1.3 Review of operations

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WorleyParsons is a professional services provider to the resources, energy and industrial sectors.

The statutory result for FY2015 was a loss of $54.9 million, including the recognition of a non-cash impairment of goodwill of $198.6 million (approximately 10% of total goodwill). Underlying net profit after tax (NPAT)1 was $198.6 million for the 12 months to 30 June 2015, down 24.6% on the previous corresponding period. 

Aggregated revenue has only modestly declined by 1.8%, against a backdrop of significant declines in market activity.  Sustained low commodity prices and the fall in oil prices have resulted in our customers reducing capital and operating expenditure. 

We achieved increases in aggregated revenue in a number of our markets that partially offset the declines in our Improve business in Canada and our Services business in North America and Australia, demonstrating the benefits of our geographic diversity and the breadth of our service offerings. 

We have been taking action since 2013 to reshape the business to align it with market activity. These actions in Financial Year 2015 resulted in redundancy and onerous lease charges being recognized. When combined with increased competition and concessions negotiated with customers, this has led to a reduction in our margin. 

The further deterioration in our markets since May has resulted in us taking further action beyond those previously announced, the cost impact of which has been recorded in the Financial Year 2015 earnings. We now employ 31,400 people operating out of 148 offices across 46 countries, compared with 35,600 people across 157 offices at 30 June 2014.  

We have secured 105 significant awards this year compared with 90 in Financial Year 2014, including a recent significant long term contract with a confidential customer in the power industry in North America.

Our financial position remains sound with the Company’s gearing ratio at 30 June 2015 of 28.0%, near the middle of the target range of 25% to 35%. 

The FY2014 segment result and segment margins shown in sections 1.3.1 and 1.3.2 have been restated to reflect the organization of the Group and changed reporting effective 1 July 2014.

The reconciliation of the underlying earnings before interest and tax (EBIT) and NPAT results to the EBIT and NPAT attributable to members of WorleyParsons Limited is shown in the following table.

There are three measures that are key to understanding our results: 
  1. Aggregated revenue
  2. EBIT (earnings before interest and tax)
  3. NPAT (net profit after tax) attributable to shareholders.
 
FY2015
$'M
FY2014
$'M
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Movement

1. Aggregated revenue

7,227.5

7,363.7

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; and
  • Less procurement at nil margin, and interest income.

Our aggregated revenue decreased by 1.8% in FY2015 when compared with that for FY2014, due to the decline in market activity in APAC (Australia, Pacific, Asia, China) and North America regions which was partially offset by foreign exchange benefits and growth in our other markets.

2. EBIT

87.1

428.2

EBIT means earnings before interest and tax.

Our EBIT decreased by 80% in FY2015 when compared with that for FY2014, due primarily to the impact of the impairment charge, redundancy and onerous lease charges recognized in the second half and customer concessions.

3. NPAT attributable to shareholders

(54.9)

249.1

NPAT means net profit after tax.

Our NPAT decreased by 122% in FY2015 when compared with that for FY2014, due primarily to the impact of the impairment charge, redundancy and onerous lease charges recognized in the second half and customer concessions.