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We have taken decisive action to position the Company to take advantage of market conditions and for future growth.

The 2014 financial year was a difficult year for WorleyParsons as we faced challenges in a number of our key markets. WorleyParsons is one of the most globally diverse companies in our international peer group, with a network of 157 offices in 46 countries. This global diversification has been an important factor in assisting WorleyParsons to offset challenging conditions in a number of key markets, particularly Australia, by capitalizing on opportunities in better performing markets.

To address these market conditions and to ensure we maintain an intense focus on our customers and project delivery, a number of actions were taken during the year. We simplified the corporate structure including a reorganization of the business into three business lines, refreshed the leadership team, reduced overhead costs, removed 1,700 overhead positions and initiated programs to enable our staff to deliver greater customer satisfaction. We have refocused our strategy to more aggressively leverage our broad and deep technical capabilities and diverse geographic presence.

Financial Performance

The Group reported an underlying net profit after tax of $263.4 million, excluding $35.4 million pre-tax restructuring costs and the net fair value gain on acquisition of associates of $11.4 million, down 18.2% on our 2013 underlying result. This reduction was due primarily to a significant decline in the contribution from the Australian business across all customer sectors and poor commercial performance on a project in Cord, our Canadian construction and fabrication operation. Margins remained under pressure although they improved significantly in the second half to a three-year high. It is pleasing to note that the Group delivered an impressive operating cash flow of $550.1 million and our balance sheet remains strong.

The Board has resolved to pay a final dividend of 51.0 cents per share 20.5% franked, taking the total dividends for the year to 85.0 cents per share, down 8.1% from 92.5 cents per share last year. 

As the 2014 financial result was below the threshold for vesting, no Combined Incentive was awarded to Executives.

Health, Safety and Environment (HSE)

There is nothing more important to WorleyParsons than the safety of our people. To this end, the Board and management continue to strive to achieve the goal of Zero Harm across all countries in which we operate. This year, our Total Recordable Case Frequency Rate reduced to 0.10 compared with 0.13 per 200,000 manhours in the 2013 financial year. Notwithstanding this improvement, we are deeply saddened to report that we had a colleague aboard Malaysia Airlines flight MH370. This loss has been deeply felt through the organization, particularly in our Kuala Lumpur operations.

Motor vehicle travel remains the greatest risk to the safety of our employees. Our attention on this area has resulted in a 30% reduction in vehicle crashes in the last 12 months. We continue our focus on our 9 key safe driving behaviors as we strive to embed these behaviors into every area of our lives.

Our New Future

On 1 May 2014, WorleyParsons reorganized into three business lines – Services, Major Projects and Improve. Each of these business lines has full accountability and responsibility for customer satisfaction, generating sustainable earnings and providing a satisfactory level of return on capital invested. In addition, each business line is responsible for providing and sourcing the optimal level of operational support.

Group functions at the corporate level were streamlined with a lean corporate office responsible for strategy, governance activities and improved allocation of capital.

The Development group has implemented formal processes to harness innovation, to manage investment in the business and to nurture new ventures.  

During the 2015 financial year, we will focus on embedding behaviors that will support our restructure and future success. We will continue to simplify our business processes and will be implementing a change program to:

  • Refocus the organization on having an obsession with making our customers successful
  • Capture our knowledge and share that knowledge to find better solutions for our customers’ problems
  • Build a strong culture of performance and accountability to achieve: “Delivering what we promise”.

Strategically, our immediate focus is on getting better at what we do and prudently managing costs. We are more aggressively pursuing growth from our core, both into new geographies and new service offerings. In addition we are developing new ventures aligned with and complementary to our existing business. Two new ventures are being developed - our advisory business, Advisian, and Digital Enterprise. We are pleased to announce two key appointments. Iain Ross has been appointed as the CEO of Digital Enterprise to accelerate and build on the work done by Graeme Henderson and his team. As previously announced, Dennis Finn has been appointed as the CEO of Advisian. Dennis joins us from PwC and commences on 1 September 2014. 

Historically, WorleyParsons has delivered above average total shareholder returns; however, we recognize that in recent times our total shareholder returns have declined along with our performance relative to our peer group. The actions taken in the second half of the 2014 financial year, including the refocusing of our strategy and investment review framework via the Development group, seek to return us to satisfactory levels of total shareholder return.

People

We are a professional services business with our employees as our most important asset. We rely on our people to meet our customers’ needs. Our people continue to learn and adapt to respond to the changing needs of our customers and the dynamics of our markets.

We are pleased that the wide range of skills and deep expertise we have in the business, spread across so many countries and offices, has enabled us to respond quickly and competently to our customers’ changing needs.

In establishing our future, we have had to make some difficult decisions across the business to position the Company to take advantage of market conditions. This was necessary to ensure the Company remains sustainable and profitable for the long term.

We would like to express both the Board and Group Leadership Teams’ appreciation for the commitment and contribution to WorleyParsons by our people over this past year, particularly during the period of transition to the new organization.

Board and Management Changes

On 3 April 2014, WorleyParsons announced the resignation of JB McNeill from the Board of Directors for family reasons. JB joined the WorleyParsons Board in 2010 after retiring from a 30-year career with ExxonMobil. JB was a valuable member of the Board and brought to it his extensive knowledge and understanding of the oil and gas industry globally. We thank JB for his significant contribution. 

As previously mentioned, the leadership team was refreshed and is introduced in the following pictures. For more details view the Group Leadership Team.

Ethics and Corporate Responsibility

We recognize that WorleyParsons’ reputation for honesty, integrity and ethical dealings is one of its key business assets and a critical factor in ensuring the Company’s continued success. All of WorleyParsons’ people continue to strive to maintain the standard of ethical behavior expected by our customers, suppliers and shareholders.

The Company continues to refine its corporate responsibility efforts across all the parts of the world in which we do business, in an effort to ensure that our programs are as effective and efficient as possible in delivering value to the communities we support. The Corporate Responsibility section of this Annual Report provides greater detail on these activities.

Corporate Governance

The Board remains confident that the Company has in place a strong corporate governance system, and that this system is well maintained, reviewed and updated. Our governance policies and procedures are benchmarked against those of other comparable companies to ensure that the appropriate standards are maintained.

The Group maintains a comprehensive, independent, internal audit program that reports directly to the Audit and Risk Committee. This function not only focuses on specific areas of interest, but provides an annual assurance to the Audit and Risk Committee of the adequacy and effectiveness of the Group’s internal controls.

The Corporate Governance Statement 2014 can be found on the Company’s website.

We would like to thank the WorleyParsons Group Leadership Team, and the Board of Directors, for their excellent work and contribution in what has been a challenging year for WorleyParsons. We believe that the decisive action and hard work undertaken during the year, positions the Group to take advantage of the growth opportunities available to us.

 

John Grill AO
Andrew Wood
Chairman and Non-Executive Director
Chief Executive Officer

Andrew Wood

CEO

John Grill AO

Chairman and Non-Executive Director

Group Leadership Team
Group Leadership Team

From left to right: Chris Parker, Ian Wilkinson, Randy Karren, Marian McLean, Mark Southey, David Steele, Gerard Dyson, Andy Cole, Andrew Wood, Simon Holt, Peter Janu

Read the Group Leadership Bios >