurdles). Variable pay is weighted as a
significant proportion of an Executive's total remuneration package as shown below in the pay mix graphic,
and is linked to various aspects of the Company’s performance. The targeted mix of remuneration
components assumes all performance conditions are satisfied. Allowances and benefits are for specific
purposes and are excluded from determining the pay mix.
See page
42
What are the annual KPIs
and their outcomes for
FY2017?
The cash component of the Executives' variable pay is linked to achievements against annually set KPIs.
The KPIs for FY2017 as determined and measured at the end of the year by the Board, were primarily
focused on the achievement of specific financial measures for the period. Based on the overall Company
performance, it was determined by the Board that partial cash payments linked to KPI achievements will be
made to the Executives for FY2017.
See page
44
What is the rationale for
applying two equity
The Executive pay mix contains two equity components (the SPPRs and the long term equity) with varying
performance hurdles, all of which aim to drive value for shareholders in both the medium and the long
See
pages 44,
WorleyParsons Annual Report 2017 3
WorleyParsons Annual Report 2017 39
DIRECTORS’ REPORT CONTINUED
based plans within the
variable pay
arrangements?
term. The two equity based plans are aligned with the remuneration principles which include building
share ownership and aligning employee, customer and shareholder interests.
45 and 46
What are the performance
hurdles and measurement
period for the SPPRs?
The Board introduced the SPPRs in FY2016 (an annual grant of performance rights with a share price
multiplier and performance hurdle) as a way to ensure our Executives continue to be aligned with
shareholders and strive toward strengthening the core and positioning the Company for the future.
See
pages 44,
45
What are the performance
hurdles and measurement
period for the long term
equity grant?
SPPRs are performance rights which provide strong alignment to shareholders' interests and they also
motivate our Executives to take action that results in enhanced shareholder return. The performance period
is two years, with the quantum of vesting linked to share price movement during that period (within a
minimum ‘floor’ and maximum ‘cap’), a service condition and satisfactory performance.
From FY2013 to FY2016, the long term equity grants had two equally weighted performance hurdles,
relative TSR and EPS growth. There is a four year performance period, with no opportunity to retest.
As disclosed in the 2016 Remuneration Report, the FY2017 long term equity grant is subject to relative TSR
and strategic performance hurdles to focus Executives on the Company’s Realize our future strategy
(weighted at 50% each). The strategic performance hurdle is subject to the achievement of cost reduction
and net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) targets. The
introduction of the strategic targets as a one-off measure is to motivate and incentivise Executives during
our current transition phase. Details of performance against the targets will be disclosed retrospectively due
to the commercially sensitive nature of the targets.
See
pages 45,
46
Are there any changes
planned for the
Executive's variable pay
in FY2018?
In response to shareholder feedback, the SPPR minimum share price required for any vesting to occur
(floor) has been increased for future grants to 70% of the original share price (previously 50%). This will
apply to SPPR awards granted from FY2018. This adjustment has taken into consideration the feedback
received from shareholders at the 2016 Annual General Meeting.
See
pages 45,
46
We have reviewed the long term equity plan during the year to ensure that it continues to suit our business
needs and focuses our Executives on the long term through applying both internal and external
performance requirements. Following this review, a decision was made that relative TSR and EPS growth
measures will again be utilized for long term equity grants from FY2018, with a four year vesting period.
The relative TSR and EPS growth hurdles will be measured over a three year performance period and an
additional one year restriction period, subject to continued employment, will apply to the vested shares
following the measurement of the targets.
40 WorleyParsons Annual Report 2017
4 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
2. EXECUTIVE REMUNERATION IN DETAIL
GUIDING REMUNERATION PRINCIPLES
The guiding principles that underpin Executive remuneration are driven by the Company beliefs. The beliefs guide our actions, making it clear
what we are accountable for and how we achieve success:
WorleyParsons Annual Report 2017 41
WorleyParsons Annual Report 2017 5
DIRECTORS’ REPORT CONTINUED
EXECUTIVE REMUNERATION STRUCTURE
Executive remuneration is structured to recognise an individual’s role, 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. The diagram below provides details of the various remuneration components, the pay mix, timing for their
delivery and their link to the remuneration principles. Actual variable pay for the Executives can vary for individuals depending on the extent
that they and the Company, meet or exceed performance requirements.
Further details in relation to the Company’s variable pay arrangements, the performance conditions imposed and the outcomes of those
arrangements (based on the Company’s performance over FY2017 and prior years), are set out below and on page 43.
COMPONENT
DELIVERY METHOD
FIXED PAY
CASH
CASH
MEDIUM TERM EQUITY
LONG TERM EQUITY
VARIABLE PAY
PURPOSE/
PERFORMANCE FOCUS
To provide a
competitive fixed pay,
set relative to market.
To reward prior year's
performance against
Company goals and
KPIs.
Future focused to
motivate delivery of
sustainable growth in
share price.
FORM OF REWARD AND
PERFORMANCE
REQUIREMENTS
Cash linked to
achievement against
annual KPIs which are
set and measured by
the Board.
Cash (or base) salary,
superannuation
contributions and any
salary sacrificed
components.
Requires ongoing
employment and
performance.
Equity through SPPRs
linked to two year
performance targets (share
price movement). Also
requires continued
employment and
performance. No retesting
provisions allowed or
dividends paid on
unvested SPPRs.
Designed to reward for
delivering on long term
performance measured against
external peers and internal
targets.
Long term equity typically
linked to four year performance
targets (relative TSR and EPS
growth*). Also requires
continued employment and
performance. No retesting
provisions allowed or
dividends paid on unvested
long term equity.
PAY MIX**
CEO
OTHER EXECUTIVES
FIXED PAY
VARIABLE CASH
MEDIUM TERM EQUITY
(SPPRs)
LONG TERM EQUITY
30%
41%
30%
29%
15%
15%
25%
15%
* Excludes the FY2017 grant, see varied performance hurdles on page 45. The FY2018 performance period will be three years plus an additional one year restriction period.
** The targeted mix of remuneration components shown above refers to the amount that would be payable if all performance conditions that apply to variable pay are satisfied and assumes 100%
achievement of cash and equity awards. Allowances and benefits are for specific purposes and are excluded in determining the mix.
REMUNERATION OUTCOMES IN FY2017
Variable pay outcomes - Cash
Reward outcomes paid as cash to Executives are linked to performance against annually agreed KPIs.
Based on the outcomes of the FY2017 KPIs and the
Company’s financial performance for the period, it was
determined that there would be partial cash payments
made to the Executives through the variable pay plan for
FY2017.
Over the past five years, the strong alignment between
Company performance and payment outcomes to
Executives through their variable pay is clearly
demonstrated. The graph to the right, illustrates this
alignment compared to the Group net profit after tax
(NPAT) outcomes.
Variable pay outcomes - SPPRs
The first SPPRs which were granted during FY2016 will
be tested against their performance hurdles in FY2018.
1 The average cash amount awarded as a percentage of maximum for any financial year relates to amounts that were paid under the cash portion of the variable pay plans (previously the Combined
Incentive Plan) in the September following that financial year end.
2 Underlying NPAT figures are used for this graph, in FY2013, these are the same as reported Group NPAT figures.
42 WorleyParsons Annual Report 2017
6 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
Variable pay outcomes - long term equity
The graph below tracks the Company’s TSR over the last four years against the 50th percentile TSR of the peer comparator group used for the
long term equity plan:
TSR performance measured over the last four years
This graph illustrates that growth in the
Company’s TSR was below the 50th percentile,
which has resulted in a nil vesting for Executives
for TSR related long term equity (previously
known as long term incentive (LTI)) granted in
FY2014. As vesting was not achieved, the TSR
performance rights will lapse on 30 September
2017.
Over the same four year period, the Company’s
EPS growth was below the minimum required
to trigger vesting against the EPS performance
hurdle for long term equity granted in FY2014.
EPS performance rights will lapse on 30
September 2017. No retest applies to either
measure.
Summary of vested rights
The table below shows the recent history of vesting of Executives’ long term equity grants and demonstrates the strong link between
remuneration and outcomes and shareholder experience:
GRANT
FY20123
FY2013
FY20134
FY2014
PERFORMANCE PERIOD
ACHIEVED1
EPS ACHIEVED2
TSR PERCENTILE
CHANGE IN
% OF TOTAL
LTI GRANT
VESTED/EXERCISED
01 Jul 11 – 30 Jun 14
01 Jul 12 – 30 Jun 15
01 Jul 12 – 30 Jun 16
01 Jul 13 – 30 Jun 17
lowest
8th
11th
36th
(4.2%)
(17.0%)
(18.6%)
(21.5%)
0%
0%
0%
0%
VESTING DATE
30 Sep 14
30 Sep 15
30 Sep 16
30 Sep 17
VALUE PER RIGHT
VESTED/EXERCISED
$
n/a
n/a
n/a
n/a
1 Represents the Company’s relative TSR ranking over the performance period compared to the peer comparator group.
2 Change in EPS achieved is calculated as the compound annual growth rate of EPS over the performance period.
3 The FY2012 grant was retested to consider the Company’s relative TSR ranking over a four year performance period compared to the peer comparator group. The lowest percentile was achieved.
4 In FY2013, Andrew Wood was granted LTI with a four year vesting period, details are provided in the remuneration report for the relevant year.
COMPANY PERFORMANCE OVER A FIVE YEAR PERIOD
The table below contains a snapshot of the Company’s performance against annual financial indicators and shows how the Company’s
performance has impacted on remuneration outcomes for Executives under the Company’s variable pay 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, variable pay outcomes have moved in line with
the Company’s performance against relevant key metrics:
TSR portion of long term equity
EPS portion of long term equity
Cash portion of variable pay2
FINANCIAL YEAR ENDED 30 JUNE
FY2013
FY2014
FY2015
FY2016
Closing share price ($)
Dividends paid (cents per share)
1 year TSR for the Company (%)
1 year TSR for 50th %ile of peer group (%)
Vesting outcome of LTI (%)
Underlying EPS (cents per share)1
Vesting outcome of LTI (%)
Underlying NPAT ($’m)3
Average % of maximum cash portion
awarded to Executives (%)
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
10.41
56.0
(36.4)
(23.6)
nil
98.4
nil
243.1
nil
7.20
-
(30.2)
(4.0)
nil
61.8
nil
153.1
nil
ANNUALIZED
GROWTH OVER
FIVE YEARS
(15.0%)
(100%)
(18.8%)
FY2017
11.22
-
56.3
3.8
nil
49.6
nil
123.2
(18.6%)
14
1 Underlying EPS, which in the Board’s opinion reflects the Company’s operating results, has been used to calculate the outcomes.
2 The cash component of the variable pay is linked to the achievement of annual KPIs; previously, this was the Combined Incentive Plan which was a mix of cash and equity.
3 Group NPAT was considered to reflect the Company’s operating results for FY2013 and has been used to calculate the remuneration outcomes for that financial year. For all other financial periods
represented in this table, underlying NPAT has been used to calculate the remuneration outcomes. Underlying NPAT excludes impairment of goodwill, restructuring costs (net of tax), net loss on sale of
assets held for sale, impairment of associate intangible assets, certain functional currency related foreign exchange gains, net gain on revaluation of investments previously accounted for as equity
accounted associates and joint operations and other adjustments at the Board discretion, being the difference between reported Group NPAT and underlying NPAT.
WorleyParsons Annual Report 2017 43
WorleyParsons Annual Report 2017 7
DIRECTORS’ REPORT CONTINUED
VARIABLE PAY IN DETAIL
By linking pay to performance, 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 elements of remuneration which are at risk are in the form of both cash
and equity. The following section provides details about each of the components of variable pay.
Cash component - linked to performance against KPIs
Performance targets are set and measured through both financial and non-financial KPIs. These KPIs are agreed at the beginning of the financial
year and the Board retains rigorous oversight, to ensure they retain sufficient stretch, and appropriate thresholds. The minimum potential value
is zero where applicable levels of performance have not been met; the maximum opportunity is 150%1 of the Executive’s target. To be eligible for
a cash 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.
The KPIs chosen for FY2017 are heavily focused on a number of the Company’s key financial indicators in order to strengthen the alignment
between short term remuneration outcomes and financial objectives of the Company. The FY2017 KPIs and their link to the Company’s strategy
are provided below:
PERFORMANCE MEASURES
COMMENTARY
FINANCIAL KPIs (90%
WEIGHTING)
OUTCOMES FOR FY2017 - assessed at the end of
FY2017 by the Board
Delivery of cost out program
Exceeds target - the cost out program has achieved
savings above the initial target.
Delivery of Group days sales
outstanding
Below target - whilst good progress in most parts of
the business, the group wide target was not achieved.
Delivery of additional cash
Maintained earnings at
agreed targets
Below target - progress has been made in improving
the cash position.
Below target - as earnings slightly below internal
target, the cost out program and increased margins
could not offset market contraction.
Maintained liquidity targets On target - liquidity indicators are within an acceptable
level.
Chosen for the performance year (1
July 2016 to 30 June 2017) as they
reflect and measure achievement
against a number of the
Company’s core financial KPIs.
Significant focus has been on
sustainably reshaping and resizing
the business to ensure we continue
to be viable and competitive as the
resources and energy markets
evolve into the future.
NON-FINANCIAL KPIS
(10% WEIGHTING)
OUTCOMES FOR FY2017 - assessed at the end of
FY2017 by the Board
PERFORMANCE MEASURES
Health, Safety and
Environment (HSE)
On target - delivered industry leading safety
performance through this period.
Chosen in support of the
Company's goal of Zero Harm and
measured through the reduction in
the number of reportable incidents
and the demonstration of personal
and visible leadership.
Each KPI has an
individual threshold;
for financial KPIs,
achievement above 80%
of the budget/target is
required before a
sliding scale applies i.e.
for each 1% above 80%
of the budget, 5% is
awarded. This is
capped at 200% (at
120% achievement
against budget).
Non-financial KPIs
have a maximum
achievement of 100%.
1 Variation for Mr Finn - maximum opportunity is 200% of target.
It should be noted that for FY2017, the Board has applied discretion to provide a partial payment to the Executives through the cash portion of
their variable pay plan. This recognises their achievements against the challenging financial KPIs, in particular, their efforts on the cost out
program. The amount equates to between 21-22% of their target.
SPPRs - linked to medium term company performance
Performance rights which are granted annually to Executives as SPPRs, provide the motivation and alignment to drive sustainable share price
growth through an increase in share price measured over a two year vesting period. The number of SPPRs granted is determined by dividing the
dollar value of the award achieved by the face value of shares.
For the SPPRs to convert into shares, the share price at the end of the two year performance period (the closing share price) must be in between
the maximum cap and the minimum floor of the opening share price; the SPPRs vest on a proportionate basis between the cap and the floor. An
Executive must remain in service and receive satisfactory performance ratings throughout the two year vesting period. If these conditions are not
met, the SPPRs will lapse. No dividends are payable on unvested SPPRs.
Examples - based on a notional grant of 1,000 SPPRs with a notional WorleyParsons opening share price of $10.00 at the time the SPPRs are issued i.e. a notional value
of $10,000. In two years' time:
Scenario 1: The closing share price is $21.00 (i.e. more than doubles). The 1,000 SPPRs convert to 2,000 shares and their total value = $42,000.
Scenario 2: The closing share price is $12.00. The 1,000 SPPRs convert to 1,000 x ($12/$10) = 1,200 shares and their total value = $14,400.
Scenario 3: The closing share price is $8.00. The 1,000 SPPRs convert to 1,000 x ($8/$10) = 800 shares and their total value = $6,400.
Scenario 4: The closing share price is half or less than half of the opening share price; then the SPPRs lapse and no shares are issued.
44 WorleyParsons Annual Report 2017
8 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
FY2018 SPPR update
Following feedback received from shareholders in relation to the SPPR ‘floor’, the grant of SPPRs in FY2018 will have a significantly higher ‘floor’
at 70% of the opening share price. As such, if the closing share price is 70% or less than the opening share price, the SPPRs lapse.
The graph to the left demonstrates how the
multiplier, based on share price variation is
applied to the SPPRs with the new hurdle.
FY2016 and FY2017 SPPR grants
(Grant price $7.26 and $8.11 respectively)
Cap = 2x original grant price
Floor = at or less than half original grant price.
Long term equity - linked to long term company performance
Long term equity is assessed against two equally weighted, independent performance targets that align an Executive’s interests with shareholder
returns while driving long term Company performance. Long term equity 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 long term equity with reference to
the underlying share price when the rights are issued.
Rights vest and are automatically exercised (unless an Executive elects otherwise) after the vesting 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 long term equity plan rules ensure a participant can still be rewarded for their contribution, while catering for the local
restrictions on the issue of securities.
For grants made during FY2017, the following performance hurdles apply:
Relative total shareholder return (TSR) performance hurdle 50% weighting
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 long term equity plan if the Company’s TSR performance is at least at the 50th
percentile of the companies in the peer comparator group over a four year period. Executives are not provided an opportunity for retesting of
their long term equity under the relative TSR measure.
50% of the FY2017 long term equity award is subject to a relative TSR performance hurdle that uses the same TSR vesting schedule as shown
below for the FY2013 to FY2016 awards; however, the peer comparator group comprises a revised list of companies that were identified by the
Board as having similar business profiles and with which the Company competes for capital and executive talent; these include: AECOM, Aker
Solutions, AMEC Foster Wheeler, Arcadis, Fluor Corporation, Fugro, Jacobs Engineering Group, JGC Corporation, KBR, Petrofac, SNC Lavalin,
Stantec, Tetra Tech, Wood Group and WSP Global.
Strategic performance hurdles 50% weighting
Given the importance of delivery of the Company's Realize our future strategy and the role that Executives play in leading its implementation,
the Board introduced strategic hurdles as a one-off change for the FY2017 award. These performance hurdles include the achievement of cost
reduction and net debt to EBITDA targets measured at the end of FY2018, both of which are key to the delivery of the Company's current
strategy. A further two year restriction period applies to the shares following the measurement of the targets. Details of performance against the
targets will be disclosed retrospectively due to the commercially sensitive nature of the targets.
WorleyParsons Annual Report 2017 9
WorleyParsons Annual Report 2017 45
DIRECTORS’ REPORT CONTINUED
For grants made during FY2013 to FY2016, the following performance hurdles apply:
Relative total shareholder return (TSR) performance hurdle 50% weighting
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 TSR comparator group include: AECOM, AMEC Foster Wheeler, Arcadis, Balfour Beatty, Cardno, Chicago Bridge & Iron Company, CIMIC1,
Downer EDI, Fluor Corporation, Fugro, Jacobs Engineering Group, JGC Corporation, KBR, McDermott International, Monadelphous Group,
SNC Lavalin2, Saipem, Serco Group, Stantec, TechnipFMC3, Tecnicas Reunidas, Tetra Tech and Wood Group.
1 Due to the acquisition by CIMIC on 28 December 2016, UGL is no longer listed above.
2 Due to the acquisition by SNC Lavalin on 30 June 2017, Atkins is no longer listed above.
3 Due to the merger of Technip and FMC Technologies on 16 January 2017.
Aker Solutions not listed in the above following separation into two entities in 2014.
The Board has discretion to adjust the peer comparator 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) growth performance hurdle 50% weighting
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 growth 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.
Executives will only derive value from the EPS growth component of the grants made between FY2013 and FY2016 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 growth 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
4% p.a. above the increase in CPI
0%
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)
It should be noted that for long term equity grants made in FY2018, the EPS growth performance hurdles shown above will once again be used in
addition to relative TSR (50/50 weighting). These will be measured over a three year performance period plus an additional one year restriction
period.
Other provisions
Rights granted under the SPPR and long term equity plans carry no voting or dividend entitlements. In addition, other than bonus issues and
capital reorganizations (when the number of rights may be adjusted by the Board in accordance with the Australian Securities Exchange 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.
Dilution limit
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 2.25% of the Company’s issued share capital (FY2016: 2.01%).
46 WorleyParsons Annual Report 2017
10 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
Eligible recipients
With the exception of Dennis Finn who has a varied pay mix more aligned with professional services, all current Executives are able to receive
rights through the long term equity plan. Details of the rights granted to Executives as the long term equity component of their remuneration in
FY2017 are outlined on page 53.
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.
EMPLOYMENT ARRANGEMENTS
The key aspects of Executive contracts are outlined below:
CONTRACT DURATION NON-COMPETE CLAUSES
NOTICE PERIODS1
EXECUTIVE DIRECTOR
Andrew Wood
GROUP EXECUTIVES
Robert (Chris) Ashton
Dennis Finn
Thomas Honan
Unlimited
12 months
12 months
Unlimited
Unlimited
Unlimited
12 months
12 months
12 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 variable pay plans
upon termination, where an Executive resigns, the cash portion of the variable pay 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 on page 49. In exercising such discretion, this is typically on a pro-rata basis and subject to the original performance requirements and
timing.
At the 2016 Annual General Meeting, the Board sought and received approval from shareholders, where discretion was applied for the retention
of long term equity following cessation of employment for the value of long term equity to be disregarded when calculating the relevant
participant’s cap for the purpose of section 200F(2)(b) or section 200G(1)(c) of the Act.
Mr Abba ceased to be KMP of WorleyParsons from 1 December 2016 following his resignation from the Company. All unvested equity lapsed
upon his cessation of employment.
The Company did not provide sign-on or separation payments to Executives during FY2017.
3. NON-EXECUTIVE DIRECTOR REMUNERATION
This section outlines the remuneration arrangements in place for the Company’s Non-Executive Directors (NEDs). All directors held office for the
whole of FY2017, except where otherwise stated on page 38.
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.
Directors' fees remained constant in FY2017 and for the sixth consecutive year, there will be no increase in annual fees for NEDs in FY2018.
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 Annual General
Meeting. Of the aggregate annual fee pool, 53% ($1.73 million) was utilized during FY2017 (76% ($2.47 million) for FY2016). NEDs are paid fees
for services on the Board and its Committees. The directors do not receive any performance related incentives such as options or rights to shares,
and no retirement benefits are provided to NEDs other than superannuation contributions.
WorleyParsons Annual Report 2017 47
WorleyParsons Annual Report 2017 11
DIRECTORS’ REPORT CONTINUED
REMUNERATION STRUCTURE
Board and Committee fees
Board and Committee fees for FY2016 and FY2017 are set out below.
These amounts are inclusive of superannuation contributions made on behalf of NEDs in accordance with the Company’s statutory obligations.
ROLE
Chairman1
Deputy Chairman and Lead Independent Director3
Member
Chairman/Member of Nominations Committee
BOARD
$520,0002
$312,000
$194,000
nil
AUDIT AND RISK
$47,000
$26,000
nil
HSE
$30,000
$12,000
nil
REMUNERATION
$37,000
$21,000
nil
1 The Chairman of the Board does not receive additional Board membership fees or fees for Committees of which he may be a member. The Chairman of a Committee does not receive additional
membership fees for that Committee.
2 Mr Grill requested a temporary reduction in his Chairman fee of $520,000 per annum in FY2016 (reduced to $395,053) and to receive no fees for his role in FY2017.
3 The Deputy Chairman and Lead Independent Director does not receive additional fees for Committees of which he may be a member.
COMMITTEE
Other benefits
NEDs are eligible to receive travel allowances of $5,000 per trip for additional time incurred on overseas business related travel including
attendance at Board meetings and site visits. These payments are made within the NED fee pool. 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. From time to time, the Board may determine special fees for additional duties undertaken by
directors. No such fees were paid in FY2017.
REMUNERATION OUTCOMES
The remuneration outcomes of the NEDs for FY2017 and FY2016 are set out in the Remuneration Tables section of the report, on page 54.
NON-EXECUTIVE DIRECTOR INTERESTS IN SHARES
The NED beneficial interests in shares of the Company as at 30 June 2017 are detailed in the Remuneration Tables section of the report, on page
54.
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. NEDs are expected to comply with this requirement within
their first full term of three years as a director. For the purpose of this test, the value of shares is calculated using the number of shares held at 30
June 2017 multiplied by the five day volume weighted average price of the Company’s shares up to and including 30 June 2017 ($11.12) or
purchase price if higher. All NEDs currently comply with the minimum shareholding requirement.
4. REMUNERATION GOVERNANCE FRAMEWORK
REMUNERATION DECISION MAKING
The diagram below illustrates the process by which remuneration decisions are made within the Company, and explains the roles played by
various stakeholders involved in setting remuneration:
12 WorleyParsons Annual Report 2017
48 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
Benchmarking of total remuneration and remuneration mix for Executives during FY2017 was performed by Aon Hewitt, an independent
research and advisory remuneration consulting firm. This advice was used as a guide, and was not a substitute for thorough consideration of all
of the issues by the Remuneration Committee. The cost of advice and assistance by Aon Hewitt for the Executives is not material for either party.
Aon Hewitt was engaged by and reported to the Chairman of the Remuneration Committee. The Board is therefore satisfied that the information
provided by Aon Hewitt was free from undue influence by members of the Executive group to whom the remuneration benchmark information
related.
PwC was engaged to provide commentary and market practice data during FY2017; however, no advice was provided. The cost of the support
was not material for either party. Orient Capital calculated the TSR for the purpose of vesting long term equity. The amount paid to Orient
Capital for TSR reporting is not material for either party.
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 on page 52 provides a summary of the position of each Executive
against the requirement as at 30 June 2017.
HEDGING
Under the Company’s Securities Dealing Policy, directors and Executives are not permitted to hedge unvested performance rights or shares that
count toward 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 variable pay plans.
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.
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 exercises 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.
WorleyParsons Annual Report 2017 49
WorleyParsons Annual Report 2017 13
DIRECTORS’ REPORT CONTINUED
5. REMUNERATION TABLES
STATUTORY REMUNERATION OUTCOMES
Executive remuneration is detailed in the following table in accordance with accounting standards.
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 SPPR and LTI columns under the remuneration awarded section of Actual Remuneration Outcomes on page 51.
SHORT TERM EMPLOYEE BENEFITS
POST-
EMPLOY-
MENT
BENEFITS
OTHER
LONG
TERM
BENEFITS
TERMIN-
ATION
BENEFITS
SHARE BASED PAYMENTS
CASH
SALARY
$
CASH
INCENTIVE1
$
OTHER
BENEFITS2
$
TOTAL
SHORT
TERM
CASH
AND
BENEFITS
$
SUPER-
ANNUATION
$
LONG
SERVICE
LEAVE
$
TERMIN-
ATION
BENEFITS
$
EQUITY
INCENTIVE3
$
LTI
EQUITY
SETTLED3
$
TOTAL
REMUN-
ERATION
IN
ACCORDANCE
WITH
ACCOUNTING
STANDARDS
$
VARIABLE
PAY
% OF
TOTAL
REMUN-
ERATION
%
EXECUTIVE DIRECTOR
Andrew Wood
FY2017
1,434,930
317,673
6,970
1,759,573
FY2016
1,435,238
-
9,533
1,444,771
GROUP EXECUTIVES
Robert (Chris) Ashton4 FY2017
511,773
72,446
262,222
846,441
FY2016
299,410
-
188,593
488,003
Dennis Finn
FY2017
1,049,371
217,096
95,972
1,362,439
FY2016
1,225,831
-
455,171
1,681,002
Thomas Honan5
FY2017
930,385
124,488
1,544
1,056,417
FY2016
542,094
PREVIOUSLY REPORTED GROUP EXECUTIVES
Filippo Abba6
FY2017
227,566
FY2016
661,610
-
-
-
895
542,989
185,391
412,957
643,656
1,305,266
Denis Lucey7
FY2017
259,774
33,216
158,022
451,012
FY2016
356,457
-
238,748
595,205
Chris Parker7
FY2017
242,455
30,187
9,666
282,308
FY2016
322,657
-
14,525
337,182
Total remuneration
FY2017
4,656,254
795,106
719,787
6,171,147
19,615
19,307
12,561
6,245
19,615
-
19,615
16,945
4,142
52,631
7,889
8,017
3,187
14,892
86,624
24,112
24,112
-
-
14,313
-
15,748
9,147
-
-
-
-
-
-
54,173
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
549,003
587,537
147,591
140,765
2,939,840
1,776,546
49.5%
16.2%
133,630
18,192
507,192
190,947
54,743
10,286
-
-
1,047,375
24.9%
522,726
5.4%
1,903,559
1,871,949
38.0%
10.2%
128,382
109,994
1,330,156
27.3%
-
-
569,081
-
(385,906)
(65,899)
(34,706)
n/a
424,359
1,836,953
26.1%
54,697
60,620
-
54,364
-
37,272
10,099
42,526
24,681
1,047,285
766,173
556,793
23.5%
613,321
1.6%
382,385
33.2%
376,755
6.6%
8,125,402
8,949,336
FY20168
5,547,828
-
1,770,496
7,318,324
141,769
120,929
522,770
421,257
424,287
1 The amount relates to the cash portion of the FY2017 variable pay plan typically payable in September 2017.
2 This includes assignment uplifts, market adjustments and non-monetary benefits which include benefits such as expatriate benefits (i.e. housing, home leave etc. applicable to Mr Ashton, Mr Finn, Mr
Abba and Mr Lucey), 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.
3 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, varies based on the probability of vesting 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.
4 Remuneration for FY2016 was disclosed to the extent that it related to Mr Ashton's employment in the capacity of an Executive, which commenced on 1 January 2016.
5 Remuneration for FY2016 was disclosed to the extent that it related to Mr Honan's employment in the capacity of an Executive, which commenced on 1 December 2015.
6 Remuneration is disclosed to the extent that it relates to Mr Abba's employment in the capacity of an Executive, which ceased on 1 December 2016. All of Mr Abba's unvested equity lapsed following his
departure. See page 53.
7 Remuneration is disclosed to the extent that it relates to Mr Lucey and Mr Parker's employment in the capacity of an Executive, which ceased on 1 December 2016. See page 38.
8 The FY2016 totals match the amounts disclosed in the 2016 Remuneration Report. Full details of prior year total remuneration are set out in the remuneration report for the relevant year.
Share based payments are disclosed to the extent they relate to their employment in the capacity of an Executive.
50 WorleyParsons Annual Report 2017
14 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
ACTUAL REMUNERATION OUTCOMES
The table below shows actual remuneration awarded during the year and actual remuneration received during the year. This is separate to the
Executive remuneration details in accordance with the accounting standards per page 50.
AWARDED AND RECEIVED DURING
REPORTING PERIOD
RECEIVED DURING REPORTING PERIOD
DEFERRED FROM PREVIOUS PERIODS2
AWARDED DURING REPORTING PERIOD
DEFERRED FOR FUTURE PERIODS3
SHORT TERM
CASH AND
BENEFITS
$
OTHER
BENEFITS1
$
EQUITY
INCENTIVE
$
TOTAL
REMUNERATION
RECEIVED
DURING
REPORTING
PERIOD
$
EQUITY
INCENTIVE
/SPPR
$
LTI
$
TOTAL
REMUNERATION
AWARDED
DURING
REPORTING
PERIOD
$
EXECUTIVE DIRECTOR
Andrew Wood
GROUP EXECUTIVES
Robert (Chris) Ashton4
Dennis Finn
Thomas Honan5
FY2017
FY2016
FY2017
FY2016
FY2017
FY2016
FY2017
FY2016
1,759,573
1,444,771
846,441
488,003
1,362,439
1,681,002
1,056,417
542,989
PREVIOUSLY REPORTED GROUP EXECUTIVES
Filippo Abba6
FY2017
FY2016
412,957
1,305,266
Denis Lucey7
Chris Parker7
Total remuneration
FY2017
FY2016
FY2017
FY2016
FY2017
FY20168
451,012
595,205
282,308
337,182
6,171,147
7,318,324
43,727
43,419
12,561
6,245
33,928
-
35,363
26,092
4,142
52,631
7,889
8,017
3,187
14,892
-
-
-
-
-
-
-
-
-
-
-
-
-
-
LTI
$
-
-
-
-
-
-
-
-
179,873
163,187
-
-
-
-
1,803,300
1,488,190
727,272
727,271
1,236,370
1,236,356
859,002
494,248
1,396,367
1,681,002
1,091,780
569,081
596,972
1,521,084
458,901
603,222
285,495
352,074
170,213
153,868
490,087
1,042,188
284,994
-
170,042
204,188
185,419
-
170,205
-
283,688
-
-
-
569,995
-
340,085
424,187
309,032
-
283,680
-
3,766,942
3,451,817
1,312,903
648,116
1,886,454
2,723,190
1,946,769
569,081
927,226
1,986,272
953,352
603,222
739,380
352,074
11,533,026
13,195,742
140,797
785,468
-
26,130
179,873
163,187
6,491,817
8,293,109
2,198,232
2,536,412
3,022,850
2,555,538
1 This is the total of superannuation received and long service leave benefits accrued during the reporting period.
2 Remuneration received in reporting period from previous periods includes equity awards granted under the variable pay plans in previous years which vested during reporting period. The Equity
Incentive and LTI value reflects the actual value realized by the Executive.
3 Remuneration awarded during the reporting period but deferred for future periods includes equity awards granted under the variable pay plans (SPPRs and long term equity) which may vest and
become available to Executives in future periods. A grant value based on fixed pay (as defined on page 42) multiplied by the variable pay plan target 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.
4 Remuneration for FY2016 was disclosed to the extent that it related to Mr Ashton's employment in the capacity of an Executive, which commenced on 1 January 2016.
5 Remuneration for FY2016 was disclosed to the extent that it related to Mr Honan's employment in the capacity of an Executive, which commenced on 1 December 2015.
6 Remuneration is disclosed to the extent that it relates to Mr Abba's employment in the capacity of an Executive, which ceased on 1 December 2016. Mr Abba's unvested equity lapsed following his
departure. See page 53.
7 Remuneration is disclosed to the extent that it relates to Mr Lucey and Mr Parker's employment in the capacity of an Executive, which ceased on 1 December 2016. See page 38.
8 The FY2016 totals match the amounts disclosed in the 2016 Remuneration Report. Full details of prior year total remuneration are set out in the remuneration report for the relevant year.
Share based payments are disclosed to the extent they relate to their employment in the capacity of an Executive.
WorleyParsons Annual Report 2017 51
WorleyParsons Annual Report 2017 15
DIRECTORS’ REPORT CONTINUED
EXECUTIVE MINIMUM SHAREHOLDING REQUIREMENT
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 2017:
EXECUTIVE DIRECTOR
Andrew Wood4
GROUP EXECUTIVES
Robert (Chris) Ashton
Dennis Finn
Thomas Honan
WEIGHTED
NUMBER OF SHARES
HELD AT 30 JUNE 20171
VALUE OF SHARES
HELD AT 30 JUNE 20172
$
ANNUAL FIXED PAY AT
30 JUNE 20173
$
PERCENTAGE
OF MINIMUM
REQUIREMENT ACHIEVED
1,184,824
51,538
101,991
62,712
13,175,242
587,207
1,134,139
697,357
1,600,000
559,701
1,080,000
950,000
>100%
52%
53%
37%
1 Includes shares held in the Company plus a 50% weighting of unvested performance rights provided on page 53.
2 Calculated as the weighted number of shares held at 30 June 2017 multiplied by the volume weighted average price of the Company’s shares for the five trading days up to and including 30 June 2017
($11.12) or the price at which performance rights were allocated.
3 The Australian dollar equivalent of annual fixed pay as at 30 June 2017.
4 Effective 1 July 2015, Mr Wood elected to reduce his fixed pay by 10%. The minimum shareholding requirement will be held against the higher fixed pay amount.
EXECUTIVE INTERESTS IN SHARES AND PERFORMANCE RIGHTS
Executives’ beneficial interests in shares and performance rights granted as at 30 June 2017 are detailed in the table below. The service and
performance criteria for the rights are discussed in the SPPR and long term equity sections on pages 44 to 46 or are available in prior year
remuneration reports.
NUMBER OF SHARES AND PERFORMANCE RIGHTS HELD IN WORLEYPARSONS LIMITED
BALANCE AT
1 JULY 2016
GRANTED
PERFORMANCE
RIGHTS
ON EXERCISE OF
PERFORMANCE
RIGHTS
CHANGE IN
STATUS
OTHER
TRANSACTIONS1
BALANCE AT
30 JUNE 2017
856,565
467,476
10,255
26,598
-
143,552
10,000
-
12,537
151,168
EXECUTIVE DIRECTOR
Andrew Wood
GROUP EXECUTIVES
Robert (Chris) Ashton
Dennis Finn
Thomas Honan
TYPE
Shares
Rights
Shares
Rights
Shares
Rights
Shares
Rights
PREVIOUSLY REPORTED GROUP EXECUTIVES
Filippo Abba2
Shares
Rights
Denis Lucey3
Christopher Parker3
Grand total
Shares
Rights
Shares
Rights
Shares
Rights
104,088
5,306
7,455
22,585
1,000,900
816,685
n/a
242,126
n/a
55,968
n/a
60,430
n/a
105,424
n/a
62,901
n/a
60,968
n/a
55,966
-
643,783
-
-
-
-
-
-
-
-
21,312
(21,312)
-
-
-
-
21,312
(21,312)
-
-
-
-
-
-
-
-
(24,208)
(192,757)
(104,088)
(66,274)
(7,455)
(78,551)
(135,751)
(337,582)
-
(53,084)
-
-
-
-
-
-
(9,641)
-
-
-
-
-
856,565
656,518
10,255
82,566
-
203,982
10,000
105,424
-
-
-
-
-
-
(9,641)
(53,084)
876,820
1,048,490
1 May include rights lapsed or a transaction where the Company incurs overseas withholding tax obligations due to the vesting of the Executives’ performance rights; a sufficient number of the shares that
the Executive otherwise would have retained following vesting of their performance rights will be relinquished in order to enable the Company to meet its withholding tax obligations.
2 Mr Abba ceased to be KMP effective 1 December 2016 following his resignation.
3 Mr Lucey and Mr Parker ceased to be KMP effective 1 December 2016.
.
16 WorleyParsons Annual Report 2017
52 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
DETAILS OF VESTED, LAPSED AND OUTSTANDING RIGHTS
Full details of prior year equity grants are set out in the remuneration report for the relevant year.
FAIR
VALUE
PER
RIGHT
(AT
GRANT
DATE)2
$
FAIR
VALUE
OF
GRANT
(AT
GRANT
DATE)3
$
DATE
OF
GRANT
NUMBER
OF
RIGHTS
GRANTED1
VESTING
DATE/
FIRST
EXERCISE
DATE
NUMBER
OF
RIGHTS
VESTED
EXPIRY
DATE
VALUE
OF
RIGHTS
VESTED4
$
NUMBER
OF
RIGHTS
EXERCISED
VALUE
OF
RIGHTS
EXERCISED4
$
NUMBER
OF
RIGHTS
LAPSED5
VALUE
OF
RIGHTS
LAPSED6
$
% OF
RIGHTS
LAPSED
PLAN
EXECUTIVE DIRECTOR
Andrew Wood
LTI
31 Oct 16
31 Oct 16
76,225
76,225
30 Oct 15
170,297
30 Oct 14
83,232
5.96
6.41
3.69
8.62
454,301 30 Sep 20 30 Oct 23
488,602 30 Sep 18 30 Oct 23
628,396 30 Sep 19 28 Oct 22
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
SPPR
31 Oct 16
89,676
10.96
982,849 30 Sep 18 30 Oct 23
30 Oct 15
100,175
4.42
442,774 31 Oct 17 28 Oct 22
GROUP EXECUTIVES
Robert (Chris) Ashton7 LTI
31 Oct 16
31 Oct 16
17,490
17,490
5.96
6.41
104,240 30 Sep 20 30 Oct 23
112,111 30 Sep 18 30 Oct 23
SPPR
31 Oct 16
20,988
10.96
230,028 30 Sep 18 30 Oct 23
Comb Incentive
30 Oct 15
21,194
5.15
109,149 30 Sep 18 28 Oct 22
30 Oct 14
5,404
11.42
61,714 30 Sep 17 30 Oct 21
Dennis Finn7
SPPR
31 Oct 16
60,430
10.96
662,313 30 Sep 18 30 Oct 23
Comb Incentive
Thomas Honan
LTI
30 Oct 15
30 Oct 15
31 Oct 16
31 Oct 16
81,060
62,492
35,141
35,142
4.42
5.15
5.96
6.41
358,285 30 Sep 17 28 Oct 22
321,834 30 Sep 18 28 Oct 22
209,440 30 Sep 20 30 Oct 23
225,260 30 Sep 18 30 Oct 23
SPPR
31 Oct 16
35,141
10.96
385,145 30 Sep 18 30 Oct 23
PREVIOUSLY REPORTED GROUP EXECUTIVES
Filippo Abba8
LTI
31 Oct 16
31 Oct 16
30 Oct 15
01 Apr 15
01 Apr 15
01 Apr 15
20,967
20,967
58,428
11,333
26,641
26,641
5.96
6.41
3.69
5.37
7.82
8.40
124,963 30 Sep 20 30 Oct 23
134,398 30 Sep 18 30 Oct 23
215,599 30 Sep 19 28 Oct 22
60,858 30 Sep 18 01 Apr 22
208,333 30 Sep 17 01 Apr 22
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,084
836,604 100.0%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,967
124,963 100.0%
20,967
134,398 100.0%
58,428
215,599 100.0%
11,333
60,858 100.0%
26,641
208,333 100.0%
223,784 30 Sep 16 01 Apr 22 21,312
172,627
21,312
172,627
5,329
44,764 20.0%
SPPR
31 Oct 16
20,967
10.96
229,798 30 Sep 18 30 Oct 23
Denis Lucey7
LTI
30 Oct 15
28,125
4.42
124,313 30 Sep 17 28 Oct 22
31 Oct 16
31 Oct 16
19,052
19,053
5.96
6.41
113,550 30 Sep 20 30 Oct 23
122,130 30 Sep 18 30 Oct 23
SPPR
31 Oct 16
22,863
10.96
250,578 30 Sep 18 30 Oct 23
Comb Incentive
30 Oct 14
5,306
11.42
60,595 30 Sep 17 30 Oct 21
Christopher Parker7
LTI
31 Oct 16
31 Oct 16
30 Oct 14
17,489
17,490
18,522
5.96
6.41
8.62
104,234 30 Sep 20 30 Oct 23
112,111 30 Sep 18 30 Oct 23
159,660 30 Sep 18 30 Oct 21
SPPR
31 Oct 16
20,987
10.96
230,018 30 Sep 18 30 Oct 23
Comb Incentive
30 Oct 14
4,063
11.42
46,399 30 Sep 17 30 Oct 21
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,967
229,798 100.0%
28,125
124,313 100.0%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 The service and performance criteria for the rights are discussed in the long term equity section on page 45 and 46. 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 in the 2015 Remuneration Report.
2 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. We have used a Monte Carlo simulation model to value the relative
TSR and strategic hurdle rights and SPPRs and a Black-Scholes model to value the EPS growth rights, other cash settled rights and other equity settled rights.
3 Total fair value of 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.
4 This amount is based on the volume weighted average price of the Company’s shares for the five 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).
5 The number of rights lapsed represents rights lapsed due to performance hurdles not being met and/or rights lapsed on cessation of employment.
6 Based on the measurement of the relevant performance hurdles, this total value may be an accumulation of values for rights lapsed over multiple periods.
7 The value of the rights issued to Mr Ashton, Mr Finn, Mr Lucey and Mr Parker are disclosed on page 50 to the extent that they were granted during their term as an Executive. Mr Ashton, Mr Finn and Mr
Parker were granted rights in the Combined Incentive Plan prior to them becoming KMP.
8 The performance rights granted to Mr Abba in April 2015, as disclosed in the 2015 Remuneration Report, were structured with specific targets related to his personal performance and the ongoing
performance of the Improve business line. Partial vesting was achieved against the grant which vested on 30 September 2016, with the remainder being lapsed at that time. Mr Abba ceased to be an
Executive on 1 December 2016.
All vested rights are exercisable. There are no vested and unexercisable rights.
WorleyParsons Annual Report 2017 53
WorleyParsons Annual Report 2017 17
DIRECTORS’ REPORT CONTINUED
DIRECTORS’ REPORT CONTINUED
NON-EXECUTIVE DIRECTOR REMUNERATION OUTCOMES
Remuneration of the NEDs for FY2017 and FY2016 is set out below:
NON-EXECUTIVE DIRECTOR REMUNERATION OUTCOMES
Remuneration of the NEDs for FY2017 and FY2016 is set out below:
SHORT TERM EMPLOYEE BENEFITS
SHORT TERM EMPLOYEE BENEFITS
TRAVEL ALLOWANCES
$
FEES
$
POST-EMPLOYMENT BENEFITS
SUPERANNUATION1
POST-EMPLOYMENT BENEFITS
$
TOTAL
$
-
TOTAL
$
395,053
-
317,000
395,053
327,000
317,000
84,061
327,000
262,000
84,061
278,000
262,000
250,500
278,000
237,922
250,500
261,000
237,922
58,198
261,000
242,200
58,198
267,576
242,200
249,000
267,576
233,076
249,000
240,000
233,076
255,000
240,000
245,000
255,000
1,730,833
245,000
2,471,753
1,730,833
2,471,753
John Grill
John Grill
Ron McNeilly
Ron McNeilly
Larry Benke2
Larry Benke2
Jagjeet S Bindra
Jagjeet S Bindra
Erich Fraunschiel
Erich Fraunschiel
John M Green2
John M Green2
Christopher Haynes
Christopher Haynes
Catherine Livingstone
Catherine Livingstone
Wang Xiao Bin
Wang Xiao Bin
Total remuneration
FY2017
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2017
FY2016
FY2016
FY2017
FY2016
-
FEES
$
378,439
-
292,385
378,439
292,693
292,385
74,061
292,693
232,000
74,061
243,000
232,000
225,500
243,000
213,658
225,500
221,808
213,658
52,376
221,808
203,511
52,376
242,576
203,511
224,000
242,576
209,112
224,000
201,390
209,112
201,310
201,390
201,390
201,310
1,528,478
201,390
2,180,731
1,528,478
2,180,731
-
TRAVEL ALLOWANCES
$
-
-
5,000
-
15,000
5,000
10,000
15,000
30,000
10,000
35,000
30,000
25,000
35,000
5,000
25,000
20,000
5,000
-
20,000
20,000
-
25,000
20,000
25,000
25,000
5,000
25,000
20,000
5,000
35,000
20,000
25,000
35,000
120,000
25,000
180,000
120,000
180,000
-
SUPERANNUATION1
$
16,614
-
19,615
16,614
19,307
19,615
-
19,307
-
-
-
-
-
-
19,264
-
19,192
19,264
5,822
19,192
18,689
5,822
-
18,689
-
-
18,964
-
18,610
18,964
18,690
18,610
18,610
18,690
82,355
18,610
111,022
82,355
111,022
Total remuneration
1 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). 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.
1 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
2 Mr Benke and Mr Green retired effective 25 October 2016.
annualized superannuation guarantee cap (Cap). 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.
2 Mr Benke and Mr Green retired effective 25 October 2016.
NON-EXECUTIVE DIRECTOR INTERESTS IN SHARES
NED beneficial interests in shares of the Company as at 30 June 2017 are detailed in the below table:
NON-EXECUTIVE DIRECTOR INTERESTS IN SHARES
NUMBER OF SHARES HELD IN WORLEYPARSONS LIMITED
NED beneficial interests in shares of the Company as at 30 June 2017 are detailed in the below table:
NUMBER OF SHARES HELD IN WORLEYPARSONS LIMITED
John Grill
Ron McNeilly
John Grill
Larry Benke1
Ron McNeilly
Jajgeet S Bindra
Larry Benke1
Erich Fraunschiel
Jajgeet S Bindra
John M Green1
Erich Fraunschiel
Christopher Haynes
John M Green1
Catherine Livingstone
Christopher Haynes
Wang Xiao Bin
Catherine Livingstone
1 Mr Benke and Mr Green retired effective 25 October 2016.
Wang Xiao Bin
TYPE
Shares
Shares
TYPE
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
Shares
BALANCE AT
1 JULY 2016
25,372,173
BALANCE AT
442,564
1 JULY 2016
25,372,173
1,133,383
442,564
35,650
1,133,383
198,755
35,650
891,869
198,755
11,945
891,869
13,000
11,945
11,000
13,000
11,000
CHANGE IN STATUS
-
CHANGE IN STATUS
-
-
(1,133,383)
-
-
(1,133,383)
-
-
(891,869)
-
-
(891,869)
-
-
-
-
-
OTHER
TRANSACTIONS
-
OTHER
-
TRANSACTIONS
-
-
-
(16,650)
-
-
(16,650)
-
-
-
-
-
-
-
-
-
BALANCE AT
30 JUNE 2017
25,372,173
BALANCE AT
30 JUNE 2017
442,564
25,372,173
n/a
442,564
19,000
n/a
198,755
19,000
n/a
198,755
11,945
n/a
13,000
11,945
11,000
13,000
11,000
1 Mr Benke and Mr Green retired effective 25 October 2016.
This Directors’ Report (including Remuneration Report) is made in accordance with a resolution of the directors.
This Directors’ Report (including Remuneration Report) is made in accordance with a resolution of the directors.
JOHN GRILL AO
Chairman
JOHN GRILL AO
Sydney, 23 August 2017
Chairman
Sydney, 23 August 2017
54 WorleyParsons Annual Report 2017
18 WorleyParsons Annual Report 2017
18 WorleyParsons Annual Report 2017
DIRECTORS’ REPORT CONTINUED
Statement of financial performance
STATEMENT OF FINANCIAL PERFORMANCE
For the financial year ended 30 June 2017
REVENUE AND OTHER INCOME
Professional services revenue
Procurement revenue
Construction and fabrication revenue
Interest income
Other income
Total revenue and other income
EXPENSES
Professional services costs
Procurement costs
Construction and fabrication costs
Global support costs
Other costs
Borrowing costs
Total expenses
Share of net profit/(losses) of associates accounted for using the equity method
Profit before income tax expense
Income tax expense
Profit after income tax expense
Profit after income tax expense attributable to:
Members of WorleyParsons Limited
Non‐controlling interests
Basic earnings per share (cents)
Diluted earnings per share (cents)
The above Statement of Financial Performance should be read in conjunction with the accompanying notes.
NOTES
4
3(E)
5
21(C)
6(A)
16
16
CONSOLIDATED
2017
$’M
3,558.7
1,142.4
502.8
7.1
9.6
5,220.6
(3,364.6)
(1,135.4)
(444.0)
(103.3)
(40.2)
(75.9)
(5,163.4)
3.6
60.8
(4.6)
56.2
33.5
22.7
13.5
13.4
2016
$’M
4,641.8
2,571.7
561.6
8.8
6.2
7,790.1
(4,446.6)
(2,558.0)
(513.8)
(115.0)
(16.7)
(68.8)
(7,718.9)
(2.3)
68.9
(20.3)
48.6
23.5
25.1
9.5
9.5
WorleyParsons Annual Report 2017 1
WorleyParsons Annual Report 2017 55
Statement of comprehensive income
STATEMENT OF COMPREHENSIVE INCOME
For the financial year ended 30 June 2017
Profit after income tax expense
Other comprehensive income/(loss)
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/(loss), net of tax
Total comprehensive income/(loss), 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
2017
$’M
56.2
(37.9)
(3.0)
15.3
(4.4)
19.7
2016
$’M
48.6
(111.9)
3.8
(59.5)
(79.9)
20.4
2 WorleyParsons Annual Report 2017
56 WorleyParsons Annual Report 2017
Statement of financial position
STATEMENT OF FINANCIAL POSITION
As at 30 June 2017
ASSETS
Current assets
Cash and cash equivalents
Trade receivables
Other receivables
Procurement assets
Prepayments
Income tax receivable
Derivatives
Total current assets
Non‐current assets
Trade receivables
Intangible assets
Deferred tax assets
Derivatives
Equity accounted associates
Property, plant and equipment
Other non‐current assets
Total non‐current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Trade and other payables
Procurement payables
Provisions
Interest bearing loans and borrowings
Income tax payable
Derivatives
Total current liabilities
Non‐current liabilities
Trade and other payables
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non‐current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Retained profits
Members of WorleyParsons Limited
Non‐controlling interests
TOTAL EQUITY
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
NOTES
7
8
8
27
8
10
29(A)
18
21(B)
28
9
27
11
13
18
9
13
29(B)
11
14
15
CONSOLIDATED
2017
$’M
2016
$’M
226.2
1,110.2
183.4
103.0
110.8
3.2
2.6
1,739.4
28.2
2,002.6
258.1
87.7
77.3
52.3
13.4
2,519.6
4,259.0
745.4
71.1
354.5
272.5
5.1
1.8
303.7
1,323.5
231.0
394.1
116.6
15.4
0.7
2,385.0
‐
2,077.2
297.5
94.8
86.8
73.3
6.2
2,635.8
5,020.8
917.6
326.7
406.0
249.2
14.8
4.8
1,450.4
1,919.1
24.3
830.1
24.3
61.6
940.3
2,390.7
1,868.3
1,268.5
(270.4)
875.6
1,873.7
(5.4)
1,868.3
30.4
990.2
116.8
84.4
1,221.8
3,140.9
1,879.9
1,264.9
(223.1)
842.1
1,883.9
(4.0)
1,879.9
WorleyParsons Annual Report 2017 3
WorleyParsons Annual Report 2017 57
Statement of changes in equity
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 30 June 2017
ISSUED
CAPITAL
$’M
1,264.9
RETAINED
PROFITS
$’M
842.1
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$’M
(266.2)
HEDGE
RESERVE
$’M
14.5
PERFORMANCE
RIGHTS
RESERVE
$’M
38.2
ACQUISITION
RESERVE
$’M
(9.6)
MEMBERS OF
THE GROUP
$’M
1,883.9
NON‐
CONTROLLING
INTERESTS
$’M
(4.0)
CONSOLIDATED
As at 1 July 2016
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
Total comprehensive
income/(loss), net of tax
Transactions with owners
Share based payments
expense
Transfer to issued capital on
issuance of shares to satisfy
performance rights
Increase in ownership of
controlled entity
Dividends paid
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
3.6
‐
‐
33.5
‐
‐
‐
‐
‐
‐
‐
‐
(66.8)
43.1
(11.2)
‐
‐
‐
‐
‐
‐
‐
‐
4.3
(1.2)
(8.3)
2.2
33.5
(34.9)
(3.0)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
7.5
(3.6)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
TOTAL
$’M
1,879.9
56.2
(69.8)
43.1
(11.2)
4.3
(1.2)
(8.3)
2.2
33.5
(66.8)
43.1
(11.2)
4.3
(1.2)
(8.3)
2.2
22.7
(3.0)
‐
‐
‐
‐
‐
‐
(4.4)
19.7
15.3
7.5
‐
(13.3)
(13.3)
‐
‐
‐
‐
‐
(21.1)
(5.4)
7.5
‐
(13.3)
(21.1)
1,868.3
As at 30 June 2017
1,268.5
875.6
(301.1)
11.5
42.1
(22.9)
1,873.7
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
4 WorleyParsons Annual Report 2017
58 WorleyParsons Annual Report 2017
Statement of changes in equity
STATEMENT OF CHANGES IN EQUITY
For the financial year ended 30 June 2016
ISSUED
CAPITAL
$’M
1,255.0
RETAINED
PROFITS
$’M
873.0
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$’M
(159.0)
HEDGE
RESERVE
$’M
10.7
PERFORMANCE
RIGHTS
RESERVE
$’M
46.9
ACQUISITION
RESERVE
$’M
(9.6)
MEMBERS OF
THE GROUP
$’M
2,017.0
NON‐
CONTROLLING
INTERESTS
$’M
0.6
CONSOLIDATED
As at 1 July 2015
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 loss on foreign exchange
hedges
Income tax on net loss on
foreign exchange hedges
Fair value gain on mark to
market of cross currency
hedge
Income tax on fair value gain
on mark to market of cross
currency hedge
Total comprehensive
income/(loss), net of tax
Transactions with owners
Share based payments
expense
Transfer to issued capital on
issuance of shares to satisfy
performance rights
Dividends paid
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
9.9
‐
23.5
‐
‐
‐
‐
‐
‐
‐
‐
(72.5)
(56.2)
21.5
‐
‐
‐
‐
‐
‐
‐
‐
(0.5)
0.0
5.7
(1.4)
23.5
(107.2)
3.8
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(54.4)
842.1
‐
‐
‐
‐
‐
‐
(266.2)
14.5
1.2
(9.9)
‐
38.2
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
(9.6)
As at 30 June 2016
1,264.9
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
TOTAL
$’M
2,017.6
48.6
(77.2)
(56.2)
21.5
(0.5)
0.0
5.7
(1.4)
23.5
(72.5)
(56.2)
21.5
(0.5)
0.0
5.7
(1.4)
25.1
(4.7)
‐
‐
‐
‐
‐
‐
(79.9)
20.4
(59.5)
1.2
‐
‐
‐
1.2
‐
(54.4)
1,883.9
(25.0)
(4.0)
(79.4)
1,879.9
WorleyParsons Annual Report 2017 5
WorleyParsons Annual Report 2017 59
Statement of cash flows
STATEMENT OF CASH FLOWS
For the financial year ended 30 June 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Dividends received from associates
Interest received
Borrowing costs paid
Income taxes refunded/(paid)
Net cash inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of controlled entities
Proceeds from disposal of investments
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 loans and borrowings
Proceeds from loans and borrowings
Costs of bank facilities
Net loans from related parties
Dividends paid to members of WorleyParsons Limited
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
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES
7
17(B)
7
CONSOLIDATED
2017
$’M
5,802.0
(5,680.2)
121.8
2.9
4.7
(57.0)
6.5
78.9
(18.8)
0.9
(44.7)
0.1
(62.5)
(2,042.8)
1,930.0
(2.6)
3.4
‐
(21.8)
(133.8)
(117.4)
373.1
(11.4)
244.3
2016
$’M
8,113.3
(7,809.2)
304.1
6.3
6.4
(60.9)
(63.9)
192.0
(25.2)
13.8
(69.5)
1.0
(79.9)
(3,635.6)
3,612.3
(3.5)
0.5
(54.4)
(24.1)
(104.8)
7.3
380.8
(15.0)
373.1
6 WorleyParsons Annual Report 2017
60 WorleyParsons Annual Report 2017
Notes to the financial statements
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 30 June 2017
1. CORPORATE INFORMATION
The financial report of WorleyParsons Limited (Company or parent entity) for the financial year ended 30 June 2017 was authorized for issue in
accordance with a resolution of the directors on 23 August 2017.
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 are 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 (AASB).
The Group is of a kind referred to in ASIC Corporations Instrument 2016/191 (Rounding in Financial /Directorsʹ Reports) 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 Instrument. 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 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. 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; 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 amendments from 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.
Adoption of this amendment did not have any effect on the Statement of Financial Performance, Statement of Comprehensive Income and Statement
of Financial Position of the Group.
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. Adoption of this amendment did not have any effect on the Statement of Financial
Performance, Statement of Comprehensive Income and Statement of Financial Position of the Group.
WorleyParsons Annual Report 2017 7
WorleyParsons Annual Report 2017 61
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
Adoption of this amendment did not have any effect on the Statement of Financial Performance, Statement of Comprehensive Income and Statement
of Financial Position of the Group.
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 amendment clarifies 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. Adoption of this amendment did not have any effect on the Statement of Financial Performance, Statement
of Comprehensive Income and Statement of Financial Position of the Group.
(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 2017:
Effective 1 July 2017:
2016‐1 Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses: Amendments to AASB 112
AASB 2016‐1 amends AASB 112 Income Taxes to clarify the requirements on recognition of deferred tax assets for unrealized losses on debt
instruments measured at fair value. The impacts of this amendment are not expected to be material to the Group’s financial statements.
2016‐2 Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107
AASB 2016‐2 amends AASB 107 Statement of Cash Flows to require entities preparing financial statements in accordance with Tier 1 reporting
requirements to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities,
including both changes arising from cash flows and non‐cash changes. The amendment is expected to enhance the Groupʹs disclosure in relation to
interest bearing loans and borrowings.
Effective 1 July 2018:
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.
The Group has established a project team which has undertaken an analysis of a cross‐section of material contracts across the Group to assess the
impact of AASB 15. Based upon this initial assessment, the impact of AASB 15 on earnings is not expected to be material. The next phase of the
project is to perform a deeper assessment of certain types of contracts, implement controls to monitor and assess new contracts and identify the
system and process requirements needed to capture additional information required to support the increased disclosures.
AASB 2014‐5 incorporates the consequential amendments to a number of AASBs (including interpretations) arising from the issuance of AASB 15.
The impacts of this amendment are not expected to be material to the Group’s financial statements.
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.
Effective 1 July 2019:
AASB 16 Leases
AASB 16 is the AASBʹs replacement for AASB 117 Leases. The standard includes new recognition, measurement and disclosure requirements for
lessees. The Group has not yet finalized its assessment of how the new lessee accounting requirements will impact the Groupʹs financial statements.
8 WorleyParsons Annual Report 2017
62 WorleyParsons Annual Report 2017
(B) BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the assets and liabilities of all entities controlled by WorleyParsons Limited as at 30 June 2017 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 is 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.
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 the equity of members of WorleyParsons Limited.
(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
The previously reported segment results for the year ended 30 June 2016 have been restated to be comparable with the revised segmentation
approach as required by AASB 8 Operating Segments. The Group has also included additional information segmented according to its customer
sector groups.
(A) OPERATING SEGMENTS
Professional services revenue
Construction and fabrication revenue
Procurement revenue at margin
Other income
Total segment revenue 1
Segment result2
Segment margin
Other segment information
Depreciation and amortization expense
Share of net profits/(losses) of associates accounted for using the equity method
Equity accounted associates
Purchase of non‐current assets
MAJOR
PROJECTS
AND
INTEGRATED
SOLUTIONS
ADVISIAN
TOTAL
2017
$’M
685.1
502.8
25.4
0.1
2016
$’M
813.7
561.6
58.0
0.9
2017
$’M
410.8
‐
71.6
0.1
2016
$’M
2017
$’M
2016
$’M
605.1 3,548.4 4,805.1
561.6
502.8
357.5
316.2
1.7
9.6
‐
55.8
‐
SERVICES
2017
$’M
2016
$’M
2,452.5 3,386.3
‐
‐
243.7
219.2
0.8
9.4
2,681.1 3,630.8 1,213.4 1,434.2
482.5
660.9 4,377.0 5,725.9
265.9
439.2
242.8
9.1% 7.3% 9.8% 8.9% 2.6% 6.9% 8.6% 7.7%
127.6
119.5
374.8
45.7
12.5
40.3
1.7
66.4
28.6
42.3
(8.2)
60.7
40.3
16.3
1.9
8.5
12.3
20.9
5.8
23.5
23.2
7.4
‐
2.4
3.8
7.7
0.1
2.6
6.0
64.0
3.6
77.3
44.7
70.9
(2.3)
86.8
69.5
1 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, pass‐through revenue at nil margin, interest income and net gain on revaluation of investments previously accounted for as joint operations. The
directors believe the disclosure of revenue attributable to associates provides additional information in relation to the financial performance of the Group.
2 Segment result is segment revenue less segment expenses and excludes the items listed in note 3(H). It is the key financial measure that is presented to the chief
operating decision makers.
WorleyParsons Annual Report 2017 9
WorleyParsons Annual Report 2017 63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. SEGMENT INFORMATION (continued)
(B) CUSTOMER SECTOR GROUPS
Professional services revenue
Construction and fabrication revenue
Procurement revenue at margin
Other income
Total segment revenue
Segment result
Segment margin
HYDROCARBONS
MINERALS, METAL
& CHEMICALS
INFRASTRUCTURE
TOTAL
2017
$’M
2,363.3
502.8
230.7
8.8
2016
$’M
3,277.8
561.6
259.6
0.9
3,105.6
4,099.9
311.3
10.0%
339.4
8.3%
2017
$’M
436.5
‐
4.1
0.8
441.4
16.7
3.8%
2016
$’M
634.1
‐
8.4
‐
642.5
39.9
6.2%
2017
$’M
748.6
‐
81.4
‐
830.0
46.8
5.6%
2016
$’M
893.2
‐
89.5
0.8
983.5
59.9
6.1%
2017
$’M
3,548.4
502.8
316.2
9.6
2016
$’M
4,805.1
561.6
357.5
1.7
4,377.0
5,725.9
374.8
8.6%
439.2
7.7%
(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)
Pass‐through revenue at nil margin 1
Share of revenue from associates
Interest income
Net gain on revaluation of investments previously accounted for as joint operations
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 costs
Interest and tax for associates
Amortization of acquired intangible assets
Total underlying earnings before interest expense and tax expense (underlying EBIT)
Total underlying EBIT margin on aggregated revenue for the Group
Staff restructuring costs2
Onerous lease contracts3
Onerous engineering software licenses
Other restructuring costs
Impairment of associate intangible assets
Net loss on sale of assets held for sale
Certain functional currency related foreign exchange gains
Net gain on revaluation of investments previously accounted for as joint operations
Total EBIT
EBIT margin on aggregated revenue for the Group
Net borrowing costs
Income tax expense
Profit after income tax expense per the Statement of Financial Performance
TOTAL
2016
$’M
5,725.9
2,226.4
167.0
(342.5)
8.8
4.5
2017
$’M
4,377.0
826.2
229.0
(218.7)
7.1
‐
5,220.6
7,790.1
TOTAL
2016
$’M
439.2
(109.0)
(8.3)
(19.2)
302.7
5.3%
(76.8)
(86.4)
(14.3)
(4.6)
‐
(12.1)
15.9
4.5
128.9
2.3%
(60.0)
(20.3)
48.6
2017
$’M
374.8
(96.7)
(3.5)
(16.8)
257.8
5.9%
(59.2)
(24.2)
(3.2)
(38.9)
(2.3)
(0.4)
‐
‐
129.6
3.0%
(68.8)
(4.6)
56.2
1 Pass‐through revenue at nil margin refers to sub‐contract packages for services or materials where the Group does not receive a margin.
2 Includes staff restructuring costs incurred in equity accounted investments.
3 Includes onerous lease costs incurred in equity accounted investments.
10 WorleyParsons Annual Report 2017
64 WorleyParsons Annual Report 2017
(E) RECONCILIATION OF GLOBAL SUPPORT COSTS TO THE STATEMENT OF FINANCIAL PERFORMANCE
Global support costs per segment information1
Staff restructuring costs
Staff restructuring costs attributable to professional services costs, construction and fabrication costs and staff restructuring costs
incurred by equity accounted associates
Global support costs per the Statement of Financial Performance
(F) GEOGRAPHIC SEGMENTS2
Revenue from external customers3
2017
Australia, Pacific, Asia and China
Europe, Middle East and Africa
Americas
Total
Other income
Interest income
AGGREGATED
REVENUE
ADD:
PROCUREMENT
REVENUE AT
NIL MARGIN
ADD:
PASS‐THROUGH
REVENUE AT
NIL MARGIN
$’M
1,064.8
1,577.6
1,734.6
4,377.0
$’M
13.4
9.9
802.9
826.2
$’M
‐
229.0
‐
229.0
Total revenue and other income per the Statement of Financial Performance
2016
Australia, Pacific, Asia and China
Europe, Middle East and Africa
Americas
Total
Other income
Interest income
AGGREGATED
REVENUE
ADD:
PROCUREMENT
REVENUE AT
NIL MARGIN
ADD:
PASS‐THROUGH
REVENUE AT
NIL MARGIN
$’M
1,366.7
1,892.4
2,466.8
5,725.9
$’M
14.1
42.1
2,170.2
2,226.4
$’M
‐
167.0
‐
167.0
Total revenue and other income per the Statement of Financial Performance
Non‐current assets by geographical location:5
Australia, Pacific, Asia and China
Europe, Middle East and Africa
Americas
Non‐current assets by geographical location
LESS:
SHARE OF
REVENUE
FROM
ASSOCIATES
$’M
(118.2)
(55.4)
(45.1)
(218.7)
LESS:
SHARE OF
REVENUE
FROM
ASSOCIATES
$’M
(120.3)
(154.3)
(67.9)
(342.5)
TOTAL
2016
$’M
109.0
76.8
(70.8)
2017
$’M
96.7
59.2
(52.6)
103.3
115.0
TOTAL
REVENUE
FROM
EXTERNAL
CUSTOMERS
$’M
959.7
1,755.6
2,488.6
5,203.9
9.6
7.1
5,220.6
TOTAL
REVENUE
FROM
EXTERNAL
CUSTOMERS
$’M
1,258.8
1,947.2
4,569.1
7,775.1
6.2
8.8
7,790.1
2016
$’M
112.6
115.3
125.1
353.0
LESS:
OTHER
INCOME
$’M
(0.3)
(5.5)
(3.8)
(9.6)
LESS:
OTHER
INCOME4
$’M
(1.7)
‐
‐
(1.7)
2017
$’M
62.4
80.7
197.9
341.0
1 Excludes all restructuring costs.
2 Geographic locations are presented across all business lines. This is different to the internal reports presented to the chief operating decision makers.
3 Revenue is attributed to the geographic location based on the entity providing the services.
4 Excludes net gain on revaluation of investments previously accounted for as joint operations.
5 Excludes goodwill, deferred tax assets and derivative financial instruments.
WorleyParsons Annual Report 2017 11
WorleyParsons Annual Report 2017 65
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
3. SEGMENT INFORMATION (continued)
(G) IDENTIFICATION OF REPORTABLE SEGMENTS
Effective 1 July 2016, the Groupʹs operations are managed and reported through the following business lines: Services, Major Projects, Integrated
Solutions, and Advisian.
Services
To remove duplication of engineering activities and to provide single points of contact to the Groupʹs customers, Improve engineering only
relationships and businesses are moved into the Services business line.
Major Projects and Integrated Solutions
Improve integrated services relationships and opportunities become part of the Major Projects and Integrated Solutions segment, including O&M and
full delivery EPC relationships.
The Group has created a central Global Sales and Marketing function. Personnel conducting business development previously as part of the Major
Projects business line are now included within Global Support. In addition, the Group has redefined aggregated revenue to exclude pass‐through
revenue at nil margin. The previously reported segment results for 30 June 2016 have been restated to be comparable with the revised segmentation
approach as required by AASB 8 Operating Segments. Total EBIT for the Group and profit after income tax expense per the Statement of Financial
Performance remain unchanged.
(H) 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:
• global support costs;
• interest and tax for associates;
• amortization of acquired intangible assets;
• staff restructuring costs;
• onerous lease contracts;
• onerous engineering software licenses;
• other restructuring costs;
• impairment of associate intangible assets;
• net loss on sale of assets held for sale;
• certain functional currency related foreign exchange gains;
• net gain on revaluation of investments previously accounted for as joint operations;
• net borrowing costs; and
• income tax expense.
(I) MAJOR CUSTOMERS
The most significant customer accounted for 6.1% (2016: 5.6%) of aggregated revenue and is within the Services, Major Projects and Integrated
Solutions, and Advisian 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 revaluation of investments previously accounted for as joint operations
Other
Total revenue and other income
CONSOLIDATED
2017
$’M
3,558.7
1,142.4
502.8
7.1
5,211.0
‐
9.6
5,220.6
2016
$’M
4,641.8
2,571.7
561.6
8.8
7,783.9
4.5
1.7
7,790.1
During the year ended 30 June 2016, the Group finalized the acquisition accounting for an additional net interest in entities which had previously
been accounted for as joint operations. This resulted in a $4.5 million net gain on revaluation of investments previously accounted for as joint
operations. There was no such transaction during the year ended 30 June 2017.
12 WorleyParsons Annual Report 2017
66 WorleyParsons Annual Report 2017
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. 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. 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 professionals. The Group considers the terms 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
Write‐down of investment in equity accounted associates
Other restructuring costs
Total other costs
Operating lease rentals ‐ minimum lease payments
Amortization
Depreciation
MOVEMENTS IN PROVISIONS
Employee benefits
Insurance
Onerous leases
Warranty
Other
CONSOLIDATED
2017
$’M
2016
$’M
2,634.2
79.1
7.5
2,720.8
1.3
38.9
40.2
138.9
62.8
18.0
182.6
8.9
5.3
(10.6)
21.4
3,559.8
106.5
1.2
3,667.5
12.1
4.6
16.7
151.1
65.0
25.1
166.0
(5.1)
86.4
6.3
27.9
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 equity settled 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.
WorleyParsons Annual Report 2017 13
WorleyParsons Annual Report 2017 67
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
5. EXPENSES AND LOSSES/(GAINS) (continued)
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. A Monte Carlo simulation is applied to fair value the TSR component, strategic hurdle rights and the
SPPRs. For the EPS, EBIT and “continuous employmentʺ condition, the Black‐Scholes model is utilized. Total fair value at grant date 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 were 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. The employee share plan has closed to new participants, effective from 1 May 2016.
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 non‐current payables; 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
3‐15 years;
5‐20 years;
7 years; and
3‐10 years.
Goods and services tax (GST)
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
Under provision in previous financial periods
Income tax expense
Deferred income tax expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax liabilities
Deferred tax
14 WorleyParsons Annual Report 2017
68 WorleyParsons Annual Report 2017
CONSOLIDATED
2017
$’M
2016
$’M
76.7
(72.9)
0.8
4.6
18.9
(91.8)
(72.9)
124.8
(104.8)
0.3
20.3
(105.7)
0.9
(104.8)
(B) RECONCILIATION OF PRIMA FACIE TAX PAYABLE TO INCOME TAX EXPENSE
Profit before income tax expense
Prima facie tax expense at WorleyParsons Limited’s statutory income tax rate of 30% (2016: 30%)
Tax effect of amounts which are non‐deductible/(non‐taxable) in calculating taxable income:
Non‐deductible share based payments expense
Non‐taxable gain on acquisitions
Non‐deductible impairment of associates
Share of (profits)/losses of associates accounted for using the equity method
Tax losses not previously recognized
Under provision in previous financial periods
Other1
Income tax expense
CONSOLIDATED
2017
$’M
60.8
18.2
2.3
‐
0.4
(1.1)
(1.5)
0.8
(14.5)
4.6
2016
$’M
68.9
20.7
0.4
(1.4)
3.6
0.7
(1.7)
0.3
(2.3)
20.3
(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
(10.2)
(20.1)
(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%
95.1
28.5
84.1
25.2
The benefit for tax losses will only be recognized if:
• 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.
1 Primarily represents the differential for foreign tax rates.
WorleyParsons Annual Report 2017 15
WorleyParsons Annual Report 2017 69
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
7. CASH AND CASH EQUIVALENTS
Cash and cash equivalents per Statement of Financial Position
Procurement cash and cash equivalents
Cash at bank and on hand
Less: bank overdraft
Balance per the Statement of Cash Flows
Reconciliation of profit after income tax expense to net cash inflow from operating activities:
Profit after income tax expense
NON‐CASH ITEMS
Amortization
Depreciation
Share based payments expense
Doubtful debts expense
Share of associatesʹ dividends received in excess of share of (profits)/losses
Net gain on revaluation of investments previously accounted for as joint operations
Write‐down of investments in equity accounted associates
Write‐down of onerous engineering software licenses
Other
Cash flow adjusted for non‐cash items
CHANGES IN ASSETS AND LIABILITIES ADJUSTED FOR EFFECTS OF PURCHASE OF
CONTROLLED ENTITIES
Decrease in trade and other receivables
Decrease/(increase) in prepayments and other assets
Decrease/(increase) in deferred tax assets
Decrease in income tax receivable
Decrease in trade and other payables
Decrease in billings in advance
(Decrease)/increase in income tax payable
(Decrease)/increase in deferred tax liabilities
Decrease in provisions
Net cash inflow from operating activities
NOTES
27
13
CONSOLIDATED
2017
$’M
226.2
25.6
251.8
(7.5)
244.3
56.2
62.8
18.0
7.5
1.3
(0.7)
‐
1.3
3.2
(4.2)
2016
$’M
303.7
69.4
373.1
‐
373.1
48.6
65.0
25.1
1.2
3.5
8.6
(4.5)
12.1
14.3
3.2
145.4
177.1
456.6
2.6
39.4
12.2
(417.6)
(8.2)
(9.6)
(92.5)
(49.4)
78.9
223.7
(17.4)
(85.2)
39.2
(2.5)
(93.8)
1.4
1.1
(51.6)
192.0
RECOGNITION AND MEASUREMENT
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 in 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
Cash and cash equivalents include restricted cash that is available for use under certain circumstances by the Group ($2.0 million) (2016: $14.2
million). Included within procurement assets are cash and cash equivalents of $25.6 million (2016: $69.4 million) which has been identified as for
procurement.
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.
16 WorleyParsons Annual Report 2017
70 WorleyParsons Annual Report 2017
8. TRADE AND OTHER RECEIVABLES
CURRENT TRADE RECEIVABLES
Trade receivables
Unbilled contract revenue
Retentions
Allowance for impairment of trade receivables
Less: procurement trade and other receivables
Allowance for impairment of trade receivables
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 Groupʹs exposure to credit, currency and interest rate risk for trade receivables and unbilled
contract revenue is disclosed in note 18.
NON‐CURRENT TRADE RECEIVABLES
Trade receivables1
Unbilled contract revenue
OTHER RECEIVABLES
Other receivables
Amounts receivable from associates and related parties
NOTES
CONSOLIDATED
2017
$’M
2016
$’M
745.5
468.5
23.1
(49.5)
(77.4)
1,110.2
50.7
1.3
(3.2)
0.7
49.5
13.8
14.4
28.2
127.7
55.7
183.4
832.9
823.2
42.8
(50.7)
(324.7)
1,323.5
49.5
3.5
(3.1)
0.8
50.7
‐
‐
‐
176.6
54.4
231.0
27
30(B)
RECOGNITION AND MEASUREMENT
All trade and other receivables are recognized at the original amounts less an allowance for any impairment of receivables. An allowance for
impairment of receivables 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 Group’s activities in general.
1 Non‐current trade receivables and unbilled contract revenue relate to a single contract where recovery is expected to take greater than twelve months.
WorleyParsons Annual Report 2017 17
WorleyParsons Annual Report 2017 71
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
9. TRADE AND OTHER PAYABLES
CURRENT
Trade payables
Accruals
Amounts payable to associates and related parties
Billings in advance
Accrued staff costs
Other payables
Less: procurement trade and other payables
NON‐CURRENT
Other payables
NOTES
CONSOLIDATED
2017
$’M
2016
$’M
30(B)
27
380.8
226.8
15.0
75.0
111.1
7.8
(71.1)
745.4
24.3
24.3
477.7
500.2
16.7
83.2
158.7
7.8
(326.7)
917.6
30.4
30.4
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 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.
18 WorleyParsons Annual Report 2017
72 WorleyParsons Annual Report 2017
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:
Balance at 1 July 2016
Additions/transfers
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2017
Balance at 1 July 2015
Additions
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2016
CONSOLIDATED
GOODWILL
$’M
CUSTOMER
CONTRACTS AND
RELATIONSHIPS
$’M
TRADE
NAMES
$’M
COMPUTER
SOFTWARE
$’M
1,890.5
‐
‐
(57.7)
1,832.8
1,906.8
8.6
‐
(24.9)
1,890.5
28.7
‐
(13.9)
(0.4)
14.4
40.3
4.9
(15.5)
(1.0)
28.7
11.1
‐
(2.9)
0.0
8.2
15.3
‐
(3.7)
(0.5)
11.1
135.7
36.4
(31.1)
0.1
141.1
113.3
49.4
(26.9)
(0.1)
135.7
CONSOLIDATED
2017
$’M
2016
$’M
2,033.0
(200.2)
1,832.8
187.9
(173.5)
14.4
82.7
(74.5)
8.2
329.2
(188.1)
141.1
24.8
(18.7)
6.1
2,002.6
OTHER
$’M
11.2
1.6
(6.7)
0.0
6.1
14.6
1.5
(4.8)
(0.1)
11.2
2,090.7
(200.2)
1,890.5
191.3
(162.6)
28.7
83.9
(72.8)
11.1
301.1
(165.4)
135.7
25.9
(14.7)
11.2
2,077.2
TOTAL
$’M
2,077.2
38.0
(54.6)
(58.0)
2,002.6
2,090.3
64.4
(50.9)
(26.6)
2,077.2
RECOGNITION AND MEASUREMENT
Goodwill
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.
WorleyParsons Annual Report 2017 19
WorleyParsons Annual Report 2017 73
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Identifiable intangible assets
10. INTANGIBLE ASSETS (continued)
Intangible assets acquired separately or in a business combination have finite useful lives and are initially measured at cost. The cost of an intangible
Identifiable intangible assets
asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at
Intangible assets acquired separately or in a business combination have finite useful lives and are initially measured at cost. The cost of an intangible
cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets are not capitalized and
asset acquired in a business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at
expenditure is recognized in the profit and loss in the year in which the expenditure is incurred.
cost less any accumulated amortization and any accumulated impairment losses. Internally generated intangible assets are not capitalized and
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognized only when
expenditure is recognized in the profit and loss in the year in which the expenditure is incurred.
the Group can demonstrate:
Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognized only when
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the Group can demonstrate:
• its intention to complete and its ability to use or sell the asset;
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• how the asset will generate future economic benefits;
• its intention to complete and its ability to use or sell the asset;
• the availability of resources to complete the development; and
• how the asset will generate future economic benefits;
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
• the availability of resources to complete the development; and
Impairment of assets
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Goodwill is not amortized; instead, it is tested annually, unless impairment is indicated. Goodwill is carried at cost less accumulated impairment.
Impairment of assets
For the purposes of impairment testing, goodwill acquired in a business combination is allocated to groups of cash generating units (CGUs) that are
Goodwill is not amortized; instead, it is tested annually, unless impairment is indicated. Goodwill is carried at cost less accumulated impairment.
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those groups
For the purposes of impairment testing, goodwill acquired in a business combination is allocated to groups of cash generating units (CGUs) that are
of CGUs. Following the business line restructure on 1 July 2016 (refer note 3 (G)), a review of CGUs was completed, resulting in Improve no longer
expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those groups
being a CGU and goodwill being allocated to five CGUs. These CGUs represent the lowest level within the entity at which the goodwill is monitored
of CGUs. Following the business line restructure on 1 July 2016 (refer note 3 (G)), a review of CGUs was completed, resulting in Improve no longer
for internal management purposes. Impairment is determined by assessing the recoverable amount of the groups of CGUs to which the goodwill
being a CGU and goodwill being allocated to five CGUs. These CGUs represent the lowest level within the entity at which the goodwill is monitored
relates. When the recoverable amount of the groups of CGUs is less than the carrying amount, an impairment loss is recognized.
for internal management purposes. Impairment is determined by assessing the recoverable amount of the groups of CGUs to which the goodwill
Impairment losses recognized for goodwill are not subsequently reversed. Assets that are subject to amortization are reviewed for impairment
relates. When the recoverable amount of the groups of CGUs is less than the carrying amount, an impairment loss is recognized.
whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. The recoverable amount is the
Impairment losses recognized for goodwill are not subsequently reversed. Assets that are subject to amortization are reviewed for impairment
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
whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount. The recoverable amount is the
which there are separately identifiable cash flows (CGUs). Impairment testing calculations use cash flow projections based on financial forecasts of
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
how the business is expected to perform consistent with current and historical experience and external data. The estimation of future cash flows
which there are separately identifiable cash flows (CGUs). Impairment testing calculations use cash flow projections based on financial forecasts of
requires assumptions to be made regarding future uncertain events. Management has risk adjusted the future cash flows to recognize challenging
how the business is expected to perform consistent with current and historical experience and external data. The estimation of future cash flows
market conditions. The risk adjusted revenue growth rates for all the CGUs range from 2% to 5%. A risk premium is included in determining each
requires assumptions to be made regarding future uncertain events. Management has risk adjusted the future cash flows to recognize challenging
CGUʹs discount rate, reflecting the level of forecasting, size, country and financing risks for that CGU.
market conditions. The risk adjusted revenue growth rates for all the CGUs range from 2% to 5%. A risk premium is included in determining each
KEY ESTIMATES
CGUʹs discount rate, reflecting the level of forecasting, size, country and financing risks for that CGU.
The goodwill allocated to the material CGUs and the key assumptions used for the value in use impairment testing are as follows:
KEY ESTIMATES
The goodwill allocated to the material CGUs and the key assumptions used for the value in use impairment testing are as follows:
2017
Opening balance
2017
Closing balance
Opening balance
Risk‐weighted pre‐tax discount rate
Closing balance
Risk‐adjusted growth rate beyond five years
Risk‐weighted pre‐tax discount rate
Risk‐adjusted growth rate beyond five years
SERVICES –
AUSTRALIA,
PACIFIC, ASIA AND
SERVICES –
CHINA
AUSTRALIA,
$’M
PACIFIC, ASIA AND
CHINA
524.3
$’M
509.9
524.3
16.6%
509.9
3.0%
16.6%
3.0%
SERVICES –
AMERICAS
$’M
SERVICES –
AMERICAS
312.2
$’M
303.6
312.2
14.4%
303.6
3.0%
14.4%
3.0%
SERVICES – EUROPE,
MIDDLE EAST,
AFRICA
SERVICES – EUROPE,
$’M
MIDDLE EAST,
AFRICA
360.2
$’M
350.3
360.2
13.9%
350.3
3.0%
13.9%
3.0%
MAJOR PROJECTS
AND INTEGRATED
SOLUTIONS
MAJOR PROJECTS
$’M
AND INTEGRATED
SOLUTIONS
421.7
$’M
410.1
421.7
12.4%
410.1
3.0%
12.4%
3.0%
2016
Opening balance
2016
Closing balance
Opening balance
Risk‐weighted pre‐tax discount rate
Closing balance
Risk‐adjusted growth rate beyond five years
Risk‐weighted pre‐tax discount rate
Risk‐adjusted growth rate beyond five years
SERVICES –
AUSTRALIA,
PACIFIC, ASIA
SERVICES –
AND CHINA
AUSTRALIA,
$’M
PACIFIC, ASIA
AND CHINA
550.2
$’M
514.3
550.2
14.0%
514.3
3.0%
14.0%
3.0%
SERVICES – EUROPE,
MIDDLE EAST,
NORTH AFRICA
SERVICES – EUROPE,
$’M
MIDDLE EAST,
NORTH AFRICA
420.1
$’M
398.4
420.1
14.9%
398.4
3.0%
14.9%
3.0%
SERVICES –
AMERICAS
$’M
SERVICES –
AMERICAS
571.8
$’M
255.8
571.8
12.5%
255.8
3.0%
12.5%
3.0%
MAJOR PROJECTS
$’M
MAJOR PROJECTS
145.9
$’M
338.2
145.9
11.6%
338.2
3.0%
11.6%
3.0%
IMPROVE
$’M
IMPROVE
119.5
$’M
118.3
119.5
12.7%
118.3
3.0%
12.7%
SENSITIVITY ANALYSIS
The combined fair value in the all the CGUs exceeds the carrying value by over $1,018.0 million. Management recognizes that the cash flow
SENSITIVITY ANALYSIS
projections, discount and growth rates used to calculate the value in use may vary from what has been estimated.
The combined fair value in the all the CGUs exceeds the carrying value by over $1,018.0 million. Management recognizes that the cash flow
The value in use estimate is particularly sensitive to the achievement of long term growth rates, discount rates and the forecast performance
projections, discount and growth rates used to calculate the value in use may vary from what has been estimated.
improvement program. The Group has performed detailed sensitivity analysis as part of its impairment testing to ensure that the results of its testing
The value in use estimate is particularly sensitive to the achievement of long term growth rates, discount rates and the forecast performance
are reasonable.
improvement program. The Group has performed detailed sensitivity analysis as part of its impairment testing to ensure that the results of its testing
Sensitivity analysis on the inputs for all CGUs is as follows:
are reasonable.
• terminal growth rates: a 1% decrease in the terminal growth rate will result in all CGUs listed above being free of impairment at reporting date;
Sensitivity analysis on the inputs for all CGUs is as follows:
• post‐tax discount rates: a 0.5% increase in the discount rate will result in all the CGUs listed above being free of impairment at reporting date; and
• terminal growth rates: a 1% decrease in the terminal growth rate will result in all CGUs listed above being free of impairment at reporting date;
• forecast cash flows: a 3% decrease in the forecast cash flows will result in all the CGUs listed above being free of impairment at reporting date.
• post‐tax discount rates: a 0.5% increase in the discount rate will result in all the CGUs listed above being free of impairment at reporting date; and
3.0%
• forecast cash flows: a 3% decrease in the forecast cash flows will result in all the CGUs listed above being free of impairment at reporting date.
20 WorleyParsons Annual Report 2017
74 WorleyParsons Annual Report 2017
20 WorleyParsons Annual Report 2017
ADVISIAN
$’M
ADVISIAN
272.1
$’M
258.9
272.1
13.4%
258.9
3.0%
13.4%
3.0%
ADVISIAN
$’M
ADVISIAN
99.3
$’M
265.5
99.3
13.2%
265.5
3.0%
13.2%
3.0%
11. PROVISIONS
CURRENT
Employee benefits
Deferred revenue and project
Insurance
Onerous leases
Warranty
Deferred consideration
Other
NON‐CURRENT
Employee benefits
Onerous leases
Warranty
Other
CONSOLIDATED
2017
$’M
170.8
116.3
25.9
20.8
14.3
‐
6.4
354.5
31.7
22.6
4.2
3.1
61.6
2016
$’M
204.4
123.0
18.5
25.6
18.6
6.3
9.6
406.0
32.2
34.6
16.2
1.4
84.4
RECONCILIATIONS
Reconciliations of each class of current and non‐current provision at the beginning and end of the current and previous financial years are set out
below:
CURRENT
Balance at 1 July 2016
Additional provisions/transfers to/from non‐current provisions
Release of unused provision
Amounts utilized
Differences arising from translation of foreign operations
Balance at 30 June 2017
Balance at 1 July 2015
Additional provisions/transfers to/from non‐current provisions
Release of unused provision
Amounts utilized
Differences arising from translation of foreign operations
Balance at 30 June 2016
CONSOLIDATED
DEFERRED
REVENUE
AND
PROJECT
$’M
EMPLOYEE
BENEFITS
$’M
204.4
248.2
(70.5)
(207.9)
(3.4)
170.8
266.2
227.2
(70.1)
(219.2)
0.3
204.4
123.0
39.9
(13.1)
(30.1)
(3.4)
116.3
109.6
171.8
(61.3)
(95.7)
(1.4)
123.0
INSURANCE
$’M
ONEROUS
LEASES
$’M
WARRANTIES
$’M
DEFERRED
CONSIDERATION
$’M
OTHER
$’M
18.5
11.2
(2.3)
(0.8)
(0.7)
25.9
22.6
2.8
(7.9)
‐
1.0
18.5
25.6
18.5
(1.5)
(19.4)
(2.4)
20.8
23.3
51.1
‐
(47.7)
(1.1)
25.6
18.6
6.0
(5.0)
(4.7)
(0.6)
14.3
31.0
9.8
(19.4)
(0.5)
(2.3)
18.6
6.3
‐
‐
(6.2)
(0.1)
9.6
‐
‐
(0.9)
(2.3)
‐
6.4
23.7
6.1
(0.2)
(24.3)
1.0
11.5
2.6
(1.6)
(1.9)
(1.0)
6.3
9.6
WorleyParsons Annual Report 2017 21
WorleyParsons Annual Report 2017 75
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
11. PROVISIONS (continued)
NON‐CURRENT
Balance at 1 July 2016
Additional provisions/transfers to/from current provisions
Release of unused provision
Amounts utilized
Differences arising from translation of foreign operations
Balance at 30 June 2017
Balance at 1 July 2015
Additional provisions
Release of unused provision/transfer to/from current provisions
Amounts utilized
Differences arising from translation of foreign operations
Balance at 30 June 2016
CONSOLIDATED
EMPLOYEE
BENEFITS
$’M
ONEROUS
LEASES
$’M
WARRANTIES
$’M
DEFERRED
CONSIDERATION
$’M
OTHER
$’M
32.2
6.7
(1.8)
(4.7)
(0.7)
31.7
40.0
10.0
(1.1)
(17.5)
0.8
32.2
34.6
(11.3)
(0.4)
‐
(0.3)
22.6
‐
35.3
‐
‐
(0.7)
34.6
16.2
0.8
(12.4)
‐
(0.4)
4.2
0.3
16.2
(0.3)
‐
‐
16.2
‐
‐
‐
‐
‐
‐
6.0
‐
(6.1)
‐
0.1
‐
1.4
3.0
(0.8)
‐
(0.5)
3.1
1.8
1.1
(0.5)
‐
(1.0)
1.4
RECOGNITION AND MEASUREMENT
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 high quality corporate bond rate
with 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
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.
76 WorleyParsons Annual Report 2017
22 WorleyParsons Annual Report 2017
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 2017 and
30 June 2016 was as follows:
Total interest bearing loans and borrowings1
Less: derivatives2
Less: cash and cash equivalents3
Net debt
Total equity
Gearing
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 in breach of externally imposed capital requirements.
CONSOLIDATED
2017
$’M
1,106.2
(87.7)
(251.8)
766.7
1,868.3
29.1%
2016
$’M
1,243.9
(94.8)
(373.1)
776.0
1,879.9
29.2%
1 Excluding capitalized borrowing costs.
2 Only includes mark‐to‐market cross currency swaps.
3 Includes procurement cash.
WorleyParsons Annual Report 2017 23
WorleyParsons Annual Report 2017 77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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
2017
$’M
242.7
23.0
0.2
7.5
(0.9)
272.5
592.2
240.6
‐
(2.7)
830.1
2016
$’M
227.5
20.4
2.2
‐
(0.9)
249.2
861.1
132.4
0.3
(3.6)
990.2
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.
A qualifying asset is defined as an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. 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 non‐current payables; 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 as
follows:
AMOUNT, MILLION
USD 205.0
USD 75.0
USD 20.0
USD 175.0
USD 22.0
USD 144.5
USD 169.5
DATE OF ISSUE
September 2012
September 2012
September 2012
March 2011
March 2011
April 2008
May 2007
DATE OF MATURITY
September 2022
September 2019
September 2017
March 2021
March 2018
April 2018
May 2017 (matured)
FIXED COUPON PER ANNUM
4.00%
3.45%
3.09%
5.56%
4.86%
6.50%
5.76%
Cross currency swaps have been entered into, swapping USD 289.3 million (2016: USD 289.3 million) of notes payable into CAD 288.3 million (2016:
CAD 288.3 million). This represents 45.1% of the outstanding 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. This includes facilities of USD 620 million, of which $240.6 million is utilized at 30 June
2017, mature on 30 August 2018 and accordingly are classified as non‐current. These facilities, denominated in various currencies, are subject to
negative pledge arrangements which require the Group to comply with certain minimum financial requirements.
24 WorleyParsons Annual Report 2017
78 WorleyParsons Annual Report 2017
14. ISSUED CAPITAL
Ordinary shares, fully paid1
Special voting share
(A) MOVEMENTS IN SHARES
Balance at the beginning of the financial year
Ordinary shares issued on redemption of exchangeable shares
Exchangeable shares exchanged for ordinary shares
Transfer from performance rights reserve on issuance of shares2
Ordinary shares issued from WorleyParsons Limited Plans Trust
Balance at the end of the financial year
2017
NUMBER OF
SHARES
248,189,086
1
248,189,087
2017
NUMBER OF
SHARES
247,837,326
1,177,207
(1,177,207)
351,761
‐
248,189,087
CONSOLIDATED
2016
NUMBER OF
SHARES
$’M
1,268.5
‐
1,268.5
247,837,325
1
247,837,326
$’M
1,264.9
31.5
(31.5)
3.6
‐
1,268.5
2016
NUMBER OF
SHARES
247,263,345
580,189
(580,189)
555,636
18,345
247,837,326
$’M
1,264.9
‐
1,264.9
$’M
1,255.0
15.5
(15.5)
9.9
0.0
1,264.9
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 2017, 1,177,207 (2016: 580,189) 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.
1 Included in ordinary shares are 1,363,638 (2016: 2,540,875) 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 248,828 (2016: 248,828) shares in the Company, which have been consolidated and eliminated in
accordance with the accounting standards.
2 Includes 30,966 employee bonus shares.
WorleyParsons Annual Report 2017 25
WorleyParsons Annual Report 2017 79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
(C) PERFORMANCE RIGHTS
14. ISSUED CAPITAL (continued)
The policy in respect of performance rights is outlined in note 5.
(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
Balance at the beginning of the financial year
Rights exercised
Rights granted
Rights lapsed or expired
Rights exercised
Balance at the end of the financial year
Rights lapsed or expired
Exercisable at the end of the financial year
Balance at the end of the financial year
Weighted average exercise price
Exercisable at the end of the financial year
NUMBER OF
PERFORMANCE RIGHTS AND SPPR
NUMBER OF
PERFORMANCE RIGHTS AND SPPR
2017
2016
2,830,580
2017
1,059,084
2,830,580
(320,795)
1,059,084
(430,915)
(320,795)
3,137,954
(430,915)
1,199
3,137,954
$nil
1,199
2,226,779
2016
1,874,717
2,226,779
(555,636)
1,874,717
(715,280)
(555,636)
2,830,580
(715,280)
1,874
2,830,580
$nil
1,874
Performance rights
Weighted average exercise price
The outstanding balance as at 30 June 2017 is represented by:
Performance rights
• 1,199 performance rights, vested on 30 September 2015 and expiring on 18 October 2019;
The outstanding balance as at 30 June 2017 is represented by:
• 91,933 performance rights, vesting on 30 September 2017 and expiring on 24 October 2020;
• 1,199 performance rights, vested on 30 September 2015 and expiring on 18 October 2019;
• 543,704 performance rights, vesting on 30 September 2017 and expiring on 30 October 2021;
• 91,933 performance rights, vesting on 30 September 2017 and expiring on 24 October 2020;
• 152,644 performance rights, vesting on 30 September 2018 and expiring on 30 October 2021;
• 543,704 performance rights, vesting on 30 September 2017 and expiring on 30 October 2021;
• 168,107 performance rights, vesting on 30 September 2017 and expiring on 28 October 2022;
• 152,644 performance rights, vesting on 30 September 2018 and expiring on 30 October 2021;
• 100,175 performance rights, vesting on 31 October 2017 and expiring on 28 October 2022;
• 168,107 performance rights, vesting on 30 September 2017 and expiring on 28 October 2022;
• 916,664 performance rights, vesting on 30 September 2018 and expiring on 28 October 2022;
• 100,175 performance rights, vesting on 31 October 2017 and expiring on 28 October 2022;
• 198,277 performance rights, vesting on 30 September 2019 and expiring on 28 October 2022;
• 916,664 performance rights, vesting on 30 September 2018 and expiring on 28 October 2022;
• 431,267 performance rights, vesting on 30 September 2018 and expiring on 30 October 2023;
• 198,277 performance rights, vesting on 30 September 2019 and expiring on 28 October 2022;
• 369,974 performance rights, vesting on 30 September 2019 and expiring on 30 October 2023; and
• 431,267 performance rights, vesting on 30 September 2018 and expiring on 30 October 2023;
• 164,010 performance rights, vesting on 30 September 2020 and expiring on 30 October 2023.
• 369,974 performance rights, vesting on 30 September 2019 and expiring on 30 October 2023; and
Weighted average remaining contractual life
• 164,010 performance rights, vesting on 30 September 2020 and expiring on 30 October 2023.
The weighted average remaining life for the rights outstanding as at 30 June 2017 is 5.4 years (2016: 5.7 years).
Weighted average remaining contractual life
Weighted average fair value
The weighted average remaining life for the rights outstanding as at 30 June 2017 is 5.4 years (2016: 5.7 years).
The weighted average fair value of rights granted during the financial year was $8.15 (2016: $4.82).
Weighted average fair value
KEY ESTIMATES
The weighted average fair value of rights granted during the financial year was $8.15 (2016: $4.82).
Pricing model
KEY ESTIMATES
The following table lists the inputs to the models used for the financial years ended 30 June 2017 and 30 June 2016:
Pricing model
The following table lists the inputs to the models used for the financial years ended 30 June 2017 and 30 June 2016:
PERFORMANCE RIGHTS
PLAN 2017
$nil
$nil
PERFORMANCE RIGHTS
PLAN 2016
TSR AND SPPR
PERFORMANCE RIGHTS
TSR, EPS AND SPPR
PERFORMANCE RIGHTS
Dividend yield (%)
Expected volatility (%)1
Dividend yield (%)
Risk‐free interest rate (%)
Expected volatility (%)1
Expected life of rights (years)
Risk‐free interest rate (%)
Rights exercise price ($)
Expected life of rights (years)
Weighted average share price at measurement date ($)
Rights exercise price ($)
Weighted average share price at measurement date ($)
PLAN 2017
CEO
1.31‐2.25
TSR AND SPPR
60
CEO
1.31‐2.25
1.68‐1.83
60
2‐4
1.68‐1.83
nil
2‐4
8.50
nil
8.50
EXECUTIVES
1.31‐2.25
60
EXECUTIVES
1.31‐2.25
1.68‐1.83
60
2‐4
1.68‐1.83
nil
2‐4
8.50
nil
8.50
PLAN 2016
TSR, EPS AND SPPR
CEO
7.80‐8.40
45
CEO
7.80‐8.40
1.76‐1.95
45
2‐4
1.76‐1.95
nil
2‐4
6.52
nil
6.52
EXECUTIVES
7.80‐8.40
45
EXECUTIVES
7.80‐8.40
1.76‐1.95
45
2‐4
1.76‐1.95
nil
2‐4
6.52
nil
6.52
1 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.
1 The expected volatility was determined based on the historical share price volatility of the Company. The resulting expected volatility therefore reflects the assumption
26 WorleyParsons Annual Report 2017
that the historical volatility is indicative of future trends, which may not necessarily be the actual outcome.
80 WorleyParsons Annual Report 2017
26 WorleyParsons Annual Report 2017
15. RESERVES
Foreign currency translation reserve
Hedge reserve
Performance rights reserve
Acquisition reserve
CONSOLIDATED
2017
$’M
(301.1)
11.5
42.1
(22.9)
(270.4)
2016
$’M
(266.2)
14.5
38.2
(9.6)
(223.1)
(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.
No amount was recognized in the Statement of Financial Performance in relation to hedge ineffectiveness for the year ended 30 June 2017 (2016:
$0.3 million).
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 Group increased its share of
WorleyParsons Oman Engineering LLC by 14% during the year ended 30 June 2017.
16. EARNINGS PER SHARE
ATTRIBUTABLE TO MEMBERS OF WORLEYPARSONS LIMITED
Basic earnings per share
Diluted earnings per share
The following reflects the income and security data used in the calculation of basic and diluted earnings per share:
(A) RECONCILIATION OF EARNINGS USED IN CALCULATING EARNINGS PER SHARE
Earnings used in calculating basic and diluted earnings per share
(B) WEIGHTED AVERAGE NUMBER OF SHARES USED AS THE DENOMINATOR
Weighted average number of ordinary securities used in calculating basic earnings per share
Performance rights which are considered dilutive
CONSOLIDATED
2017
CENTS
2016
CENTS
13.5
13.4
$’M
33.5
9.5
9.5
$’M
23.5
Number
248,075,793
2,028,922
Number
247,676,851
657,337
Adjusted weighted average number of ordinary securities used in calculating diluted earnings per share
250,104,715
248,334,188
Within the total number of performance rights which are considered dilutive, the weighted average number of converted, lapsed or cancelled
potential ordinary shares used in calculating diluted earnings per share was 150,453 (2016: 38,923).
WorleyParsons Annual Report 2017 27
WorleyParsons Annual Report 2017 81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
16. EARNINGS PER SHARE (continued)
MEASUREMENT
Basic earnings per share
Basic earnings per share is determined by dividing the profit attributable to members of WorleyParsons Limited by the weighted average number of
ordinary shares outstanding during the financial year.
Diluted earnings per share
Diluted earnings per share is calculated as 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 2017:
Nil cents per share
Dividend in respect of the six months to 30 June 2016:
Nil cents per share
CONSOLIDATED
2017
$’M
2016
$’M
‐
‐
‐
‐
The directors have resolved not to pay a final dividend (2016: nil cents per share). The Company will make total dividend payments of nil cents per
share for the financial year (2016: nil cents per share).
(B) DIVIDENDS PAID DURING THE FINANCIAL YEAR
Dividend in respect of the six months to 30 June 2015:
22.0 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% (2016: 30%)
Imputation debits 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
‐
‐
‐
‐
‐
‐
‐
54.4
54.4
1.2
(1.2)
‐
‐
‐
(A) OVERVIEW
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.
82 WorleyParsons Annual Report 2017
28 WorleyParsons Annual Report 2017
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.
Maximum credit exposure
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 receivable from 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
2017
$’M
482.9
419.5
54.0
32.5
22.3
254.1
1,265.3
PROVISION FOR
IMPAIRMENT
2017
$’M
‐
‐
‐
‐
‐
(49.5)
(49.5)
CARRYING AMOUNT
CONSOLIDATED
2017
$’M
251.8
1,215.8
127.7
55.7
90.3
1,741.3
GROSS
2016
$’M
823.2
448.0
80.6
53.3
15.7
278.1
1,698.9
2016
$’M
373.1
1,648.2
176.6
54.4
95.5
2,347.8
PROVISION FOR
IMPAIRMENT
2016
$’M
‐
‐
‐
(0.8)
(0.3)
(49.6)
(50.7)
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.
WorleyParsons Annual Report 2017 29
WorleyParsons Annual Report 2017 83
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
(C) LIQUIDITY RISK
18. FINANCIAL RISK MANAGEMENT (continued)
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
(C) LIQUIDITY RISK
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.
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,
The Groupʹs main facility will fall due in August 2018 and will be refinanced before December 2017.
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;
The Groupʹs main facility will fall due in August 2018 and will be refinanced before December 2017.
this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
The Group ensures that it has sufficient cash on demand to meet expected operational expenses including the servicing of financial obligations;
The Group has unrestricted access at balance date to the following lines of credit.
this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.
CONSOLIDATED
The Group has unrestricted access at balance date to the following lines of credit.
UNSECURED FACILITIES
Total facilities available:
UNSECURED FACILITIES
Loan facilities
Total facilities available:
Overdraft facilities
Loan facilities
Bank guarantees and letters of credit
Overdraft facilities
Bank guarantees and letters of credit
Facilities utilized at balance date:
Loan facilities1
Facilities utilized at balance date:
Overdraft facilities
Loan facilities1
Bank guarantees and letters of credit
Overdraft facilities
Bank guarantees and letters of credit
Facilities available at balance date:
Loan facilities
Facilities available at balance date:
Overdraft facilities
Loan facilities
Bank guarantees and letters of credit
Overdraft facilities
Bank guarantees and letters of credit
The maturity profile in respect of the Groupʹs total unsecured loan and overdraft facilities is set out below:
Due within one year
The maturity profile in respect of the Groupʹs total unsecured loan and overdraft facilities is set out below:
Due between one and four year(s)
Due within one year
Due after four years
Due between one and four year(s)
Due after four years
SECURED FACILITIES
Total facilities available:
SECURED FACILITIES
Finance lease facilities
Total facilities available:
Finance lease facilities
Facilities utilized at balance date:
Finance lease facilities
Facilities utilized at balance date:
Finance lease facilities
The maturity profile in respect of the Groupʹs secured facilities is set out below:
Due within one year
The maturity profile in respect of the Groupʹs secured facilities is set out below:
Due between one and four year(s)
Due within one year
Due between one and four year(s)
2017
$’M
2017
$’M
1,762.7
72.5
1,762.7
1,116.7
72.5
2,951.9
1,116.7
2,951.9
1,098.5
7.5
1,098.5
568.1
7.5
1,674.1
568.1
1,674.1
664.2
65.0
664.2
548.6
65.0
1,277.8
548.6
1,277.8
335.9
1,232.5
335.9
266.8
1,232.5
1,835.2
266.8
1,835.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
0.2
‐
0.2
0.2
‐
0.2
CONSOLIDATED
2016
$’M
2016
$’M
2,076.5
102.7
2,076.5
1,159.3
102.7
3,338.5
1,159.3
3,338.5
1,241.4
‐
1,241.4
646.6
‐
1,888.0
646.6
1,888.0
835.1
102.7
835.1
512.7
102.7
1,450.5
512.7
1,450.5
382.3
1,286.9
382.3
510.0
1,286.9
2,179.2
510.0
2,179.2
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.2
0.3
2.2
2.5
0.3
2.5
1 Excludes capitalized borrowing costs.
30 WorleyParsons Annual Report 2017
1 Excludes capitalized borrowing costs.
84 WorleyParsons Annual Report 2017
30 WorleyParsons Annual Report 2017
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.
As at 30 June 2017
Due within one year
Due between one and four year(s)
Due after four years
As at 30 June 2016
Due within one year
Due between one and four year(s)
Due after four years
TRADE AND OTHER
PAYABLES
AMOUNTS
PAYABLE TO
ASSOCIATES AND
RELATED PARTIES
$’M
388.6
24.3
‐
412.9
485.5
30.4
‐
515.9
$’M
15.0
‐
‐
15.0
16.7
‐
‐
16.7
CONSOLIDATED
INTEREST
BEARING
LOANS AND
BORROWINGS
$’M
EXPECTED
FUTURE
INTEREST
PAYMENTS
$’M
273.4
565.9
266.9
1,106.2
250.1
483.8
510.0
1,243.9
10.7
55.6
54.7
121.0
11.8
25.1
137.5
174.4
DERIVATIVES
$’M
1.8
‐
‐
1.8
4.8
‐
‐
4.8
TOTAL
FINANCIAL
LIABILITES
$’M
689.5
645.8
321.6
1,656.9
768.9
539.3
647.5
1,955.7
(D) MARKET RISK
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 loans and 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 denominated.
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 equity attributable to members of WorleyParsons Limited.
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 as follows:
Contracts to buy USD and sell CAD
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)
2017
0.99
1.00
1.01
0.99
2016
0.99
1.00
1.01
0.99
2017
$’M
2017
$’M
2016
$’M
2016
$’M
USD 22.0
USD 72.3
USD 75.0
USD 120.0
CAD (21.7)
CAD (72.3)
CAD (76.0)
CAD (118.3)
USD 22.0
USD 72.3
USD 75.0
USD 120.0
CAD (21.7)
CAD (72.3)
CAD (76.0)
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 (loss)/gain pre‐tax in hedge relationship
CONSOLIDATED
2017
$’M
87.7
(96.0)
(8.3)
2016
$’M
94.8
(89.1)
5.7
WorleyParsons Annual Report 2017 31
WorleyParsons Annual Report 2017 85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
18. FINANCIAL RISK MANAGEMENT (continued)
(2) FORWARD EXCHANGE CONTRACTS
The Group is exposed to foreign exchange rate transaction risk on foreign currency sales and purchases, and loans to and from related entities. The
most significant foreign exchange risk is USD 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 and 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)
2017
2016
2017
$’M
2017
$’M
2016
$’M
2016
$’M
Maturing in the next 6 months to 31 December 2017
Buy AUD and Sell USD
Buy CNY and Sell AUD
Buy CNY and Sell USD
Buy EUR and Sell AUD
Buy EUR and Sell KWD
Buy EUR and sell USD
Buy GBP and Sell CNY
Buy GBP and Sell EUR
Buy GBP and Sell RUB
Buy GBP and Sell USD
Buy IDR and Sell USD
Buy INR and Sell USD
Buy MYR and Sell AUD
Buy MYR and Sell CAD
Buy MYR and Sell GBP
Buy MYR and Sell USD
Buy NOK and Sell AUD
Buy NOK and Sell SGD
Buy NZD and Sell AUD
Buy SGD and Sell AUD
Buy SGD and Sell USD
Buy USD and Sell AUD
Buy USD and Sell CAD
Buy ZAR and Sell EUR
Maturing in the next 6‐12 months to 30 June 2018
Buy AUD and Sell USD
Buy CNY and Sell USD
Buy EUR and Sell KWD
Buy GBP and Sell CNY
Buy IDR and Sell USD
Buy SGD and Sell AUD
Buy SGD and Sell USD
Maturing in the next 12‐18 months to 31 December 2018
Buy AUD and Sell USD
Buy IDR and Sell USD
‐
‐
6.82
0.68
2.94
1.13
4.28
‐
‐
1.29
13,666.26
65.44
3.38
3.24
5.50
4.28
6.43
‐
‐
1.06
‐
0.76
‐
‐
‐
‐
‐
‐
13,798.0
1.05
‐
14,777.58
1.32
4.79
6.60
‐
2.92
1.10
9.9
0.66
‐
1.46
‐
68.36
3.00
3.24
6.75
4.37
6.10
0.17
1.06
0.99
1.38
‐
1.31
16.33
‐
6.66
‐
10.2
‐
‐
‐
‐
‐
CNY 18.1
EUR 2.0
EUR .1
EUR 2.7
GBP .4
‐
‐
GBP 9.1
IDR 16,245.6
INR 85.1
MYR 19.9
MYR 3.7
MYR .6
MYR 25.6
NOK 14.0
‐
‐
SGD 1.9
‐
USD 10.0
‐
‐
‐
‐
‐
‐
IDR 16,557.6
SGD 10.0
SGD 2.8
‐
‐
USD (2.7)
AUD (3.0)
KWD (0.0)
USD (3.1)
CNY (4.4)
‐
‐
USD (11.8)
USD (1.2)
USD (1.3)
AUD (5.9)
CAD (1.2)
GBP (0.1)
USD (6.0)
AUD (2.2)
‐
‐
AUD (1.8)
‐
AUD (13.2)
‐
‐
‐
‐
‐
‐
USD (1.2)
AUD (9.5)
USD (2.0)
AUD 24.4
CNY 121.4
CNY 83.5
‐
EUR 0.7
EUR 6.8
GBP 2.6
GBP 0.1
‐
GBP 2.2
‐
INR 62.9
MYR 1.7
MYR 8.0
MYR 1.4
MYR 9.7
NOK 135.0
NOK 0.0
NZD 6.0
SGD 7.3
SGD 0.8
‐
USD 11.9
ZAR 19.7
‐
CNY 10.7
‐
GBP 1.3
‐
‐
‐
USD (18.5)
AUD (25.3)
USD (12.6)
‐
KWD (0.2)
USD (7.5)
CNY (26.1)
EUR (0.2)
‐
USD (3.2)
‐
USD (0.9)
AUD (0.6)
CAD (2.5)
GBP (0.2)
USD (2.2)
AUD (22.1)
SGD (0.2)
AUD (5.7)
AUD (7.4)
USD (0.6)
‐
CAD (15.5)
EUR (1.2)
‐
USD (1.6)
‐
CNY (13.7)
‐
‐
‐
1.0
‐
‐
IDR 161,804.3
‐
USD (10.8)
AUD 0.0
‐
USD (0.0)
‐
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 as follows:
Effective hedge – unrealized gains
Effective hedge – unrealized losses
Net unrealized gains/(losses), pre‐tax
86 WorleyParsons Annual Report 2017
32 WorleyParsons Annual Report 2017
CONSOLIDATED
2017
$’M
4.3
‐
4.3
2016
$’M
1.5
(2.0)
(0.5)
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 2017
Cash and cash equivalents
Trade receivables
Trade payables
Gross Statement of Financial Position exposure
As at 30 June 2016
Cash and cash equivalents
Trade receivables
Trade payables
Gross Statement of Financial Position exposure
(4) CURRENCY SENSITIVITY ANALYSIS
CAD
$’M
1.1
‐
(2.3)
(1.2)
0.5
1.4
(4.0)
(2.1)
CONSOLIDATED
GBP
$’M
5.1
5.3
(1.3)
9.1
3.4
1.8
(3.1)
2.1
USD
$’M
46.4
44.4
(69.3)
21.5
96.8
61.6
(86.4)
72.0
EUR
$’M
OTHER1
$’M
4.5
13.9
(12.7)
5.7
3.4
13.0
(7.5)
8.9
10.5
13.2
(11.2)
12.5
14.1
7.2
(6.5)
14.8
A 10% weakening of the Australian dollar against the following currencies at 30 June 2017 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 2016.
CONSOLIDATED
2017
2016
EFFECTS IN MILLIONS OF AUD
EQUITY
PROFIT
EQUITY
PROFIT
CAD
GBP
USD
EUR
Other
‐
‐
‐
‐
‐
(0.1)
1.2
2.2
0.7
0.9
‐
‐
‐
‐
‐
(0.2)
0.3
7.5
1.0
1.0
A 10% strengthening of the Australian dollar against the above currencies at 30 June 2017 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
EUR
AVERAGE
EXCHANGE RATE
REPORTING DATE
SPOT EXCHANGE RATE
2017
1.0006
0.5951
0.7542
0.6922
2016
0.9653
0.4912
0.7284
0.6565
2017
0.9988
0.5908
0.7683
0.6715
2016
0.9647
0.5595
0.7450
0.6712
1 Represented in AUD currency millions as indicated.
WorleyParsons Annual Report 2017 33
WorleyParsons Annual Report 2017 87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
(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.
18. FINANCIAL RISK MANAGEMENT (continued)
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
(ii) Interest rate risk
interest rates on borrowings is on a fixed rate basis.
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.
(1) INTEREST RATE RISK EXPOSURES
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
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:
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:
1 YEAR
OR LESS
$ʹM
1 TO
2 YEAR(S)
$ʹM
2 TO
3 YEARS
$ʹM
3 TO
4 YEARS
$ʹM
4 TO
5 YEARS
$ʹM
MORE THAN
5 YEARS
$ʹM
NON‐
INTEREST
BEARING
$ʹM
TOTAL
$ʹM
AS AT 30 JUNE 2017
Cash and cash equivalents
Bank loans 1
AS AT 30 JUNE 2017
Notes payable1
Cash and cash equivalents
Finance lease liabilities
Bank loans 1
AS AT 30 JUNE 2016
Notes payable1
Cash and cash equivalents
Finance lease liabilities
Bank loans and overdrafts1
AS AT 30 JUNE 2016
Notes payable1
Cash and cash equivalents
Finance lease liabilities
Bank loans and overdrafts1
Notes payable1
FLOATING
INTEREST
251.8
RATE
$ʹM
‐
‐
251.8
‐
‐
‐
373.1
‐
‐
‐
373.1
‐
‐
‐
1 YEAR
‐
OR LESS
$ʹM
23.0
1 TO
‐
2 YEAR(S)
$ʹM
240.6
2 TO
‐
3 YEARS
$ʹM
‐
3 TO
‐
4 YEARS
$ʹM
‐
4 TO
‐
5 YEARS
$ʹM
‐
MORE THAN
‐
5 YEARS
$ʹM
‐
NON‐
INTEREST
‐
BEARING
$ʹM
‐
242.7
‐
0.2
23.0
242.7
‐
0.2
20.4
227.5
‐
2.2
20.4
227.5
‐
‐
‐
240.6
‐
‐
‐
‐
250.3
‐
0.3
‐
250.3
97.6
‐
‐
‐
97.6
‐
‐
132.4
‐
‐
‐
132.4
‐
227.8
‐
‐
‐
227.8
‐
‐
‐
100.7
‐
‐
‐
100.7
‐
‐
‐
‐
‐
‐
‐
‐
234.9
‐
‐
‐
234.9
266.8
‐
‐
‐
266.8
‐
‐
‐
275.2
‐
‐
‐
275.2
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
251.8
TOTAL
$ʹM
263.6
834.9
251.8
0.2
263.6
834.9
373.1
0.2
152.8
1,088.6
373.1
2.5
152.8
1,088.6
4.9
2.6
6.9
2.3
4.9
1.4
6.9
2.3
5.1
1.4
2.8
2.3
5.1
FLOATING
INTEREST
RATE
$ʹM
WEIGHTED
AVERAGE
INTEREST
RATE
% PA
WEIGHTED
AVERAGE
INTEREST
2.6
RATE
% PA
2.3
Finance lease liabilities
As the largest component of interest bearing liabilities, being notes payable, is at fixed interest rates, the effect of changes in interest rates on equity
and profit of the Group is negligible.
0.3
2.2
2.8
‐
‐
‐
‐
‐
‐
2.5
19. FAIR VALUES
As the largest component of interest bearing liabilities, being notes payable, is at fixed interest rates, the effect of changes in interest rates on equity
DETERMINATION OF FAIR VALUES
and profit of the Group is negligible.
The Group’s accounting policies and disclosures require the determination of fair value, for both financial and non‐financial assets and liabilities.
19. FAIR VALUES
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further
DETERMINATION OF FAIR VALUES
information about the assumptions used in determining fair values is disclosed in the notes specific to that asset or liability.
The Group’s accounting policies and disclosures require the determination of fair value, for both financial and non‐financial assets and liabilities.
Derivatives
Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further
The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price for the residual
information about the assumptions used in determining fair values is disclosed in the notes specific to that asset or liability.
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.
Derivatives
Those quotes are tested for reasonableness by discounting estimated cash flows based on the terms and maturity of each contract and using market
The fair value of forward exchange contracts is estimated by discounting the difference between the contractual forward price for the residual
interest rates for similar instruments at the measurement date.
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.
Non‐derivative financial liabilities
Those quotes are tested for reasonableness by discounting estimated cash flows based on the terms and maturity of each contract and using market
Fair value, which is determined for disclosure purposes, is the price that would be paid to transfer a liability in an orderly transaction between
interest rates for similar instruments at the measurement date.
market participants at the measurement date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.
Non‐derivative financial liabilities
FAIR VALUES COMPARED TO CARRYING AMOUNTS
Fair value, which is determined for disclosure purposes, is the price that would be paid to transfer a liability in an orderly transaction between
The fair values of financial assets and liabilities approximate their carrying values with the exception of interest bearing loans and borrowings which
market participants at the measurement date. For finance leases, the market rate of interest is determined by reference to similar lease agreements.
have a fair value of $1,186.7 million (2016: $1,394.0 million) and a carrying value of $1,106.2 million (2016: $1,243.9 million).
FAIR VALUES COMPARED TO CARRYING AMOUNTS
The Group uses the following hierarchy for determining the fair value of a financial asset or liability:
The fair values of financial assets and liabilities approximate their carrying values with the exception of interest bearing loans and borrowings which
• Level 1 – the fair value is calculated using quoted prices in active markets; and
have a fair value of $1,186.7 million (2016: $1,394.0 million) and a carrying value of $1,106.2 million (2016: $1,243.9 million).
• 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
The Group uses the following hierarchy for determining the fair value of a financial asset or liability:
directly (as prices) or indirectly (derived from prices). The Groupʹs interest bearing loans and borrowings and derivative instruments including
interest rate swaps and forward exchange contracts fall within Level 2 of the hierarchy.
• 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
Derivative instruments including interest rate swaps and forward exchange contracts are restated to fair values at each reporting date based on
directly (as prices) or indirectly (derived from prices). The Groupʹs interest bearing loans and borrowings and derivative instruments including
market observable inputs such as foreign exchange spot and forward rates, interest rate curves and forward rate curves.
interest rate swaps and forward exchange contracts fall within Level 2 of the hierarchy.
Fair values of the Group’s interest bearing loans and borrowings are determined by discounting future cash flows using period‐end borrowing rates
Derivative instruments including interest rate swaps and forward exchange contracts are restated to fair values at each reporting date based on
on loans and borrowings with similar terms and maturity.
market observable inputs such as foreign exchange spot and forward rates, interest rate curves and forward rate curves.
There were no transfers between Level 1 and 2, and no financial instruments were measured at Level 3 (where fair value is measured using
Fair values of the Group’s interest bearing loans and borrowings are determined by discounting future cash flows using period‐end borrowing rates
unobservable inputs for the asset or liability) for the periods presented in this report.
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.
1 Excludes capitalized borrowing costs.
34 WorleyParsons Annual Report 2017
1 Excludes capitalized borrowing costs.
88 WorleyParsons Annual Report 2017
34 WorleyParsons Annual Report 2017
ENTITY
COUNTRY OF INCORPORATION
20. INVESTMENTS IN CONTROLLED ENTITIES
(A) SIGNIFICANT ENTITIES
Worley No 2 Pty Limited1
WorleyParsons Canada Services Ltd
WorleyParsonsCord Limted
WorleyParsons Engineering Pty Limited1
WorleyParsons Europe Limited
WorleyParsons Financial Services Pty Limited1
WorleyParsons Group Inc
WorleyParsons International Inc
WorleyParsons Oman Engineering LLC 2
WorleyParsons Services Pty Limited1
Rosenberg WorleyParsons AS
Beijing MaisonWorleyParsons Engineering & Technology Co Limited
WorleyParsons Kazakhstan LLP
Australia
Canada
Canada
Australia
United Kingdom
Australia
USA
USA
Oman
Australia
Norway
China
Kazakhstan
BENEFICIAL
INTEREST HELD BY
CONSOLIDATED ENTITY
2017
%
2016
%
100
100
100
100
100
100
100
100
65
100
100
80
100
100
100
100
100
100
100
100
100
51
100
100
80
100
In accordance with the accounting standards, the Group discloses only significant entities identified on the basis of materiality.
(B) ACQUISITION OF CONTROLLED ENTITIES
During the year ended 30 June 2016, the Group finalized the acquisition accounting for an additional net interest in entities which had previously
been accounted for as joint operations. This resulted in a $4.5 million net gain on revaluation of investments previously accounted for as joint
operations. There was no such transaction during the year ended 30 June 2017.
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 acquisition 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.
1 Entities subject to ASIC Corporations Instrument 2016/785.
2 The Group increased its share of WorleyParsons Oman Engineering LLC by 14% during the year ended 30 June 2017.
WorleyParsons Annual Report 2017 35
WorleyParsons Annual Report 2017 89
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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
20. INVESTMENTS IN CONTROLLED ENTITIES (continued)
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
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
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
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date,
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
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
the identifiable net assets of the subsidiary, the difference is recognized as a gain in the Statement of Financial Performance, but only after a
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
reassessment of the identification and measurement of the net assets acquired.
the identifiable net assets of the subsidiary, the difference is recognized as a gain in the Statement of Financial Performance, but only after a
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
reassessment of the identification and measurement of the net assets acquired.
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
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
an independent financier under comparable terms and conditions.
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
21. EQUITY ACCOUNTED ASSOCIATES
an independent financier under comparable terms and conditions.
(A) DETAILS OF EQUITY ACCOUNTED ASSOCIATES
21. EQUITY ACCOUNTED ASSOCIATES
The Group’s largest equity accounted investments are listed below. None is considered individually material to the Group.
(A) DETAILS OF EQUITY ACCOUNTED ASSOCIATES
The Group’s largest equity accounted investments are listed below. None is considered individually material to the Group.
OWNERSHIP INTEREST
CONSOLIDATED
CARRYING AMOUNT
CONSOLIDATED
PRINCIPAL
PLACE OF
BUSINESS
PRINCIPAL
PLACE OF
BUSINESS
ENTITY
Australia
Significant investments
ENTITY
Transfield Worley Power Services Pty Limited
Significant investments
DeltaAfrik Engineering Limited
Transfield Worley Power Services Pty Limited
Ranhill WorleyParsons Sdn Bhd
DeltaAfrik Engineering Limited
Nana WorleyParsons LLC
Ranhill WorleyParsons Sdn Bhd
Cegertec WorleyParsons Inc1
Nana WorleyParsons LLC
Transfield Services‐WorleyParsons JV (M) Sdn Bhd Malaysia
Cegertec WorleyParsons Inc1
Other investments2
Transfield Services‐WorleyParsons JV (M) Sdn Bhd Malaysia
Nigeria
Australia
Malaysia
Nigeria
USA
Malaysia
Canada
USA
Canada
PRINCIPAL ACTIVITY
PRINCIPAL ACTIVITY
Infrastructure
Hydrocarbons
Infrastructure
Hydrocarbons
Hydrocarbons
Hydrocarbons
Hydrocarbons
Minerals, Metals & Chemicals
Hydrocarbons
Hydrocarbons
Minerals, Metals & Chemicals
Hydrocarbons
2017
%
2017
%
50
49
50
49
49
50
49
‐
50
33
‐
33
Other investments2
(B) CARRYING AMOUNT OF EQUITY ACCOUNTED ASSOCIATES
(B) CARRYING AMOUNT OF EQUITY ACCOUNTED ASSOCIATES
Balance at the beginning of the financial year
Share of net profits/(losses) of investments accounted for using the equity method
Balance at the beginning of the financial year
Dividends declared by equity accounted associates
Share of net profits/(losses) of investments accounted for using the equity method
Change in nature of investment
Dividends declared by equity accounted associates
Write‐down of investments in equity accounted associates
Change in nature of investment
Movement in foreign currency translation reserve of equity accounted associates
Write‐down of investments in equity accounted associates
Balance at the end of the financial year
Movement in foreign currency translation reserve of equity accounted associates
Balance at the end of the financial year
(C) NET PROFITS ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
Profits before income tax expense
(C) NET PROFITS ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
Income tax expense
Profits before income tax expense
Net profits/(losses) of equity accounted associates
Income tax expense
Net profits/(losses) of equity accounted associates
(D) REVENUE ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
Share of revenue from equity accounted associates
(D) REVENUE ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
Share of revenue from equity accounted associates
(E) RESERVES ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
FOREIGN CURRENCY TRANSLATION RESERVE
(E) RESERVES ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
Balance at the beginning of the financial year
FOREIGN CURRENCY TRANSLATION RESERVE
Change in nature of investment
Balance at the beginning of the financial year
Movement in reserve
Change in nature of investment
Balance at the end of the financial year
Movement in reserve
Balance at the end of the financial year
OWNERSHIP INTEREST
2016
CONSOLIDATED
%
CARRYING AMOUNT
2016
CONSOLIDATED
$’M
2017
$’M
2016
%
50
49
50
49
49
50
49
50
50
33
50
33
2017
$’M
22.8
20.4
22.8
7.4
20.4
10.9
7.4
‐
10.9
3.8
‐
12.0
3.8
77.3
12.0
77.3
2017
$’M
2017
86.8
$’M
3.6
86.8
(2.9)
3.6
(3.6)
(2.9)
(1.3)
(3.6)
(5.3)
(1.3)
77.3
(5.3)
77.3
6.6
(3.0)
6.6
3.6
(3.0)
3.6
218.7
218.7
(19.6)
(0.1)
(19.6)
(5.2)
(0.1)
(24.9)
(5.2)
(24.9)
2016
$’M
23.5
21.3
23.5
13.6
21.3
12.6
13.6
3.0
12.6
4.1
3.0
8.7
4.1
86.8
8.7
86.8
CONSOLIDATED
CONSOLIDATED
2016
$’M
2016
116.2
$’M
(2.3)
116.2
(6.3)
(2.3)
(0.8)
(6.3)
(12.1)
(0.8)
(7.9)
(12.1)
86.8
(7.9)
86.8
2.7
(5.0)
2.7
(2.3)
(5.0)
(2.3)
342.5
342.5
(11.7)
0.2
(11.7)
(8.1)
0.2
(19.6)
(8.1)
(19.6)
1 Cegertec was sold at nil profit to the Group in January 2017.
2 In July 2015 the ownership of Sakhneftegaz Engineering LLC changed from 50% to 100% and the entity was consolidated from July 2015. The financial result of change
1 Cegertec was sold at nil profit to the Group in January 2017.
of nature of the investment did not have a significant impact to the financial statements at 30 June 2016.
2 In July 2015 the ownership of Sakhneftegaz Engineering LLC changed from 50% to 100% and the entity was consolidated from July 2015. The financial result of change
36 WorleyParsons Annual Report 2017
of nature of the investment did not have a significant impact to the financial statements at 30 June 2016.
90 WorleyParsons Annual Report 2017
36 WorleyParsons Annual Report 2017
21. EQUITY ACCOUNTED ASSOCIATES (continued)
21. EQUITY ACCOUNTED ASSOCIATES (continued)
(F) RETAINED PROFITS ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
(F) RETAINED PROFITS ATTRIBUTABLE TO EQUITY ACCOUNTED ASSOCIATES
Balance at the beginning of the financial year
Share of net profits/(losses) of investments accounted for using the equity method
Balance at the beginning of the financial year
Write‐down of investments in equity accounted associates
Share of net profits/(losses) of investments accounted for using the equity method
Change in nature of investment
Write‐down of investments in equity accounted associates
Dividends declared by equity accounted associates
Change in nature of investment
Dividends declared by equity accounted associates
Balance at the end of the financial year
Balance at the end of the financial year
(G) SHARE OF EQUITY ACCOUNTED ASSOCIATES’ CONTINGENT LIABILITIES
(G) SHARE OF EQUITY ACCOUNTED ASSOCIATES’ CONTINGENT LIABILITIES
Performance related guarantees issued
Performance related guarantees issued
(H) SHARE OF EQUITY ACCOUNTED ASSOCIATES’ EXPENDITURE COMMITMENTS
(H) SHARE OF EQUITY ACCOUNTED ASSOCIATES’ EXPENDITURE COMMITMENTS
Operating lease commitments
Operating lease commitments
(I) SUMMARY OF FINANCIAL POSITION OF EQUITY ACCOUNTED ASSOCIATES
(I) SUMMARY OF FINANCIAL POSITION OF EQUITY ACCOUNTED ASSOCIATES
The consolidated entity’s share of aggregate assets and liabilities of equity accounted associates is as follows:
The consolidated entity’s share of aggregate assets and liabilities of equity accounted associates is as follows:
Current assets
Non‐current assets
Current assets
Current liabilities
Non‐current assets
Non‐current liabilities
Current liabilities
Non‐current liabilities
Net assets
Net assets
Balance at the end of the financial year
CONSOLIDATED
CONSOLIDATED
2016
$’M
2016
$’M
106.4
(2.3)
106.4
(12.1)
(2.3)
(0.9)
(12.1)
(6.3)
(0.9)
(6.3)
84.8
84.8
5.0
5.0
1.5
1.5
124.3
72.3
124.3
(98.5)
72.3
(11.3)
(98.5)
(11.3)
86.8
86.8
86.8
2017
$’M
2017
$’M
84.8
3.6
84.8
(1.3)
3.6
‐
(1.3)
(2.9)
‐
(2.9)
84.2
84.2
2.0
2.0
2.1
2.1
133.1
53.6
133.1
(95.6)
53.6
(13.8)
(95.6)
(13.8)
77.3
77.3
77.3
Balance at the end of the financial year
RECOGNITION AND MEASUREMENT
RECOGNITION AND MEASUREMENT
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
Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under this method, the
the Statement of Comprehensive Income, and its share of post‐acquisition movements in reserves is recognized in consolidated reserves. 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
cumulative post‐acquisition movements are adjusted against the cost of the investment. Associates are those entities over which the consolidated
the Statement of Comprehensive Income, and its share of post‐acquisition movements in reserves is recognized in consolidated reserves. The
entity exercises significant influence, but not control.
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.
77.3
86.8
WorleyParsons Annual Report 2017 37
WorleyParsons Annual Report 2017 37
WorleyParsons Annual Report 2017 91
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
22. INTERESTS IN JOINT OPERATIONS
JOINT OPERATION
The Group’s largest joint operation is listed below. It is not individually material to the Group.
Kazakh Projects Joint Venture
PRINCIPAL ACTIVITY
Hydrocarbons
OWNERSHIP INTEREST
CONSOLIDATED
2017
%
50
2016
%
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:
CONSOLIDATED
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Other
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
2017
$’M
10.2
59.3
‐
69.5
0.0
0.0
69.5
63.2
0.0
63.2
‐
‐
63.2
6.3
2016
$’M
7.8
35.4
1.5
44.7
0.0
0.0
44.7
38.8
0.1
38.9
‐
‐
38.9
5.8
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.
23. ASSETS AND LIABILITIES HELD FOR SALE
At 30 June 2016, the investment in the equity accounted associate Cegertec WorleyParsons Inc (Cegertec) and certain assets and liabilities of the
Groupʹs business in South Africa were in the process of being sold. The details are listed below:
• Cegertec was an investment accounted for as an equity accounted associate. At 30 June 2016, the total investment was $3.0 million, after an
impairment charge of $7.5 million recognized in FY2016. In FY2017, there was an impairment charge of $1.3 million and Cergertec was sold at nil
profit to the Group in January 2017; and
• certain net assets of the WorleyParsons Public Infrastructure business in South Africa totalling $2.0 million at 30 June 2016 were sold in FY2017 for
a net profit to the Group of $0.9 million.
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 except where the amounts involved are
considered immaterial.
38 WorleyParsons Annual Report 2017
92 WorleyParsons Annual Report 2017
24. COMMITMENTS FOR EXPENDITURE
(A) OPERATING LEASES
Commitments for minimum lease payments in relation to non‐cancelable property 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
2017
$’M
2016
$’M
160.5
325.1
1.3
486.9
105.3
7.1
112.4
170.0
375.9
24.8
570.7
92.2
26.2
118.4
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
2017
$’M
568.1
568.1
2016
$’M
646.6
646.6
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.
WorleyParsons Annual Report 2017 39
WorleyParsons Annual Report 2017 93
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
26. SUBSEQUENT EVENTS
Since the end of the financial year, the directors have resolved to pay no dividend (2016: nil cents per share).
Unless disclosed elsewhere in the financial statements, no other material matter or circumstance has arisen since 30 June 2017 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
CONSOLIDATED
2017
$’M
316.2
(309.2)
826.2
(826.2)
25.6
77.4
71.1
2016
$’M
345.3
(331.6)
2,226.4
(2,226.4)
69.4
324.7
326.7
1 Revenue and expenses exclude procurement revenue and expenses from associates.
40 WorleyParsons Annual Report 2017
94 WorleyParsons Annual Report 2017
CONSOLIDATED
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
2017
$’M
10.1
(5.2)
4.9
165.6
(147.0)
18.6
170.2
(145.7)
24.5
74.6
(70.3)
4.3
52.3
RECONCILIATIONS
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 2016
Additions
Disposals
Other movements
Depreciation
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2017
Balance at 1 July 2015
Additions
Disposals
Other movements
Depreciation
Amortization
Differences arising on translation of foreign operations
Balance at 30 June 2016
CONSOLIDATED
LAND AND
LEASEHOLD
BUILDINGS
IMPROVEMENTS
PLANT AND
EQUIPMENT
COMPUTER
EQUIPMENT
$’M
4.6
0.6
‐
0.8
(0.9)
‐
(0.2)
4.9
9.3
‐
(0.7)
‐
(3.9)
‐
(0.1)
4.6
$’M
31.2
2.7
(1.4)
(4.9)
‐
(8.2)
(0.8)
18.6
46.4
8.1
(8.3)
(0.7)
‐
(14.1)
(0.2)
31.2
$’M
28.2
10.5
(2.5)
4.5
(15.0)
‐
(1.2)
24.5
45.3
9.1
(3.2)
(4.6)
(18.9)
‐
0.5
28.2
$’M
9.3
2.7
‐
(5.6)
(2.1)
‐
0.0
4.3
6.2
6.2
(0.8)
‐
(2.3)
‐
‐
9.3
RECOGNITION AND MEASUREMENT
Property, plant and equipment are stated at cost less accumulated depreciation, amortization and impairment, if any.
2016
$’M
9.1
(4.5)
4.6
170.5
(139.3)
31.2
173.4
(145.2)
28.2
76.9
(67.6)
9.3
73.3
TOTAL
$’M
73.3
16.5
(3.9)
(5.2)
(18.0)
(8.2)
(2.2)
52.3
107.2
23.4
(13.0)
(5.3)
(25.1)
(14.1)
0.2
73.3
WorleyParsons Annual Report 2017 41
WorleyParsons Annual Report 2017 95
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
29. DEFERRED TAX
(A) DEFERRED TAX ASSETS
The balance comprises temporary differences attributable to:
Amounts recognized in the Statement of Financial Performance:
Allowance for impairment of trade receivables
Employee benefits provisions
Warranty provisions
Project provisions
Other provisions
Property, plant and equipment
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
Credited to the Statement of Financial Performance
Charged to equity
Differences arising on translation of foreign operations
Balance at the end of the financial year
CONSOLIDATED
2017
$’M
2016
$’M
9.2
36.4
1.9
16.1
28.8
18.3
18.4
61.1
51.0
23.3
2.0
1.4
267.9
(9.8)
258.1
297.5
(18.9)
(10.9)
(9.6)
258.1
9.0
42.0
3.6
16.7
55.3
19.3
19.7
35.3
40.2
51.3
3.0
1.0
296.4
1.1
297.5
212.3
105.7
(20.8)
0.3
297.5
42 WorleyParsons Annual Report 2017
96 WorleyParsons Annual Report 2017
29. DEFERRED TAX (continued)
29. DEFERRED TAX (continued)
(B) DEFERRED TAX LIABILITIES
The balance comprises temporary differences attributable to:
(B) DEFERRED TAX LIABILITIES
Amounts recognized in the Statement of Financial Performance:
The balance comprises temporary differences attributable to:
Identifiable intangible assets and goodwill
Amounts recognized in the Statement of Financial Performance:
Unbilled contract revenue
Identifiable intangible assets and goodwill
Property, plant and equipment
Unbilled contract revenue
Unrealized foreign exchange gains
Property, plant and equipment
Prepayments
Unrealized foreign exchange gains
Other
Prepayments
Other
Amounts recognized directly in equity:
Other
Amounts recognized directly in equity:
Deferred tax liabilities
Other
Balance at the beginning of the financial year
Deferred tax liabilities
Credited to the Statement of Financial Performance
Balance at the beginning of the financial year
Charged to equity
Credited to the Statement of Financial Performance
Differences arising on translation of foreign operations
Charged to equity
Balance at the end of the financial year
Differences arising on translation of foreign operations
CONSOLIDATED
2017
$’M
2017
$’M
CONSOLIDATED
2016
$’M
2016
$’M
17.2
2.5
17.2
‐
2.5
14.2
‐
0.5
14.2
(12.7)
0.5
21.7
(12.7)
21.7
2.6
24.3
2.6
116.8
24.3
(91.8)
116.8
(0.7)
(91.8)
‐
(0.7)
24.3
‐
70.6
20.1
70.6
0.5
20.1
34.2
0.5
1.4
34.2
(13.3)
1.4
113.5
(13.3)
113.5
3.3
116.8
3.3
115.7
116.8
0.9
115.7
(0.7)
0.9
0.9
(0.7)
116.8
0.9
24.3
116.8
Balance at the end of the financial year
RECOGNITION AND MEASUREMENT
Deferred tax assets and liabilities are recognized for temporary differences at the tax rates expected to apply when the assets are recovered or
RECOGNITION AND MEASUREMENT
liabilities are settled, based on those tax rates which are enacted or substantially enacted for each jurisdiction. The relevant tax rates are applied to
Deferred tax assets and liabilities are recognized for temporary differences at the tax rates expected to apply when the assets are recovered or
the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for
liabilities are settled, based on those tax rates which are enacted or substantially enacted for each jurisdiction. The relevant tax rates are applied to
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
the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for
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
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
taxable profit and loss.
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
Deferred tax assets and liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in
taxable profit and loss.
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
Deferred tax assets and liabilities are not recognized for temporary differences between the carrying amount and tax bases of investments in
differences will not reverse in the foreseeable future.
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
Current and deferred tax amounts relating to items recognized directly in equity are also recognized in equity and not in the Statement of Financial
differences will not reverse in the foreseeable future.
Performance.
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
KEY ESTIMATES
be available to utilize those temporary differences.
Deferred tax assets are recognized for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will
30. RELATED PARTIES
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:
(A) DIRECTORS
John Grill (Chairman), AO
The names of persons who were directors of the Company at any time during the financial year were as follows:
Ron McNeilly (Deputy Chairman and Lead Independent Director)
John Grill (Chairman), AO
Jagjeet Bindra
Ron McNeilly (Deputy Chairman and Lead Independent Director)
Erich Fraunschiel
Jagjeet Bindra
Christopher Haynes, OBE
Erich Fraunschiel
Catherine Livingstone, AO
Christopher Haynes, OBE
Wang Xiao Bin
Catherine Livingstone, AO
Andrew Wood (Chief Executive Officer)
Wang Xiao Bin
Larry Benke ‐ retired on 25 October 2016
Andrew Wood (Chief Executive Officer)
John M Green ‐ retired on 25 October 2016.
Larry Benke ‐ retired on 25 October 2016
John M Green ‐ retired on 25 October 2016.
WorleyParsons Annual Report 2017 43
WorleyParsons Annual Report 2017 43
WorleyParsons Annual Report 2017 97
(B) OTHER RELATED PARTIES
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
30. RELATED PARTIES (continued)
Aggregate amounts brought to account in relation to other transactions with each class of other related parties were as follows:
(B) OTHER RELATED PARTIES
Loans advanced to:
CONSOLIDATED
2017
$’M
2016
$’M
CONSOLIDATED
Associates and related parties
Loan repayments from:
Associates and related parties
Aggregate amounts brought to account in relation to other transactions with each class of other related parties were as follows:
Dividends received from:
Loans advanced to:
Dividend revenue from associates
Associates and related parties
Aggregate amounts, receivable from, and payable to, each class of other related parties at balance date were as follows:
Loan repayments from:
Current receivables
Associates and related parties
Associates and related parties
Dividends received from:
Dividend revenue from associates
Current payables
Associates and related parties
Aggregate amounts, receivable from, and payable to, each class of other related parties at balance date were as follows:
Current receivables
Related entities provide specific advisory services to controlled entities in the normal course of business. These transactions are made on normal
Associates and related parties
terms and conditions and at market rates.
Current payables
(C) CONTROLLING ENTITIES
Associates and related parties
WorleyParsons Limited is the ultimate Australian parent company.
‐
2017
$’M
(3.4)
(3.4)
55.7
2.9
‐
15.0
15.0
55.7
2.9
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.
CONSOLIDATED
2.1
2016
$’M
(2.6)
6.3
2.1
(2.6)
54.4
6.3
16.7
54.4
16.7
2016
$
2017
$
(C) CONTROLLING ENTITIES
31. REMUNERATION OF AUDITORS
WorleyParsons Limited is the ultimate Australian parent company.
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
31. REMUNERATION OF AUDITORS
Remuneration for audit or review of the financial reports of the parent entity or any other entity in the Group:
Amounts received for other services:
Tax related services
Auditor of the parent entity ‐ Ernst & Young
Acquisition related assurance services
Other auditors of controlled entities
Other non‐audit services
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
Termination benefits
Other long term benefits
32. KEY MANAGEMENT PERSONNEL
Share based payments
Short term employee benefits
Total compensation
Post‐employment benefits
Termination benefits
Other long term benefits
Share based payments
Total compensation
44 WorleyParsons Annual Report 2017
98 WorleyParsons Annual Report 2017
44 WorleyParsons Annual Report 2017
2,623,585
2017
$
91,569
2,715,154
383,771
2,623,585
‐
91,569
137,921
2,715,154
521,692
3,236,846
383,771
‐
137,921
521,692
2017
$
3,236,846
7,819,625
2017
168,979
$
‐
54,173
1,813,458
7,819,625
9,856,235
168,979
‐
54,173
1,813,458
9,856,235
CONSOLIDATED
3,018,158
2016
$
115,666
3,133,824
835,817
3,018,158
12,211
115,666
83,594
3,133,824
931,622
4,065,446
835,817
12,211
83,594
CONSOLIDATED
931,622
2016
$
4,065,446
CONSOLIDATED
9,679,055
2016
252,791
$
522,770
120,929
845,544
9,679,055
11,421,089
252,791
522,770
120,929
845,544
11,421,089
33. PARENT ENTITY DISCLOSURES
(A) PARENT ENTITY
WorleyParsons Limited parent entity financial statements include investments in the following entities:
ENTITY
COUNTRY OF INCORPORATION
WorleyParsons Financial Services Pty Limited
WorleyParsons Canada Holdings Pty Limited
WorleyParsons Canada Callco Ltd
WorleyParsons Engineering Pty Limited
Engineering Securities Pty Limited atf The Worley Limited Trust
Australia
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 benefit
Profit after income tax
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
2017
$’M
440.1
197.9
121.0
100.0
94.7
953.7
2017
$’M
6.2
0.2
6.4
6.4
90.9
‐
97.3
6.4
6.4
1,029.2
1,998.2
566.0
590.3
1,407.9
1,268.5
42.1
97.3
1,407.9
2016
$’M
440.1
197.9
121.0
100.0
94.7
953.7
2016
$’M
13.0
1.0
14.0
14.0
130.7
(53.8)
90.9
14.0
14.0
1,040.6
2,013.5
589.1
619.5
1,394.0
1,264.9
38.2
90.9
1,394.0
The parent entity has bank guarantees in respect of contractual performance outstanding at 30 June 2017 for the amount of $334.6 million
(2016: $381.8 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.
WorleyParsons Annual Report 2017 45
WorleyParsons Annual Report 2017 99
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
33. PARENT ENTITY DISCLOSURES (continued)
(B) CLOSED GROUP
(B) CLOSED GROUP
WorleyParsons Limited together with Worley No 2 Pty Limited, WorleyParsons Engineering Pty Limited, WorleyParsons Financial Services Pty
Limited, WorleyParsons Services Pty Limited and Engineering Securities Pty Limited entered into a Deed of Cross Guarantee on 26 May 2003. On 23
WorleyParsons Limited together with Worley No 2 Pty Limited, WorleyParsons Engineering Pty Limited, WorleyParsons Financial Services Pty
June 2016, Advisian Group Pty Limited, Worley SPV1 Pty Limited, WorleyParsons EA Holdings Pty Limited, WorleyParsons Infrastructure
Limited, WorleyParsons Services Pty Limited and Engineering Securities Pty Limited entered into a Deed of Cross Guarantee on 26 May 2003. On 23
Holdings Pty Limited, WorleyParsons SEA Pty Limited, WorleyParsons South America Holdings Pty Limited and WorleyParsons Africa Holdings
June 2016, Advisian Group Pty Limited, Worley SPV1 Pty Limited, WorleyParsons EA Holdings Pty Limited, WorleyParsons Infrastructure
Pty Limited also became parties to the Deed of Cross Guarantee. On 22 May 2017, Advisian Pty Ltd, Energy Resourcing Australia Pty Limited and
Holdings Pty Limited, WorleyParsons SEA Pty Limited, WorleyParsons South America Holdings Pty Limited and WorleyParsons Africa Holdings
INTECSEA Pty Ltd also entered into the Deed of Cross Guarantee. The effect of the deed is that WorleyParsons Limited has guaranteed to pay any
Pty Limited also became parties to the Deed of Cross Guarantee. On 22 May 2017, Advisian Pty Ltd, Energy Resourcing Australia Pty Limited and
deficiency in the event of the winding up of the abovementioned controlled entities. The controlled entities have also given a similar guarantee in the
INTECSEA Pty Ltd also entered into the Deed of Cross Guarantee. The effect of the deed is that WorleyParsons Limited has guaranteed to pay any
event that WorleyParsons Limited is wound up. As a result, ASIC Corporations Instrument 2016/785 relieves certain of the controlled entities from
deficiency in the event of the winding up of the abovementioned controlled entities. The controlled entities have also given a similar guarantee in the
the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports.
event that WorleyParsons Limited is wound up. As a result, ASIC Corporations Instrument 2016/785 relieves certain of the controlled entities from
the Corporations Act 2001 requirements for preparation, audit and lodgement of financial reports.
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:
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:
CLOSED GROUP
STATEMENT OF FINANCIAL PERFORMANCE
Profit before income tax expense
STATEMENT OF FINANCIAL PERFORMANCE
Income tax expense
Profit before income tax expense
Income tax expense
Profit after income tax expense
Profit after income tax expense
Profit attributable to members of WorleyParsons Limited
Retained profits at the beginning of the financial year
Profit attributable to members of WorleyParsons Limited
Retained profits of entities that became party to the Deed during the financial year
Retained profits at the beginning of the financial year
Dividends paid1
Retained profits of entities that became party to the Deed during the financial year
Dividends paid1
Retained profits at the end of the financial year
Retained profits at the end of the financial year
STATEMENT OF FINANCIAL POSITION
ASSETS
STATEMENT OF FINANCIAL POSITION
Current assets
ASSETS
Cash and cash equivalents
Current assets
Trade and other receivables
Cash and cash equivalents
Other current assets
Trade and other receivables
Other current assets
Total current assets
Total current assets
Non‐current assets
Deferred tax assets
Non‐current assets
Intangible assets
Deferred tax assets
Property, plant and equipment
Intangible assets
Other non‐current assets
Property, plant and equipment
Other non‐current assets
Total non‐current assets
Total non‐current assets
TOTAL ASSETS
TOTAL ASSETS
LIABILITIES
Current liabilities
LIABILITIES
Trade and other payables
Current liabilities
Interest bearing loans and borrowings
Trade and other payables
Provisions
Interest bearing loans and borrowings
Provisions
Total current liabilities
Total current liabilities
Non‐current liabilities
Trade and other payables
Non‐current liabilities
Interest bearing loans and borrowings
Trade and other payables
Deferred tax liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Total non‐current liabilities
Total non‐current liabilities
TOTAL LIABILITIES
TOTAL LIABILITIES
NET ASSETS
NET ASSETS
EQUITY
Issued capital
EQUITY
Reserves
Issued capital
Retained profits
Reserves
Retained profits
TOTAL EQUITY
TOTAL EQUITY
1 Dividends paid by the Closed Group exclude dividends paid to holders of exchangeable shares.
1 Dividends paid by the Closed Group exclude dividends paid to holders of exchangeable shares.
46 WorleyParsons Annual Report 2017
100 WorleyParsons Annual Report 2017
46 WorleyParsons Annual Report 2017
2017
CLOSED GROUP
$’M
2017
$’M
173.7
(22.3)
173.7
(22.3)
151.4
2016
$’M
2016
$’M
85.0
(10.5)
85.0
(10.5)
74.5
74.5
74.5
226.1
74.5
310.5
226.1
(53.8)
310.5
(53.8)
557.3
557.3
18.4
979.2
18.4
43.6
979.2
43.6
1,041.2
1,041.2
67.7
217.1
67.7
9.0
217.1
2,140.7
9.0
2,140.7
2,434.5
2,434.5
3,475.7
3,475.7
285.6
‐
285.6
86.6
‐
86.6
372.2
372.2
1,078.0
198.7
1,078.0
12.7
198.7
12.7
1,289.4
1,289.4
1,661.6
1,661.6
1,814.1
1,814.1
1,264.9
(8.1)
1,264.9
557.3
(8.1)
557.3
1,814.1
1,814.1
151.4
151.4
557.3
151.4
20.9
557.3
‐
20.9
‐
729.6
729.6
51.6
1,253.0
51.6
35.9
1,253.0
35.9
1,340.5
1,340.5
53.4
275.4
53.4
7.8
275.4
2,116.7
7.8
2,116.7
2,453.3
2,453.3
3,793.8
3,793.8
567.4
221.8
567.4
42.0
221.8
42.0
831.2
831.2
778.2
166.2
778.2
11.3
166.2
11.3
955.7
955.7
1,786.9
1,786.9
2,006.9
2,006.9
1,268.5
8.8
1,268.5
729.6
8.8
729.6
2,006.9
2,006.9
Directors’ declaration
DIREC
S’ DEC
ATION
N
CLARA
CTORS
In accordance w
with a resolution
n of the director
rs of WorleyPars
sons Limited, I s
state that:
1.
In the opin
nion of the direc
ctors:
(a) the fina
ancial statement
ts and notes of t
the consolidated
d entity are in ac
ccordance with t
the Corporations
Act 2001, includ
ding:
(i) giv
tha
ving a true and f
at date; and
fair view of the c
consolidated en
ntity’s financial p
position as at 30
June 2017 and o
of its performan
nce for the year e
ended on
(ii) com
mplying with Au
ustralian Accou
unting Standards
s and the Corpor
rations Regulation
ns 2001;
(b) the fina
ancial statement
ts and notes also
o comply with In
nternational Fin
nancial Reportin
ng Standards as
disclosed in not
te 2(A);
(c) there a
re reasonable gr
rounds to believ
ve that the Comp
pany will be abl
le to pay its deb
ts as and when
they become du
ue and payable;
and
(d) as at th
be able
he date of this de
e to meet any ob
eclaration, there
bligations or liab
e are reasonable
bilities to which
grounds to beli
they are or may
ieve that the mem
y become subject
mbers of the Clo
t, by virtue of th
osed Group iden
he Deed of Cross
ntified in note 3
s Guarantee.
33(B) will
2. This declar
financial of
ration has been m
fficer in accorda
made after recei
ance with section
iving the declara
n 295A of the Co
ations required
orporations Act 2
to be made to th
001 for the finan
he directors from
ncial year ended
m the chief execu
d 30 June 2017.
utive officer and
d chief
On behalf of th
he Board
JOHN GRILL,
Chairman
AO
Sydney, 23 Aug
gust 2017
WorleyP
Parsons Annual Re
eport 2017 47
WorleyParsons Annual Report 2017 101
48 WorleyParsons Annual Report 2017
102 WorleyParsons Annual Report 2017
WorleyParsons Annual Report 2017 49
WorleyParsons Annual Report 2017 103
50 WorleyParsons Annual Report 2017
104 WorleyParsons Annual Report 2017
WorleyParsons Annual Report 2017 51
WorleyParsons Annual Report 2017 105
52 WorleyParsons Annual Report 2017
106 WorleyParsons Annual Report 2017
WorleyParsons Annual Report 2017 53
WorleyParsons Annual Report 2017 107
54 WorleyParsons Annual Report 2017
108 WorleyParsons Annual Report 2017
Shareholder information
SHAREHOLDER INFORMATION
TOP 20 HOLDINGS OF FULLY PAID ORDINARY SHARES AS AT 7 AUGUST 2017
NAME
SHARES
% OF ISSUED CAPITAL
RANK
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
Wilaci Pty Limited
National Nominees Limited
Serpentine Foundation Pty Limited
BNP Paribas Noms Pty Ltd
Mr John Michael Grill
BNP Paribas Nominees Pty Ltd
RBC Investor Services Australia Nominees Pty Ltd
Haju Pty Limited
Juha Pty Limited
Taylor Square Designs Pty Ltd
UBS Bank Canada TR Chalet Holdings Inc
Inmac Engineering Pty Ltd
Dubotu Pty Ltd
Argo Investments Limited
Inmaccorp Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr John Craig Reeves
Total
Total number of current holders for all named classes is 19,291.
73,199,170
52,457,695
34,692,378
11,778,006
9,998,895
4,844,825
3,094,479
2,569,342
2,401,896
2,287,332
1,500,000
1,500,000
1,423,641
1,077,475
890,000
800,000
797,336
756,961
707,046
693,994
207,470,471
29.46
21.12
13.96
4.74
4.05
1.95
1.25
1.03
0.97
0.92
0.60
0.60
0.57
0.43
0.36
0.32
0.32
0.30
0.28
0.28
83.51
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 7 AUGUST 2017*
NAME
NOTICE DATE
Dar Al‐Handasah Consultants Shair and Partners Holdings Ltd (Dar)**
John Grill & associated companies
Polaris Capital Management, LLC
T. Rowe Price Associates, Inc.
Dimensional Entities
* As disclosed in substantial shareholder notices received by the Company.
10 April 2017
31 May 2010
13 December 2016
15 February 2017
27 September 2016
SHARES
37,407,686
25,313,786
15,643,256
12,504,329
12,303,897
** As disclosed in the substantial shareholder notice received by the Company, Samurai Investments, a Dar group company, has entered into a cash‐
settled equity swap with Citigroup Global Markets Australia Pty Limited, which as at the date of the substantial shareholder notice, related to a
notional 11,706,269 shares (equivalent to approximately 4.74% of the shares on issue at the time). The cash‐settled equity swap does not give Dar,
any Dar group company or Talal Shair any relevant interest in shares.
RANGE OF FULLY PAID ORDINARY SHARES AS AT 7 AUGUST 2017
HOLDERS
SHARES
% OF ISSUED CAPITAL
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 $12.41 per unit
13,202
5,098
557
372
62
19,291
MINIMUM PARCEL SIZE
41
5,309,838
11,293,146
4,103,873
9,367,456
218,363,600
248,437,913
HOLDERS
973
2.14
4.55
1.65
3.77
87.89
100.00
SHARES
18,722
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 2017 55
WorleyParsons Annual Report 2017 109
SHAREHOLDER INFORMATION
TOP 20 HOLDINGS OF FULLY PAID ORDINARY SHARES AS AT 7 AUGUST 2017
SHARES
% OF ISSUED CAPITAL
RANK
NAME
HSBC Custody Nominees (Australia) Limited
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
Wilaci Pty Limited
National Nominees Limited
Serpentine Foundation Pty Limited
BNP Paribas Noms Pty Ltd
Mr John Michael Grill
BNP Paribas Nominees Pty Ltd
RBC Investor Services Australia Nominees Pty Ltd
Haju Pty Limited
Juha Pty Limited
Taylor Square Designs Pty Ltd
UBS Bank Canada TR Chalet Holdings Inc
Inmac Engineering Pty Ltd
Dubotu Pty Ltd
Argo Investments Limited
Inmaccorp Pty Ltd
HSBC Custody Nominees (Australia) Limited
Mr John Craig Reeves
73,199,170
52,457,695
34,692,378
11,778,006
9,998,895
4,844,825
3,094,479
2,569,342
2,401,896
2,287,332
1,500,000
1,500,000
1,423,641
1,077,475
890,000
800,000
797,336
756,961
707,046
693,994
29.46
21.12
13.96
4.74
4.05
1.95
1.25
1.03
0.97
0.92
0.60
0.60
0.57
0.43
0.36
0.32
0.32
0.30
0.28
0.28
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Total
207,470,471
83.51
Total number of current holders for all named classes is 19,291.
SHAREHOLDER INFORMATION CONTINUED
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 7 AUGUST 2017*
NAME
NOTICE DATE
Dar Al‐Handasah Consultants Shair and Partners Holdings Ltd (Dar)**
John Grill & associated companies
Polaris Capital Management, LLC
T. Rowe Price Associates, Inc.
Dimensional Entities
* As disclosed in substantial shareholder notices received by the Company.
10 April 2017
31 May 2010
13 December 2016
15 February 2017
27 September 2016
SHARES
37,407,686
25,313,786
15,643,256
12,504,329
12,303,897
** As disclosed in the substantial shareholder notice received by the Company, Samurai Investments, a Dar group company, has entered into a cash‐
settled equity swap with Citigroup Global Markets Australia Pty Limited, which as at the date of the substantial shareholder notice, related to a
notional 11,706,269 shares (equivalent to approximately 4.74% of the shares on issue at the time). The cash‐settled equity swap does not give Dar,
any Dar group company or Talal Shair any relevant interest in shares.
RANGE OF FULLY PAID ORDINARY SHARES AS AT 7 AUGUST 2017
HOLDERS
SHARES
% OF ISSUED CAPITAL
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 $12.41 per unit
13,202
5,098
557
372
62
19,291
MINIMUM PARCEL SIZE
41
5,309,838
11,293,146
4,103,873
9,367,456
218,363,600
248,437,913
HOLDERS
973
2.14
4.55
1.65
3.77
87.89
100.00
SHARES
18,722
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 2017 55
110 WorleyParsons Annual Report 2017
Glossary
TERM
Americas
APAC
Backlog
CEO
Downstream
EBIT
EcoNomics™
EDS
EMEA
EPC
EPC contract
EPCM
EPCM contract
EPS
Executive
Front end engineering design (FEED)
DEFINITION
Services business line region encompassing sub‐regions of North America and Latin America.
Services business line region encompassing Australia, Pacific, Asia and China.
Backlog is the total dollar value of the amount of revenues expected to be recorded for the
next 36 months as a result of work performed under contracts or purchase/work orders
awarded to the Group. With respect to long term agreements and framework agreements,
an amount is included for the work expected to be received over the period under
consideration. The view of backlog is sensitive to timing of awards and as such a conservative
view of timing has been adopted.
Chief Executive Officer.
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.
Services business line region encompassing Europe, Middle East and Africa.
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 sub‐contractors 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. Determined by dividing the Group NPAT by the weighted average
number of the Company’s ordinary shares on issue during the financial year.
As detailed on page 47, 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.
Basic engineering design providing owners and their financiers with information enabling
them to determine whether or not, and if so how, to commit resources to a proposed project to
maximize its projected returns.
GDC
Global Delivery Center.
Group net profit after tax (NPAT)
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.
WorleyParsons Annual Report 2017 111
GLOSSARY CONTINUED
TERM
HSE
DEFINITION
Health, Safety and Environment.
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 page 38.
Midstream
The transport (by pipeline, rail, barge or truck), storage, and wholesale marketing of crude or
refined petroleum products.
Non-executive director (NED)
As detailed on page 38, non‐executive directors of the entity have authority and responsibility
for planning, directing and controlling the activities of the entity, directly or indirectly.
O&M
OneWay™
PMC
Reimbursable EPC
Total shareholder return (TSR)
Unconventional oil and gas
Upstream
Operating and maintenance.
Our enterprise‐wide integrity management framework which establishes our corporate
expectations for Zero Harm to our business.
Project management consultant.
Arrangements under which we are reimbursed for the costs we incur plus a margin in
meeting our obligations under an EPC contract.
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.
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‐centered gas, gas hydrates
and coal seam gas.
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.
112 WorleyParsons Annual Report 2017
Corporate information
CORPORATE INFORMATION
WorleyParsons Limited
ACN 096 090 158
DIRECTORS
John Grill (Chairman), AO
Ron McNeilly (Deputy Chairman and Lead Independent Director)
Jagjeet (Jeet) Bindra
Erich Fraunschiel
Christopher Haynes, OBE
Catherine Livingstone, AO
Wang Xiao Bin
Andrew Wood (Chief Executive Officer)
COMPANY SECRETARY
Nuala OʹLeary
REGISTERED OFFICE
Level 15
141 Walker Street
North Sydney NSW 2060
AUDITORS
Ernst & Young
BANKERS
Banco Bilbao Vizcaya Argentaria
Bank of America Merrill Lynch
BNP Paribas
Commonwealth Bank of Australia
HSBC
JPMorgan Chase
National Australia Bank
Royal Bank of Canada
Standard Chartered Bank
Sumitomo Mitsui Banking Corporation
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
WorleyParsons Annual Report 2017 57
WorleyParsons Annual Report 2017 113
www.worleyparsons.com