ASX Announcement WORLEYPARSONS LIMITED (ASX: WOR) 2007 ANNUAL GENERAL MEETING ADDRESS OF THE CHIEF EXECUTIVE OFFICER

Transcription

1 12 October 2007 ASX Announcement WORLEYPARSONS LIMITED (ASX: WOR) 2007 ANNUAL GENERAL MEETING ADDRESS OF THE CHIEF EXECUTIVE OFFICER WorleyParsons is a dynamic company whose success is the result of a continuing ability to deliver outstanding projects for our customers around the world. Buoyant conditions in the industries we service have continued this year, and I am pleased with the way staff have responded in the execution of the increasingly demanding project workload. This year, we have once again exceeded the very high performance benchmarks we set for ourselves delivering a record financial performance from our global network of operating centres across the globe. There is no doubt the headline figures are impressive: - Revenue of $3.5 billion - up 43.4% from the previous year - EBIT for the year of $319.1 million - up 59.9% and - Net Profit of $224.8 million - an increase of 61.6% on the pervious year While it would be easy for the management team to take much of the credit for this success, it would fail to recognise the depth of talent of the people who make up WorleyParsons. Across 32 countries, our 24,000 people once again excelled - successfully delivering project after project for our clients. The WorleyParsons team received a significant boost this year following the $1.13 billion acquisition of the Colt Group of Companies. This experienced team brings a range of skills and experiences gained through the delivery of more than 3000 oil sands projects. The acquisition is another step in the continued development of our capabilities and our global presence. The acquisition of Colt has been well received by our staff and clients who have been particularly impressed by the combined capability we are now able to deliver. It positions us as the premier project deliverer in one of the world s fastest growing hydrocarbons markets and gives us a global leadership position in heavy oil and pipelines. We are looking forward to a full year s contribution from the enhanced Canadian business in has also seen a number of other highlights. These include a continued effort in moving towards best practice in Health, Safety and Environment performance, the continued development

2 and roll out of our systems capabilities and risk management framework and a number of small but significant acquisitions in addition to Colt. In recent years we have seen a marked increase in requests from our clients to help enhance the environmental performance of new project developments and to improve and enhance the sustainability of their existing assets. This year, we have spent considerable effort ensuring we have sufficient capability and capacity to support our clients in these areas. As a result of this review we have grouped our already impressive capabilities in this area under the name EcoNomics. EcoNomics describes the full range of services we can offer in providing profitable sustainability to our clients. I will speak about EcoNomics in more detail later in my presentation. Before I give you an overview of the performance of each business unit during the year, I would like to comment on our most important drivers: health, safety and environment, and people. HEALTH, SAFETY AND ENVIRONMENT WorleyParsons now has offices in around 32 countries, many of which have different requirements for classification and reporting safety performance. The Company believes that our most appropriate system for classification and reporting our consolidated safety performance is the use of the US Occupational Safety and Health Act (OSHA). This act includes reporting requirements for Total Recordable Injury Frequency (TRIF) and Lost Time Injury Frequency (LTIF). WorleyParsons safety performance as reported under OSHA showed a TRIF of 0.11 for the 2007 financial year, an improved performance when compared to the 0.16 achieved in Our LTIF rate was 0.02 in While our safety results compare favourably with international best practice and within our industry sectors we believe our performance can improve. Our safety performance is paramount and we still have more to do to ensure that we achieve our objective of Zero Harm. We committed additional resources to our management process and practices in 2007 and will continue to do more in 2008 to ensure we progress towards this objective. PEOPLE Our highly capable team of people is our greatest asset. We place a significant emphasis on recruiting and retaining high quality people and providing a safe, stimulating and rewarding environment for them. The acquisition of the Colt Group adds an experienced and skilled team to our existing Canadian operations and to the Company generally. Following the Colt integration and other growth in the Group, the Company has increased total personnel from 14,300 in 2006 to approximately 24,000 in

3 Like other professional service providers, we face the continued challenge of increased competition for human resources. We are addressing this challenge in a number of ways. Work share of projects between our offices is rapidly becoming the norm for how we execute projects. This year significant steps have been made in developing this capability. Enhancements to our systems capabilities mean we can have a number of offices working on the same project with the outcome being a more consistent and more economical project for our clients. In addition, our global network ensures we can recruit on a broad basis across many disciplines, enabling us to tap new markets for talent. Work share is also proving beneficial in improving staff retention, allowing us to better balance work loads and expose staff to a broad range of projects under development across the WorleyParsons group. We remain very active in retention initiatives and in the recruitment and development of graduates and new hires. We believe this investment of time and resources is worthwhile considering the significant long-term contribution these young professionals will make to the business. REVIEW OF OPERATIONS COLT INTEGRATION As previously noted, the company is extremely pleased with the early results delivered by the Colt Group of companies. Since concluding the acquisition in March this year we completed an extensive integration process, a significant achievement which is a credit to the people involved, particularly our new Canadian Managing Director, Larry Benke. The enthusiasm and support of all staff during the transition has been especially pleasing. Performance in the first three months of this year has been in line with our expectations and the Group is now focused on securing a number of synergy projects which will position the group well for 2008 and future years. Cord Projects, our Canadian-based construction fabrication subsidiary, was recently awarded a Facilities Construction Services contract for Enbridge Pipelines. This contract is valued at approximately C$90 million. As announced at the time of the Colt acquisition, Colt Engineering was successful in winning a major contract with Transfield Services for Suncor. Colt has reached agreement to be the engineering partner for Flint Transfield Services on Suncor Energy s asset management services contract. The contract is a 5 year performance based rolling contract covering turnaround and shutdown services for Suncor s Fort McMurray oil sands operations and Sarnia facility. This contract award reinforces our strong track record in the Canadian oil sands industry and will expand the range of services we provide to Suncor, one of our largest clients in Canada. The initial value of this contract is expected to be approximately C$30 million annually. INVESTMENTS AND CAPABILITY DEVELOPMENT While the Colt deal received significant attention, the Company also made a number of smaller investments in These included the acquisition of Sea Engineering, which expanded our 3

4 presence in the deepwater and floating production sectors of the offshore hydrocarbons market. We more recently acquired Patterson Britton & Partners and John Wilson & Partners to increase our water and environmental capability. We expect that these acquisitions will support our EcoNomics initiative. WorleyParsons also recently announced its acquisition of Polestar Applied Technology Inc in a move that will expand our nuclear power capability and resources. The transaction is subject to US regulatory approval and is expected to close in November Our ability to operate effectively across multiple offices and locations is underpinned by our management systems. This year, we took another significant step forward in this area as we commenced rolling out our enhanced project systems across the Group. These enhanced systems provide a standardised set of project delivery processes enabling consistency in delivery across the Group and better work sharing. This in turn ensures higher levels of technical integrity and predictability for our clients and their projects. SECTOR BY SECTOR REVIEW A number of material contracts were announced during the year and details of these contracts are in market announcements and the Annual Review. As you can see a summary of these contracts is included on this slide. I would now like to touch briefly on the performance of our main operating divisions. HYDROCARBONS Hydrocarbons remains the largest contributor to the WorleyParsons business, generating 73% of the Group s revenue in the 2007 financial year. This year saw significant contract awards in the Australasian region including the award of A$192 million in FEED contracts for Woodside s Pluto project. The award saw the Foster Wheeler WorleyParsons joint venture perform the FEED contracts for the onshore LNG production plant and associated infrastructure and Eos, the WorleyParsons/KBR joint venture, perform the FEED contract for the offshore platform. A very pleasing aspect of the hydrocarbons group s performance in recent years has been the ability to partner with other service providers for the increased number of mega projects which are now being developed globally. In October WorleyParsons was engaged to provide detailed engineering services to Hyundai Heavy Industries for the Umm Shaif gas injection facilities project, offshore Abu Dhabi. The Company had previously performed the FEED for this project in Perth. The Company s expanding West African operations were significantly boosted in December when WorleyParsons was awarded a US$220 million EPCM services contract by Mobil Producing Nigeria to support the execution of a portfolio of offshore projects in Nigeria. 4

5 The Parsons Iraq joint venture, a joint venture of WorleyParsons and Parsons Corporation the entity executing the contract to restore Iraqi oil infrastructure performed strongly in the year. The joint venture no longer has personnel in the country with the Iraq-based work complete. ExxonMobil Asia Pacific has awarded WorleyParsons and its joint venture partner, Foster Wheeler, a multi-million-dollar contract for their new project at the company s Singapore Chemical Plant site. This project will include construction of a new world-scale petrochemical complex centred around a manufacturing facility designed to produce one million tons per year of ethylene and downstream plants for production of ethylene/propylene derivatives. Our integrated team will use our collective global execution capability and our strong presence in Singapore to deliver this prestigious project for ExxonMobil. In addition to the significant workload in new project development we remain focused and responsive to the enormous needs of our clients for the servicing and maintenance of existing facilities. A significant proportion of our workload is focused on improving our clients existing assets. POWER The Power business remains the second largest contributor to earnings in the Group and continues to deliver strong growth driven by increased demand for new power generation and air quality control projects. Our increased global capability and presence resulted in contract awards in solar energy, nuclear, coal plants, long-term asset services and Integrated Gas Combined Cycle front end engineering. Contracts awarded included an agreement with the National Electric Company of Bulgaria for the second phase of the Belene nuclear power plant and the award of a US$64 million professional services contract for Santee Cooper s 600-megawatt coal-fired generation facility in South Carolina. Also in the United States, WorleyParsons is working with BrightSource Energy to deliver 400MW of renewable power to the Californian electric grid from three solar thermal power plants. This is the first solar thermal power project licensed in California and is the world s first plant using dispersed power towers which boil and reheat steam for use in steam turbine generation. The acquisition of the remaining 50% share of the Australian power joint venture and formation of Transfield Worley Power Services for long-term asset services was a major step in Australia. In addition new offices were established in Sacramento, California and Bratislava, Slovakia. The Colt acquisition also provides a power track record and capabilities in Canada, a significant new market opportunity for us. The company s expertise in clean coal technology, renewable energy, gas turbines, nuclear energy and efficiency improvements and upgrades of existing plants leave us well placed to respond to the increased global focus on low emissions technology. 5

6 Our significant investment in EcoNomics provides a practical focus for our work in this area and a valuable suite of capabilities to offer to our clients. MINERALS & METALS The Minerals & Metals group performed above expectations reflecting strong primary demand in the global commodities market. Revenue was up 44.8% to just over $292 million. Growth was experienced across all regions. The Company continued to develop its technical and project delivery capability and was awarded the EMAL greenfield aluminium smelter project in Abu Dhabi in addition to ongoing support for the Ma aden phosphate project in Saudi Arabia and the Pilbara iron ore project for Fortescue Metals Group also saw the successful completion of BHP Billiton s Olympic Dam expansion pre-feasibility study; performed in a joint venture with SNC Lavalin and solid progress in the development of program management and EPCM activities in the Middle East and Russia. It also saw commencement of the company s first major chemicals project in China. The Company continues to be very active in the alumina process engineering market with support for a number of projects in the study and expansion phase. The Dallas based Gas Cleaning group has continued its strong growth through support for gas cleaning and energy optimisation services. The Toronto operation experienced significant growth throughout the year with some early synergies from the Colt acquisition, diversification into alumina and the award of several key EPCM projects and studies. Long term asset services contracts continued to grow in Australia in the year with the Zinifex relationship expanded to include the Rosebery mine in Tasmania. INFRASTRUCTURE The Infrastructure business was driven by large, world scale projects in 2007 including the Ma aden phosphate project, Fortescue s Pilbara iron ore project, and Woodside s Pluto LNG project. Specialised consulting services continue to provide a solid base for the Infrastructure business in the marine, rail and water & wastewater markets. We recently announced the acquisition of two Australian consulting groups, Patterson Britton and Partners and John Wilson and Partners, which will expand our water and infrastructure capability on the east coast of Australia. EcoNomics At WorleyParsons we are very focused on the attributes that differentiate us. We articulate them explicitly and we clearly communicate them internally and externally. We work hard to ensure that we stay in the forefront of our markets in relation to them. This year, we are introducing a new differentiator reflecting the importance of environmental and economic sustainability for our clients. We have named this initiative EcoNomics. EcoNomics brings together and extends our substantial range of services and technologies in environmental, social and financial sustainability. It is our plan that these capabilities will be 6

7 embedded into all aspects of our business, including all of our customer sector groups and in all of our operations, worldwide. Through EcoNomics we are focused on both sustainability and profitability - the green and the black. EcoNomics responds to the opportunity and the challenge that all businesses face as we deal with the imperatives of the changing global business environment. This is particularly pertinent for WorleyParsons customers who are the most significant operators in the resources & energy sectors. Businesses need to operate existing facilities more efficiently and develop new, more resilient solutions for future developments. All businesses need to efficiently optimise their operations in the context of ecology and society - in addition to their obligation of profitable operation. EcoNomics combines a number of existing and recently acquired capabilities to enable us to help our clients navigate and anticipate increasingly complex regulations and expectations. Although we launched this initiative with the release of our annual results, we are already crucially involved in many EcoNomics projects around the world. A number of these are outlined in the Annual Review. We believe EcoNomics will open up significant new business opportunities for the company in the future, and I look forward to providing shareholders with updates in the coming year. OUTLOOK FOR WORLEYPARSONS GROUP As Ron has said, our outlook for the forthcoming year remains unchanged from the guidance provided with the release of the 2007 financial results. On behalf of WorleyParsons management, I would again like to pay tribute to our loyal personnel, and to say a sincere thank you to all our shareholders for their continued support and confidence in WorleyParsons. I would now like to show you a DVD we have made about EcoNomics. The DVD will run for about 2 ½ minutes. You can download the DVD from the Investor section or the EcoNomics homepage on the WorleyParsons website. 7