Delivering a More Sustainable World ANNUAL REPORT 2021
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Delivering a more sustainable world ANNUAL REPORT 2021 worley.com We are driven by a common purpose… …delivering a more sustainable world. We value Life We Rise to the We are Stronger We Unlock We believe in the safety, challenge together brilliance health and well-being of We love a challenge. We go We thrive in real relationships We are passionate about our people, communities the extra mile, delivering and partnerships. We nurture innovating and learning. and the environment. new and better solutions to networks and collaboration. We value, share and Without it, nothing complex problems. We recognize our differences grow our expertize. else matters. make us stronger. Contents Group Financial Highlights 2 Chairman’s Report 3 Board of Directors 6 Chief Executive Officer’s Review 7 Group Executive 11 Environmental, Social and Governance 28 Operating and Financial Review 42 Directors’ Report 53 Remuneration Report 62 Financial Statements 89 Shareholder Information 139 Glossary 140 Corporate Information 141 Worley acknowledges and pays respect to the past, present and future Traditional Custodians of Country throughout Australia and extends this acknowledgement and respect to First peoples in all countries in which we operate. In Australia, it is Aboriginal and Torres Strait Islander peoples who have cared for and sustained this land, its animals, plants and waters for more than 60,000 years. We recognize the continuation and importance of cultural, spiritual and educational practices of Aboriginal and Torres Strait Islander peoples. Worley: A global company headquartered in Australia A leading global provider of professional project and asset services in the energy, chemicals and resources sectors. We are Australia’s largest exporter of knowledge-based services. We use this position to support our customers across the world as they transition towards a low-carbon future. Worley Annual Report 2021 1 Group Financial Highlights Five year performance at a glance AGGREGATED REVENUE EBITA NPATA CASH FLOW FROM OPERATIONS $8,774m $324m $161m $533m $829m $432m $743m $11,249m $533m $281m $8,774m $468m $260m $413m $6,439m $182m $313m $275m $4,749m $498m $260m $252m $4,377m $135m $236m $324m $308m $172m 6m $161m $79m $278m m $14 $45 $73m 17 18 19 20 21 17 18 19 20 21 17 18 19 20 21 17 18 19 20 21 EBITA NPATA Underlying EBITA Underlying NPATA $m 2017 2018 2019 2020 2021 % change Aggregated revenue1 4,377 4,749 6,439 11,249 8,774 (22%) EBITA 146 278 308 498 324 (35%) EBITA margin 3.3% 5.9% 4.8% 4.4% 3.7% (0.7pp) NPATA 45 73 173 252 161 (36%) Net profit margin 1.0% 1.5% 2.7% 2.2% 1.8% (0.4pp) Cash flow from operations2 79 260 236 829 533 (36%) Return on equity 5.5% 6.8% 5.1% 5.3% 3.1% 2.2pp Basic EPS normalized (cents)3 20.1 27.1 41.3 48.4 30.8 (36%) Basic EPS (cents) 13.4 22.6 36.4 32.8 16.5 (50%) Dividends (cents per share) – 25 27.5 50 50 – 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, and interest income. The directors believe the disclosure of revenue attributable to associates provides additional information in relation to the financial performance of the Group. 2 FY2020 cash flow excludes lease liability payments ($147 million) in accordance with AASB 16 Leases adopted on 1 July 2019. 3 Before amortization of intangibles including tax effect of amortization expense. 2 Worley Annual Report 2021 Chair’s Report Our strategy is delivering and positions us for long term success The past year has been challenging, but we are pleased with how we have performed The actions we have taken during this period have set our business up for the future. We are delivering on our commitments in line with our expectations and accelerating our strategic transformation. Our shift to sustainability provides the structural framework for growth. As a global leader delivering high-value solutions for our energy, chemicals and resources customers, we are well positioned to benefit from the megatrend towards sustainability. Our earnings base is more diversified than ever before – across geographies, sectors and customer spend. We are driving long-term value for our shareholders, underpinned by a strong balance sheet to support growth initiatives and shareholder returns. John Grill AO Region aggregated Sector aggregated Customer spend Chair and Non-Executive Director revenue (%) revenue (%) aggregated revenue (%) This year, our people, customers 26% 12% 37% 50% 54% 46% and business have been impacted 7% 43% 12% by the global health and economic 13% circumstances. Americas Energy Capex Europe Chemicals Opex Many countries around the world including Australia are still Middle East & Africa Resources Asia dealing with the impacts of COVID-19. We want to express Australia & New Zealand our deep gratitude for the ongoing resilience, agility and professionalism of our global team who have supported Our people are key to our success each other while continuing to deliver for our customers. Safety and well-being is our main priority. We will continue The Board recognizes that our success is a result of the to take all appropriate actions to protect our people while extraordinary efforts of our people. Our purpose is resonating ensuring business continuity, supporting our customers in the with our people. It has enhanced employee engagement through delivery of their projects and maintaining operations on their a culture defined by our purpose and values. critical infrastructure. The safety and well-being of our people Over the year, we have seen momentum building in response is what matters most to climate change. The recent release of the Intergovernmental We are committed to providing a respectful, safe and healthy Panel on Climate Change (IPCC) Sixth Assessment Report environment – one where we support each other and our provides further impetus for industry, regulators and communities. Our teams have industry leading safety government to work together in driving the energy transition. performance. This year, our Total Recordable Case Frequency Our purpose is delivering a more sustainable world and as a Rate was 0.16 across the Group. leading provider of professional project and asset services, we are uniquely positioned to enable industry to deliver the We improve the safety, health and well-being of our people sustainability imperative. We are a critical part of the solution as through ‘Life’ which connects our expectations, programs, our customers transition to a low-carbon future. systems and tools to keep our people safe. We will continue to embed Life into all that we do as one of our core values. Worley Annual Report 2021 3 Chair’s Report We’ve maintained our strong financial position The Group reported an underlying net profit after tax of $206 million and a positive operating cash flow of $533 million. We delivered an improved second half FY2021 in line with our expectations. Our gearing is at 21.7% and leverage is 2.0 times which is within our target range. We extended our long-term debt maturity profile with the completion of a €500 million sustainability-linked bond under a Euro Medium Term Note The biggest contribution we program. This was Australia’s first sustainability linked bond can make in addressing climate and we’re proud that the bond aligns Worley’s financing with our purpose. The bond is linked to our Scope 1 and Scope 2 emissions change is in the work we do for target reduction of just over 57,000 tonnes of carbon equivalent by 2025. our customers.” The Board declared a final dividend payment of 25 cents per fully paid ordinary share, unfranked. This is in addition to the interim dividend of 25 cents per share for a total dividend of 50 cents per share for the full year. As a result, we will distribute 88% of our full year underlying profit after tax, excluding the post-tax impact of amortization Sustainability is gaining momentum on intangible assets acquired through business combinations Our traditional work in energy, chemicals and resources for FY2021, to shareholders as dividend. continues to be an important part of our future, with We have adapted with agility to economic circumstances sustainability providing a higher rate of growth. Our customers Global economic circumstances including the COVID-19 will continue to invest in their traditional business given ongoing pandemic have affected our customers – particularly in demand demand while also investing in decarbonization of existing in their end markets. Our diversification will be important as assets and potential new markets. different sectors and regions recover at different speeds. The scale of sustainability investment is predicted to greatly We acted with agility to ensure our financial and operational exceed what we have seen before. This is supported by both integrity. We have continued accelerating our transformation sustainable investing, which has been gaining momentum, and through this dynamic period. Our strategic investment in global the geopolitical environment. Ambitious emissions reductions integrated platforms and our digital capability have enabled us plans in the US could have far reaching impacts on sustainability to improve efficiency and deliver innovation for our customers. investment. Further investment is anticipated in the UK, the EU This strategic investment has delivered greater collaboration and Canada. and further enhanced access to our global talent pool. Our customers are making their own commitments to both The actions we have taken in FY2021 have set our emissions reductions and investment in sustainability markets. business up for future growth There are increasing opportunities in decarbonization as our customers focus on emissions reduction from operations and We have driven successful outcomes for both of our cost integrate sustainability into their investment decisions.