Worley Limited (WOR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is John Grill, and I'm the Chairman of Worley Limited. On behalf of the Board and management, I'd like to welcome you to the 2020 Annual General Meeting. We are pleased you have taken the time to join us, and thank you for your interest in and support of Worley. The group company secretary has confirmed that we have a quorum present, and accordingly, I declare this annual general meeting open. As we gather for this meeting, physically dispersed and virtually constructed, I'd like to acknowledge the traditional owners of the lands on which we meet -- [ that we all meet ] today. For me here, in this place we now call North Sydney, it is the Cammeraygal of the Eora nation. We acknowledge the elders, past, present and emerging, of all the lands we work and live on and extend that respect to other Aboriginal and Torres Strait Islander people present. In light of the COVID-19 pandemic and restrictions on physical gatherings, we are hosting our AGM virtually this year to ensure the safety of everyone. This is a brand-new experience for us, and we appreciate that for many of you, it may be the first one that you have participated in too. The notice of meeting and the online virtual meeting guide contain instructions to assist participation. If you experience any difficulties with the online platform, the helpline number is displayed at the top of your screens and is +613-9415-4024. If you're watching this now, you will be doing so through the online platform provided by Lumi. Guests will be able to view the meeting webcast and presentation slides. Shareholders and proxies have the ability to submit text questions and cast live votes. You'll see a split screen with the webcast and presentation slides on the right and the landing page on the left. The landing page is where you may cast votes and ask a question. If you did not submit your questions prior to the AGM and would like to do so, you may type your questions into the online platform. Follow the instructions from the landing page. You may ask questions at any time during the meeting, starting from now. Please indicate which item of business your question relates to as we will seek to address questions during the discussion on that item. I'll explain the question and voting procedures when we get to the formal items of business. However, I understand that shareholders may not be able to stay for the entire meeting, so I will declare the polls open now. This means that you can vote on items 2 to 5 at any time until I declare the poll closed. As I'll explain later in the meeting, Item 6 is a conditional resolution and voting isn't currently open for that item. The Board recommends that shareholders vote in favor of all items except Item 6. The Board recommends that shareholders vote against Item 6. The notice of meeting explains the items in detail, and I'll take the notice of meeting as read. If we experience any technological difficulties today, I'd like to apologize in advance, however I assure you that we have rehearsed the meeting and tested the technology to hopefully create a seamless and enjoyable experience for you. If, however, it becomes necessary to adjourn the meeting, we will reconvene at 3:00 p.m. Australian Eastern Daylight Time today, or at an alternative time as notified to the ASX. If this occurs, we'll lodge an ASX release detailing the next steps. I'd like to now introduce the Worley Board to you. Some of us are here in person at our head office in North Sydney. We are maintaining physical distancing requirements. Being present in Sydney, however, was not possible for the remaining directors who are joining us remotely from their homes. I'd first like to introduce those with me here in this room. We have Nuala O'Leary, the group company secretary; Andrew Liveris, Deputy Chairman and non-Executive Director; Martin Parkinson, non-Executive Director; and Anne Templeman-Jones, non-Executive Director. Scott Jarrett of Ernst & Young, the company's auditor, is also in attendance today. Scott is available to answer questions. I'd now like to introduce our directors who are joining the meeting remotely: Chris Haynes, Lead Independent Director and non-Executive Director; Tom Gorman, non-Executive Director; Roger Higgins, non-Executive Director; Juan Suárez Coppel, non-Executive Director; Wang Xiao Bin, non-Executive Director; Sharon Warburton, Non-Executive Director; and Chris Ashton, the Chief Executive Officer and Managing Director. I appoint, Mr. Dustin Teasdale of Computershare Investor Services to conduct the poll as returning officer. Dustin is joining the meeting remotely. However, Caitlin Robinson, also a representative of Computershare, is with us in the room today. As you know, at Worley, we start every meeting with a safety moment. I'd like to share one with you today before we commence the meeting formalities. I'd like to introduce you to Sue Brown, who will present our safety moment to you.

Thank you, John. My safety moment today will focus on our company purpose, delivering a more sustainable world and how it relates to the important health and safety issue of climate change. The World Health Organization declared 4 years ago, that climate change will be the greatest threat to global health in the 21st Century. This is because climate change affects the social and environmental determinants of health, including clean air, safe drinking water, sufficient food and secure shelter. The World Health Organization estimates that between 2030 and 2050, an additional 0.25 million people will die per annum from malnutrition, malaria, diarrhea and heat stress as a direct result of warming of the planet. In recent times, millions of people have lived with persistent smoke-filled air for days and weeks on end. This has been due to forest fires of unprecedented timing, duration and intensity across Australia, the West Coast of the U.S., South America and parts of Europe. People are also experiencing unusual storm seasons in the Gulf Coast of the U.S. and elsewhere. Anthropogenic climate change is indeed a health and safety issue. Worley has an important role to play to partner with our customers as they transition to a low-carbon future. Analysis by the intergovernmental panel on climate change indicates that to limit warming to 1.5 degrees above preindustrial levels will require global investment in low-carbon solutions of between USD 1.6 trillion and USD 3.8 trillion annually to 2050. We are an organization of around 50,000 people, including many highly skilled engineers and project managers who work on some of the largest and most complex energy, chemicals and resources projects across the world. Working with some of the world's largest emitters, we apply our technical project delivery and technology solutions expertise to drive down emissions. But our impact is not limited to the energy transition. We work to ensure sustainable outcomes on projects at all stages of the life cycle. We assess the environmental impact of greenfield projects. We design assets to minimize emissions and waste. We apply circular economy principles to our projects. We are in a unique position to bring our knowledge, combined with our deep domain experience and expertise, to help make the world sustainable for generations to come. There is much to do, and Worley is ready to play its part.

I will now turn to my formal Chairman's address, which will be followed by an address from Chris Ashton. After Chris' address, you'll have the opportunity to ask questions during the formal business of the meeting. This year is an important milestone in our history. Financial year 2020 was our first full year operating as the new Worley and we have many achievements to celebrate. Worley has grown from humble, Australian beginnings into a leading global provider, a professional project and asset services in the energy, chemicals and resources sectors. Worley is one of Australia's largest exporters of knowledge-based services. No other Australian company has a comparable global leadership position in the sectors in which we operate. This year, we successfully integrated the Energy, Chemicals and Resources division, or the ECR division, of the Jacobs Engineering Group, delivering cost and revenue synergies beyond those we identified pre-acquisition. We increased our revenue, improved underlying EBITA margin and significantly increased our operating cash flow compared with financial year 2019. Our more diversified business has demonstrated earnings resilience in the face of the economic circumstances resulting from the COVID-19 pandemic. We laid the foundation for our future and we are now fast-tracking our transformation. I'd like to take this opportunity to thank Andrew Wood, who stepped down as CEO in February and left the company in July. I've worked closely with Andrew over many years and I wish him and his family all the best for his retirement. His long and distinguished career with us spanned 26 years, including 17 years on overseas assignments. He was appointed Group Managing Director of Finance and CFO in 2011 and was then appointed CEO in 2012. Andrew has made an enormous contribution to the growth of Worley. He led the company-defining acquisitions of Parsons E&C Corporation in 2004, Colt Group in 2007 and ECR in 2019. Andrew's contribution has been fundamental in shaping the company we are today. I would also like to take this opportunity to formally introduce and welcome our new CEO, Chris Ashton, who you will have the opportunity to hear from after my address. Chris became CEO and Managing Director of Worley and a member of the Board on the 24th of February, 2020. Chris has been with Worley since 1998 and has held many leadership roles, including Chief Operating Officer, where he was responsible for the integration of ECR. I'm looking forward to continuing to work with Chris as we accelerate our transformation. There have also been changes to the Board this year. It's important that our Board members' knowledge and expertise are aligned with Worley's strategy and global reach. Your directors have invaluable and relevant skills, coupled with unrivaled leadership experience. In February this year, Andrew Liveris took up the new position of Deputy Chairman, and we welcomed Martin Parkinson. Martin served as inaugural Secretary of the Department of Climate Change before becoming Secretary of the Treasury and later, Secretary of the Department of the Prime Minister and Cabinet. Martin has extensive advisory experience, having served the Australian government and prime ministers on economic, social, foreign, defense and national security policies for almost 40 years. And having served for over 8 years as Chairman of the Health, Safety and Sustainability Committee and currently serving as Lead Independent Director, Chris Haynes will be stepping down from these positions. Chris will continue serving on the Board, and will seek reelection at today's meeting. I'm pleased to advise that Andrew Liveris will take on the additional responsibilities of Lead Independent Director while remaining Deputy Chairman; and Roger Higgins will take on the responsibilities as Chairman of the Health, Safety and Sustainability Committee. I'd like to highlight that this year, we formalized Board level governance over the sustainability program following a change in charter and name from the Health, Safety and Environment Committee to the Health, Safety and Sustainability Committee. In addition, the responsibilities of the People and Remuneration Committee, formerly the Remuneration Committee, were expanded to include people strategy and policies. The Board would like to introduce Emma Stein, who, it's our intention, will be appointed as an independent non-Executive Director to fill a casual vacancy on the Board on the 10th of December, 2020. Since 2003, Emma has worked as a non-Executive Director for listed ASX 200 companies and private and government-owned companies in Australia and New Zealand. The sectors she has worked in include upstream oil and gas, power, energy retailing and utilities, mining and resources, water and waste, engineering and industrial services companies. Emma Stein was introduced to us by the Dar Group to act as an Independent Director of Worley, but not as a representative of Dar Group. The Board has satisfied itself that Emma is well equipped to represent the interest of all shareholders as an independent non-Executive director. The Board is confident that Emma will make a valuable contribution to Worley and is a high-quality candidate with a proven track record as a listed company-independent non-Executive director whose skills and qualifications complement those of the existing board. Our intention to appoint Emma as an independent non-Executive director is consistent with my AGM address in 2019 and demonstrates progress with Worley's relationship with Dar Group. I'd now like to address our response to the COVID-19 pandemic. The current economic circumstances have led to a rapidly changing environment for our business. We were agile in our response and acted early to protect our people to maintain financial and operational integrity and to support our customers and communities. We continue to successfully deliver projects and provide services to support our customers with most of our office-based people working from home. We also continue to provide field-based services to build, improve, maintain and operate critical infrastructure in Australia and around the world. We took action to strengthen our liquidity position by extending existing and securing additional facilities. We have managed what is in our control, and we will continue [ this ] as the global disruption evolves. The Board recognizes that the success of our business is underpinned by our people, and the Board expresses its deep appreciation for their contribution during the year. Our people have demonstrated great resilience, flexibility and determination in what has been a challenging period during the COVID-19 pandemic. I would now like to focus on our safety and financial performance for financial year 2020. We are committed to providing a respectful, safe and healthy environment where we support each other and our communities. Our teams maintain industry-leading safety performance. This year, our total recordable case frequency rate was 0.16 across the group. We're deeply saddened, however, to have lost people this year to COVID-19 and to have reported the loss of one of our team members while traveling. Our thoughts go to their families. Turning to our financial results. The group reported an underlying net profit after tax, excluding the post-tax impact of amortization on intangible assets acquired through business combinations, or NPATA, of $432 million. This is up 66% on the corresponding underlying -- of the corresponding period underlying result. We delivered a positive underlying operating cash flow of $881 million with more consistent earnings due to our increased diversification and increased exposure to our customers' operational expenditures, which have been historically less variable in periods of industry downturn. Worley now has a lower exposure to offshore oil and gas capital expenditure and increased exposure to the less cyclical chemicals sector. The Board declared a final dividend payment of $0.25 per fully paid ordinary share unfranked. This is in addition to the interim dividend of $0.25 per share for a total dividend of $0.50 per share for the full year. As a result, we contributed 60% of our full year underlying NPATA for financial year 2020 to shareholders as dividend. The successful integration of the ECR business has delivered on expectations communicated at the time of the acquisition. We are delivering cost, margin and revenue synergies in line with our commitments. We have also increased our cost synergy target to $190 million per annum by April 2021. We have combined the best of both organizations by adopting common systems and processes and by harmonizing our knowledge and management systems. The current economic circumstances have given us an opportunity to transform faster, and we have taken action to reposition the business. To support our transformation, it has been important for us to reflect on our company purpose and the role we see ourselves playing in our industries. Simply, our purpose is delivering a more sustainable world. Alongside our new purpose, we have launched new values that reflect our transformation, capture our culture and honor our heritage. Delivering a more sustainable world includes addressing climate change, which will have significant implications for the industries we serve. We have revised our climate change position statement and committed to reducing our scope 1 and 2 emissions to net 0 by 2030 and are developing a set of strategic actions to deliver this. We have an important role to play in working with our customers to reduce their energy consumption and carbon footprint as we transition to a low-carbon future. We believe this is the biggest impact we can have. Industry commitment to sustainability action is increasing. This will open opportunities across all sectors that we serve. Transitioning the world's energy systems will require technical, engineering and project delivery expertise. We are already a leader in delivering these types of projects, and we can leverage our demand knowledge and expertise to support customers around the world. In financial year 2020, we completed 2 transactions to grow our capabilities in renewable and distributed energy. We acquired 3sun to deliver installation, inspection and maintenance expertise in the offshore wind sector. We also formed a joint venture with Xendee called Veckta, a distributed energy system, microgrids and storage business. Subsequent to the end of the financial year, the group remained -- has acquired the remaining 50% shareholding of TW Power Services. TWPS is an operations and maintenance business, providing services to support the critical power infrastructure across Australia, New Zealand and Southeast Asia. These investments further strengthen our ability to support our customers through the energy transition locally and globally. The company demonstrated its commitment to continual enhancement of the group's governance processes in financial year 2020. We completed a sustainability and materiality review aligned to the United Nations Sustainable Development Goals. The review identified sustainability topics of significance to our investors, customers, employees and community partners for us to act on. We continued working towards the recommendations of the task force and climate-related financial disclosures. We have also embedded sustainability considerations in our business processes. These will inform our decision-making around bidding work by prompting us to consider even more deeply risk issues such as ethical business practices, carbons and emissions intensity and social license. Worley is committed to providing a workplace that is diverse and inclusive of people from a wide range of backgrounds. We are committed to diversity in all its forms, and we recognize that our diversity is our strength. Maintaining and enhancing our reputation for integrity, honesty and ethical practices is important to the Board. As we transform our business, it will continue to be a critical factor in our future success. We comply with all applicable laws and conduct our business to the highest standard, a standard to which we also hold our partners and agents. We recognize our responsibilities to our shareholders, customers, employees and suppliers as well as to the communities in which we operate. In conclusion, I'd like to thank the directors, the leadership team and more important, our people for their contribution in a year where we delivered on our promises and withstood great track challenges. I'd also like to thank you, our shareholders, for your continued support. This concludes my review of financial year 2020. And as announced on the 22nd of October, Worley is pleased to report that the shareholder class action brought against the company in the Federal Court of Australia was decided in Worley's favor yesterday. The judgment dismissed the class action, and this means that Worley won the case. The judgment decided that cost be awarded in Worley's favor. The Honorable Justice, Jacqueline Gleeson, found that Worley had reasonable grounds for its 2014 financial year earnings guidance and the process by which the financial year '14 budget was developed was reasonable. The judgment records that Justice Gleeson formed favorable views of each of Worley's witnesses, being Chris Ashton, Chief Executive Officer; Andrew Wood, the former Chief Executive Officer; and Denis Lucey, the former Regional Managing Director, Asia Pacific and China. This case was the first Australian shareholder action won by a defendant. The court's decision represents the first dismissal of a shareholder class action after a full trial. I'd like to thank the directors and management who contributed to this outcome. I would like -- now like to ask Chris Ashton, the Chief Executive Officer, to address the meeting.

Thank you, John. Hello, ladies and gentlemen. My name is Chris Ashton, and I'm pleased to be addressing my first Annual General Meeting as the CEO and Managing Director of your company. I'm speaking with you today from the United States, working from home like so many of our people around the world, and I look forward to when we can meet in person. My journey with Worley began 22 years ago, and it's a privilege to have assumed the leadership of this great Australian company as we step into a new and exciting future. Before I begin, I'd like to recognize and thank Andrew Wood. Andrew has been a great leader, mentor and friend. Thanks to his leadership over the past 7 years, we're well positioned for continued success. Much has changed in the world since our meeting in October last year. We've successfully integrated our 2 heritage organizations to create a dynamic and more diverse business. We've exceeded cost synergy delivery expectations and strengthened our financial position during what has been a challenging period. I'm confident we've built a platform upon which we will continue to transform. We're at a critical moment in time, living and working in the midst of a health and economic crisis on a scale never experienced before. And at the same time, we're on the cusp of fundamental shifts in our industries and beyond. Forces including climate change, the energy transition, the increasing importance of sustainability, the circular economy and the digitalization of our industries are changing not only the markets we serve, but also how our customers see themselves and their roles in the energy, chemicals and resource sectors. These changes present us with an opportunity to stand up and stand out from the crowd to rise to the challenge before us, transforming faster to emerge stronger. I want to acknowledge the devastation COVID-19 has caused to communities around the world. We felt this through the loss of some of our colleagues to the virus. Our thoughts are with their families and friends. At the beginning of the pandemic, and within a matter of weeks, our teams around the world adapted to new ways of working as we responded to the rapidly changing environment. Our robust technology platforms allowed us to continue delivering services for our customers as more than 40,000 of our office-based people transitioned to working from home. We modified field practices for our site-based teams to keep them safe while they supported our customers' facilities around the world. We led a cross-industry task force to share safety lessons. And importantly, we continued supporting those communities in which we work. We formed a business response task force to actively manage business fundamentals throughout this period, taking action to protect cash, manage receivables and postpone all nonessential capital expenditure. We optimized staffing levels while maintaining diverse and valuable capability and adjusted both operational and support cost structures. We ended the period of disruption in a stable financial position, and we've since strengthened our liquidity. We've responded to the economic circumstances and demonstrated through our performance and ability to adapt. As the global economic landscape continues to change, we respond and actively manage that which is in our control. Although the world has changed this year, our focus on safety remains unwavering. We did, however, lose a member of our team. One of our vehicles was traveling on a public road when a power pole fell and impacted the vehicle cabin. Above all else, we remember our colleague and keep his family and friends in our thoughts. In pursuit of continuous improvement, we launched Life in January this year. Life is our safety, health and well-being approach, which connects our health, safety and environment practices, systems and tools under one Worley program. The program empowers our people to act, to challenge and to continually improve. In terms of financial year 2020 results, we're proud of what we delivered. Aggregated revenue grew to over $11 billion, up 75% on the prior corresponding period, and underlying EBITA was up 80% to $743 million. Aggregated revenue and underlying EBITA were both up 7% on the FY '19 pro forma. Through the efforts of our people, we delivered a strong underlying cash flow of $881 million compared to $239 million in the 2019 financial year. Our gearing, excluding lease liabilities, closed the year at 18.3% and leverage decreased to 1.8x. Our diversified business has shown resilience as the greater exposure to our customers' operating expenditures and sustaining capital contracts comes through together with the chemical sector. 3 years ago, 65% of our aggregated revenue was from upstream and midstream capital expenditure. Today, it represents less than 20%. As I mentioned at the start of my address, we've successfully integrated the ECR business. We now have shared global systems in place for safety, sales and operations. And our financial systems rollout are in their final stages. We're delivering on our acquisition cost synergy commitments, having already delivered savings of $177 million per annum and we've now increased our run rate target to $190 million per annum by April 2021. As part of the transformation strategy, we're driving an accelerated cultural shift in the way we work. I believe this shift has been brought forward by as much as a decade with the global disruption of COVID-19 acting as a catalyst for this change. We've simplified our business to better support our customers, drive new ways of working and to support the execution of our transformation strategy. Our new ways of working will deliver ongoing operational savings of approximately $275 million per year by 31st of December, 2021. And we've already delivered $165 million run rate savings as of the 30th of June, 2020. And these savings are in addition to the ECR acquisition cost synergies. A clear purpose and set of values underpin our transformation strategy. Together, they motivate and engage our people while signaling to our stakeholders who we are and the difference we can make in a world that is changing. Our new purpose is clear: delivering a more sustainable world. It describes the intent of the work we do, making a significant contribution to more sustainable communities, societies and nations, ultimately, improving the well-being and health of the world in which we live. Alongside our purpose are our values. They will guide align and stretch our people. Our values are life. We believe in the safety, health and well-being of our people, communities and the environment. And without it, nothing else matters. We rise to the challenge. We love a challenge and go the extra mile, delivering on better solutions to ever more complex problems for our customers. We recognize that we are stronger together. We thrive in authentic relationships and partnerships. We nurture networks and collaboration and recognize our differences make us better. And we unlock brilliance. We're passionate about innovating and learning. We value share and grow our expertise. These values represent the behaviors and standards we believe are fundamental for a culture that underpins successful outcomes. We're building Worley to be a welcoming and inclusive organization, and we want all our people to genuinely feel as if this is a place where they belong and where their voice matters. I'm proud to lead a group executive team with equal gender representation, and I've made it clear that we have no tolerance for racism and exclusion. In delivering a more sustainable world, the most important role we have is in supporting our customers on their sustainability journey, and we're already doing this. We've delivered over 2,000 new energy projects for our customers. We provide inspection and maintenance services to over 70% of the U.K.'s offshore wind turbines. And our projects contribute over 50% of the renewable diesel capacity in the United States. As a knowledge-based service provider, we can martial our expertise and deploy it at pace and at scale across the globe. Sustainability is core to who we are and is a growing part of our business. Our future includes increasing the role we have in the broader elements of sustainability, including the circular economy, developing sustainable technologies and water stewardship. This year, we issued our revised climate change position statement, which signals where our future lies, as leaders in the world transitioning to consuming low carbon and carbon free energy. It has an increasingly important role to play and is core to our strategy. We're committed to proactively supporting our customers' reduced emissions on their projects and assets. Our sustainable solutions process empowers our people to use their technical skills to deliver quantifiable reductions in our customers' carbon emissions. And our responsible business assessment standard is used to assess our involvement in any carbon-intensive project. We've seen major announcements recently that support our transformation strategy, including China's net 0 emissions commitment and the European Green Deal. The International Energy Authority World Energy Outlook 2020 estimates investment of almost USD 3 trillion per year to 2030 under its sustainable development scenario. And even more under the net 0 emissions by 2050 case, a new scenario released last week. The majority of the investment is supporting the energy transition and related sustainability objectives. This investment will provide opportunities across all the sectors in which we work. Worley collaborates with all partners on a project-by-project basis in the sectors -- in sectors that are both synergistic and aligned with Worley's strategy in the energy, chemicals and resource sectors. Such partnerships decisions are driven by delivering value to our customers and creating value for all of Worley's shareholders. To this end, there have been recent discussions between Worley and the Dar Group management teams, and we will continue evaluating project opportunities to work together with Dar as they arise. I'll now turn to the market update in more detail for each of our sectors. In the upstream and midstream market, the decline in oil and gas prices has led to a reduction in near term investment. However, markets are forecast to rebalance and investment is expected to continue. There are still significant brownfield and sustaining capital spend in these markets. Together with our customers and industry partners, we're supporting the electrification and decarbonization of facilities and the development of technologies such as carbon capture, utilization and storage as well as the rapidly emerging hydrogen space. We are currently involved in 31 hydrogen projects in various stages of the project life cycle from front end studies through to commissioning in 12 countries around the world. Turning to our power sector. Investment has shown resilience during the pandemic, particularly in the renewables market. The International Energy Authority last week forecast that despite global energy demand being set to drop by 5% in 2020, there will be a slight increase in the contribution of renewables. Offshore wind forecast show capacity is set to increase by at least 15-fold worldwide by 2040. In support of this, all of the European oil majors are forecasting investment in the renewables sector going forward. Chemicals growth is expected to resume in 2021 as economies return to being closer to more normal operating rates. In refining, however, reduced demand for transportation fuels is expected to continue through '21 and will likely result in capacity rationalization in the developed world as newer, larger refineries start up in developing economies. Regulations in this space and technology developments are presenting opportunities in decarbonization, such as bio-based fuels as well as the circular economy markets such as plastics recycling. In mining, minerals and metals, COVID-19 has had a modest and varied impact on the mined commodity and metal prices. A combination of returning demand led by the restart of the Chinese economy and ongoing supply disruptions in some major commodities has, in most cases, seen prices recover to levels that continue to encourage investment. We see an increased focus from our mining customers on the electrification of their operations and energy source switching as they look to benefit from low-cost renewables and work towards their own emissions reduction commitments. Turning now to our outlook. As I shared at the full year results, the current economic circumstances have led to a rapidly changing environment for Worley's business. The COVID-19 pandemic has continued to impact access to some sites, and we are seeing near-term project deferrals as the result of associated economic circumstances. The medium to long-term market continues to indicate that sustainability and the digitalization of our industries will open up opportunities, including those resulting from government stimulus spend to support economic recovery. We continue to manage the business fundamentals in our control. Our headcount has reduced in the first quarter of this financial year by 5%, from 51,900 at the end of June to 49,100 at the end of September. However, our utilization remains on target. The relative improvement of the Australian dollar compared to this time last year is creating foreign exchange headwinds, given the majority of our earnings come from currencies other than the Australian dollar. As an indication, the average U.S. dollar to Australian dollar exchange rate over financial year 2020 was $0.67 compared to an average of $0.71 in the first quarter of financial year 2021. This financial year, we're on track to deliver an increased acquisition cost synergy target of $190 million per annum by April '21 as well as additional operational savings of $275 million per annum by December 2021 as we accelerate our transformation. Worley has the global scale as well as the technical and financial strength to support our energy, chemicals and resource customers as we help them navigate a changing world, a world increasingly focused on sustainability. Worley has a remarkable group of people who've brought us to this position. Our ongoing delivery during COVID-19 is thanks to their extraordinary efforts. The agility and resilience they've demonstrated exemplifies the spirit of Worley, and I thank each and every one of them for their dedication. Our people are at the heart of your company, and I look forward to seeing them continue to succeed, develop and unlock brilliance, motivated by knowing what we do makes a difference in the world. To our shareholders, thank you for your confidence you have in your company and for your support. I'll now hand you back to your Chairman, John Grill.

Thank you, Chris. Ladies and gentlemen, we now come to the formal business of the meeting. There are a number of procedural matters to which I must draw your attention. This is a shareholders meeting and only shareholders that are attorneys, proxies and authorized company representatives are entitled to ask questions or vote. In the interest of the meeting, I ask that questions be in line to the business of the meeting and shareholder issues. You have the opportunity to ask questions at all times throughout the meeting through the online portal. After each item of business, I'll address questions relating to that item. Questions may be moderated or combined, particularly if we receive many questions on one topic. To ensure all shareholders have time to ask questions, please limit yourself to 2 questions per item. We will endeavor to answer as many questions as we can. As Chairman, I will determine who is best placed to answer the question. There will also be time to answer -- to address further questions at the end of the formal items of business. In line with the company's usual practice, all resolutions will be determined on a poll. As a Board, we wish to encourage all shareholders to vote, including institutions and those who are not able to attend these meetings. Voting exclusions related to each item of business are set out in the notice of meeting. If you are eligible to vote at the meeting, a polling icon will appear. Selecting this icon will bring up the list of resolutions and present you with voting options. To cast your vote, simply select one of the options. There is no need to hit a submit or enter button as the vote is automatically recorded. As detailed at our notice of meeting, item 6 is a conditional resolution and polling will only open on Item 6, if required, depending on the result of item 3. After the poll is closed for Items 2 to 5, the results will be finalized by the returning officer and reported to me during the meeting. If more than 25% of votes are cast against Item 3, which I will call to -- which I will refer to as a second strike, the poll will reopen for Item 6 only. Shareholders, their attorneys, proxies and authorized company representatives may then vote on this item of business. Voting on the online platform will close just prior to the end of the meeting. I will notify you as we approach the close. You can change your vote until I declare voting closed. Before moving on, I confirm that I hold a number of open proxies as Chairman of the meeting. As set out in the notice of meeting, I will be voting all available undirected proxies in favor of each item of business, except for Item 6. If a contingent spill resolution is required to be put to the meeting, I will be voting all available undirected proxies against Item 6. I remind you that we will take questions at the end of the formal items of business. The first item of business listed on the notice of meeting is to receive and consider the financial report, which includes the directors' report and auditor's report, as set out in the company's annual report for the financial year ending 30th of June 2020. There is no resolution for this item. This item of business provides shareholders with the opportunity to ask questions about the financial report and the business and management of the company in general. Shareholders, also, can also ask questions of the auditor relevant to the conduct of the audit, the preparation and content of the auditor's report and accounting policies adopted in preparing the financial statements and the auditor's independence.

We will now address shareholders' questions on this item. Please note that we will focus specifically on the remuneration report later in the meeting. We have a question from [ Gary Barton ], shareholder and proxy holder representing to the Australian Shareholders' Association. Gary asked the acquisition of Jacobs ECR appears to be successful with greater synergies than expected. However, this is not reflected in the margin, which has decreased. What strategy does Worley have to increase the margins? I will refer this question to Chris Ashton to respond.

Yes. So if we consider the margins in 2019, I believe EBITA was, in fact, 6.4%. And if we look at financial year '20, the EBITA was 6.6%. What you're referring to, I think, I believe is the NPATA, which has gone from 4% to 3.8%, and that's a result of the mix of the tax jurisdictions within which we earn the revenue. So in fact, if we look at the underlying margins of the business, they're actually higher than they were in the prior financial year. In terms of what we're doing to continue to maintain or improve margins, during the ECR integration, we committed to cost synergies. And at the end of June 30 -- or June 30 this year, we delivered $177 million. And we've increased the target run rate savings to $190 million for -- by April '21. And if we then look at the transformation that the organization has gone through, is going through now, then we delivered $165 million of savings -- run rate savings at the end of June, and we've committed that to increase to $275 million by December 31, 2021. So our underlying profitability is higher than it was in 2019. What you're seeing is, in fact, a difference in the tax jurisdictions, and we continue to deliver on the commitments of our cost-out program. Thank you.

Thank you, Chris. Nuala, can you please read out any further questions for this item?

Thank you, Chairman. We have a question from [ Rachel Deans ] on Item 1. Rachel's question is as follows: At last year's AGM, former CEO, Andrew Wood, said that while projects are broadly assessed by reference to the United Nations Sustainable Development Goals, consistency with the Paris Agreement was not necessarily a prerequisite for working on a project. Rachel's question now is has Worley's responsible business assessment standard been updated since then to ensure any carbon-intensive project is assessed and confirmed as aligned with the Paris Agreement's goal of limiting warning -- warming to 1.5% Celsius -- degrees Celsius before the company decides to work on that project?

I'll ask Chris Ashton to answer the question.

So if you consider our new purpose statement, that purpose statement is delivering a more sustainable world. And as part of that, we've evaluated a number of processes, including the responsible business assessment process to reflect that new purpose statement. And as part of that revision, it now has to go -- any projects that have a carbon emissions aspect to them need to be escalated to one of my direct reports before we'll consider executing it. So we have, in fact, revised the responsible business assessment process to reflect the commitment of our new purpose, but also to support the revision of our climate change position statement.

Thank you, Chris. Any further questions, Nuala?

Yes, Chairman. We have further questions. The next question is from [ Sue Dixon ] in regard to Item 1. Sue's question is as follows: I was pleased to read in the AFR recently about new CEO, Chris Ashton's commitment to sustainability and recognition that investors are increasingly turning away from the fossil fuel sector. Does this mean we can expect to no longer work on projects like the Corpus Christi LNG facility, which is estimated to enable emissions equivalent to 1.5x Australia's annual national emissions over its lifetime?

I'll let Chris Ashton to answer that question as well.

Okay. Thanks, John. Look, when we look at the energy transition, I think it's really important to recognize that it is, in fact, a transition. It's not an either/or, it's about an orderly transition to a low-carbon or carbon-free future. And so when we look at that, it's going to take a mix of both low carbon and carbon-free and traditional forms of energy to enable that orderly transition. And so that's how we will view it. And we will help our customers when they're investing to invest in a way that they will reduce or minimize the carbon intensity of the investment. But I think the important message is it's about a transition, an orderly transition to a low-carbon and carbon-free future.

Thank you, Chris. Any further questions?

Yes, Chairman. We have further questions. Mr. Stephen Mayne has submitted the following questions in regard to Item 1. They are as follows: Could you explain how Emma Stein can be classified as an independent director, having been introduced to Worley by Dar Group. Why not just classify her as a nonindependent, nonexecutive director representing Dar Group? Secondly, could you please explain the background of how Emma Stein came to be associated with Dar Group? And also, what is she allowed to tell Dar Group about things she hears and reads once serving on the Worley Board as an independent director? And the third question related to this, Chairman, has any agreement been reached with Dar Group in terms of Emma Stein as an independent director, and how has Dar Group voted on the potential second strike?

I will answer the question. The Board has introduced Emma Stein as independent, non-Executive Director to fill a casual vacancy on the Board. Emma was introduced to us by Denver -- sorry, by Dar Group, 2 -- along with 2 other candidates, with the idea that one of them would act as an independent nonexecutive director of Worley but not as a representative of Dar. We -- I had -- I and a number of other directors had detailed discussions with Emma, and we came to the conclusion that she understood her responsibilities in relation to being an independent, non-executive director very well and knew exactly how she should behave with all shareholders. Since 2003, Emma has worked as a non-Executive director for listed ASX 200 companies, private and government-owned in Australia and New Zealand. She's worked in sectors including upstream oil and gas, power, energy retailing and utilities, mining and resources, water and waste, energy -- engineering and industrial services. In terms of her current workload, Emma has discussed with us her intention to retire from one of the listed company Boards to align with her appointment to Worley. Emma has said that she wishes to do no more than 4 listed Boards, and she'll be sorting that out between now and December. But noting also that one of her currently listed Boards, Infigen Energy, has been acquired by Iberdrola. The -- in relation to how Dar has voted, as far as I know the last I'd heard they haven't voted. But I'm hopeful that they will vote in accordance with all resolutions today. Any further questions, Nuala?

Yes, Chairman, there are further questions. The next question is from [ Ms. Hui Zhang ] in regard to Item 1. Her question is as follows: What kind of ongoing collaboration is planned with Dar Group?

I'll ask -- I'll get Chris Ashton to answer that question.

Okay. Thanks, John. So look, the way forward that we will be looking at the partnership or the -- will be on a project-by-project basis where it makes sense and where value can be delivered to Worley. We believe in partnerships. We partnered across our history where it makes sense to us as an organization, where we believe it differentiates us, where we believe it can create value for all of our shareholders. And that's the premise upon which we will continue to consider partnerships with all manner of companies, including Dar.

Any further questions?

Yes, there is a further question, Chairman. This is a follow-up question from Rachel Deans in relation still to Item 1, and this is following up the question previously answered by Chris. The question is as follows: specifically, will our company assess projects as aligned with limiting warming to 1.5 degrees?

Chris, can you answer that follow-up question, please?

Yes. So I think if you look at what we've said in our climate change position statement and how that aligns with the Paris Agreement, and then add that to our purpose of delivering a more sustainable world, and that will manifest itself through the assessment of an opportunity through the responsible business assessment process, yes, I think that's how we will assess all opportunities that we look at. Now then I think it's important to recognize that, again, as I've said, moving to the future, it's about a transition, an orderly transition. And that means we're going to have to use traditional forms of energy as we progressively increase the consumption of low-carbon and carbon free energy.

Thank you, Chris. Any further questions?

There is one more question, Chairman. This question is from Mr. Stephen David Mayne in relation to Item 1. The question is as follows: The Chairman turned 75 this year. How much longer is he planning to remain as the nonindependent Chair of Worley? And is it correct that he still has more than 75% of his net wealth tied up in Worley shares?

I think in my reelection a year ago that I said that I would stay for the end of that term, which takes me through to October 2022. I'll make a decision in that year as to whether I continue to run. The -- I hold quite a number of Worley shares through my various interests and family, and I'm very proud to do that. And the -- sorry, the question was to…

I will repeat the last section, Chairman. Is it correct that the Chairman still has more than 75% of his net wealth tied up in Worley shares?

I don't actually know the answer to -- whether that answer to the question is correct, and it obviously varies as to what the exact value of the Worley's shares is. But certainly, I have a substantial portion of my net wealth tied up in Worley shares. Any further questions?

There is one more question at the moment, Chairman, from Mr. Stephen David Mayne, in relation to Item 1. Chairman, given that you are allowed to represent your own shares on the Worley Board as a non-independent Director, why isn't Dar Group, as the largest shareholder, allowed to have a nominee on the Board? Many other ASX 100 companies, such as Seven Group, Crown and Boral, allow large shareholders to have nominated directors to represent their interests, provided it is commensurate to their shareholding. Shouldn't Dar be allowed to have 22% of the Board seats?

I would just refer to the companies that are being mentioned in the questions and that their issues they are having with nominated directors. And I think we've tried very hard to keep our Board as independent as we can because we're trying very hard to stay out of the issues you get when you have a combination of nominee and independent directors on the Board. Any further questions?

There's one, this is the last question for Item 1, Chairman. [ Rachel Deans ], again, Item 1. And her question is, we have a further related question in relation to new -- in relation to fossil fuels. Given no new fossil fuel projects can be built under a 1.5-degree scenario, does that mean our company will stop working with fossil fuel companies to ensure we're working within the goals of the Paris Agreement?

Again, I will get Chris Ashton to answer that question.

And I'll answer the question by saying, look, Worley supports an orderly transition to a low-carbon and carbon-free future. And as part of that transition, will mean that consumption of conventional, traditional forms of energy. And as such, it's important for Worley to support that orderly transition and support our customers to minimize the carbon emission from both existing and future investments as we transition to that low carbon and carbon future. It's about a just transition. It's about an orderly transition to a low-carbon and carbon-free future.

Chairman, there are no further questions.

Thank you. We'll move on to the next item of business. Two of the company's directors are standing for election and reelection today. Item 2A, reelection of Dr. Christopher Haynes for Item 2A. Shareholders are asked to consider the reelection of Dr. Chris Haynes. Chris was appointed to the Board in January 2012, and he's a Lead Independent Director of the Board, Chairman of the Health, Safety and Sustainability Committee and a member of the People and Remuneration Committee and Nominations Committee. I would now like to give Chris an opportunity to address the meeting.

Chairman, directors, ladies and gentlemen. I joined the Board of what was then WorleyParsons in January 2012, and have had the opportunity and privilege to work for these past 8 years with the management and with fellow directors of WorleyParsons for the past 18 months at Worley. It's been a great experience. Throughout the past 8 years, I've visited most of the company's work sites and officers and met many of our people. That for me has been the real highlight, to learn and understand firsthand what makes the company tick. I can say without reservation, Worley is truly a people company. I have enjoyed the experience, learned a lot, and I hope made a real contribution to the enterprise through both challenging and good times. I'm a professional engineer with 48 years' experience, principally in operations and project development and execution in the petrochemical, upstream oil and gas and LNG industries. And more latterly, in senior line executive and CEO roles of joint ventures and operating companies in those industries. I retired in August 2011 from full-time employment, having lived and worked in 8 very different countries across Europe, Africa, the Middle East, Asia and Australia, and have the experience of doing business in many other countries, most of which Worley is operating in currently. I bring to the Board of Worley, knowledge and experience in developing, designing and building major projects in the oil and gas industry, working on global infrastructure projects and managing the operation of the types of assets that Worley delivers to its customers. I bring an international perspective of the global energy, chemicals and resource businesses and of a very different project contracting and business practices that exist around the world. I have a track record of working effectively with company executives, their Boards and government representatives at the highest levels. I am currently also a non-Executive Director of Woodside Petroleum Limited. My experience gives me an understanding of the principles and best practices of corporate governance, strategic planning and the society's expectations on the social and environmental impact that our activities have on the world. Now more than ever, we need to deliver a more sustainable world. Throughout my career, I have worked in many senior leadership roles with significant responsibilities and demands on my time. I'm confident even in these most unusual times that we find ourselves in, that I can continue to manage my time and make the necessary arrangements to ensure that I can responsibly discharge my duties as a Director of Worley. I've always been committed to contributing positively and working constructively with other directors and the executive team in order to create shareholder value in a sound and responsible manner. Today, I am seeking your support for my reelection as a non-Executive Director of Worley for a further 3-year term, as Worley transforms to an even more successful future. With your support, I can continue to draw on my experience to the benefit of our investment in Worley. Thank you.

Thank you, Chris. The directors recommend that Chris be reelected to the Worley Board and that shareholders vote in favor of Item 2A. The resolution is shown on the presentation slide on your screen. Also on the slide are the proxies received in respect to Chris' reelection. I'd like to remind shareholders who have not yet cast votes to do so now. If you have any questions on this item, please submit them now if you've not already done so. Nuala, can you please read out any questions relating to this item?

Thank you, Chairman. We do have questions for this item. Mr. Stephen Mayne has submitted the following question in relation to Item 2A. If Chris Haynes is standing down from chairing 2 important committees, why isn't he retiring fully from the Board after a long period of service? Also, what is the proxy position?

Well, isn't the proxy position on the screen? The proxy position's on the screen. I mean it indicates at this stage that 98% of votes have been cast in favor of Chris Haynes. Then the question -- I mean, to answer the question, Chris is -- will remain an ordinary nonexecutive director on the Board and adds, as you can tell from his words, a great deal of value to the Board on many, many issues that confront the Board, and he's -- and will continue to do so for this term, the term that he's -- we're hoping that he gets reelected for today. Any further questions?

Thank you, Chairman. There is another question, also from Stephen David Mayne in regard to Item 2A. The question is as follows: Can Chris Haynes please address the issue of how the logistics of being on the Worley Board works when he is based offshore? Also, is he planning to serve a full term and how old is he?

Chris, can you answer those questions?

Yes. Simple one first, I'm 73. I perform my duties as a director, pre-COVID by traveling to Australia for the Board meetings or wherever the Board meetings were being held. At the moment, we have a very good broadband system that we can have our meetings remotely. So I'm, in fact, no different really, to somebody who's based in, say, Western Australia, in terms of being able to participate. And since we've all been -- most of us have been together as a Board for quite some time, I believe we know each other well enough and we can have -- although it's a virtual meeting, it's actually almost a live meeting as we would normally have. So I have no -- I manage my time. This week, of course, it's night shift. It's just turned 1:00 in the morning, and I do a night shift 1 week every 2 months, and that's fine.

Thank you, Chris. Any further questions, Nuala?

There are no further questions, Chairman.

Thank you, Nuala. Moving on to Item 2B, shareholders are asked to consider the election of Dr. Martin Parkinson. Martin was appointed to the Board in February 2020 as a member of the Nominations Committee and a member of the Audit and Risk Committee. I would now like to give Martin an opportunity to address the meeting.

Thank you, Chairman. Colleagues, my name is Martin Parkinson, and I'm seeking your support for election to the Worley Board of Directors. I was invited to join the Board in February this year, just as the world was about to enter a particularly challenging time with consequences for many of the sectors in which Worley operates. But in times of challenge, opportunities emerge for those who are strategic, flexible and exhibit leadership. While COVID has limited my opportunities to physically visit Worley sites, I've taken every chance available to talk to members of the team from around the world. The commitment, dedication and focus that I've heard in those conversations reinforces my view that Worley is one of the hidden gems of Australian industry. Its growth over the last half century to become a global multinational headquartered in Australia is something we can all be proud of. The transformation of the company with the Jacobs ECR acquisition and the opportunities in sustainability, for example, energy transition in the circular economy, give me great confidence that Worley can go on to even greater things in the years and decades ahead. My career has been heavily focused on public policy, in the economic social, foreign strategic and national security domains. I've led 3 departments of state, including the Australian Treasury and finished the last part of my career as the Prime Minister's Chief Policy Adviser and the Head of the 160,000-strong Australian Public service as Secretary of the Department of the Prime Minister and Cabinet. I have extensive international experience at the most senior levels of government in Australia and globally, representing Australia in many fora and also working at the International Monetary Fund. The latter part of my career, my international focus has been more on G20 members and the countries of the Indo-Pacific. I have strategic skills and a breadth of international and domestic experience across government and corporate Australia as well as financial markets. I also have expertise in governance and financial discipline, and I believe the combination of these skills and experience will bring additional value and new perspectives to the Board. I've served on both ASX-listed and unlisted company boards and as a member of the Board of the Reserve Bank of Australia. I've also chaired Australia's Debt Management Agency. I'm currently Chancellor of Macquarie University and a non-Executive Director of North Queensland Airports. I've had many decades of experience managing complex and demanding roles and responsibilities. And I'm confident that I can manage these roles, alongside my commitments to Worley to perform the role of an NED on the Worley Board effectively and make a valuable contribution to the operations of the Board and the company. Together with Worley's other directors, I'm committed to working constructively with management and employees to deliver sustainable shareholder value. Thank you for your consideration.

Thank you, Martin. The directors recommend that Martin be elected to the Worley Board and that shareholders vote in favor of Item 2B. The resolution is shown on the presentation on slide on your screen. Also on the slide are the proxies received in respect of Martin's election. I'd like to remind shareholders who have not yet cast their votes to do so now. If you have any questions on this item, please submit them now if you've not already done so.

We have a question from [ Gary Barton ], shareholder and proxy holder representing the Australian Shareholders' Association. Gary asks: Mr. Parkinson has several government-related roles. His workload seems excessive and how is he adding value to Worley? I will refer this question to Martin to respond.

Thank you, Chairman, and thank you to the Australian Shareholders' Association for the question. On my workload, I have only one government-related role, and that is as a part-time member of the Northern Territory Economic Reconstruction Commission, and that role ceases at the end of November. As I mentioned earlier, over my career, I've had extensive experience managing complex and demanding roles and responsibilities. And I'm confident that I can manage my workload while also discharging my commitments to Worley and to its shareholders in an effective manner. In terms of my contribution to Worley, all I can really say is that I will serve diligently, and I'm committed to working with my fellow directors and the executive team to create value for shareholders. However, given my experience in the economic, social, foreign strategic and national security domains, both domestically and internationally, and the corporate and public sector experience in governance and financial discipline I have, I would hope and expect that I could bring valuable perspectives to complement those of my Board colleagues. I hope those answer the question for you. Thank you.

Thank you, Martin. Nuala, can you please read out any further questions relating to this item?

Thank you, Chairman. We have a question from Stephen David Mayne for Item 2B. Could Martin please explain the process by which he came to be appointed to the Worley Board in February this year? Given his intimate knowledge of Canberra processes and institutions, could he also provide his thoughts on whether the firm would be likely to approve a full Dar takeover of Worley or permission to creep to a controlling position over the next few years.

Let me answer this question. None. I was approached in relation to Martin through a business -- a claimants who put the 2 of us in contact with each other. He then went through the normal processes that all directors go through to become members of the Worley Board as set out in our -- all of our various procedures. I think it's ironic in the case of Martin that I have a job working for -- or had a job working for Martin's wife at the time and that he didn't come to me through her because he didn't know about my other job. The -- in relation to Martin, the other -- the rest of the question, I think that, that's not a question that either Worley or Martin is prepared to answer at this stage. I think that's really outside the questions that we can really have any ability to answer.

Thank you, Chairman. There are no further questions.

Okay. We now come to Item 3, the adoption of the company's remuneration report for the financial year ended 30th of June, 2020. As required by the Corporations Act, the vote on this item is advisory only and does not bind the directors or the company. However, the Board will take the voting results and discussion into account when considering Worley's ongoing remuneration strategy. I'd now like to ask Tom Gorman, the Chairman of the People and Remuneration Committee, to address the meeting.

Hello. Thank you very much for participating in this virtual Annual General Meeting. My name is Tom Gorman, and as Chairman of the People and Remuneration Committee, I have been the lead non-Executive director responsible for the development of this year's remuneration report. This report explains in detail how we approach remuneration at Worley and the remuneration outcomes for financial year 2020. I would encourage you to read the entire remuneration report as it provides context and background to the matters I will cover with you today. Now let me begin by saying that 2020 was a remarkable year, that our people have risen to the challenge. In a significant and challenging year, we are pleased with the 2020 performance outcomes, the ECR integration achievements and the leadership of our executive team. In addition to these accomplishments, Worley, like all of you, has been faced with significant challenges presented by the global COVID-19 pandemic. We have focused on keeping our people safe, supporting and delivering to our customers and making sure we remain financially strong to meet the hurdles, uncertainties and opportunities ahead. Our employees have risen to the challenge of COVID-19 in unimaginable ways as well as more than 40,000 of our people rapidly switching to a work-from-home profile. Many of our people have gone above and beyond to deliver incredible solutions to help with the fight against COVID-19. In addition to the delivery of the integration benefits from last year's acquisition of ECR and responding to the challenges presented by COVID-19, we have successfully transitioned our executive leadership, with Chris Ashton succeeding Andrew Wood as our Chief Executive Officer on the 24th of February of this year. Chris brings more than 20 years of experience at Worley to the Chief Executive Officer's office, having worked in senior roles in the United States, Europe and the Middle East. Most recently, Chris was the Chief Operating Officer based in Houston, Texas in the United States. His fixed annual salary is $1.7 million, and he has a 6-month notice period, both are less than the former CEO. His participation in incentive arrangements is the same, on a percentage basis as the former CEO and, of course it is at the discretion of the Board. Our Chairman, John Grill and I, have listened carefully to the feedback we received regarding the 2019 remuneration report, which had received a first strike. The Board has taken the 2019 remuneration report vote very seriously. Based on this feedback, we have made changes to the Worley remuneration framework and worked to improve the quality of our remuneration report disclosures. After reviewing changes to our remuneration framework in 2019 and discussing it with our shareholders and proxy advisers, we have strengthened communications with key stakeholders throughout the year. We've redesigned the remuneration report to improve transparency and readability. We've changed our remuneration framework for 2021 to eliminate the elements our shareholders did not support and to strengthen the performance focus of our ongoing plans, including the addition of a performance hurdle to the deferred equity plan. And we've recommitted to our strong shareholding requirements and the focus on sustainable long-term outperformance by extending the performance period of the deferred equity plan and the long-term incentive plan for our executives. The deferred equity plan performance hurdle will comprise quantitative key performance indicators that will be assessed by the Board at the end of the performance period. These will measure significant progress in creating value for all stakeholders and increasing contribution to delivering a more sustainable world. Specifically, these KPIs will be growth in value from services provided to customer projects, delivering a sustainability for the customer consistent with Worley's strategy. This will be measured through growth in gross margin from these projects, and we will also measure delivering enhanced capabilities and solutions consistent with Worley's strategy to help customers achieve their sustainability goals. Now achieving these KPIs is fundamental to Worley's strategy to deliver growth and shareholder value and help Worley's customers to achieve their own sustainability goals. Our executive remuneration strategy is designed to support the global Worley business and strategy and to drive sustainable outperformance over the short and long term. It aligns to, and encourages conduct, that supports Worley's purpose, values, strategic objectives and risk appetite. We are a global business with significant operations and people in multiple countries, including over half of our senior leaders being in North America. Our remuneration strategy must, therefore, be internationally competitive to attract, motivate, retain and mobilize top talent across countries. Our remuneration strategy creates strong shareholder alignment by incorporating significant equity components to encourage executives to behave like owners, focus on building long-term value and to stay with us through business cycles. Our minimum shareholding requirement for executives is above that of the Australian market and reinforces this objective. As we transform our business, we may review elements of our remuneration framework from time to time to ensure it continues to support our business objectives. We are committed to engage and communicate clearly with shareholders on the framework and any key changes we make. I will now turn to the performance and remuneration outcomes for the year. FY 2020 performance outcomes are solid and strongly reflect our intent to build a resilient business. The executive team worked hard to successfully integrate the ECR business and focus on effective delivery to customers throughout the transition and COVID-19. Notwithstanding the many market challenges, utilization has remained high and a dedicated focus on cash management has delivered a strong liquidity position and underlying cash flow of $881 million. We have accelerated our new ways of working while simplifying the business and delivering a savings run rate of $165 million in FY 2020. The Board is pleased with the continued performance of the business throughout this difficult period and commends the executive team for the performance outcome. Performance results against the objectives set by the Board for the executive team are strong, with the following highlights: Underlying NPATA result was $432 million, which is below target and reflects the market challenges impacting the business in the latter part of FY '20; days sales outstanding, which measures the time taken to collect cash from our customers reflected an improvement on last year and was partially achieved at 68 days compared to the target of 65 days; health and safety expectations were met, and we continued to embed a strong focus on the health, safety and well-being of our people and our environment; the integration cost reduction program delivered synergy savings of $177 million, which was better than target; the cost of transition delivery was within budget and key integration milestones met; and we have made good progress implementing new common operating systems and processes for the combined organization. In making decisions regarding FY 2020 remuneration, we carefully reviewed the performance results compared to the stretch targets set in the scorecard at the beginning of the year. The Board has a policy to review underlying earnings measures for remuneration purposes to ensure that our executives are being appropriately held to account for their actions and delivery of annual targets, and we also consider potential acquisitions or investments and transformational opportunities without the influence of their impact on remuneration outcomes. For FY '20, we excluded ECR transition and integration costs as well as transformational and restructuring costs and government payments in relation to COVID-19. Worley did not receive Job Keeper support from the Australian government. However, we received COVID-19-related government grants in Canada, the United Kingdom and Singapore. Underlying earnings for remuneration purposes includes project and operational related provisions. However, it did not include any government grants in relation to COVID-19. Additionally, we considered a number of factors to determine the remuneration outcomes for the Chief Executive Officer and other executives. This covered broader measures of performance and the health of our business and the impact of the business response to COVID-19 on our people, shareholders, customers and communities. Considering the performance results and the objectives set, the Board reduced short-term incentive scorecard results by 15% and considers the overall outcomes are a fair reflection of FY '20 performance. This has resulted in the Chief Executive Officer receiving a payout of 62% of target and other executives receiving payouts ranging from 56% to 80% of their specific target. Our long-term performance measures reflect the value created for shareholders over many years, with earnings per share growth of 9.3% compounded per annum above CPI over the last 3 years and total shareholder return relative to Worley peers of 50th percentile over the last 3 years and the 71st percentile over the last 4 years. These results are calculated consistent with the performance conditions set for each long-term incentive award. This has resulted in long-term incentives vesting to executives between 50% and 93%, depending on the award. We continue to focus on keeping our people safe, satisfying our customers and ensuring our business remains strong for many years to come. As part of our ongoing review of governance, the Remuneration Committee has expanded its role to include executive development and succession, culture, diversity and inclusion. Our committee is now called the People and Remuneration Committee. Finally, I want to thank you, our shareholders, for your support over the year. I am pleased to engage with all shareholders about the matters set out in this report. Thank you very much.

Thank you, Tom. The resolution is shown on the presentation slide on your screen, also on the slide are the proxies received in respect to this item. I'd like to remind shareholders who have not yet cast votes to do so. The Board recommends that shareholders vote in favor of Item 3. As set out in the notice of meeting a voting exclusion applies to this item of business. If you have any questions on this item, please submit them now if you have not already done so.

We have a question from [ Gary Barton ], shareholder and proxy holder representing the Australian Shareholders' Association. Gary asks: Worley has misread the shareholders sentiment on remuneration. There was a strike against the remuneration report last year and possibly, there will be another strike this year. The share price has gone down, the total shareholder return has decreased, but bonuses continue to be paid. It seems employees are being paid bonuses for being an employee. Why? I will refer this question to Tom Gorman to respond.

Well, thank you very much, John, and thank you, Gary, for that question. Executives are awarded bonuses for achieving stretched annual performance targets, which are key measures of successful operating performance. We believe it's fair, appropriate and consistent with market practice to reward executives on this basis. In the short term, I think as you realize, share price can be influenced by factors that are not related to direct operating performance. Our medium and long-term equity-based incentives, which we refer to as the DEP and LTI, are in fact strongly aligned to share price and TSR performance. And executives have, in fact, been impacted by the decrease in share price. Despite the many market challenges that we faced in FY '20, the executive team has successfully delivered what we believe as a Board is solid operating performance outcomes. As has been mentioned, underlying NPATA was $432 million, and the team managed cash extremely well, with a strong days sales outstanding, or DSO result, and our underlying cash flow was $881 million in the year. The integration of ECR has been a success, with $177 million of synergy savings identified in the year, which was, in fact, above target and you've heard both Chris and our Chairman, refer to the fact that we have now increased that synergy target. The Board consider a number of additional factors to determine the remuneration outcomes. This covered broader measures of performance and the impact of our business response to the COVID-19 pandemic, and how that pandemic has impacted our people, our shareholders, our customers and the communities in which we operate. As has been stated, the Board did reduce short-term incentive scorecard results by 15%. Overall, we consider the outcomes are a fair reflection of FY '20 performance. Thank you.

Thank you, Tom. Nuala, can you please read out any further questions relating to this item?

Thank you, Chairman. We have one question from Stephen Mayne in relation to Item 3. It is amazing that you can go into an AGM not knowing how Dar is going to vote on the rem report. Can you please explain who the Chair and other directors are dealing with at Dar? Once it is apparent how Dar has voted, can you please provide some commentary on what it means? Also, please confirm that John Grill has not voted his stock on the remuneration report.

Yes, on a day-to-day basis, I deal with the Chair of Dar. In this particular case for the voting, the -- because Dar's personnel are not located in Australia, they have nominated an attorney to vote on their behalf. And I imagine that they're voting presently. I have no -- have had no discussions with Dar about the timing of their votes. Certainly, my personal holdings and the ones related to me are not voting for the remuneration -- on the remuneration report item. Are there any further questions?

No further questions.

Okay. We now come to Item 4, which relates to the grant of deferred restricted share rights to Chris Ashton. If the grounds are approved, the rights will make up one of the at-risk equity components of Chris' variable pay arrangements. The resolution is shown on the presentation slide on your screen, also on the slide are the proxies received in respect of this item. I'd like to remind shareholders who have not yet cast votes to do so now. The Board, with Chris Ashton abstaining, recommends that shareholders vote in favor of Item 4. As set out in the notice of meeting, a voting exclusion applies to this item of business. If you have any questions on this item, please submit them now if you've not already done so.

We have a statement from [ Gary Barton ], shareholder and proxy holder representing the Australian Shareholder Association. Gary asks: The ASA is against the grant of deferred rights to Mr. Ashton. The rights with low hurdle rates are a reward for being an employee. This is more aligned to a North American-related bonus. I'll ask Tom Gorman to respond to this statement.

Thank you, John, and thank you also, Gary, for asking that question as well. I would say that the primary purpose of the DEP, as structured, is really to create shareholder alignment and to support our robust minimum shareholding requirements. And also, it is in place to encourage our executives to stay with us through business cycles. The DEP is a very important part of our overall remuneration plan, and we believe it's needed to be internationally competitive, particularly in the United States where we have the majority of our leaders and where this type of incentive is consistent with market practice. Now in response to shareholder feedback over the past year, we have, in fact, added performance hurdles, which represent a certain -- which represent a required level of performance. They are key measures of strategy execution, and they have robust, quantifiable targets and actions that are required. Worley, we believe, is an ambitious company with a strong drive to accelerate our transformation and to deliver a more sustainable world, as Chris has covered. There is significant opportunity and the robust strategy execution targets, we believe, will, in fact, drive the needed change in focus to harness future growth and to deliver value over the long term. Thank you, John.

Thank you, Tom. Nuala, can you please read out any further questions relating to this item?

There are no further questions, Chairman.

Thank you, Nuala. We now come to Item 5, which relates to the grant of long-term performance rights to Chris Ashton. The resolution is shown on the presentation slide on your screen. Also on the slide are the proxies received in respect of this item. I'd like to remind shareholders who have not yet cast votes to do so now. The Board, with Chris Ashton abstaining, recommends that shareholders vote in favor of Item 5. Please note that voting on items 2 to 5 will close immediately after we address questions on this item. As set out in the notice of meeting, a voting exclusion applies to this item of business. If you have any further questions on this item, please submit them now if you've not already done so. Nuala, can you please read out any questions relating to this item?

There are no further questions, Chairman.

Please cast your votes for Items 2 to 5 now if you haven't already done so. Voting is about to close. As mentioned earlier, final Item 6 is a conditional spill resolution and will only be considered if a second strike is received on the remuneration report. The poll is closing now. The returning Officer has confirmed the poll is closed. While we are waiting for the returning officer to collect the results for Item 3, I'd like to play a recording from our people. [Presentation]

The returning officer has confirmed the results of Item 3 have been finalized. We did not receive a second strike on the remuneration report today. And accordingly, we do not need to proceed with Item 6. We will now take general questions. Nuala, can you please read out any questions from shareholders that have not already been addressed?

There are no further questions, Chairman.

Ladies and gentlemen, as there -- are no further -- there's no further business, I declare the meetings closed. The results of the meeting will be released to the ASX as soon as possible after the meeting. On behalf of the Board, I thank you all for attending the AGM and engaging with us before and during the meeting. Please stay safe, and have a wonderful day. Thank you.