Worleyparsons : Annual Report to Shareholders

Annual Report 2019

We help our customers meet the world's changingenergy, chemicals and resources needs

We are a professional services business, a partner in delivering sustained economic, social and environmental 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

Our values

WorleyParsons Limited 2019 Annual General Meeting will be held on Monday 21 October 2019 commencing at 2.00pm (AEDT) at The Westin Sydney, 1 Martin Place, Sydney.

Contents

Group Financial Highlights	1
Chairman's Report	2
Board of Directors	5
Chief Executive Officer's Review	6
Group Executive	17
Environmental, Social	20
and Governance
Operating and Financial Review	29
Directors' Report	37
Remuneration Report	43
Financial Statements	61
Shareholder Information	118
Glossary	119
Corporate Information	121

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 toworld-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 2019 shareholder results microsite, which offers our

2019 results documents and detailed information on our business operations.

Visit us online

annualreport2019.worley.com

Front CoverWorley's Vadodara office in India

Group Financial Highlights

Five year performance at a glance

Aggregated revenue	EBITA				NPATA				Cash flow from operations
$6,439.1m	$308.1m		$172.3m		$236.3m
$7,227.5m	$5,725.9m (restated)	$4,377.0m	$4,749.2m	$6,439.1m	$439.8m $108.9m	$322.0m $148.1m	$274.6m $146.4m	$313.0mm$278.0m	$412.8m $308.1m	$(39.6m)	$36.9m	$135.0m $45.3m	$72.8m	$172.3m	$251.3m	$192.0m	$78.9m	$259.7m	$236.3m
15	16	17	18	19	15	16	17	18	19	15	16	17	18	19	15	16	17	18	19

EBITA		NPATA
Underlying EBITA		Underlying NPATA

$m	2015	2016	2017	2018	2019	% change
Aggregated revenue1	7,227.5	5,725.9	4,377.0	4,749.2	6,439.1	35.6
EBITA	108.9	148.1	146.4	278.0	308.1	10.8
EBITA margin	1.5%	2.6%	3.3%	5.9%	4.8%	(1.1pp)
NPATA	(39.6)	36.9	45.3	72.8	172.3	136.7
Net profit margin	(0.5%)	0.6%	1.0%	1.5%	2.7%	1.2pp
Cash flow from operations	251.3	192.0	78.9	259.7	236.3	(9.0)
Return on equity	9.2%	6.9%	5.5%	6.8%	5.1%	(1.7pp)
Basic EPS normalized (cents)2	(14.7)	16.3	20.1	27.1	41.3	52.4
Basic EPS (cents)	(22.2)	9.5	13.4	22.6	36.4	61.1
Dividends (cents per share)	56.0	-	-	25	27.5	10.0

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. Before amortization of intangibles including tax effect of amortization expense.

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Chairman's Report

Welcome to the WorleyParsons Limited ("Worley") Annual Report for financial year 2019

John Grill AO

Chairman and Non-Executive Director

In FY2019 Worley underwent one of the most transformative and dynamic changes in its history with the completion of the acquisition of the Energy, Chemicals and Resources division of Jacobs Engineering Group Inc. or "ECR", and in the process of doing so positioned the company as a pre-eminent global player in the energy, chemicals and resources sectors.

The integration of the ECR business is progressing well with cost and revenue synergies being identified beyond those identified pre-acquisition. The business has made it a priority to ensure the strong culture of both organizations is reflected in the new Worley.

Our operating and financial metrics continue to be strong. Our customers have been supportive of the improved capabilities, expertise and global reach of Worley.

The New Worley

With the ECR acquisition being finalized in April this year, we have become the pre-eminent global provider of professional projects and asset services in energy, chemicals and resources. This combining of expertise establishes us as the global sector leader across hydrocarbons, chemicals and mining, minerals and metals. We have a solid platform to better service our customers across the entire asset life-cycle, while also delivering our shareholders enhanced earnings diversification and resilience. We have reorganized, breaking out our Services line of business into two separate components: Energy & Chemicals Services, and Mining, Minerals & Metals Services. This structure will allow us to best service the needs of the changing energy, chemicals and resources industries.

The acquisition of ECR continued our strategy of diversifying earnings by growing in the Chemicals and Mining, Minerals

• Metals sectors. Clear direction provided by the strategy architecture we rolled out in 2017 has provided the basis for bold action this year. Andrew Wood will provide further details of the progress we have made in the past 12 months on page 6.

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Market dynamics

The energy, chemicals and resources markets continue to experience significant change. Across our markets, we are seeing opportunities arising from the rapidly changing energy mix and the flow on effects in our other sectors. Driven by continued improvement in market conditions, our energy, chemicals and resources customers have increased their early phases activity over the past 12 months.

The current medium-term picture continues to indicate the global energy transition will open opportunities across all markets that we serve. These opportunities combined with our deep domain knowledge and expertise in the power and new energy space, means that Worley is well positioned to support our customers in leading and navigating this new world. The global energy transition will require innovative thinking and adoption of new technology, and your Company is well positioned to make a significant contribution to that transition.

ECR Acquisition

In October 2018, Worley entered into a binding agreement to acquire ECR from Jacobs. The acquisition was completed in April 2019 with the new merged business employing 57,831 people across 51 countries. The acquisition was completed for a total consideration of US$3.2 billion (A$4.56 billion), funded by a A$2.9 billion entitlement offer, and A$842.1 million stock issued to Jacobs and additional debt.

In combining the two complementary organizations, the transaction is expected to:

1. generate material EPS accretion and returns for shareholders;
2. create apre-eminent global provider of professional project and asset services in resources and energy;
3. provide global sector leadership across hydrocarbons, chemicals and mining, minerals & metals;
4. deliver enhanced earnings diversification and resilience; and
5. bring significant value upside through cost and revenue synergies.

Cost synergies have increased from A$130 million estimated at the time of announcement to A$150 million including Global Integrated Delivery synergies. These benefits are anticipated to be delivered within two years. Further benefits are expected to be achieved from share services and revenue synergies.

Financial performance

The Group reported an underlying net profit after tax excluding the post tax impact of amortization on intangible assets acquired through business combinations of $259.8 million (which excludes $87.5 million of one off costs post tax), up 43% on the 2018 underlying result. The Group delivered a positive

operating cash flow of $236.3 million. Our gearing is at 20.9%, and leverage has remained flat at 1.9 times. The funding structure of the ECR acquisition has allowed the leverage to remain flat through the transaction.

The Board declared a final dividend payment of 15.0 cents per fully paid ordinary share, unfranked. This is in addition to the interim dividend of 12.5 cents per share for a total dividend of 27.5 cents per share for the full year. As a result 52.2% of our full year underlying profit after tax excluding the post tax impact of amortization on intangible assets acquired through business combinations for FY2019 will be distributed to shareholders as a dividend.

Health, safety and environment (HSE)

A key value shared across all of Worley is our commitment to safety, and a strong safety culture exists across our Company. Our teams maintain an industry-leading performance in safety. This year our Total Recordable Case Frequency Rate (TRCFR) was 0.14 across the Group for employees and contractors.

Theenergy transition is opening upopportunities across all sectors we serve

Brand

Following the completion of the ECR acquisition, the Company adopted 'Worley' as its new brand. The new brand leverages the brand equity in our name Worley, acknowledges ECR in the brand colour and typographic style and highlights 'energy, chemicals and resources' in our tagline.

The Company name will be changed to Worley Limited, subject to the approval of members at the Annual General Meeting in October 2019.

People

With the acquisition of the ECR business, I am delighted to see our people numbers increased from 26,050 12 months ago to 57,831 as at end of June. Our people have demonstrated enormous resilience and character during the transition period. This is a credit to them as well as to our Transition Management Office (TMO) who have worked tirelessly to ensure as smooth an experience as possible for all our people. The Board is acutely aware of the fact that the Company's success is underpinned by its people and the Board expresses its deep appreciation for their contribution during the year.

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