Worley Limited (WOR) Earnings Call Transcript & Summary

Please be aware that we're recording this event and, of course, broadcasting it live. For those of you who may need to leave the webcast, the pack, which will be presented here today, is now available on the Worley website, and the recording of the event will be uploaded within 48 hours. So let's get started. Over to Sue for our safety moment before we hear from our CEO, Chris Ashton.

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 strokes as a direct result of warming of the planet. In recent times, millions of people have lived with the 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 our tech 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. [Presentation]

[indiscernible] Today, I'll provide a brief operating update and then touch on why we're making this pivot. This is something I've spoken on before. And today, I want to introduce our sustainability domain and delve deeper into what this domain currently represents for our business. How we see it as a structural growth opportunity in the medium-term and to the longer-term and why we're well positioned to support our customers on their sustainability journeys. We'll highlight several focus areas in greater depth to explain the role that these areas play in sustainability, the size of our opportunity and our project experience in these areas. Turning to Slide 7. Before I begin, I'd like to acknowledge the traditional owners of the land and waters, their unique ability to care for our country and deep spiritual connection to it. For me, here in the U.S., the land I'm on has long served as a site of meeting and exchange amongst a number of indigenous people, specifically the Apache, Caddo, Comanche, Kiowa and Wichita Nations. In Australia, the Aboriginal and Torres Strait Islander peoples have cared for and maintained for the thousands of years the land which provide our company with a place upon which our business provides its services. I'd also like to pay respect to the elders past, present and emerging, whose knowledge and wisdom has ensured the continuation of culture and traditional practices and extend that respect to other Aboriginal and Torres Strait inter people present on the call today. Turning to Slide 8. I'll share now a brief operating update, starting on Slide 9. Our integration of ECR -- of the ECR acquisition has been truly successful, and we are truly now a global connected company. Our business is more diversified across geographies, sectors and business mix, which has meant we've shown resilience through the challenging economic circumstances we've experienced this year. Turning to Slide 10. At the end of October, our global headcount is 49,200, a reduction of 5% since the end of the financial year in June and down 17% compared with our headcount at the end of January. The reductions have mainly been of billable people and almost 500 were from supporting corporate functions related to the business restructure. There was an immaterial increase in headcount over the month of October, but it's too soon to consider this a trend. We're managing headcount as one of the business fundamentals we can control, and our staff utilization is on target as of the end of October. Overall, the economic circumstances are having an impact on demand, which has meant we continue to see project delays and deferrals occurring, although we're seeing minimal project cancellations. 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 currency other than Australian dollars. As an indication, the average U.S. dollar to Australian dollar exchange rate over the financial year 2020 was $0.67 compared to an average of $0.72 in the first 5 months of financial year '21. This does not impact the underlying performance of the business but does alter the translation of earnings into Australian dollars. Moving on to Slide 11. Managing costs and our liquidity position are also business fundamentals that are in our control. As we announced at our full year 2020 results, we've increased our ECR acquisition synergy target to $190 million of annualized savings by April 2021, and we're on track to achieve this target. And I'm pleased to share with you that our integrated back-office systems went live in early November. This has been the last piece of the puzzle to enable delivery of the cost synergy program and to complete the integration. In addition to our cost synergies, our operational savings program, which will deliver a further $275 million in annualized savings by 31st -- sorry, December 31, 2021, is also on track. Our operational savings program comprises of 4 categories: discretionary spend, property rationalization, business restructure and shared services. Looking at discretionary spend, we're currently ahead of run rate but in line on an ongoing basis. We saved on many components of discretionary spend. And this year, in particular, we've saved on travel. We know that some travel will return, and we've planned our target to allow for this. And although a travel budget will still be less than 50% of what we believe or what it was in COVID and pre-COVID times. Our property rationalization program is about 75% complete. To date, we've closed around 30 offices in high-cost locations and are considering around another 15. Office optimization is also well progressed, and we're planning on space utilization of about 180% or nearly 2 people per desk, where local customs and contracts allow. This restructure to simplify our business is now complete. As I mentioned earlier, almost 500 people in overhead roles have left the business and our shared services program, which will be enabled by the integrated back-office systems, is in the initial planning phase. While we're on track to achieve both of our savings targets, maintaining or improving our margin will depend on what happens in the short-term markets with our customers. These programs will set up for improving margins when the economic circumstances and end markets recover. We've also further improved our liquidity. As announced in October, we were confirmed as an eligible issuer for the Bank of England COVID Corporate Financing Facility for a GBP 300 million commercial paper program. We were eligible for the program as an investment-grade company that makes a material contribution to the U.K. economy. There will be an opportunity in the Q&A session later to ask questions about the business update, and Tom will be joining me. But now I'd like to turn our attention to the focus of today, our strategic pivot to sustainability. Turning to Slide 12. In the past, our business has been successful because of our ability to effectively identify, adapt and respond to external forces and shifts. As we've shared previously, our strategy formation is shaped by a number of external forces, which we refer to as megatrends. This year, COVID-19 has had a dramatic impact. While the IMF has indicated a global economic contraction of 4% in 2020, and demand in our end markets has reduced, the megatrends we've been preparing for have continued and in some cases, moved faster. There's no doubt historic sharp disruptions such as the pandemic are often accelerators of structural change. We believe one of the long-term outcomes of the COVID-19 pandemic will be the acceleration of addressing the sustainability challenges in the world. People are more aware of the fragilities of the planet and the way we live. And together with the opportunities presented by an unprecedented scale of government intervention, it means it's likely the energy transition and transition to a circular economy will be accelerated. Moving on to Slide 13. There are indicators that this acceleration is exactly what's happening. The world's most influential economies have moved to explicit targets for achieving net zero carbon emissions to meet the commitments of the Paris Agreement and an increasing number of organizations are also committing. The U.K., the EU, Japan, South Korea and China have all committed to net zero emission targets recently and 50% of global GDP and carbon emissions are currently under net zero commitments. This will increase to 2/3 if U.S. President-elect Joe Biden implements net zero emissions target. As you would be well aware, major investors have started making decisions based on sustainability. In a relatively short period of time, sustainability drives have shifted. It shifted from a tendency for individual choices made by private citizens and their investment institutions to what is now the stated public policy intent of the world's largest economies and investment institutions. This supports our strategic pivot to sustainability, where the core of our strategy positions us in the middle of this shift. Turning to Slide 14. The scale of the sustainability challenges the world is facing is enormous and will require the largest allocation of capital in history. The International Energy Agency Sustainable Development Scenarios sees a near-term surge of investment in clean energy technology over the next 10 years. In this scenario, along with action to reduce emissions from existing infrastructure, investment in clean energy and electricity networks is enough to make 2019 the definitive peak for the global carbon dioxide emissions. Goldman Sachs estimates that renewable power will become the largest area of spending in the energy industry in 2021, surpassing upstream oil and gas for the first time in history. Given the significant policy announcements during 2020 by major economies to set targets to achieve net zero emissions by 2050, the IEA has developed a scenario to model the nature and level of investments like this will require. The net zero emissions by 2050 scenario estimates that in the power sector alone, this will require a tripling of annual investment from 2019 to 2030 to $2.2 trillion annually. Turning to Slide 15. Customers across all of the sectors in which we work are starting to make sustainability commitments and are backing them up with road maps and investment. It's well-known that the European international oil companies such as BP and Shell are leading the way and realigning their businesses to become international energy companies and setting net zero targets on their Scope 1 and Scope 2 and 3 emissions. We've also seen Petrochina and PetroNas commit to net zero Scope 1 and 2 emissions in 2020, the first national oil companies to do so. In chemicals, customers are making carbon neutral commitments and promoting a circular economy. And in resources, there is an increased focus on the electrification of operations as miners look to meet their own emissions reduction ambitions. Companies such as BHP and FMG have already made net zero commitments in their operational or Scope 1 and 2 emissions. Moving to Slide 16. There are a number of other companies who are emerging as key players based on their bold commitments. These companies aren't traditional energy, chemicals and resource majors, they're utility companies, recycling companies. And they're ahead of the curve and they're emerging customers for us. They represent broader opportunities in the sectors in which we work. Moving on to Slide 17. We're now at a time when addressing sustainability challenges shift from economists to accountants from scientists to engineers. We're mobilizing our organization around this shift. And for us, this is in the form of our purpose, delivering a more sustainable world. Our purpose underpins our strategy. Our transformation has had its origins in 2019 with the integration of WorleyParsons and Jacobs ECR. With the acquisition of ECR, our business became more diversified across geographies, sectors and business mix. Looking ahead to the medium and long term, sustainability provides a structural framework for growth for our business. Core to our strategy is capturing the expanded opportunities presented by sustainable development by changing the way we operate, by leveraging automation and the use of digital products. We'll partner with our customers and deliver to of them using new commercial models that reflect the value we bring. We're clear about our role, and that is to support our customers on their journeys to sustainability. This will require a fundamental change to the complex challenging task of engineering and delivery. It's going to need a lot of hard thinking, innovation, complex choices and deep expertise in its final delivery. Turning to Slide 18. We believe that there are key differentiators that set us apart, and these will enable us to deliver on our strategy and create value for all of our shareholders. Our customers will be critical players in meeting global decarbonization and sustainability objectives. These customers, with who we have long-term relationships, the customers who know we can deliver major and complex projects and in many cases, we've already started supporting them on their sustainability journeys. Our scale. We're an industry leader and increasingly seen by our customers as a partner to help solve industry challenges. Sustainability projects require scale to be economic and so our ability to deliver at scale is key. Our global reach and the breadth of our expertise, means we're well positioned to support all of our customers. Take 3sun, for example. We recently won some work that wouldn't have been awarded without the global reach Worley provides. We're known for delivering technically complex projects, both large and small, and the sustainability projects we will work on are actually no different. Our expertise can be marshaled and deployed around the world at pace and at scale. In terms of complexity, margins and risk profile, sustainability projects are similar to our core services. Given the scale and complexity of the projects we're bidding on, we're mostly seeing the same global competitors. Our pivot to sustainability doesn't mean that we will change our company risk profile. We'll continue to manage contract risk appropriately and will not participate in lump-sum turnkey projects. Discussions to date have been more around partnering relationships, which favor our emerging commercial models. I often get asked, does Worley have the skills to support sustainable development. And I respond that our people are experts. We understand the technologies that will deliver solutions to sustainability challenges, and this includes industries of the future, such as hydrogen, plastic recycling and the new energy materials. I'd like to describe our people as being fungible. The problems we solve are interchangeable for that skill set. We'll continue to develop organically, target specific skill sets and explore partnerships and acquisitions in line with our growth strategy. We've embraced the new normal by simplifying our business and have a digitally enabled workforce where talent can be accessed across the globe. COVID-19 has accelerated the shift for us, opening up the global talent pool. Our systems and processes are consolidated through our integrated delivery platform, and we create value for our customers through innovation and technology solutions. Turning to Slide 9 (sic) [ 19 ]. I now want to look at what sustainability means for Worley and the market opportunity presents, starting on Slide 20. We're putting sustainability at the core of what we do and making it relevant to all aspects of our business. The sustainability domain provides us with a different perspective on the opportunity sustainability provides. Firstly, alongside our sustainability domain, our core services will remain. I've expressed previously the transition is an and not an or for our business. This transition is going to take place over decades, and our customers' existing assets will still operate and be maintained during this transition, and our customers will also need to plan for and deliver changes for a sustainable future. In defining Worley sustainability domain, 7 themes you can see here have been identified, each of which contribute to the United Nations Sustainable Development Goals. I've mentioned the energy transition and circular economy as megatrends. But to support sustainable development, broader opportunities can be considered: restoration, including decommissioning of assets; delivering environmentally and socially centered infrastructure for our sectors; advancing solutions that ensure the longevity of water; developing practical way to enable development while safeguarding environmental issues; and helping create positive social and economic outcomes, all provide further opportunity. This domain of sustainability for Worley will inform our future strategic growth priorities. Clearly, there are a number of themes with tremendous growth potential. For example, an estimated $40 billion will be spent in environmental consulting in 2022 alone. Mark will share more information on our 4 -- on 4 of our growth priorities shortly: offshore wind, carbon capture and utilization and storage, hydrogen and the circular economy. This is just the introduction to our new sustainability domain. And over time, we will continue to share more detail about other focus areas. Turning to Slide 21. On this slide, we show -- we see our sustainability demand growing. Over time, the sustainability domain will become our core services. Exactly how it grows with respect to what time frame and which technologies is not something that we can yet predict. Technology advances, social behavior and government intervention will each influence how the shift plays out over the coming decades. There is no one single scenario, which can be used as a blueprint. What we do know is that progress will happen and will include the themes of our sustainability domain. This means our strategy is resilient to a range of outcomes. We're well positioned to support our customers across all of these themes. And in fact, we're already working across various elements around the world. Across the business, we're committed to growing our sustainability domain. A component of that -- of the incentive program for our senior leaders is dedicated to growth in this area. As detailed in our fiscal year 2020 remuneration report, our deferred equity plan for executives is focused on value from customer sustainability projects and sustainability action plans. The baseline for this program is the current contribution of sustainability to our business, which I'll now talk to on Slide 22. Turning to Slide 22. We've established a baseline for our sustainability domain as a percentage of our FY '20 revenue and current sales pipeline, factored for likelihood of the project proceeding and being awarded to Worley. We will use this information as a baseline to track our progress in growing our sustainability business over time. On this slide, you can see that the energy transition and the circular economy are growing rapidly, increasing nearly fourfold in our factored pipeline. These elements alone contributed to a $300 million to our aggregated revenue in financial year 2020. We anticipate that transition materials, environmental management, social value and water stewardship will grow over time, although we haven't yet seen significant movement. We include gas and LNG projects as part of our sustainability domain. Our view is that natural gas has played a key role in the energy transition to date and still has a critical role to play in the short and longer-term energy mix as a lower carbon energy source, both for power generation, but also to support difficult to abate energy-intensive industries. Natural gas also has a key role as a feedstock to hydrogen production, an important chemical industry supporting food production, health care and sanitation. The continued use in the long term, that will be a growing focus on lowering the carbon intensity of gas, and we will play a part in this. Turning to Slide 23. Clearly, we've already been supporting our customers around the world across the sustainability domain. A small sample of our transformative solutions across our industries is shown here. These are projects we've worked on, which have had an important impact, such as converting waste into aviation fuels in Europe. Half of the world's aircraft could be on sustainable fuels by 2030. We're scaling up electrolyzers for green hydrogen, we're helping miners produce materials for electric vehicle batteries and we're supporting chemicals companies develop renewable feedstock. These are technically complex projects where we're using our expertise and scale to support our customers around the world. We're proud of our Australian heritage, and we're supporting customers and governments across the full asset life cycle, drawing on our considerable global expertise. We hold vast intellectual property and data about the design, management, operation and maintenance of Australia's and the world's critical infrastructure. Approximately 1/3 of Australia's baseload power generation fleet is operated and maintained by Worley, and we're the largest independent farm operator in the country. Out of Australia, we're working on a global program to convert residue from metal recycling operations into new products, and we've delivered the world's largest carbon capture storage project. These are big complex challenges. This is where Worley excels, and we're proud of our contribution. Our people are passionate about their work and have prepared a video demonstrating how they're delivering a more sustainable world, which I'd like to share with you now. Following this short video clip, Mark Trueman, Group Executive Director for Growth, will talk to you in further detail about some of our focus areas within the sustainability domain. Thank you. [Presentation]

Good morning, everyone, and thanks for being with us today. I'm Mark Trueman, Worley's Executive Group Director for Growth. As Chris discussed earlier, Worley has been providing solutions to our customers' most complex sustainability issues in a number of areas, and we're seeing exciting opportunities ahead of us. Today, I'd like to explain 4 of our key growth priorities in sustainability, that's offshore wind, hydrogen, the circular economy and carbon capture utilization and storage or CCUS. In these areas, Worley already has a strong, established market presence, and we're excited about the potential to build on this to create material scale for Worley across the markets we operate in. First up, I'll talk about offshore wind. Offshore wind continues to outpace other renewable technologies, and the rate of growth has been largely unaffected by COVID-19. The growth projections for generation capacity are significant. And to meet industry targets, customers, suppliers and governments will all need to expand their thinking and go outside of current norms for both project delivery and operations of assets. In the operations phase, for example, new technologies will be critical to reduce the operations and maintenance costs that today contribute around 1/3 of the levelized cost of offshore wind electricity. The emphasis on planning and approvals for new sites, environmental and social impact assessments and securing and maintaining the social license through stakeholder engagement has never been greater. Projects are getting larger all the time as turbine sizes are growing. And with that, the economies of scale must keep up to reduce costs. To give you a sense of this scale, the planned 3.6 gigawatt Dogger Bank project in the U.K. covers an area about the same size as Greater London. This magnitude of offshore wind projects means that large-scale renewable power supply often exceeds the immediate demand, and this excess energy can power green hydrogen projects. We're seeing more collaboration between developers and industrial users to design green hydrogen projects. I'll talk separately about hydrogen shortly. It's worth noting this example of interdependency between the different parts of the energy system to be able to deliver on community expectations of emissions reductions. On Slide 28, we'll look at the market. Bloomberg forecasts a compound annual growth rate of 19% in offshore wind gigawatts deployed through to 2030. It's a fivefold increase from where we are today. In terms of -- in terms of cumulative capacity, this equates to some 160 gigawatts in 2030. The EU has just announced its offshore energy strategy, targeting 60 gigawatts by 2030. That's also a fivefold increase. With Brexit, of course, this excludes the U.K., which announced its own 40-gigawatt target by 2030, which is around 4x the current rate. With scale, of course, comes investment, which is estimated to be in the order of AUD 480 billion globally over the next 10 years. By 2030, CapEx will represent around $80 billion per annum. These are large numbers. The key growth markets in offshore wind are aligned with Worley's presence, Europe, North America and Asia predominantly. We estimate an accessible market in CapEx and OpEx spend of around $65 billion to 2030. And this includes services across the project life cycle from the front end through engineering and delivery and into operations and maintenance. Data management and other digital tools will also have an important role to play here. Worley is already a leader in this offshore wind market across the value chain and across geographies. To give you some context, we recently delivered the design for offshore substations in the United States. In the U.K., we've provided inspection services to about 70% of their offshore wind turbines and in Europe, we've executed asset management services for one of the continent's largest wind farms, identifying material savings for our customer for those maintenance services. We have a strong engineering and operations maintenance team in Europe, which acts as a center of excellence for our global projects. Our priority is to combine the best knowledge from across our teams to truly differentiate our expertise. An example of this type of collaboration is our offshore and subsea hydrocarbons business, INTECSEA, applying their skills to floating wind and also partnering with our electrical teams for interconnections and electrical design. Some of our largest projects include reliability-centered maintenance, including for one of the largest offshore wind farms, the 2.6-gigawatt Hornsea project in the North Sea for Ørsted, and inspection services with the London Array. With 175 turbines, this is the largest farm we service. Second priority I want to talk about today is low carbon hydrogen. Hydrogen is widely regarded as the solution to decarbonizing sectors that are not easy to electrify. Over the last 12 months, there's been a significant increase in the activity in the low-carbon hydrogen market. It's driven by favorable government policy and funding commitments, combined with significant industry investment. No matter the scenario, low-carbon hydrogen will be critical to getting to net zero. Traditionally, hydrogen has been produced through steam methane reforming. This process is defined as grey hydrogen, with CO2 released into the atmosphere. Blue hydrogen is also produced from fossil fuel processing, but is coupled with CCUS to reduce emissions. Green hydrogen is produced by water electrolysis, using renewable energy or gasification of biomass. Low-carbon hydrogen will likely be used primarily in heavy transport and industries like steel and cement, where emissions are very difficult to reduce. The technology is set to become a competitive solution for long-term energy storage, backing up grids when demand outstrip supply. Green ammonia, produced from green hydrogen, is also being evaluated as a possible fuel for shipping and power generation. If we now look at the market, the next 10 years will focus largely on pilot projects and scale ups to improve technology and reduce costs. We've seen several demonstration projects seeking EU funding, for example, including partnerships between renewable energy providers such as Ørsted and off-takers, such as the refineries and ammonia plants. From around the end of the decade, growth is expected to surge off the back of what is predicted to be an effective and cost competitive technology. If governments accelerate policies to achieve net zero, so too will the growth of the industry. Striking the right balance between the price and efficiency of electrolyzers underpins a healthy cost curve and economies of scale will drive improved commercial outcomes for electrolyzers similar to what we've observed with photovoltaic cells and batteries over the last decade. According to the IEA's sustainable development scenario, close to USD 700 billion will be invested between now and 2040 in hydrogen infrastructure. Core markets are across Europe, but others are evolving quickly, including here in Australia, Chile, Canada, and we expect the U.S. to move quickly off the backing of the pending Biden administration. And if we assume around 30% of the total CapEx will be in Worley's core ECR markets, industrial applications and power generation, that's a spend of about $200 billion by 2040. We're well positioned to capture our share of this opportunity and we're already doing work in this space. We've executed more than 80 hydrogen projects, and our customers are more interested than ever in the technology. We're currently working on more than 30 projects around the world. In the Netherlands, we're working with Nouryon and Gasunie New Energy on a series of projects progressively scaling electrolyzer plant capacity. Using green electricity produced from offshore wind, green hydrogen will be produced through water electrolysis. As a renewable feedstock to our customers' plant, green hydrogen will be combined with CO2 from other processes to produce biomethanol. We've also worked on a concept study for an energy island off the North Coast of the Netherlands looking at wind [ storage ] electrolysis and salt cavern underground hydrogen storage there with an electrolyzer size of up to 36 gigawatts. In the Middle East, we're supporting one of the largest green hydrogen developments globally. And back in Europe, we're providing engineering services for the combined conceptual, design and execute phases for the first facility where hydrogen will be used, not just tested for an industrial process. Project will install and operate what will be the largest hydrogen electrolyzer to date with 10 megawatts. And closer to home, we've also been working with an Australian customer to support their strategy to use green hydrogen in the ammonia manufacturing process. Our differentiated -- our differentiators [indiscernible] in this technology: our ability to deliver solutions across the life cycle of the asset from concept development, asset design and build, all the way through to operations and maintenance. Alongside this life cycle capability, we provide solutions to support the other critical components of these projects to ensure successful delivery. For example, we provide environmental and planning support in the early phases; water sourcing and water treatment; and connect the projects with the renewable energy supply from wind and solar. Our third area of sustainability I want to discuss today is the circular economy. For Worley, circular economy really excites us for 3 main reasons. And firstly, it really absolutely aligns with our corporate purpose. Our customers are actually right in the middle of it, and we're really experienced in the processes used and the end products, fabricated or produced. The circular economy moves us all from thinking about resources as extracting, processing, using and disposing to valuing resources so we can use them and reuse them and minimize waste whenever we can. Ultimately, we aspire to full circularity. But in the meantime, we're concentrated on reusing and minimizing waste. That's why governments and companies around the world are focusing on how they can participate in the reuse hierarchy that we illustrate on this slide. In fact, at the heart of it, is about changing the feedstocks that we create in delivering a sustainable world. For Worley, we have a critical role to play, providing solutions to our customers. For example, chemical depolymerization for plastic recovery, repurposing assets, renewable fuels, gasification for waste for reuse as products or energy as well as asset recycling services like using Requis, our online equipment exchange platform. We've chosen to highlight plastics recovery today as a key component of our focus on the circular economy. Plastics recovery has garnered so much traction across the globe in the last 24 months. Since 2018, there has been a fourfold increase in participating nations in the Plastics Pact, the global initiative to create a circular economy for all plastics. Today, there are also 250 corporate signatories to the pact. This demonstrates the powerful and exciting dynamics at play. Plastic recovery via chemical processes, such as depolymerization, can generate strong margins. These are emerging technologies that do not require high-precision in sorting that can recycle contaminated plastic waste, and they can produce virgin-quality material. High-quality recycled plastic can be produced and sold at lower cost than current feedstocks. In addition, and perhaps most exciting for all of us. With these favorable dynamics, we could be 100% circular with PET by 2050 compared to the current recovery rate of only 16%. On Slide 37, I'll -- let's turn to renewable fuels as part of the circular economy. In the short term, the COVID-19 pandemic is affecting global demand for crude oil and transportation fuels, whether from renewable sources or from fossil fuels. When demand recovers, however, we anticipate significant growth in the supply of renewable fuels. Low carbon fuel supplies are projected to increase across solid biomass, liquid biofuels, biogases and low carbon hydrogen, boosted by stricter regulations, fluctuations in feedstock costs and a capital injection into the sustainable fuels market. We believe the market will play an important role in sustainability policies moving forward. Sustainable fuels do not currently play a meaningful role in industrial and transportation sectors, but this low base, coupled with mounting pressure on traditional fuel margins, represents a significant opportunity for us. If we look at the addressable market, investment is expected to be in the order of USD 265 billion in biofuel production capacity in the second half of this decade. Worley already has a leading position in the market with a role in more than 60% of the active renewable diesel projects in the United States, including the world's largest refinery conversion to biofuel feedstock in California. Looking at the market further, Worley is a world leader in providing circular economy solutions to Energy & Chemicals markets. We're excited about the aspiration of complete circularity, and we're motivated by the opportunity along the transition in the coming decades. Worley will play a critical role with our customers and technology developers to increase the reuse of products and to reduce waste in the energy, chemicals and resources markets. Turning now to our final area of sustainability, decarbonization, including carbon capture, use and storage or CCUS. CCUS enables the capture of CO2 from fuel combustion and industrial processes and is fast becoming a key technology for emissions abatement and decarbonization. In fact, progress to net zero emissions is unlikely without relying heavily on CCUS technologies. CCUS will continue to support existing operations to lower carbon intensity but will also become more important to new developments. Applications include capturing emissions from oil and gas processing, power generation and other emissions-intensive industrial processes. Direct air capture technologies can remove CO2 directly from the atmosphere. This enables emissions abatement and negative carbon emissions, and we need both of these things to happen to meet international climate targets. Captured carbon can be permanently stored in underground geological formations or it can be used as an input or feedstock to create other manufactured products. CCUS will accelerate for decarbonization of industry, but it will also facilitate new energy solutions like low-carbon blue hydrogen, which I talked about earlier on. Like many sustainability solutions, CCUS will benefit from economic recovery. New emissions reduction targets, policy incentives and tax credits and a leadership position taken by industry will drive shared carbon capture and storage infrastructure. An example of this is industry collaboration is the Northern Lights CO2 storage project in Norway, which is linked to the potential development of at least 9 capture facilities and includes investment from 3 of our largest customers, Equinor, Shell and Total. The majority of CCUS projects at the moment are in North America and Europe. And these projects are at advanced stages of planning and many await final investment decisions, representing a total potential investment of more than USD 27 billion. And to illustrate the pace of growth of future investment, this figure is around 2.5x the value of planned investment in projects at a similar stage of development just 3 years ago. Worley has the right skills and a strong track record with our customers to support every stage of CCUS from capture at facilities, compression and transport via pipeline or vessel and use as feedstock for downstream products and also subsurface storage. We've worked on more than 200 CCUS projects, including the world's largest commercial scale CO2 injection project. We've engineered -- we're engineering and designing 2 carbon capture units at Drax Group's power station in the U.K. Bioenergy with Carbon Capture and Storage, or BECCS, will be able to remove more CO2 from the atmosphere than it actually produces. Vinayak is going to talk more about this later. We're also seeing more project opportunities emerging in enhanced oil recovery, industrial hubs. And as I mentioned before, direct air capture pulling CO2 directly from the air and using it or storing it. So in conclusion, Worley has built a strong track record of experience over many years, solving our customers' challenges in sustainability. We believe we're in the strongest position to capitalize on the increasing positive momentum to deliver solutions to our current customers and new customers across technologies, sectors and geographies. COVID-19 has accelerated the push to address climate change and sustainability more broadly. Governments, industry, communities and markets are collaborating more than ever to support this transition to a net zero carbon future. There's never been a more exciting time for our business. And we're looking forward to keeping you updated on the progress we are making to deliver on our sustainability strategy for the benefit of all our stakeholders. Thanks very much for your time this morning. We're now going to hear from the leaders of our regional businesses on how our strategy comes to life around the world in our operations. Thank you very much.

Wow. The last 6 months have absolutely flown by. I want to start by recognizing the resilience of our people. If you think about everything that they have faced in the last 6 months, not just working from home, but also those that have continued to work on our construction and maintenance sites, it's been a huge adjustment. And through it all, they have continued to focus on the safety and well-being of their colleagues and others around them. This is a true commitment to our value of life, caring for the safety, health and well-being of our people and communities. Now to address the impact on the region. The Americas region continues to experience headwinds as markets navigate both the ongoing effects of COVID and low commodity prices. We have seen impacts to our business, particularly in the downstream markets in the United States, with some major projects being delayed. While it's obviously difficult to predict the global economic recovery, we are cautiously optimistic that our work will pick up in the third and fourth quarter. And we're seeing the number of opportunities in our pipeline increasing. In Canada, investment in upstream and midstream remains constrained. What we're seeing is that owners are generally deferring investment in new production in favor of smaller optimization projects. However, work continues on multiple pipeline and other midstream projects, which are intended to expand capacity to existing markets and to access new export markets. Turning to Latin America. That region has also seen an impact on the business, but this has been mitigated to an extent by the fact that some of our customers, such as those in Colombia, have benefited from stimulus money to keep project spending on track. On the positive side, we've seen a steady increase in sustainability projects as our customers are increasingly looking to diversify their assets and lessen the climate impact of their operations. We're seeing this trend with our traditional customers, and we've also acquired several new customers who are seeking to build sustainable projects. This has been a real bright spot for us in a very tough year, and I know our people are excited to be part of these new opportunities. Overall, our sustainability pipeline is growing. In particular, we've seen a threefold increase in opportunities in circular economy, water stewardship and renewable energy. In the previous update 6 months ago, I shared a little about our sustainability journey. Our pipeline includes a wide variety of projects in areas such as solar power, conversion to on-site gas power generation, plastics recycling and renewable fuels. As you have heard from Chris, many of our core customers, such as Shell and BP have announced strong commitments to reduce carbon emissions, and our strategy is to partner with them to support them in achieving these goals. We're also working with many of our chemicals customers to look at how they can decarbonize their operations and maximize the use of recycled feedstocks, while also keeping pace with the growing demand for petrochemical products. In Latin America, our customers are eager for energy transition solutions. They're looking for cheaper sources of energy that will also reduce their carbon footprint. The speed of adoption for sustainable solutions is also being influenced by policymaking at both the state and country level. And I'd like to talk a little about what we're seeing in each market. In the U.S., we anticipate there will be an acceleration of decarbonization as the new Biden administration has indicated the U.S. will rejoin the Parish Climate Accord. Additionally, legislation in California is providing financial incentives in the form of renewable energy credits to counter the impacts of climate change. Government incentives like these, along with the desire to convert existing fossil fuel-fed refineries to renewable fuels are driving an uptick in opportunities for Worley across the U.S. and Canada. We have a Center of Excellence in biofuels, technical consulting in California, and the team there is working with a range of customers on leading-edge renewable fuels projects. These include revamping existing units and converting used cooking oils to diesel products. We also have 2 projects in the U.S. focused on using fats, oils and greases as feedstock. In upstream oil and gas, our customers are looking for ways to lower carbon intensity in their processes. We're working with 1 customer to look at solar steam generation to replace natural gas in their oil and gas fields and several others on carbon capture strategies and technologies. Canada has committed to acquiring 90% of their electricity from renewable resources by 2030. And as a result, we're seeing an uptick in our co-generation opportunities. These facilities reduce both greenhouse gas emissions and the costs associated with grid power usage. The Canadian government is rolling out its hydrogen road map, and we have been presenting our blue and green hydrogen and carbon sequestration capabilities in response. We're working with the Alberta Council of Resources to leverage our global experience to help the Alberta government with a path forward. In Latin America, Chile is a first mover in hydrogen and aims to be a world-class exporter. A couple of projects have already been announced, and we anticipate more will follow, which will provide us with good opportunities to engage. Let me now turn to focus on some of the new energy transition areas that we're working in. Offshore wind is one of our key strategic priorities. It is growing at a fast pace, especially along the U.S. East Coast. There are 15 active leases in the U.S. now and a report from the special initiative for offshore wind anticipates a $70 billion business pipeline in the U.S. by 2030. Worley is well positioned in this market. We are able to leverage our offshore topside design expertise in Houston and Metairie and our power Center of Excellence in Reading, Pennsylvania. We are seeing opportunities, not only in offshore development, but also onshore marine in building out or retrofitting ports. Since winning a core role in the Ørsted Revolution Wind project off the coast of Rhode Island, we've seen an increased workload in this space. In solar, Worley is involved in several projects across the U.S. and in Brazil from feasibility studies through to full EPC execution. We are currently finishing the engineering and design for 2 major utility-scale solar PV projects in the U.S., and I'm very proud of how the Americas team reached out to the global Worley to bring together the right people for this project. The team is led by a PV experienced project manager in Reading. It incorporates technical leadership from Advisian, professional engineers out of the U.S. and the bulk of the engineering production from our global solar experts in Madrid. We also hired 3 solar construction experts to contribute to our construction plan. In energy transition projects, developers are looking for end-to-end solution providers. Encina is a great example of a customer who is finding value in our ability to take this end-to-end approach. As you may recall from our last discussion, Encina is building a facility to convert scrap plastics into benzene, toluene and xylene. And I'm very happy to say that we kicked off this effort in August. Our design-to-operate model allows us to incorporate safety and execution considerations in the design phase, and that will provide advantages later on. We also support our customers with solutions for their environmental, water and social sustainability objectives. To give a couple of examples, we've worked on the development of a small craft harbor in the Arctic Bay in Nunavut to support safe access to water and ice for traditional hunting activities. We've also worked on a marine facility and terminal project where we're focusing on repurposing the facilities to adapt to new cargo while minimizing the use of new materials and removing the need for development of greenfield tidewater space. Our Advisian Group in Latin America has a diverse and increasing portfolio of water projects. This includes projects related to water treatment, flood risk, groundwater remediation, water supply and wastewater engineering. Finally, I'd like to share a couple of projects that exemplify our work in sustainability in this region. We are providing the engineering services on a commercial scale polystyrene recycling facility in Illinois for Agilyx and INEOS Styrolution. This facility uses proprietary recycling technology from Agilyx to break down waste polystyrene. The development will enable the recycling of polystyrene contaminated with food and other organics into new food-grade plastics. We are executing this work for Agilyx in cooperation with our Belgium office. I mentioned our work with Ørsted and the Revolution Wind project earlier. Ørsted was looking for a reliable delivery partner with demonstrated experience in offshore assets. Our team came up with an innovative approach that drew upon a combination of our digital, new energy and offshore hydrocarbons expertise, which resulted in a cost competitive winning offering. The last thing that I will leave you with is this. We're very proud of the steps that we as a company have taken to partner with local communities. We continue our collaboration and partnerships with indigenous businesses across Canada. This is not only the right thing to do, but it also supports the government's objectives of achieving truth and reconciliation with indigenous peoples. We continue to progress our First Nation relations through our membership with the Canadian Council of Aboriginal Business. Our joint venture with Mikisew Cree is a successful partnership in Northern Alberta. We are particularly proud of the partnerships that we have developed on our Trans Mountain Pipeline expansion project, where Worley has awarded over 50% of our total purchase orders and site services contracts to indigenous communities and their partners. This truly exemplifies our commitment to the community and will continue as we engage in more sustainability projects in the region. In closing, I would like to recognize and thank all of my colleagues for their hard work and commitment during a very challenging time. Because of your dedication, we have a bright future here in the Americas. So thank you.

I'm really happy to have a conversation about the most interesting and exciting part of what Worley is doing: transforming our own business but also helping our customers to leave a better legacy for the next generation. I'd like to start with a quick overview and then look at 3 aspects of sustainability in these regions. One, how are various geographies adapting to energy transition and sustainability more broadly? Two, who is investing and where are they investing? And three, what is Worley specifically working on in this space? It's been a very busy 6 months, as you might expect, and we have been focused on the safety and well-being of our people, including their mental health. We have also been focused on building business resilience and on completing our restructuring, which will simplify the business. And I really think our teams have done well in balancing these 3 priorities. We have, of course, been affected by the coronavirus pandemic and the associated economic impact. This has led to some delays and deferrals, but I'm pleased to say we have seen very few cancellations. And our workload has been fairly consistent, which can be seen in our steady headcount. And more importantly, we continue to win new work. What has also been interesting is that as some of our competitors are shifting out of the energy, chemicals and resources space and customers in the sector are reaching out to us more and more. Despite working remotely, we have been able to maintain our productivity, which is testament to our digital project delivery, which has helped us to be highly consistent and efficient. Utilization of global integrated delivery also continues to improve. And we have seen an increase in opportunities for early-stage work, particularly in sustainability projects. Sustainability is a big focus area for the region. And while it is, quite rightly, in all the headlines at the moment, Worley has been working on these sort of projects for a long time. We are well-established here and customers trust us. We are seeing a significant increase in sales opportunities, with particularly strong trends in EMEA in electrification and low-carbon energy. So we are making a lot of progress on sustainability in these regions, with particular focus on wind, hydrogen, circular economy, carbon capture, utilization and storage and biofuels. We have the necessary skills and expertise, and we are working on projects currently in all these areas. That means our people are motivated and excited. Now firstly, about our various geographies. As Chris said, the regulatory framework in various countries is driving investments and presenting us with opportunities. Australia is implementing a target to reduce greenhouse gas emissions by 26% to 28%, below 2005 levels by 2030. The mining sector is taking this seriously, with Rio Tinto and BHP targeting net zero by 2050. China, President Xi announced a commitment to achieve carbon neutrality by 2060. And while it's too early to see specific actions on the ground, it is estimated that China could spend $15 trillion on energy transition. In the Middle East, we see a high focus on gas as a low-carbon energy source, with significant investments in upstream gas projects. Our project pipeline is continuing to grow in places like Saudi Arabia, UAE, Oman, Qatar. Projects have been announced with significant investments across these regions for LNG trains, notably in Qatar. In Africa, we have a significant presence in the Kingdom of Morocco, which has set an ambitious target of achieving 52% of its installed capacity from renewable energy by 2030. And we see a lot of opportunities here. The U.K. government announced GBP 12 billion of investments and a 10-point plan for green industrial revolution. In the EU, the EU Renewable Energy Directive is encouraging investments in renewables and green hydrogen, carbon capture, food-based biofuels and circular economy. Additionally, with international government policy supporting the growth of offshore wind, we are seeing rising investments there. Now the second part of who is investing and where are they investing? The numbers tell us an important story here. For me, they show that we have passed a tipping point and we are seeing investments gather pace. Recently, Shell, BP, Total, Equinor, Repsol and Eni have indicated they will grow their low-carbon businesses. The group's combined spending on renewables is estimated to increase over the coming 5 years from $7 billion in 2020 to $70 billion in 2025. By 2025, Iberdrola plans to invest EUR 75 billion in renewable energy production, grids and retail businesses to capitalize on growing global demand for clean power. In September 2020, a note from Goldman Sachs estimated that Europe's big oil companies have spent close to half of their capital expenditure on low-carbon activities, compared with just 10% to 15% in 2019. The installed power capacity is expected to grow from 7 gigawatts currently toward 140 gigawatts by 2030. So you can see that the investment is significant, including from long-term Worley customers. These low-carbon activities will require technical and engineering solutions. And this is where Worley excels. These investments are also driven by various factors, which, when they reach a tipping point, drive even more investments. I'll illustrate it with a couple of examples. The price per gigawatt of energy generated by offshore wind has come down in the last decade. The U.K. options in September 2019 gave prices that were 30% lower than those in 2017 and 60% lower than 2015. We then, of course, saw that the offshore wind financing in the first half of 2020 totaled $35 million, up 300% year-on-year. The price of carbon credits under EU ETS have increased from EUR 5 per tonne of carbon in 2017 to EUR 25 per tonne, and the BP net zero scenario forecasts a CO2 price of $125 per tonne by 2030. This is driving significant investments in carbon capture, especially in Europe and U.K., where the system is strongly embedded. Finally, what is Worley specifically working on in this space? There's significant activity in our Advisian consulting space where we are engaging with multiple customers on sustainability, focusing on what's applicable to that particular customer or location, including helping them define their site-specific sustainability road maps. In Australia, we are working on diesel fuel replacement studies, where we are developing strategies to reduce fuel in mine operations. And we are also working on alternate energy supply options for resources. In Oman, we are continuing with our partnership with BP in the development of the Khazzan and Ghazeer gas fields. We provided EPCM services. And after successfully completing the $1 billion Phase 1 of the project, Worley has been engaged on Phase 2 of the project to expand the development south into the area known as Ghazeer. In the U.K., we are working on several opportunities in the carbon capture clusters, including with our new customer, Drax, on the prefront end design, carbon capture project on Humber site. We also have a study for a different customer on another of the hubs, looking at technical solutions, local content and manufacturing models, where our fabrication facility in Grimsby will play a role. In Europe, we are working on a large biofuel project for a confidential customer, where we have completed the front end design, and are moving towards the execution phase. The investment is in the range of EUR 1 billion. There are many other examples. And importantly, we have a strong pipeline of bids for sustainability projects. The fastest single growing sector is wind. Within our pipeline, we are pursuing over 100 projects. We also see significant potential in the green hydrogen, where we currently have 45 projects in the pipeline. There are big and small projects for hydrogen for use in industrial processes, transportation, et cetera. Hydrogen is becoming a very exciting area for the next few years. The other heartening thing is that this is not generally available our business. And we are seeing opportunities to pursue alternate commercial models for this type of work. It is also important to mention that even though the engineering and project management skills are transferable from our core businesses, we are strengthening our offering with a few key sector-specific strategic hires. We are also building centralized centers of excellence to bring our expertise together. For example, we have set up a regional center of excellence for wind energy in the U.K., which is home to the world's largest offshore wind sector and has very ambitious growth plans. I'd like to finish by focusing briefly on a couple of case studies. First, let me talk about our work with Drax in U.K., linked to the U.K.'s carbon capture cluster that I mentioned earlier. We have recently been awarded a project for early front-end engineering and design for the first 2 carbon capture units at Drax Group's power station in North Yorkshire. Each unit is expected to capture approximately 4 million tonnes of carbon dioxide a year. After years of talk about this technology in the U.K., this is an exciting point. And it's particularly special because this will be carbon-negative power station. It works on sustainability-sourced wood pellets, which took carbon oxide from the atmosphere as trees grew. And when they are burned, the carbon dioxide is captured at the power stations. Drax has successfully piloted this approach known as BECCS, Bioenergy with Carbon Capture and Storage. It generates renewable electricity by permanently removing carbon dioxide from the atmosphere. The second project I'd like to share is the work we are doing on the front-end engineering design, to develop Avantium's flagship plant in the Netherlands. That will support the transition to a bio-based economy for plastics. The facility will use a technology that converts plant sugars into a wide range of sustainable chemicals and plastics, such as the next-generation plastic material, PEF. PEF is a fully recyclable bio-based polymer with improved barrier performance and thermal properties. And it has the potential to make a significant impact on the packaging, textiles and film industries. The exciting thing for us is that we are progressing the design for commercializing this technology and working towards the project execution plan. There is a possibility to scale up this technology further with multiple plants to match the supply chain needs of the product. One of the things I'm keen to share is the engineers, designers and project managers working on this project. Our Worley employees were transitioned from our previous traditional work. It shows how we are successfully transferring our people skill into sustainability projects as more and more of these opportunities will open up. So I hope I have given you a picture of how much work we are doing in the sustainability space and a wide range of projects. We have the skills, the people and we have the trusted relationship with customers. I think it's a strong foundation. More than that, I hope I have given you the sense of the opportunities we see in the years ahead as this area becomes more and more important.

So before we start the Q&A, I'd like to make a few closing remarks. While we're managing business fundamentals in response to the COVID-19 pandemic and resulting economic circumstances, we're also focusing on our strategic pivot into sustainability to meet our new company purpose, delivering a more sustainable world. This is reflected in what you've heard from Mark, Karen and Vinayak and sustainability as a significant focus and an important opportunity for our business. The dual challenge of supplying affordable energy to a growing population while addressing the risk of climate change is the most pressing and complex issue of our time. We all know that this will drive the largest deployment of capital in history, and our strategy places at the core of this spend. Today, we've shared with you how we see the sustainability demand for Worley and provided a baseline showing the sustainability domain represented about 32% of our revenue in financial year 2020. We've outlined today that we're well positioned to realize is the broader growth across opportunities, the sustainability domain, and we're ready to work with our customers across all its teams. We're proud of the work we're doing and of our contribution to delivering a more sustainable world. Thank you for joining us today. I'm now going to hand you over to Verena, who will moderate the Q&A for Sustainability Investor Day 2020.

Thank you, Chris. Thank you for your questions, everybody. I will pass the questions on directly as you have put them to me. And starting with the first one, which is from Richard Johnson of Jefferies. And his question is, can you explain why it is necessary to change the way you work in order to explore the sustainability opportunity?

Well, I don't think that we're changing the way we work to exploit the sustainability opportunity. We're changing the way we work because the pandemic -- in response to the pandemic, we were, I guess, initially, forced to put our workforce to work remotely from the office working from home. And what we realized was why we went -- we had to respond to the pandemic as a stimulus for changing, what became clear, what became evident, is there was an opportunity to actually change the way we work on a sustainable basis, and I'm using sustainable basis different from the word sustainability. So we didn't change the way we work to address the sustainability opportunity that lies before us. We changed the way we work because we realized, as a result of working remotely, working in a distributed fashion, that we could actually adopt that on an ongoing basis as we move forward. And so the 2 different things. I don't associate one with the other.

Thanks. Moving on to the next question, which is from Mark Samter, MST Marquee. And the question is, do you think there is the risk of another leg down in headcount when government support packages for employment drop off?

So I'm going to hand on to Tom and let Tom answer that. So Tom, do you want to take it?

Yes. Thanks, Chris, and thanks, Mark, for the question. In terms of direct support for Worley employees, the number is immaterial in terms of direct support. We don't take JobKeeper, for instance, in Australia. We don't qualify. So there's no direct impact from those government support packages. I think, clearly, there's a broader impact in terms of the broader economic impact of government support packages. What we've looked through in most of the major economies is their suggestions of further stimulus spending that will generate additional economic growth in those places. So in terms of immediate direct impact, we don't see that, and we see maybe longer term, some actually growth in headcount based on long-term government stimulus money.

Thanks, Tom. I have a question from James Byrne of Citi Investment Research. The question is, how would you describe the competitive landscape in the sustainable segments you're pivoting into as Worley is by no means the only one thinking about its role in the energy transition.

Look, I think the competitive landscape, I recognize that some of our competitors are -- or see and recognize the size of the opportunity and the way that we are. Where I would say we are differentiated from them is in our scale and the breadth and depth of our knowledge and our capability in our organization. So yes, I believe that the space we will move into, the sustainability domain, as we've talked about today, provides an opportunity for us to grow in a market that is less competitive. Yes, we will see some of our traditional competitors, but none has the scale and geographic coverage that we have and none has the technical breadth and the technical capacity that we have.

Thanks, Chris. The next question is from Paul Butler of Crdit Suisse. And the question is, what proportion of Worley's revenue currently comes from sustainability projects?

So if we look at, I think it's Slide 22, and it gives a breakdown. But in aggregate, in financial year 2020, it was about 32% of our revenue. So that would be the number.

Okay. Great. A question from Dan Butcher, CLSA. And the question is -- there's actually 3 parts to this question. What percentage of the green transition addressable markets can you really capture overall? I note that Worley has captured less than 1% of global upstream oil and gas CapEx spend. Second part of the question is who are your top 5 competitors in this transition work, in your view? And the third part of the question is, can you provide an update on M&A?

So let's talk about what percentage we think we can capture. We think there's opportunity for us to capture more in the sustainability space than we've currently got in the existing sectors that we operate on. And why do I say that? Because of the skills we've got. Again, I talk about the geographic coverage, the scale we've got and the complexity of some of these challenges are -- the complexity is vast and customers are looking for a level of -- looking to have a level of confidence in the investment they make in the sustainability space. So I see us being able to grow into this space at a greater rate than we've seen our growth in the other sectors or the other parts of our business. In terms of competitors, we've got the ones that you would see. We have Wood Group, we have Fluor. I think that they're 2 that we see on a frequent basis. And the others it depends on the jurisdiction and the sector or subsector that we're talking about. But they would be 2 of the larger ones that we see. In terms of M&A, I've said before, Worley has never had an M&A strategy. We've got a growth strategy. And whether or not opportunity presents itself that we believe will help drive that growth strategy and create shareholder value, then that is something that we will consider. And we'll always consider that. So we've never had an M&A strategy. We have a growth strategy, and that's what we have. If something is evaluated, comes on our radar screen that helps us drive the growth, then we'll consider it.

Great. Thanks, Chris. I have a second question from Dan Butcher, CLSA. And the question is, how much offshore wind work can you capture? You don't own any installation vessels like a Saipem or Technip. Will you just do engineering on floating platforms? And can you do maintenance without vessels?

Well, let's start with that last question first. We already maintain 70% of the offshore facilities in the U.K. Central, Southern Central and North Sea. So -- and we don't have vessels. That's not a constraint. Some of these wind farms offshore are huge. I mean they can cover hundreds of square miles. And as a result of that, the customers often have the vessels themselves. So we don't see not owning a vessel has been a constraint. In terms of installation of vessels, physical installation, we don't see that as a constraint to our ability to design and manage the build. We don't own, at the moment, vessels offshore, but we still get involved in the offshore engineering, procurement and management of offshore facilities. So I don't think that having assets, physical assets, offshore vessels are as a prerequisite to participating in the market. And in terms of what portion of the market do we believe we can capture, again, look, I think this is a huge market. It's growing. It's probably offshore wind. If you look at offshore onshore solar is probably the grow -- the fastest-growing sector in the renewable energy markets. And we -- I think we're very well positioned to get a good fair share, if not an unfair share of that market.

Great. Thank you, Chris. I have 2 questions from Adam Martin of Morgan Stanley. The first is, in terms of sustainability focus areas, where do you see the most opportunity to grow revenue pre-2025?

Well, certainly, look, first of all, it's going to be across a number of technologies. But if you look at the hydrogen, if you look at carbon capture, they're going to be key sectors. Offshore wind technology continues to evolve. But there's going to be a matrix. It's going to be a group of technologies that will help accelerate the transition. But certainly, I believe offshore wind is going to be one. The circular economy, I think that the customers are recognizing. There's a huge opportunity investing in a circular economy context rather than a linear economy, a linear production. I certainly see that as being a big opportunity as well. So look, there's going to be a mix. If we look across that sustainability domain that we talked about, I think we'll see growth opportunities in all of them, certainly over the next 5 years. Some will accelerate more quickly than others. I think the circular economy, offshore wind, I believe the decarbonization of existing facilities will be a big opportunity because if the companies and countries that have committed to net zero by 2050, if we're going to achieve that target, investment planning has to begin now. So we'll see a range of technology opportunities present themselves and we're well positioned across all of them.

Thanks, Chris. The second question from Adam Martin of Morgan Stanley is, as you build in areas like offshore wind or CCUS, do you think you'll do more construction work as opposed to design work, i.e., will your business model change at all?

Well, if it makes sense for us to do fabrication, we've got fabrication yards in Houston, we've got them in Norway, we've got them in Canada. If it makes sense for us to do fabrication, we'll do it. We do a lot of fabrication now. If you look at our fabrication facilities around the world, we're doing a lot of fabrication. But what we won't do is we won't to competitively bid lump-sum turnkey EPC work. But within the bounds of our risk profile and within the capacity of our fabrication yards, then certainly, it's something that we will look at as we do now on a case-by-case basis.

Okay. Great. I have a question from Nathan Reilly, UBS. It's a 2-part question. I believe you've largely addressed the first part, but I think there's a second part that's important. I'll read the whole question. With reference to the core service opportunities that were identified as sitting within the sustainability domain, which ones offer the greatest near-term revenue upside and second part of that is how do margins for these services compare to traditional ECR services?

Well, look, just the first question, I think the circular economy, electrification of facilities, future of emissions, there's actually, as I said, if we've gone -- if companies that are committing to net zero by 2050, and some of them are committing before then -- but companies and countries, then it's going to be across that sustainability domain, it's going to take investment in all. But yes, some of them will, as I said, accelerate more quickly than others. In terms of margins, I think one of the myths I'd like to bust is that sustainability opportunities are less complex than the traditional markets that we're operating in. And if you just consider onshore wind to offshore wind, they're very different in terms of their scale and their complexity. But let's take it a step further. We've worked on projects where one project specifically, we've converted a traditional refinery, taking oil as a feedstock, and we've converted that facility to produce green diesel, bio diesel using vegetable oil and all fats as feedstock. You can imagine taking a facility that's already 20 or 25 years old and converting it to use a very, very different feedstock, incredibly complex. And so I think one of the clarities -- one of the things I'd like to clarify today is the sustainability domain is actually a very complex domain. It's a domain that is going to take the kind of expertise, the knowledge, the IP and the capacity and scale of an organization like ours, to deliver the kind of capital and the level of capital that's going to be deployed over the coming decades. So complexity is great. It's massive in the sustainability domain, and the margins will reflect that.

Thanks, Chris. We have a question from Alex Karpos, Goldman Sachs. And the question is, can you touch on long run market share aspirations in the sustainability markets as well as CapEx needed to achieve these targets?

Well, let me talk about the long-run opportunity. I believe if you look at what our market share is now, it's not huge. It's a large market, but some of it, we don't access. Some of it is lump-sum turnkey EPC. I believe given the nature and the complexity of some of the investment going forward, it will fit more closely to our risk profile. Why do I say that? Because if you look at the trillions of dollars invested in existing assets around the world, the need to put a sustainability overlay to those brownfield investments is very complex and very risky for the customer. And the customers typically, in that brownfield environment, will look to have a contracting profile, a contracting model that is not lump-sum turnkey EPC. So I think as we look at the deployment of capital going forward I think there's an opportunity for us to grow our share of the market in the long term. I'm sorry, could you just repeat the second part of the question, Verena?

The second part was to ask about CapEx needed to achieve these targets.

Look, I don't think -- look, unless there's, say, for example, some IP that we would like to acquire that we feel would differentiate us, I think the key thing is about leveraging our capability, our capacity, our knowledge, our current IP in service of solving the challenges that our customers are facing on their own sustainability journey. So I actually don't see it being a capital-intensive journey as we grow our market share in the sustainability domain. And Tom, any thoughts on that?

Yes. I think it's worth reflecting that traditionally, we've spent something approximating 1% of our revenue on CapEx, somewhere between 0.5% and 1%. And as we look forward into these opportunities, we don't see that number changing dramatically from that. As you said, there might be particular technologies that we need to invest in. But generally speaking, it will be still in that range of less than 1% of revenue.

Thank you, Chris and Tom. I have 2 questions from John Purtell of Macquarie. The first one is, how is Worley's total factored sales opportunities trending, i.e., across the group? Are they flat or down?

In terms of across -- in terms of -- so just -- sorry, repeat again, please. I'm very sorry, so...

All right. The question is, how is Worley's total factored sales opportunities trending across the group? The question is, up, flat or down?

No, the opportunity pipeline that we're looking into is beginning to trend up.

Great. The second question I have from John Purtell as well at Macquarie. His question is, is there a similar pivot in Worley's history that you can point to where Worley was able to successfully take advantage of a changing market?

Well, I think, I would say probably the most, the biggest pivot would be the one in 2000 -- and I look back in history, there's probably -- there's a couple. One is the pivot when Worley acquired Parsons E&C in 2004 and it pivoted from really doing -- having a global footprint, but on the smaller side of projects, to a global footprint and a capacity, a capability and a reputation for being able to deliver large, complex projects onshore and downstream. And similarly, when we moved and made the acquisition of Colt in Canada in 2007, it's a similar successful strategic pivot. And I think if I look back -- if I look at the acquisition of ECR, that is an incredibly powerful strategic pivot that is allowing us, I believe, to pivot more aggressively into the sustainability space. So I think 2004, 2007, strong, successful strategic pivots. They were through acquisition. But we've pivoted expertise that we came along with the ECR acquisition into new geographies and vice versa. And I think sustainability is really about pivoting and focusing our resource, our capability into solving what is a new set of challenges. So yes, that's how I would see it. I think we've got a good history of pivoting our organizations into new markets.

Well, thank you, Chris and Tom. I have posed all the questions to you that I've received. So I would like to say thank you to everybody, for those of you who put forward your questions and for your participation today. If there is a question that you would like to have addressed, please, by all means, reach out via our Investor Relations e-mail and the address is that [email protected]. And we will look to address those and come back to you. So thank you very much for joining us today.

Thanks, Verena, and thanks, everyone.