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Half year results 2013 Andrew Wood

Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

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Page 1: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Half year results 2013 Andrew Wood

Page 2: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

First half earnings in line with guidance

► Aggregated revenue of $3,879m, up 14%* ► Hydrocarbons professional services revenue and margin up* ► Strong contribution from lower margin reimbursable EPC activity,

particularly from our fabrication and construction business, WorleyParsonsCord

► Good cashflow performance ► Number of people employed 40,400 ► 61 significant project and long term contract awards ► Expansion in key growth markets of China and Brazil continued ► Strong performance and growth in Canada ► Zero harm remains our ultimate goal ► Interim dividend of 41.5 cents per share

Overview

2 * versus previous corresponding period

Page 3: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

HY13 HY13 vs. HY12

Aggregated revenue $3,879 m 14%

EBIT $252 m 2%

Net profit after tax $155 m 2%

Operating cash flow $125 m 95%

Basic earnings per share 63.0 c/s 2%

Interim dividend 41.5 c/s 4%

Financial highlights

The IFRS financial information contained within this presentation has been derived from the 31 December 2012 Interim Financial Report which has been reviewed by Ernst & Young. This presentation however has not been reviewed or audited.

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Page 4: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

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Zero Harm is our goal and to get there we strive for year on year improvement

Performance remains good but we are further increasing our effort to ensure continued improvement

Commenced a number of programs across the Group including: • Board and Executive Committee

structured HSE site visit program

• Road safety program

• Optimising our approach to safety in construction and contractor management

• Updating our incident investigations processes

Page 5: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Increased market volatility primarily driven by fluctuating commodity prices and escalating project costs

South Africa impacted by decline in market conditions

Low cost of natural gas in the US continues to drive downstream developments

Snapshot Growth in unconventional oil and gas

developments Aging assets and greater regulatory

requirements driving increased demand for Improve

Major customers seeking common global delivery platforms

Recovery of the US power market has not yet eventuated

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Page 6: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Diversified operations enabled growth in volatile markets

Canada, and in particular WorleyParsonsCord, contributed to growth in Hydrocarbons

Strong performance from the Chinese and Brazilian businesses

Material growth in the chemicals sector

Snapshot Increased project awards from tier

2 customers Local global model implemented

with outcome of customer focus and delivery efficiency

Infrastructure & Environment operations in the US and South Africa restructured due to reduced activity

6 6

Page 7: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Local delivery, global support

40,400 people 165 offices 41 countries

2.9 million workshare hours (HY2012: 2.1 million)

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Page 8: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Significant awards for HY2013

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61 significant and long term contracts / projects

Page 9: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

► Improve remains a key differentiator

► Demand for our Improve services continues to increase

► Randy Karren appointed to the Executive Committee as Group Managing Director –Improve

► Total of 19 new Improve contracts awarded

► 6 contracts renewed ► Currently have more than

275 Improve contracts

Improve contracts

Improve services continue to diversify 9

Page 10: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Financial results Simon Holt

Page 11: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Financial profile

$m HY09 HY10 HY11* HY12 HY13 vs. HY12

Aggregated Revenue

3,256

2,548

2,905

3,399

3,879 14%

EBIT

315

210

193

248

252 2%

EBIT Margin 9.7% 8.2% 6.6% 7.3% 6.5% (0.8%)

Net profit

198

138

119

152

155 2%

Net profit margin 6.1% 5.4% 4.1% 4.5% 4.0% (0.5%)

Basic EPS (cps)

81.6

56.8

48.5

61.8

63.0 2%

Cash flow from operating activities

235

148

125

64

125 95%

ROE 23.7% 18.9% 15.6% 18.8% 18.8% 0%

11 First half earnings in line with guidance

* The underlying result for HY11 includes the fair value gain on acquisition of associates of $9.4m

Page 12: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Financial profile

Robust aggregated revenue growth

* The underlying result for FY11 and FY12 excludes the fair value gain on acquisition of associates of $65.7m and $7.6m respectively

Robust aggregated revenue Hydrocarbons primary contributor to

EBIT growth Minimal foreign exchange impact Global support costs remain flat at

approximately 4.5% of aggregated revenue

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Page 13: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Margin profile

Hydrocarbons professional services margin has increased

Hydrocarbons professional services revenue and margin have increased

Increased contribution from reimbursable EPC, including WorleyParsonsCord, has impacted Hydrocarbons margin

Power impacted by uncertainty in North America and cancellation of key government contract in Europe

Power margin includes a pre tax profit of $10.7 million from the sale of contracts into the TWPS

Minerals, Metals & Chemicals margins have held up

Infrastructure & Environment impacted by deteriorating markets in South Africa and the US

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Page 14: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Strong performance and growth in Canada

Hydrocarbons

Record aggregated revenue 12% EBIT growth from HY2012

Australia grew in challenging market conditions

Reduced activity in Europe, the Middle East and Sub Saharan Africa

Increased activity in the US

14 * Regions in constant currency

Page 15: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Diversification outside of the US

Power

Europe impacted by cancellation of key government project

Latin America experienced increased material costs on a lump sum project

The US grew despite market uncertainty The Australian power generation asset

management business was consolidated into Transfield Worley Power Services

15 * Regions in constant currency

Page 16: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Earnings growth through geographical & sector diversification

Aggregated revenue up 21% on HY12 5% EBIT growth in challenging market conditions Australia market conditions deteriorated in the half Geographical diversification with Australia now

43% of aggregated revenue versus 63% in prior year

Chemicals performing well in Asia, Latin America and the US

Latin America improved EBIT due to key chemicals projects

Minerals, Metals & Chemicals

16 * Regions in constant currency

Page 17: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Impacted by reduced government spending

Infrastructure & Environment

17

Increased environmental work for the Hydrocarbons sector

Softening in the Australian resources sector had a flow-on impact for Western Australia

Reduced activity in Canada, the Middle East, Sub Saharan Africa and the US

Demand for resource infrastructure providing growth in Latin America

* Regions in constant currency

Page 18: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Cash Flow

$m HY09 HY10 HY11* HY12 HY13

EBIT 315 210 203 248 252

Depreciation and amortization 40 43 47 50 51

Interest and tax paid (103) (132) (56) (64) (89)

Working capital / other (17) 27 (69) (170) (89)

Net cash inflow from operating activities 235 148 125 64 125

Net cash outflow from investing activities (82) (51) (24) (34) (37)

Net cash (outflow) / inflow from financing activities (111) (111) (48) (55) 102

Good cash flow performance 18

* The underlying result for HY11 includes the fair value gain on acquisition of associates of $9.4m

Page 19: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Gearing and key metrics

Strong balance sheet metrics 19

Key Metrics FY10 FY11* FY12* HY13

Gearing ratio 26% 22% 20% 20%

Facility utilization 61% 53% 51% 55%

Average cost of debt 5.2% 5.7% 5.7% 5.5%

Average maturity (years) 3.8 4.6 3.8 4.2

Interest cover ** 13.3x 12.0x 12.4x 12.0x

Net Debt/EBITDA ** 1.2x 0.9x 0.8x 0.8x

* The underlying result for FY11 and FY12 excludes the fair value gain on acquisition of associates of $65.7m and $7.6m respectively ** Rolling 12 month calculation

Page 20: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Liquidity

► Financial capacity to support growth with gearing at 20%

► US$ 300m of unsecured note payable issued in the US Private Placement market September 2012 maturing in 5 to 10 years with fixed annual coupon

Liquidity Summary $m FY10 FY11 FY12 HY13

Loan & OD facilities 1,286 1,277 1,445 1,705 Less: facilities utilized* (782) (680) (740) (946) Available facilities 504 597 705 759 Plus: cash 141 171 247 434 Total liquidity 645 768 952 1,193 Bonding facilities 669 682 787 777 Bonding facility utilization 50% 61% 66% 68%

*Excludes capitalized borrowing costs 20

Well positioned to support growth

Page 21: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Sector outlook Andrew Wood

Page 22: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Hydrocarbons

North American gas renaissance spurring increased levels of activity

High level of unconventional oil and gas development activity

Remain well positioned in oil sands market in Canada

Significant growth in our fabrication and construction business, WorleyParsonsCord

22

HY13 vs. HY12

Aggregated revenue $2,672 m 14.0%

% of Group aggregated revenue 69%

EBIT $301 m 11.9%

Margin 11.3% 0.2%

Low cost of natural gas in US driving downstream developments

Continue to secure global services contracts

Increased activity in Improve

Page 23: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Hydrocarbons

23 Modular transit, Alaska

Key project awards Chevron North Sea Limited –

Rosebank front end engineering design (FEED), United Kingdom

BP Iraq NV, PetroChina and State Oil Marketing Organisation of the Republic of Iraq – Rumaila oil field engineering, procurement and management services, Iraq

Saudi Arabian Oil Company – general engineering and project management service contract, Saudi Arabia

LukOil Mid-East Limited – West Qurna-2 oil field project management, technical and construction management personnel, Iraq

Singapore LNG Corporation – LNG regasification expansion FEED, Singapore

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Page 24: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Hydrocarbons

24 Dexzel Cogeneration, Badger Creek

Key Improve awards and renewals CNOOC and Shell Petrochemicals

Company Limited – site Improve engineering service contract, China

Canadian Natural Resources Limited – engineering services, Canada

Inpex – integrity and maintenance contract, Australia

Talisman – engineering and project delivery alliance, US

Husky – engineering and procurement for midstream operations, Canada

Suncor – sustaining capital projects for upstream and downstream facilities, Canada

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Page 25: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Hydrocarbons

25

Sector outlook International majors have

announced increased capital expenditure commitments for CY2013

Favourable economics driving gas utilization and oil production projects in the US

High number of greenfield and brownfield opportunities

Improve market growth as a result of aging assets and increased regulatory requirements

We continue to expect improved earnings in the Hydrocarbons sector in FY2013

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Page 26: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Power HY13 vs. HY12

Aggregated revenue $303 m 16.5%

% of Group aggregated revenue 8%

EBIT $31 m* 11.7%

Margin 10.3% 0.5%

► Continued uncertainty in North America

► Focus on developing long term Improve relationships

► Nuclear performance impacted by termination of large government funded project in Europe

26 Nuclear new builds and safety upgrades remain a focus

► Key resource related power projects have not been impacted by mining investment slowdown

► TWPS provides a strong platform for growth in the Australasian operations and maintenance market

* Includes $10.7m from sale of contracts into TWPS

Page 27: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

TVA, Lagoon Creek

Power

Key project awards Polska Grupa Energetyczna – site

characterisation and licensing / permitting services for the nuclear power plan development program, Poland

Tennessee Valley Authority (TVA) – plant outage and support at various fossil plants, US

Akkuyu NGS Elektrik Üretim Anonim Şirketi – consultancy services for the Akkuyu nuclear power plant, Turkey

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Page 28: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Power

Key Improve awards and renewals Bruce Power – sustaining capital

projects at nuclear facilities, Canada US Government, Department of

Energy, National Nuclear Security Administration – technical engineering and programmatic support, US

Kozloduy Nuclear Power Plant – assessment process to review the operational safety of the power plant, Bulgaria

Calpine – sustaining capital projects, US

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Page 29: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

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Sector outlook Medium to long term outlook

remains strong outside of US Expect growth to continue in fossil

Improve business in the US, Canada and Australia

New build opportunities in Latin America, South East Asia, Sub Saharan Africa and the Middle East

Focus on nuclear new build in emerging markets

Safety upgrades continue to drive demand for nuclear Improve

Continue to strengthen our relationships with strategic customers

We continue to expect improved earnings in the Power sector in FY2013

Power

Page 30: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Minerals, Metals & Chemicals

HY13 vs. HY12

Aggregated revenue $484 m 21.0%

% of Group aggregated revenue 12%

EBIT $70 m 5.1%

Margin 14.5% 2.3%

► Diversified operations have delivered continued growth in the developing world

► Significant chemicals growth in China, the US and LAM

30 Global chemicals market continues to provide growth opportunities

► Volatility in iron ore prices has impacted activity

► Softening in coal market, particularly in high cost countries

► Studies leading to major projects

Page 31: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Minerals, Metals & Chemicals

Pilbara Iron Ore and Infrastructure, Australia West

Key project awards AngloGold Ashanti – Gramalote gold

project, Colombia Pacific Aluminium – Katherine to

Gove gas project, Australia Elwady Company – phosphoric

fertilizers pre-feasibility study, Egypt Votorantim Metais – Rondon

alumina project FEL3, Brazil Nyrstar – Port Pirie transformation

pre-feasibility study, Australia Ressources d’Arianne – feasibility

study for the Lac à Paul phosphorus mining project, Canada

Dynasol – SSBR EPCM, China Potash Corporation of

Saskatchewan – underground expansion construction management, Canada

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Page 32: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Minerals, Metals & Chemicals

OneSteel WorleyParsons Alliance, Australia East

Key Improve awards and renewals Minera Escondida (BHPB) –

Escondida Improve contract, Chile Tasnee – waste heat boiler solution,

Saudi Arabia Xstrata Nickel – MSA, Canada Stepan Company – chemicals plant

sustaining capital EPCM, US

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Page 33: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Minerals, Metals & Chemicals

33

Sector outlook Improving near term outlook for iron

ore and metallurgical coal Medium to long term outlook

remains strong Customers’ capital programs

focused on productivity improvements

New developments are increasingly in developing countries

Strong focus on Improve opportunities in developed markets

Outlook for chemicals remains strong, particularly in the US and China

Completion of TWP acquisition will provide growth opportunities in Africa and underground mining

We continue to expect improved earnings in the Minerals, Metals & Chemicals sector in FY2013

Page 34: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

HY13 vs. HY12

Aggregated revenue $420 m 6.4%

% of Group aggregated revenue 11%

EBIT $45 m 18.4%

Margin 10.8% 3.3%

Infrastructure & Environment

► Hydrocarbons customers seeking to procure enabling front end environmental services on global basis

► Growth in unconventional gas increasing infrastructure opportunities

► Continued growth in the demand for restoration services

34 Integrated enabling capabilities that differentiate our business

► Regulation changes in Brazil have opened opportunities in the port sector

► Resource related rail activity trending towards safety and productivity

► Increased competition for water resources is increasing demand for our services

Page 35: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Infrastructure & Environment

Jump Creek Dam, Canada

Key project awards Alderon Mining – rail and terminal

expansion pre-feasibility, Canada Consórcio Complexo Tapajós –

environmental impact assessment for Sao Luiz do Tapajos dam, Brazil

Caltex – Kurnell port and berthing project, Australia

Ecopetrol – Refineria del Pacifico port and marine Pre-FEED, Ecuador

Wafra Joint Operations – integrated master plan, Kuwait

Rio Tinto – Koodaiderie hydrology studies, Australia

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Page 36: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Infrastructure & Environment Key Improve awards and

renewals Enbridge – remediation program,

Canada BP – oil spill response planning

framework contract, US and Canada BP – lighthouse restoration MSA,

Global Woodside Petroleum –

environmental services panel contract, Australia

Chevron – environmental services panel contract, Australia

Tullow Oil – global framework agreement for environmental and social impact assessments, Global

Water Corporation – infrastructure design branch panel contract, Australia

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37 Tengizchevroil, Kazakhstan

Infrastructure & Environment Sector outlook

Growth in unconventional oil and gas driving demand for environment and water services

Demand for resource infrastructure continues to grow in Sub Saharan Africa and Latin America

Increased demand for remediation, decommissioning, risk planning, response and recovery services across oil and gas and mining markets

Management of social and environment licenses continues to be a key success factor in project development

We expect earnings in the Infrastructure & Environment sector in FY2013 to be in line with FY2012

Page 38: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Summary

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► Robust aggregated revenue growth across the sector groups despite the volatile markets

► Fluctuating commodity prices and escalating project costs impacted the market for our services

► Diversified operations enabled us to take advantage of opportunities for growth

► Expansion in key growth markets of China and Brazil continues

► Demand for our Improve offering remained strong

► Strong performance and growth in Canada with increasing contribution from WorleyParsonsCord

► Strong balance sheet provides a sound platform for strategic acquisitions

Page 39: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Commenting on the outlook for the WorleyParsons Group, Mr Andrew Wood said: “Volatility in commodity prices impacted the market for our services and our growth in the first half. The markets for our services improved towards the end of the period and we continue to expect growth for FY2013 on FY2012 underlying earnings*. “This positive outlook is subject to sustained business confidence and commodity prices remaining reasonably strong. “The Group continues to evaluate opportunities for new business growth that will add to its existing capabilities and provide value for our shareholders. “The Group is confident that its medium term and long term prospects remain positive based on its competitive position, its diversified operations and strong financial capacity.”

Group outlook

February 2013

39 * Underlying earnings excludes the fair value gains on acquisitions of associates

Page 40: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Half year results 2013

Page 41: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Supplementary information to half year results 2013

Page 42: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Segment Margins

42

Page 43: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

FX translation impact

85.0

90.0

95.0

100.0

105.0

Jan-

12

Feb-

12

Mar-1

2

Apr-1

2

May-

12

Jun-

12

Jul-1

2

Aug-

12

Sep-

12

Oct-1

2

Nov-

12

Dec-

12

USD GBP CAD

Movement in major currencies

Annualized NPAT translation impact Average rates of major currencies

29

-41-32

-18

-50

-40

-30

-20

-10

0

10

20

30FY09 FY10 FY11 FY12 HY13

A$m

Group EBIT FX Impact Since FY09

43

Currency FY12 HY12 HY∆

AUD:USD 103.5 103.9 0.4

AUD:GBP 65.1 65.3 0.2

AUD:CAD 103.2 103.2 0.0

Currency Annualized AUD $m NPAT translation impact of 1c ∆

AUD:USD 0.6

AUD:GBP 0.5

AUD:CAD 0.7

Page 44: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

Dividends, amortization and tax

Dividend History HY09 HY10 HY11 HY12 HY13

Interim dividend (cps) 38.0 35.5 36.0 40.0 41.5

Franked 76% 100% 100% 79% 100%

$m total 92.2 87.0 88.6 98.3 102.3

Based on asset values as at 31 December 2012

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Page 45: Half year results 2013 · Half year results 2013 Andrew Wood . First half earnings in line with guidance ... The IFRS financial information contained within this presentation has

CY – Calendar year EDS – Engineering and Design Services E&P – Engineering and Procurement EPC – Engineering, Procurement and Construction EPCM – Engineering, Procurement and Construction Management ESA – Engineering Services Agreement ESP – Engineering Services Provider FEED – Front End Engineering Design FEL – Front End Loading GSA – General Services Agreement GTL – Gas to Liquids I&E – Infrastructure & Environment LNG – Liquefied Natural Gas MM&C – Minerals, Metals & Chemicals MSA – Master Service Agreement PCM – Procurement and Construction Management PMC – Project Management Consultancy SSBR – Solution Styrene Butadiene Rubber TWPS – Transfield Worley Power Services

Contractual acronyms

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