Worley Limited (WOR) Earnings Call Transcript & Summary

Hello to everyone joining us in Australia and around the world, and welcome to our Investor Day. I'm Verena Preston, Head of Investor Relations for Worley. Today, our Investor Day will provide the opportunity to learn more about our transformation and pathways for growth. Worley has a clear direction, strategy and ambition, which our leaders will talk through in greater detail. Before we begin, I encourage you to read through our disclaimer as shown here. As we always do, we'll start with a safety moment, which will be presented by John Tancsics from our Edmonton office. And today, you'll hear from Chris Ashton, our CEO; Mark Trueman, Executive Group Director for Growth; and our regional leaders, Karen Sobel and Mark Brantley. After the presentation, there will be opportunity for Q&A. Chris will be joined by, Tiernan O’Rourke, our CFO; and Charmaine Hopkins, who has held the interim CFO position. You can post your questions at any time via the chat field at the bottom of your screen, and I will pose your questions to Chris, Tiernan, and Charmaine directly. 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 presented here today is now available on the Worley website, and a recording of the event will be uploaded within 48 hours. So let's get started.

Thank you, Chair, and good morning, shareholders. Our safety moment that I'm proud to present is about mental health, which is something I'm particularly passionate about. According to reports, the new global health and economic circumstances of the past 18 months, poses the greatest threat to mental health since the second world war. And to give it some context, in England, prescriptions for antidepressants have reached the highest on record, with more than 6 million prescribed in the last 3 months, leading up to September 2020. In the U.S., there's been a tripling of anxiety and a quadrupling of depression amongst adults when compared to 2019. The CDC released a report showing that 40% of Americans are dealing with some form of anxiety and depression. The disruption over the past 18 months has negatively impacted the mental health of people and created new barriers for people already suffering from mental illness. A World Health Organization survey, which was conducted in mid-2020, clearly, showed that services for mental, neurological and substance use disorders had been significantly disrupted, and concerns around mental health and substance use have grown including concerns around suicidal ideation. Suicide rates have long been on the rise, and they may have worsened over the last 18 months. Globally, we still lose 1 person to suicide every 40 seconds. That's a sobering statistic. My brother and my niece represent the real people in these statistics, both suffered from anxiety and depression and did so alone and in silence, which is why I'm so passionate about mental health and wanting to make a change. But there's hope. At Worley, we're continually looking at how we can support mental health and wellbeing. Our life approach centers around how people connect with each other to stay safe and well. Life matters. It's our whole listed health and wellbeing program, covering mental, physical and social well-being. And we have a number of life resources available to support our people who might be struggling with their mental health and well-being and to encourage connection and help remove stigmas associated with mental illness. This includes our global assistance program, which provides confidential support to people and their families dealing with life's challenges. Our mental health for manager sessions in which nearly 1,000 of our leaders participated. They learned about common mental health issues and focus on communication skills, early identification of issues as well as the importance of maintaining their own self-care. And we have nearly 300 trained and experienced mental health champions of which I'm one, networked across 29 countries around the globe who can lend a confidential empathetic ear and help people find the professional resources they need. At Worley, we know people are at the heart of the solution. And we're working to educate, promote and support the well-being and reduce the stigma of mental illness, so no one has to feel alone or isolated because we know we are stronger together. Thank you.

Thanks, Verena, and John, and welcome, everyone to Worley's Investor Day. Today's presentation is about the future. We're going to share with you where we are in our journey and the direction in which we're taking our business, and we'll talk about how we're delivering a more sustainable world and why that's important, not just for us, but for communities all around the world. I hope you'll find it worthwhile. Before I begin, I want to acknowledge the traditional owners of the lands on which we meet, their unique ability to care for country and their deep spiritual connection to it. Here in Houston, the land I'm on, has long served as a site of meeting and exchange for indigenous peoples, specifically the Apache, Caddo, Comanche, Kiowa and Wichita Nations. In Australia, the Aboriginal and Torres Strait Islander peoples have cared for and maintained, for thousands of years, the lands where our business provides its services. I pay respect to the elders past, present and emerging. Their knowledge and wisdom has ensured the continuation of culture and traditional practices and extend that respect to other Aboriginal and Torres Strait Islander people present on the call today. As we move through today's programs, I want to leave you with 3 key messages: The first is that our strategy is delivering and is aligned with the investment decisions, which continued to gain momentum as the world shifts towards net zero. The second is that we are a global industry leader delivering solutions for our customers' complex challenges as they themselves bridge between 2 worlds, the traditional and the transformational. And as we continue to partner with them, we're well positioned to take advantage of the sustainability investment megatrend. And finally, we're delivering our own transformation. We're building on a strong foundation of traditional work while accelerating sustainability focused growth in line with our purpose and ambition. Our purpose is delivering a more sustainable world. It is owned by our people who were integral in its development. Together with our supporting values, it puts our solutions at the center of the planet's biggest sustainability challenges. We want to be known for helping to make the world more sustainable for generations to come. We know our biggest contribution to delivering a more sustainable world will be in the work we do for our customers both through traditional customers with whom we are already partnering and also emerging future customers who are looking for a partner who can help them move to a lower carbon future. Our customers respect and trust us to bring our passion, skills and beliefs to their most critical projects. Our ambition, which sets out the direction for our transformation and helps to navigate our path ahead is to be recognized globally as the leader in delivering sustainability solutions. So what does that Worley of the future look like? We have delivered some of the world's largest and most complex projects in the energy, chemicals and resource sectors over many decades. That means we have deep technical expertise to help our customers with their real challenges now and into the future. We're going to use our refining expertise to drive the development of biofuels, our mining expertise to ensure we have the battery power needed for the future electrification and our chemicals expertise for green ammonia, methanol and hydrogen and offshore oil and gas expertise for offshore renewables, for existing assets or wind farms. We're transforming into a high-value solutions provider enabled by knowledge, data, automation and technology, applying expertise and capability gained on traditional projects to deliver the projects required for us to get to net zero. We see that our projects of the future will be delivered in new ways and at unprecedented pace and scale. We're leveraging our strengths to realize our ambition. The markets we serve are transforming with governments, investors and companies all committing to move to net zero. The next decade presents a significant CapEx cycle requiring engineering and project delivery expertise. As a leader in the energy, chemicals and resource sectors, we have a strategy aligned with our customers' commitments, a strategy that places us at the center of future investment. Our people are our greatest assets and are integral to delivering our purpose and on our ambition. I'm often asked whether our people have the skills necessary to transition into new and emerging markets. And my answer is always the same. We have industry-leading talent with transferable skills and experience, and they're already working across 2 worlds, working across both through traditional and the sustainability world projects. Our traditional markets provide a strong foundation for growth with sustainability, providing a higher rate of future growth. We aspire to 75% of our revenue from sustainability-related business within 5 years. For many of our customers, the transition to a low-carbon future is a huge undertaking. Now more than ever, they need a trusted partner, one who understands their business and is like-minded in vision. They need innovation, new and different solutions, which haven't been seen and experienced across the range of technology required to tackle the world's sustainability challenges. And to keep up with the pace and scale to meet the net zero targets by 2050, they need a company with experience in delivering complex and challenging projects. We can partner, innovate and most importantly, deliver both on complex, traditional and sustainability projects for our customers. We can help new customers in emerging markets find their place in this new low carbon world too. These differentiators underpin our value proposition, and we remain focused on delivering long-term shareholder value. Our global earnings base and broad end markets provide diversification, and we are balanced in our exposure to customers' capital and operating spend. We're applying low-risk commercial models. We don't participate in material lump sum turnkey projects, and we won't in the future. We have the financial strength to support our growth initiatives and shareholder returns. Our leading positions in the sectors we serve and our long-term relationships with our customers means we're well positioned to benefit from the sustainability investment megatrend at more favorable margins. I'd now like to share with you more detail about our 5-year ambition. We set our 5-year ambition across 3 areas: our people, our portfolio and our planet. The knowledge, experience and capability of our people are key to delivering our purpose and ambition. We will continue to put safety first in everything we do and provide an inclusive environment. We will continue to invest in our people to build on the transferable skills they have. We work hard to find great people from diverse backgrounds all over the world, and we encourage our people to build great careers with us. Our portfolio articulates what our business will look like in 5 years in terms of sustainability-related work. We will accelerate our growth and aspire to drive 75% of our revenue from sustainability-related business. We're already making great progress to deliver on our vision from our portfolio. We currently have almost 1/3 of our work in sustainability and sustainability represents 50% of our factored sales pipeline. Digital, automation, data and technology will each play an increasingly important role in our future work. Our relationships will continue to evolve as our levels of collaborations increase with our customers and partners. Our ambition stage, we will expand the value we bring to our customers share in that value and ensure a higher return on investment. Our planet sets out our own commitment to net zero emissions. We'll share a video with you shortly, a bit later in the presentation, on our commitments. The elements of our ambition are measurable, and we look forward carrying our progress against this in the future. There's a lot going on in this graphic, so bear with me while I explain. We're building on a strong foundation, and our ambition will be realized across the energy, chemicals and resource markets we serve. We see our core markets shown in the middle, evolving as we support our customers with their own energy transition. At the same time, we're accelerating sustainability in our growth markets, which is shown on the right. Our sustainability pathways apply across the strategic portfolio in both our core and growth markets. To provide even greater focus on how we'll achieve our ambition, we've identified several priority initiatives across the strategic portfolio. And before I share these with you, I'd like to share how we identify them. For us, it starts with our customers. From targeted conversations with our customers, we understand their priorities and investments. And we've overlaid this information with what we see as the market opportunity and where we have a good platform for growth. In other words, for these initial priorities, we know the investment is accelerating. We know this aligns with our customers' priorities, and we already have a track record or platform to build from. We've identified the 9 accelerating growth areas you see here and a further 7 areas for continued growth focus. We've spoken about a number of these before, including hydrogen, carbon capture, offshore wind, and we continue to see significant momentum and increased investment in these areas. With some decarbonization opportunity to be more attractive, you need to aggregate customer demand and develop shared infrastructure. And this is where industrial hubs come into play. Creating a need for integrated cross-industry expertise to solve some of the challenges of how all this fits together, and this is where we excel. Another area is adapting existing assets. I recently had the opportunity to spend some time with our customers in Aberdeen, who are moving forward rapidly to address some of the challenge they face ahead. Things like adapting their existing assets through electrification, for example, utilizing offshore wind. We've also identified a number of growth areas such as environmental and social consulting, water and power networks that are each important to support development across industries. The 7 areas for continued growth focus, including copper, integrated gas, low carbon fuels are already well established within our business, but have been identified because of the increasing spend and growth potential. I'll share more about this in a little bit. Mark Trueman will also share more about the details on some of the areas a little later. But I wanted to highlight that, as we previously announced, we'll invest $100 million in organic growth over the next 3 years, and these are our initial areas of focus for that investment. However, it's important to note that we're not just looking at organic growth. We are looking at building and strengthening strategic partnerships and where it will drive a differentiate and accelerated growth, we will consider acquisitions. Before we move on to what is happening in our business and our markets, I'd like to touch on our ESG commitments and actions. As a business, we operate consistent with our purpose, and we reinforce a culture of actively -- acting lawfully, ethically and responsibly. We recently published our second unified modern slavery statement, further maturing our ethical due diligence approach for supply chains, and we continue to ensure the confidentiality, availability and integrity of information, and we have a robust cybersecurity program. We've achieved certification for our information security management system in line with ISO 27001. We use our responsible business assessment standard to inform on which projects we bid and execute, and we assess our involvement in carbon-intensive projects. This ensures risk elevated to the appropriate level of leadership within the business. I'd now like to share with you a video about some of the other actions we've taken and work we're doing towards delivering a more sustainable world. [Presentation]

As we turn to the business context and market outlook, I'd like to share what we're seeing and expecting this financial year and beyond. I'll then spend some time talking about the key investment trends and opportunities in our markets along with some of the projects we're winning. As we said at the full year results and at our recent AGM, we expect the current half to be aligned with recent performance, specifically the prior preceding period adjusted for our usual seasonality. However, we're seeing positive indicators for an improved performance in the second half of this financial year and beyond, in line with our expectations. Our global headcount has increased and our utilization continues to be on target. Our backlog has increased to $14.8 billion, up from $14.3 billion as of June '21. We continue to see a recovery of activity on our long-term contracts as well as key project awards. Our overall factored sales pipeline continues to grow with the sustainability proportion increased now to 50%. Now let's move to what's happening in the world and across the markets we serve. I was in Glasgow for COP 26 and took part in several events and spent a lot of time with our customers. The outcome from COP 26, while perhaps not ticking all the boxes some wanted, have clearly moved us forward on the commitment to achieving net zero by 2050. The conversations I had with our customers reaffirmed the strategic path we're on is the right one. We have a clear strategy, which places us at the center of the investment activity required and the areas in which our customers are investing. What was encouraging about these conversations is our customers aren't just talking about long-term plans or what needs to happen in 2 or 3 years' time. They're talking about on the ground, near-term actions they're already taking today. There's a clear signal from the investment community that this focus and ESG -- commitment to ESG investment is there. What's also clear is the challenge ahead for the energy, chemicals and resource industries to reach net zero by 2050 is immense. And while the challenge is immense, we broadly know what we need to do: electrify, improve efficiency, abate emissions, decarbonize power generations as well as the supply chains. I've already mentioned the investment required to achieve this is enormous. A recent UBS report estimated over the next 30 years, we could see a 4x increase in global energy investment compared with the last 30 years. This is even taking into consideration the decline in fossil fuel investment over the long range. The graph on the left here shows a range of possible future fuel mixes across the various scenarios produced by the IEA. Regardless of the path we take to get to net zero by mid-century, the opportunities across the markets we serve are vast. As I step through our markets, you'll hear more about the opportunities across all the areas in which we work, some of which you can see here. In low carbon energy, according to the IEA's latest gas market report, natural gas demand is forecast to grow in the near and medium term. The demand growth is primarily driven by countries planning to switch to cleaner sources of power generation. At COP 26 over 40 countries pledged to end the use of coal power, and many other countries have agreed to phase down. So while the use of natural gas or LNG in the short term will help make meaningful progress toward goals set by the Paris Agreement, it was also be produced in a more sustainable way, reducing fugitive methane emissions. This is a clear example of straddling 2 worlds, operating existing assets as efficiently as possible while also adjusting to emerging expectations around emissions and making infrastructure future-ready. We're working on projects which show carbon management technologies, including carbon capture utilization and storage and how they can significantly reduce emissions of the gas industry. We're also working on a number of projects combining carbon capture utilization and storage with gas in the production of blue hydrogen. Gas and LNG are areas of historical strength for us, and we're seeing a pipeline of projects we expect will be sanctioned soon. We were recently awarded a frame agreement to continue to provide services to Woodside's gas plants in Western Australia. This sees continuation of our relationship with Woodside that spans more than 30 years. Turning to clean energy. Regardless of which pathway the world takes to net zero, low carbon source of energy are set to benefit from accelerating investment. Enabling this will be significant investment in power networks and energy storage. We see international oil companies, many of whom are long-term customers shifting their portfolios to become international energy companies. And they are investing in areas such as renewables and low-carbon hydrogen. Nuclear is forecast to have a steady growth to 2040, with an increasing number of countries such as Canada, U.S., France and the U.K. as well as Eastern Europe, actively promoting nuclear projects. The nuclear industry continues to evolve, and there is a particular interest in the development of small modular reactors. In this space, we're currently working on a joint venture project between Ontario Power Generation and USNC power on Canada's first micro-modular nuclear reactor. We're seeing significant new wins and a growing sales pipeline, particularly in green hydrogen and offshore wind, positioning us for future growth. In offshore wind, we'll work on some cutting-edge technologies, particularly in the floating offshore wind space like the work with Hexicon using their twin wind technology. Moving on to conventional energy. The fossil fuels industry will have a big part to play to meet the net zero 2050 challenge. The last 18 months have seen major oil companies substantially enhance their long-term climate ambitions. More than 100 countries have signed the methane pledge, which aims to reduce methane emissions by 30% by 2030 over 2020 levels. And by 2050, the global energy system will look completely different to that of today. Demand for crude oil while reduced will not disappear by 2050, and new supply will be needed to replace decline in production and reserves. This is because oil will be required for materials such as plastics, fibers and various other products. It is estimated only about half of the supply needed by 2040 is guaranteed from fields already on stream. Underinvestment in the past few years has resulted in a predicted supply gap. CapEx investments are likely going to grow and new projects are expected to be sanctioned to bridge the supply gap. We expect to see a sustainability lens in the form of water and energy efficiency and carbon management across all projects going forward. An example of this is the work we're doing on the Marigold development for Anasuria Hibiscus in the U.K. We're repurposing an existing floating production storage and uploading facility with modern low emissions technology. This will support the U.K.'s current energy demands and progress towards Scotland's 2045 net zero targets. When assets finally reach end of life, it's important that they are to commission in a safe and sustainable way. An example of this is the work we're doing with Allseas to decommission large offshore assets in the North Sea. These platforms will be lifted and taken back to shore for recycling. Moving on to Chemicals. The chemicals market is historically resilient and has been shown to fundamentally grow at or above GDP. This trend is continued post pandemic with the sector experiencing strong demand and has rebounded above 2019 market levels. The capital investment cycle has commenced, and we are seeing opportunities increasing in our factored sales pipeline. Additionally, the industry has begun a journey to net zero with initiatives to decarbonize and is seeing unprecedented investment. This decarbonization will be multifaceted and occur over decades. We're providing solutions across the chemicals industries through the transition. We announced in November that we're constructing a specialty chemicals project on the U.S. Gulf Coast for Exxon Mobil. Having executed the engineering and procurement for the project, it's exciting to continue through to the construction phase, which is a great example of our full project execution capability. More broadly, with over 90 first-of-a-kind projects delivered, our ability to scale up solutions is unrivaled. We're also working with the Red Sea company on an integrated refinery and petrochemicals complex in Egypt. This facility will produce products, low sulfur products such as low sulfur fuel oil and polypropylene. Moving on to fuels. The fuels market is undergoing fundamental change with a peak in liquid fuel usage as the world travels less and electrifies. The shift to low carbon fuels will be critical both for existing transportation assets as well as hard to abate sectors like aviation. The clean skies for tomorrow coalition consists of airlines, airports and fuel companies that are pushing for a ramp-up to 10% sustainable aviation fuel global mandates for 2030. To achieve the 10% sustainable aviation fuel ambition, the world will need more than 45 biofuel plants by 2030 of the like -- of the projects like one we're working on with Shell producing low carbon fuels. That facility will be able to produce approximately 820,000 tonnes of low carbon fuels every year. Once it's built, it's expected to be the biggest in Europe to produce sustainable aviation fuel and renewable diesel from waste. And finally, let's turn to resources. Resources are fundamental to lifting the standard living across the globe. As GDP continues to grow, so too will consumption. The energy transition has purely increased demand of these commodities. Supply of base and broader energy transition metals is critical to the manufacture of renewables generation, transmission and storage infrastructure as well as electrical vehicle production. This will require significant capital investment in the resources industry if it's a key pace with demand. Our base metal subsector is predominantly underpinned by copper. We're involved in mining and processing all the way through the smelting and refining, and we're well positioned for future growth. We have a long history in iron-ore project design and delivery and are a key participant in the delivery of replacement capacity in Western Australia's iron ore sector. In mineral fertilizers, we have a unique position, both as a leading service provider and a technology developer. The projects we're working on are not just about increasing supply. Our resource customers are making commitments to reduce emissions and decarbonize their own supply chains, and we're working on some of the most exciting confidential projects to help them achieve this. We've talked about the increasing demand for battery materials such as lithium and we've seen significant growth in our factored sales pipeline in this space. And as a final case study, we recently announced an award to provide detailed feasibility study to A1 Lithium on their Paradox Lithium Bromine project in the U.S. I'd like now to hand over to Mark, who will take you through some of the growth areas in more detail. Mark, over to you.

Thanks, Chris, and good morning, everyone. Thanks for being with us today. I'm Mark Trueman, Worley's Executive Group Director for growth, speaking with you from Sydney in Australia. As we deliver our ambition, we will be building on our strong existing foundation across the energy, chemicals and resources markets. We're seeing our core markets evolve as we support our customers with the energy transition. And we're also accelerating our sustainability focused growth in emerging areas. In fact, many of our traditional customers are actually at the forefront of the energy transition and our leading capability, our leading capability in this area is adding a new depth to these partnerships that have been established over decades. Over the last 6 months, we've undertaken extensive analysis to identify initial areas for priority investment to accelerate our journey. Earlier, Chris shared our strategic portfolio and introduced our priority areas for growth. In FY '22, we expect to deploy around 1/3 of our proposed $100 million investment in organic growth in this area. The organic growth will target capability building through the development of new solutions, strategic hires, digital enablement, technology investment and training and development of our people. And to be clear, we will also continue to evaluate and strengthen strategic partnerships and consider acquisitions that bring differentiation and accelerated growth to expedite the delivery of our strategic intent and achieve scale. And just like our recent cost savings program, we will report on the organic investment program and the benefits that it generates. We will see these benefits over the next year and beyond in growth of our pipeline of opportunities, projects won and revenue growth in these targeted areas. I'd now like to share with you a selection of the initial priorities across our core and growth markets. The adaptation of current assets is about helping our customers to maximize the value and viability of their existing assets. A very large proportion of energy, chemicals and resource assets that are operating today will have an economic life beyond their owner's deadline for delivering their net zero commitments. This creates an opportunity for us to work with our customers to adapt to those assets. We estimate our addressable market is around $30 billion per annum in 2025, although I must note that this part of the market is very difficult to forecast. There are more than 200 projects in our pipeline that are due to be awarded this financial year alone, and we'll be building an extensive industrial asset knowledge and combined capabilities in electrification, environment and society, water modeling and risk management. A great example of working with our customers adapting existing assets is the work we're doing with Phillips 66 to convert its San Francisco refinery into a renewable fuels manufacturing facility. Once the conversion is completed, the facility is expected to be one of the largest in the world. Let's now turn to green hydrogen. Low carbon hydrogen is seen as a critical solution to decarbonize hard-to-abate industries. The low carbon hydrogen market has continued to strengthen on an almost daily basis. With 16 countries adopting a specific hydrogen strategy, an additional 27 countries preparing strategies and 24 countries providing subsidies to support low-carbon hydrogen projects. The market opportunity is rapidly increasing as a result. And as an example, over the last 12 months, the forecast European capacity by 2025 has increased over 10x based on announced projects alone according to data from Hydrogen Europe. In other words, this market is growing much faster than we predicted a year ago. Our customers tell us that we are the market leader in this sector today. And to give you an idea of our position in the market, we've worked on more than 100 hydrogen projects to date. And in FY '21, we won more than 8x the number of projects we secured in the previous year. We've seen a double-digit increase in our factored sales pipeline over the last 12 months. And importantly, project sizes are also increasing, with developments moving from concept into feed and then into execution. Worley has developed a number of new offerings into the hydrogen market, including a new project delivery platform based on digital design with world-class partners, standardized process blocks and deep supply chain collaboration. We've previously shared with you our work with Shell on its green hydrogen project at the Port of Rotterdam. This is a great example of the increasing scale of investment in projects in green hydrogen. Operations are scheduled to start by 2023 and will produce approximately 50,000 to 60,000 kilograms of hydrogen per day, making it one of the largest commercial green hydrogen production facilities in the world. The hydrogen produced will initially be used at the Shell refinery in furnace for partially decarbonization, that's -- pardon me, to partially decarbonize the production of fossil fuels and support the industrial use of hydrogen in the heavy transportation industry. We believe that this is the most advanced project globally to use a 200-megawatt electrolyzer block. Turning now to Carbon Capture, Utilization and Storage or CCUS. CCUS is a net zero enabler, given its role in decarbonizing hard to abate sectors like steel and cement, in reducing post combustion emissions and in producing low-carbon hydrogen. It can also deliver negative emissions with technologies such as direct air capture. CCUS is now probably the fastest moving of the emerging technologies to help with the energy transition. Adding impetus to that, the recent U.S. Infrastructure Bill had a significant amount of funding for CCUS initiatives. Our global addressable market size for CCUS opportunities is estimated at about $9 billion a year in 2025, and this market is expected to grow exponentially from 2030 onwards. Some analysts predict this growth may happen even sooner. The IEA Net Zero Emission 2050 scenario calls for CCUS capacity to be increased 190-fold. We have the scale and expertise to capitalize on this growth. And over the past year, our factored sales pipeline has increased by more than 30x across a diverse customer base, ranging from traditional oil and gas companies to utilities and government agencies in key markets globally. We were recently awarded our second direct air capture or DAC project with Oxy Low Carbon Ventures, a subsidiary of Occidental, and it's for a DAC to fuels facility. This is expected to be the first commercial scale project of its kind, producing up to 100 megaliters of ultra low carbon fuel each year. This fuel will be a new option for industries such as marine, air, rail and truck transportation. And this will allow for a reduction in customers' carbon-dioxide footprint without the need to modify their vehicle fleets. The next area I'd like to highlight today is water. Water used by our customers has become increasingly challenging, and the sustainability megatrend is only exacerbating that. Whether it is access to water without impacting communities, increasing recognition of the true economic cost of water or the technical challenge in process use of water. This is a commodity that is attracting more attention. Our water practice supports all our customer markets, including mining, fuels and low carbon energy as well as with industrial applications, including desalination. We estimate our addressable market for industrial water to be $15 billion per year in 2025, with an annual growth rate of about 8%. Our consulting group, Advisian, recently completed a study for the Gigastack Consortium in Humber, U.K., for water supply and treatment evaluation. We help select the most cost-effective water sourcing and treatment strategy for their green hydrogen development. We evaluated multiple sources and demonstrated the treated wastewater provided the lowest life cycle costs with high reliability. This is a simple example of the importance of water resources in enabling the energy transition. Plastics recovery is gaining momentum in response to community and ESG pressures on plastics waste. The world currently recycles less than 20% of the plastics that we produce with the remaining 80% ending up in landfills or oceans, creating an environmental problem of unprecedented dimensions. We have completed or are working on over 30 plastics recovery and recycling projects and are delivering solutions to our chemicals, customers challenges by replacing hydrocarbons feedstocks with biomass and waste, reducing environmental impact across the manufacturing process and using digital processes to improve industry efficiencies. This is an exciting market to be a part of as it undergoes considerable growth, whilst also helping to solve one of the world's most important and imminent waste processing needs. If our industry is going to have a meaningful impact on plastics waste, we need to drive innovation at commercial scale and work cohesively across the entire product life cycle. An example of this is the partnership we hold with Agilyx and INEOS. And this is a revolutionary project that leverages proprietary recycling technology to create new polymers from wasted polystyrene, which is a notoriously hard to recycle synthetic material. It's these types of projects, which really excite me. They leverage our unrivaled ability to develop and scale first-of-a-kind solutions and, more importantly, play a fundamental role in achieving our purpose of delivering a more sustainable world. Finally, to copper. Copper is fundamental to achieving the energy transition. And as the world's demand for copper increases, long-term copper supply faces multiple challenges. Copper deposits are progressively harder to find and develop with exploration activities yielding fewer mega discoveries, and known resources increasingly deeper and at lower grade. Not only is the copper of the future harder to source it must be developed at increased pace and in a more sustainable manner. For the world to meet its decarbonization ambitions, breakthrough technologies and project delivery solutions are required. Worley has the expertise needed to meet these challenges, especially in the underground mining environment. Worley is currently in either early stage project feasibility or late-stage management and construction for multiple large-scale underground mines across 5 continents, including the Hu’u copper project. These mines are destined to deliver new energy materials to feed the energy transition, and our role as domain and project delivery experts is recognized in bulk mining methods. These techniques are deemed critical if we are to fill the looming supply gap in years to come as mines either tradition from open pit to underground or miners seek to unlock new and deep ore bodies in new regions. So in summary, this is only a small sample of what -- of the work that Worley is doing and the areas that we are prioritizing. The energy transition is forecast to involve over USD 100 trillion in capital over the next 30 years. And as the world's largest service provider in the energy, chemicals and resources sector, Worley is uniquely positioned to participate in this. We have the best people, we have the best customer relationships. We have a clear strategy and are progressing at pace in pivoting our business. It's an exciting time for us. So thanks very much for your time. I'm now going to -- we're now going to hear from Karen and Mark who caught up with Verena recently to talk about what's happening in the regions. Thank you.

Karen and Mark. It's great to be with you both today. And a special welcome to you, Mark, to your first Investor Day in your new role as Group President of the EMEA and APAC regions. Before we turn to regional update, I know you both have been in Glasgow and at COP26, so I'd like to start with your key takeaways and thoughts from this event. Mark, let's start with you.

Thank you, Verena, and hello Karen. COP 26 was a great event to take part in. And clearly, there is a lot of energy and excitement around the topic of climate change. The commitments that are being made show signs of continued momentum. There is also a clear signal from the investment community that they remain focused and committed on ESG investment. And I do expect to see an increase in the capital flowing into the space. There is also an increasing discussion about the need for alignment between governments and industry on consistent policy. The task ahead is enormous and how we compress the schedule is a critical element, and we'll take the entire project delivery chain to work together. Karen, what are some of the takeaways you [ had? ]

Mark, great to see you again. Very similar to what you said, what struck me was a strong focus on the scale of the challenge and then also the importance of developing a more circular economy. I attended 1 session where the presenter data statistic that really stood out to me, and that was that only 8% of what the world produces is circular, the rest is disposed of. By comparison, 75% of the aluminum produced is still in circulation. Another point that came across is that while there is a big role for the energy, chemicals and resources industry in addressing the climate challenge, it's impacting all industries and we all have a role to play. One area that we are working on that was mentioned in our last Investor Day is direct air capture or DAC, as we call it, with Oxy Low Carbon Ventures. The DAC technology will help decarbonize many different types of industries as it pulls directly from the atmosphere. Mark, I think you have some examples as well.

Thanks, Karen. Another area where we are working to help the aviation industry reduce emissions in sustainable aviation fuels. We are working with Shell in the Netherlands on the development of low carbon fuel facility. Once built, this is expected to be one of the biggest facilities in Europe to produce sustainable aviation fuel and renewable diesel from waste.

Thanks for that. It's really interesting to think about the impact our projects are having on major industries like aviation. And you touched on 2 areas that are really gaining momentum, direct air capture and sustainable aviation fuel. So really interesting. Let's now turn to what's happening in your region, though. And starting with the focus on the last 6 months and what are the shifts that you've seen? Mark, I think I'll start with you again.

Thank you, Verena. I'd like to first highlight an area that we all have been dealing with, and that is COVID, and learning to move forward in our new normal. The safety and well-being of our people is our highest priority, and our teams have shown tremendous character and resilience while delivering consistent outcomes for our customers despite all of the challenges. I'm proud of how we've been able to work together to support our people and their families throughout the pandemic. I'm sure you're seeing similar, Karen, in the Americas.

Agreed, Mark. Without the safety and well-being of our people, nothing else matters. In the Americas, there was an impact from COVID, especially on our site-based work, but we seem to largely be through this. We're starting to see growth in both our core and sustainability markets. Our pipeline is growing, and we're winning some really interesting work.

Thanks, Karen. It's also been an exciting period for the business in EMEA and APAC. We're starting to see an increased activity in the market and investment planning across the sustainability pathways, which are positive indicators for our business. We have secured renewals and extensions to several of our major long-term contracts, including petroleum development, Oman's maintenance integrity contract, Qatar-Shell-GTL, and Saudi Aramco's offshore maintaining potential program. These awards are important in providing a solid baseload going forward. We're also seeing a shift in the work being more focused on sustainability with both our existing and our new customers. Our factored sales pipeline continues to build across all sectors, with almost half of this work related to sustainability. Karen, anything in addition to add?

Sure, Mark. In the Americas, we have a good baseload of offshore work. We are working on several significant projects, including the Chevron Ballymore subsea tieback project we announced earlier this year. We're also providing front-end engineering services for Shell's proposed Polaris carbon capture and storage project in Canada. This will capture carbon dioxide from their Scotford refinery complex. And as the other Mark, mentioned earlier, so this is Mark Trueman, we recently announced our second DAC project award with Oxy Low Carbon Ventures for DAC to fuels facility. It will be developed in BC, Canada by Oxy Low Carbon Ventures and Squamish Huron Clean Energy Corporation. It's expected to produce up to 100 million liters of ultra-low carbon fuel each year.

It is clear from what you've said that we are working across both traditional and sustainability projects. And the question that I'm often asked by investors is, can the engineering workforce make the transition? And what new skills do you need in order to be successful in this space? Back to you, Karen.

Absolutely, our people are making the transition and they're eager to participate. We're the examples where the transition is already happening, like our DAC projects. We have the capability internally to deliver these projects. The net stack, the DAC to fuels I mentioned earlier, will be delivered by our Canadian teams transitioning from other sectors. They'll work closely with our DAC team in Houston who will share their knowledge of the Permian DAC projects. The skills our people have are applicable and easily adapted to these new and complex projects. Another important piece we have underway is a company-wide initiative to train our workforce on the standard digital project delivery tools. These tools are critical to implementing energy transition projects at the pace and scale required to address climate change. Mark, what are your thoughts?

Thanks, Karen. I would like to highlight that Worley has already delivered over 2,500 energy transition projects, and we delivered these projects with our people. I can say our people have transferable skills. And we hear from our people that our purpose has really resonated with them, and they're highly motivated to deliver a more sustainable world. One of the key things we need to do is to build on our strong technical fundamentals, which are highly transferable. This includes both investment in the sustainability areas of focus and developing the general level of knowledge across the organization. We encourage innovation, and I have seen new ways of working that leverage agile methodologies, digital, automation, modularization and scalability.

One final question. What gives you the confidence that Worley will live up to its ambition of delivering a more sustainable world? Over to you first, Karen.

I am confident that we have what it takes to deliver our ambition. We have the right strategy, the right delivery capability and the best talent. The biggest contribution Worley can make to address climate change is providing our customers the solutions to complex sustainability challenge. One advantage we have is our breadth of industry experience, combined with delivery capability, which allows us to participate in the entire project life cycle. Our Advisian team plays a critical role in identifying and influencing early-stage projects for our clients, including those related to sustainability. Advisian were instrumental to securing the engineering contract for a residue upgrade project at Aramco's Ras Tanura refinery. The upgrade will convert low-value residue to higher-value products, such as jet fuel and ultra-low sulfur diesel. Our people are committed to Worley's purpose, and I am proud of the energy they bring and their dedication to our customers' energy transition journeys. How do you see it, Mark?

I agree, Karen. We have all the right ingredients needed to deliver a more sustainable world. We have a clear strategy and commitment to the transition. We are one of the few companies in the space that have clearly stated a net zero ambition a change position statement and a strategy to progress our ambition. We work with customers across the full project life cycle from concept development to decommissioning, restoration and remediation, including operations and maintenance.

Right, I'll summarize our conversation by saying we continue to see investment decisions gain momentum in line with sustainability expectations. Our purpose puts Worley and its people at the heart of future investment across the energy, chemicals and resources sector. We're very focused on continuing to deliver solutions for our customers' most complex challenges.

Thanks, Karen and Mark. It's been great to hear the stories of what's been happening in your regions.

Before we jump into Q&A, just to summarize, the 3 key messages today have been, firstly, our strategy is delivering and is aligned with investment decisions, which continue to gain momentum in line with the fundamental shift towards net zero. Secondly, we're a global industry leader delivering solutions for our customers, and we're well positioned to take advantage of the sustainability investment megatrend. And finally, we are delivering our transformation. We're building on a foundation of traditional work while accelerating sustainability focused growth in line with our purpose and ambition. I'm now joined by Tiernan O'Rourke and Charmaine Hopkins, and we look forward to answering some of the questions you may have. Verena, over to you.

Thank you, Chris. Thank you, everybody, for your questions. And before I start to address them and pose them to Chris and Charmaine and Tiernan. I will actually also just remind you, if you have any further questions, please continue to post them in the -- at the bottom of your screen, you will see a place that you can do so. I'll start actually, Chris, the first, -- I had a number of questions around clarification of the business outlook and particularly referring obviously to the business context information we provided. The first question really is from Adam Martin from Morgan Stanley and there are a few others that have similar. Can you discuss the outlook statement? When you talk about the first half of '22 being similar to the recent first half performances or the most recent second half of FY '21 performance. Can you comment there? Just to clarify that, please?

Yes. So what we're saying is the first half of FY '22, July 1 through to December 31 is what we're saying, it's in line. We're saying that's in line with the second half of FY '21, so Jan 1 through to June 30. What we're saying it's a similar performance across those 2 periods. What we're also saying is in the second half of FY '22, our business is seasonal. We expect the second half of FY '22 to show improved performance.

All right. Great. Thanks, Chris. Maybe just turning on to a question on the backlog. So -- and this is referring to the slide that was presented. How long do you think it will take to move your backlog to 50% of sustainability projects if this factored sales pipeline momentum continues and when will this happen without seeing your backlog go down, which is from Scot Ryall at Rimor?

So future factor pipeline, wins go into backlog, backlog goes into aggregated revenue, and it follows that process. I think the question you asked is a good one, it's a difficult one to answer because the backlog is over on the future pipeline of work have different time periods over which the work if one would be executed. So the execution period in back -- if it went in backlog would be -- can be various time frames. But if you think about where we were in our last we reported, I think, 47% of our future pipeline was in sustainability, and we're now saying 50%. 32% of our revenue in FY '21 was sustainability. And so we expect the backlog to the future pipeline to roll into it. It's difficult to say when exactly we'll hit 50%. But as I said, we do aspire by 2020 -- in 5 years to have 75% of our revenue from the sustainability space. And I think it's really important to clarify, we also expect overall top line growth. So we don't expect the traditional markets in which we're operating to decline. We expect there's -- we believe there's opportunity for growth there across the transition, but we also see an opportunity for accelerated growth in the sustainability space. So we expect it to increase half-on-half, but it's difficult to say at this point when we reach 50%.

Great. Maybe a little bit more color on the backlog. A question from Richard Johnson of Jefferies saying as far as the order book, is the book-to-bill ratio still above 1? Are we winning more than we're burning?

Yes. I mean the answer is yes. We are winning more work than we're burning.

All right. Great. And maybe just to round out that section, I think you've answered it, but just to reclarify again because -- do you actually see that the second half of this financial year will be improvement on the first half and FY '22 as a total year, improved performance on the previous year?

The answer's yes, in both of those, I expect the half 2 of '22 to be better than half 1. And in aggregate, the -- we expect, obviously, with that to be an improvement overall over FY '21.

Okay. Great. Why don't you move to a question that I have on the sector update. This is from Adam Martin of Morgan Stanley. And the question is, how is the chemicals business recovering? Allies North America's revenue was down the most in the last 12 months. Is this turning around and is access to sites improving?

Look, I think FY '21, we've got to recognize it was anomalous in its shape and the nature of the challenges we faced. And specific to your question around site access, it was impacted. Obviously, we had the down and the workforce in certain sites where the customers just slowed down investment. But when it comes to chemicals in North America, our Chemicals business globally, we are seeing a return. We're seeing a lot of investment in this space from our customers, and I expect a site access opens up, and it is opening up that we'll see the return to work of our workforce in that space.

All right. Great. It might be good to just again continue along the same vein. And this is a question from Dan Levy of Citi. To say, can you talk us through the key positive indicators you're seeing that give you confidence that the second half will significantly be better than the first half in terms of earnings, just any positive indicators, Chris?

If you look at the number of awards we've announced, and we announced only a small portion of the awards that we win. So the awards are up. If we look at our backlog, it's up. If we just look at subjectively the conversations we're having with our customers, the confidence is returning, and investment decisions are returning. So -- but backlog is up. The awards that we've announced are up, projects that were deferred that we've already been awarded in FY '21 have come back and they've started again. Long-term contracts that we have with our customers, the revenues, historical revenues that we had dosed through those contracts that came down. They begin to ramp up again. So a lot of indicators, whether it's in the energy sector, traditional or transformational or energy transition space, the chemical side or the resource side. We've got some really exciting project opportunities and project work that we're doing in the iron ore space, in the copper space and in some of the rare earth space such as lithium, some really exciting projects in that space. So lots of indicators giving me confidence that the market is showing signs of the rebound that you would expect.

Great. Thanks, Chris. Well, to turn to a couple of questions on our ambition. And this is from Richard Johnson at Jefferies. The question is regarding the target of 75% of your revenue from sustainability in 5 years, does that mean that your traditional business will shrink in absolute terms? Or do you think the traditional business can grow, albeit modestly, but with faster growth from sustainability on the top -- on top of that?

So I see overall that opportunity to grow our traditional business. What we're saying is the rate of growth in our traditional business will be exceeded by the opportunity and the rate of growth in the sustainability space. So in 5 years' time, we still see the traditional markets being a critically important part of our business. Our customers are still investing in this space, and we'll help them deliver the capital to be deployed. But what we're saying is the sustainability space will -- the sustainability market will offer opportunity -- growth opportunity at a rate greater. Bear in mind, even traditional oil and gas facilities will have a sustainability overlay in order for our customers to retain their social license to operate when they invest in what was traditional -- or considered traditional oil and gas facility. There will be consideration of water usage, energy efficiency, futures of emissions, carbon emissions. So if you looking at it through the lens of sustainability, even the more traditional markets that we consider will have a sustainability overlay. But in essence, to answer your question, I expect growth in the traditional markets as well as growth in the sustainability markets going forward.

All right. Great. So staying with the ambition, Chris. Another question from Nathan Reilly at UBS. Regarding what is the technology development strategy and how will M&A support this strategy?

Well, Worley, as always had a technology in the sulfur space. And when we integrated the Jacobs ECR base with Comprimo and Chemetics. We have an incredibly strong technology position in the sulfur space. I do believe technology offers an opportunity to differentiate us going forward. And there's different ways that we can get access to that technology. We can further develop the technologies we've got, and we're doing that. We can partner with technology providers, and we're doing that, and I expect we'll do more of that. We have always said there are 3 pathways to growth organic, partnering and acquisition. And if there's a technology opportunity that would be a sound base for acquisition that helped us accelerate the delivery of our strategy, then we'll consider it. So all 3 pathways are available to us in the technology space. And the first 2, we're already in. We're already developing organically our technology capability. We're already partnered with companies and the opportunity to acquire technology where it makes sense is something that we'll absolutely consider if it helps us drive the delivery of our strategy.

Right. Great. Question, again, still related to our ambition from Saul Kavonic at Crédit Suisse. Can you comment on the margins in sustainability theme segments, especially as workflows moves from consulting to projects and how this compares to legacy energy?

Well, I think it's a good question because it gives me an opportunity to address often maybe a misconception of what the energy transition is about. And the energy transition is often perceived as around onshore solar, onshore wind, and they are very, very simple. They're commoditized in many ways, unless you get the really large onshore solar percentage where the logistics are complex. But when we start talking about hydrogen, and carbon capture and industrial hubs, offshore wind. These are very complex projects, and they command and the customers expect the very best of our resource into that space. And that's where when we leverage our highly -- our very strong, highly capable resource we can leverage it into that space. And with that comes the improved margin. Now that's not just in the consulting space, but it moves through these complex projects. They want the very best people on those projects to manage the natural risk associated with them, and that presents an opportunity for us to improve margin.

Okay. A follow-up question on that, Chris, is again from Saul Kavonic at Credit Suisse. When is the earliest that we can expect to see the amazing growth opportunities you've outlined and how they will translate into commensurate EBITDA growth?

Well, look, as I've said, look, if we look -- if we consider the overall FY '22, we've talked about the first half. We expect said we believe we'll -- or we expect an improvement in the second half. We talked about our backlog growing. We talk about our future factored sales pipeline and the sustainability being at 50%. I think there's a number of indicators there Saul, which would tells you and it certainly tells me that we're going to see continued revenue growth opportunity moving forward in this space. I spent 2 weeks -- 2.5 weeks in the U.K., COP 26, then in Aberdeen, then in London, meeting a number of our customers, both emerging customers, but also our big established customers. They're moving. Investment is happening. It's here and now it's today. They've got long-term investment plans as they pivot toward their own net 0 commitments, but the investments there. And I say with the future pipeline of factor pipeline of 50%, our backlog up, I'm confident. I believe that we'll see that flow through into our second half results and beyond.

All right. Great. I am now going to move to a few questions around the growth areas. Some of these are a little bit more detailed, but let's just run through these ones. So Adam Martin from Morgan Stanley asked what is likely to grow quicker in terms of revenue for Worley, hydrogen or CCUS, particularly in relation to the years 2023 to 2025?

This is my opinion. Our opinion, I think in the immediate term, carbon capture sequestration projects are happening now. If you look at some of the major ones announced in the U.K. BP Net Zero Teesside, if you look at Drax, the carbon capture project they've got for their biofuels facility. You look at announcements that have been made in different parts of the world, at Santos, what they're doing in Australia. So certainly, I think carbon capture is here and now. it's occurring. Hydrogen, we're doing a huge number of studies for various customers around the world in the space of hydrogen. And look, we've got some exciting opportunities removed from the consulting phase or the early design phase into the delivery phase with some of our major customers. So the customers are committing here and now, investing here and now in carbon capture. If you look at what we're doing with Occidental with the Direct Air Capture there, which is remains for me, one of the most exciting opportunities that I believe Worley has ever been involved with in that Direct Air Capture, an incredible aligned relationship with OXY. But then also in other parts with the more traditional carbon capture. And then in the hydrogen, investments are being made. If you look at some of the statements made by Andrew Forrest in Fortescue future industry. Some of the public statements he's made around his commitment to driving FFI forward in this space. I think hydrogen will follow closely. I think it's scale, we'll be able to get the economics to hydrogen where it's an attractive alternative as a blending fuel for gas, as an example, and the same way as blending sustainable aviation fuels with traditional aviation fuels to reduce carbon emission. So I think both of them are very attractive growth opportunities. But I can say for sure, because we're involved in both carbon capture is here and now. And I would say hydrogen is just slightly behind that in its -- in the scale at which will be applied.

All right. Great. Just another question on hydrogen. This is from Dan Butcher, CLSA. You seem to be stepping up more than your fair share of hydrogen feasibility and early stage projects. What percentage market share of hydrogen projects do you have? Or after another way, what percentage of projects that you bid on, do you win?

It's difficult to say what percentage of the market, that's a difficult question because it's changing rapidly. I would say we have a disproportionately high rate of win. And Mark Trueman, Mark is Head of our growth. You heard from Mark earlier, Maybe, Mark, have you got a comment on what you think that could be in terms of the wins on hydrogen.

I don't have the number, Chris, but to your point, we're winning, and I think as Dan said, we are winning more than our fair share. It's an area where we have particular expertise, and it's in particular relationships with the right customers as well.

Yes. Yes. Look, I think what's interesting is some of the large players looking at hydrogen, they're looking at opportunities around the world because one of the challenges is renewable, if you want to be green, higher regenerative renewable energy. It's low-cost renewable energy and where are the sources -- so some of the customers are scouring the world. And one of the things that we bring is we're in 49 countries around the world. There's probably not a location where a customer is considering a hydrogen facility while we don't have local on-the-ground knowledge of what it takes to deliver a project, and that differentiates us. So we've got the central knowledge, the technical capability. We have the geographic spread that the customers are looking for, and we have the relationships.

All right. Great. Let me just to just follow on from that regarding competitors as well. What do you see as the competitor environment? And the specific question is from Shaurya Visen from Goldman Sachs. So peer commentary on term -- on near-term outlook is what he would like to ask. Could you help provide some more color on your near-term guidance? Some of your peers, most notably Wood Group has lowered guidance given the tough market conditions? Are you also seeing that maybe make some commentary as well on the competitive environment?

Well, look, we don't give guidance. But as I've said, if you look at the performance in the first half of this financial year, we believe it will be in line with the performance in the second half of FY '21. We believe the second half performance of the organization will be better than the first half. So I can't comment on what our competitors do, what Wood does or any of the others. But look, we're in really good shape. As an organization, we're in really good shape. If you look at some of the challenge of our competitors, when they did big lump sum turnkey projects, they got themselves into problems. They went into a mode where they had to really sort themselves out. We haven't been there. We don't do those risky projects. So we've got really good shape operationally. We've got a good balance sheet and the market opportunities that we are pursuing are growing. I think there's a couple of things that differentiate. One is I don't think there's a competitor out there who has such a well and clearly articulated strategic pivot relative to ourselves. If you look at competition, let's talk about relative competition, competition 5 years ago compared to today. There's still competition today and there always will be. And competition is a good thing because it keeps us on our toes, it keeps us moving forward, it keeps -- helps us to fine-tune what we do for our customers and keeps us really turned on what we should win and what we should pursue and maybe what we don't pursue. But competition is always there. Competition is still there today. But if you look at the relative number of competitors today relative to 3 years ago, 5 years ago, 10 years ago, there's a lot less. There's no more Amec. There's no more Foster Wheeler. There's no more Jacobs ECR. There's no more SNC. So yes, there's competition. We believe, I believe we have a very well-articulated strategy. I believe we have strong differentiators, and we've shared that today. And I think we're well positioned for future growth. And I can't say, I can't comment on what my counterpart is saying about their markets, but -- we believe the second half -- we're seeing the second half will be stronger than the first half, and our first half is in line with the recent other prior cores or the most recent period in the second -- which is the second half of FY '21.

Okay. Great. Chris, 2 questions, and I'll pose to you. Regarding the growth that we're seeing and what is the basis that we're talking about for growth, so really back on the growth areas. The question is from Mark Samter at MST Marquee. There are a lot of forecasts in the presentation from other providers, but you have a consulting business and sit inside the tent. Do you have a strong view on what are the winning sources and how far we're deviating off the 2050 net 0 plan?

Well, if you look at what came out of COP 26, I would say that the path we're on is to 1.8 degrees, not 1.5. So there's your answer to the second half of your question, that's a stated outcome coming from COP 26. Look, we have internal resource, and we have a consulting business we look to the markets. But we feel -- what's important is actually to also bring in third-party reference. And really, that's what we focus on. We feel it adds a degree of independent validation to what we're saying if we use third-party sources of information. And that's why we do. But yes, look, we've got our own internal consulting business. We calibrate what we're hearing and what we're reading from third-party sources against our own internal data but we use third-party source because it gives independent validation. That's the reason.

And Chris, again, just related to how we are seeing the growth in our revenue and also sustainability and in our sales pipeline. There's a question from Dan Butcher at CLSA. And it says on the FY '21 presentation gave the energy transition and circular economy, share of revenue at 4.3% and our factored sales pipeline at 25% in June '21, up from 11% in January '21. What is the energy transition and circular economy in your October '21 factored sales pipeline?

I can't answer that question at detail. We can get back to you, I'm not one on that. But that's not a level of detail I keep at hand, but we can certainly get back to you on that.

Yes. And can I just add as well that we will report under the sustainability pathways going forward, and we'll restate the comparatives, so you have that, and that will be provided at half year as well, so you can track them as well. All right. So please continue to put in your questions. And I just want to -- just double -- just having a look to see, there's a couple more that are coming in now. So they may not be ordered as I was trying to do beforehand. But the first question that I can see is from John Purtell, Macquarie. It's a question that says for Charmaine. Can you comment on the first half cash flow performance and comfort with the balance sheet? First half cash is typically seasonally weaker than the second half.

So in relation to cash, we continue to have a disciplined and focused approach in terms of ensuring that time sheets getting on time, we invoice our customers on time, and we follow up our customers to get paid in accordance with our contracted terms. So the business continues to have a key focus on cash and the expectation is that cash realization in the first half will be consistent with what we've seen historically.

Right. Great. Another question which relates to headcount increase, from Richard Johnson at Jefferies. I'll just put it to you, Chris, can you provide an indication in which geographies and sectors the headcount increases are after the...

Yes. Look, certainly, and it relates to a question asked earlier, we are seeing site access increase in North America. So we are seeing headcount increase in North America as that site accessing opens up, and we can get people back to working. It's the turnaround work and the turnaround season typically is a time when we see increased activity in the field. And obviously, we'll give more -- a lot more information on headcount and et cetera, in the half year results in February.

Okay. Great. I will ask a couple -- just a couple of other questions that are typically ones that we get asked. And I did see one that was relating to which projects will we stop doing. So maybe if you could comment, Chris, on the Worley of the future, what are the kinds of projects that we will be doing and which will we stop doing?

Well, we have a process that we call the responsible business assessment process. And part of that, we look at a consideration is carbon intensity. And we will work on a range of -- we'll work -- if we look at the energy transition and sustainability, we're going to work on a range of projects. But we have a very rigorous process, which escalates depending on the level of carbon intensity. But if you look at -- for example, if you look at new coal, thermal coal in the future, look, you've got a number of companies, 40 countries have committed to phasing it out, others to phasing it down. I don't see that a conventional thermal coal project is something that we would get a greenfield new build thermal conventional coal project is something that we would get involved with as an example.

Thanks, Chris. Just asking another question that we received in as well from Stephane Andre from Alphinity. It's clear what you are focusing on, but what type of work in -- sorry, I just did that one. So this is from John Purtell at Macquarie. What is Worley seeing regarding COVID recovery, particularly in the chemicals refinery space? I know you've touched on before. I think back to normal in the U.S.? And are you seeing any other particular concerns in other geographies?

We're seeing investment return in chemicals. As I've said earlier, we're seeing investment return into refining, but from a sustainable fuels perspective. So we're looking at what we're doing with Shell, we're looking at what we're doing with Phillips 66. These are very large complex projects. And we're talking -- we're in conversations, discussions with a number of our customers where they are looking at converting existing refineries to once that will be biofuels, sustainable aviation fuels, renewable diesel, renewable gasoline facilities. So in the refining market in the traditional sense, you're not going to see the same kind of investment or investment in refined in the conventional sense, but sustainable fuels and modifications, conversions or even perhaps even new builds such as the one we're talking about that we announced with Shell. They will -- we see continued interest in investment in that space. And in fact, we're talking with customers on multiple fronts around project -- on project around the world in that space. In terms of COVID, I think if we think of the Delta variant, I think we've worked our way through that. I think no matter what the variant is that we're talking about, the world has learned to adapt its work methodologies, it's working processes. And I think the consumer has adjusted to living in a world where COVID moves from being a pandemic to something that's endemic and so I actually don't see that the consumer demand for the products that are the final products in the energy chemical resource space will be impacted in the way it was in March, really March, April 20 is the first wave of COVID really had an economic impact. So look, I think the world is managed and learned to live with it. I think customers have learned to live with it. I think customers recognize that there's going to be long-term growth opportunity and they're making decisions in light of that. But look, the impact of Omicron, then let's see. I don't think anyone really knows at the moment.

Okay. Great. Thanks, Chris. Maybe just a question as well and Worley's traditional strength is in hydrocarbon. From where -- where is Worley getting its expertise in solar and wind energy?

Well, we've been doing solar for many, many years. Maybe not at the scale that we're talking about that became available recently, but we've been doing solar for years. We've got an expertise -- we've built one of the largest solar fields in the world in the Middle East. We've done onshore wind. We've been operating onshore wind facilities in Australia since about 2011, yes or before. So we've been involved in solar and wind for many, many years. Our expertise was in Spain, in Madrid, it's in California. And on the wind side, we've been involved in wind -- again, I mean, I first got involved in the -- what is now our Worley Power Services in Australia in wind in about 2011, when we acquired the wind assets or the operation of the wind assets from Transfield. So look, it's actually not something new to us. I think the difference is what we're experiencing now is the scale of these projects is something that's different. And one thing that Worley is good at is large, complex, logistically challenging projects and some of these large onshore or these large solar fields are very complex from a logistics perspective. When it moves to offshore, complex, floating, even more complex but it's about aggregating the skills that we already have to deliver the projects.

Great. Thanks, Chris. I have another question, which relates back to the sectors again. And this is from John Purtell at Macquarie. He is asking, are you seeing a pickup in resources revenues, noting that Worley's revenues in Resources segment was down 21% last year?

Sorry, what...

The revenues -- Chris, it's about the resources sector. And are you seeing a pickup in resources revenues, noting that the revenue in that -- in the Resources segment was down 21% last?

[Technical Difficulty] because a couple of really big iron ore projects came to a close. So what we're seeing is continued investment. We've got great relationships with the big iron ore producers. We're seeing some of the projects that we've been working on starting to come down, but we're in discussions with those iron ore producers around new projects in the Phase 2 of some of the investment that we're completing Phase 1 on moving into the next phase. And these are significant capital investments that will be made and moving forward on them. So look, I think the '20 to '21 drop was really about big projects coming off rather than the underlying trend available to us, John.

Great. And thank you, everyone, by the way, for continuing to send such great questions in. There are 2 that really -- I'll ask them both. But they are 2 that relate to the -- maybe the traditional business. And the first one -- and I'm sorry, I just cannot see the -- your first name, but -- so from a super investment. But the question is, how are you positioning if at all for the scenario where investment into legacy oil and gas projects does not grow up to 2025 and instead, supply falls and the gas prices simply just rise. So what is the net impact to Worley?

Well, let's talk about the high-level scenario. Even in the IEA's most aggressive scenario, 20 million barrels a day of oil are still needed by 2050. And if you look at all of the other scenarios, yes, it's much higher than that. I don't think that we're going to see a slowdown in investment by 2025. I think it's going to go beyond that. What I think you're going to see is a shift in the shape and nature of investment. I think customers will go for a lower capital spend per project with a shorter to market time line, so they can monetize the assets more quickly. But look, 2025, that's around about 5 years' time when we're talking about a large portion of our business coming from sustainability. But we think that there's still opportunity to grow in what you're calling the traditional space. However, it will grow at a rate lower than the growth opportunity -- growth rate opportunity in the sustainability space. So I don't think that we're going to see an aggressive drop-off because it's -- even in the most aggressive IEA scenario, there's still 20 million barrels of oil needed a day in 2050. And so look, I think it's -- and gas is going to be a critical component of the transition going forward. So if you look at gas prices now and the spot market, long-term price of gas. Gas is going to see a major -- play a major role going forward. And in fact, that's what we're hearing from our customers. And gas will displace coal. So countries are looking for gas to displace the much higher intensity coal. And that's an opportunity that we're seeing, and that's what we're hearing from our customers.

Great. A little nuance as well on -- the question is from Lisa Yang, GRC. On traditional oil and gas CapEx, have you seen a difference in CapEx appetite between the NOCs and the IOCs? And what is our exposure? And what is your exposure to the NOCs and -- versus the IOCs?

Well, we work with most of the NOCs, if you look at the Middle East, in Asia. We work with -- I say most of them in the Middle East, if not all of them, and a good number of them in Asia. Look, when you've got a petro-dollar economy, your relationship to the importance of oil or gas is different to when you are an independent oil company looking at things purely around the revenue and profitability associated with that opportunity. So I think the NOCs look at it from a macroeconomic perspective, as opposed to the IOCs looking at it from an opportunistic and opportunity-by-opportunity perspective. So much more about the return on investment or return on the capital they deploy as opposed to an NOC. It's really about getting petro dollars into the economy to service the broader economic needs of the jurisdictions such as Saudi or Kuwait or Qatar, or say, Malaysia or Petronas, those ones. So there's different drivers between the IOCs and the NOCs. But I think what's exciting is if you look in the Emirates and you look in Saudi, the NOCs are making real commitments also to the transition. You look at the commitment that Saudi Aramco is making to hydrogen and to renewables, it's quite immense. But equally, they need to fund that from the generation of revenues and cash flow from the sale of traditional oil and gas products. In terms of our exposure, we do a lot of work with both of them.

Thanks, Chris. Scott Ryall of Rimor is asking as well about the factored sales pipeline. So looking at your factored sales pipeline, what is Worley's track record on estimating the likelihood of winning? And does Worley retrospectively interrogate projects where it's viewed the prospect of winning as high, but did not win?

So we have a very rigorous process wherein we identify what we call the go, i.e., what is the likelihood of this project going north to 100% and then what is the likelihood of winning it. And we have categories and we have a very rigorous process that allows us to assess the opportunity, and we take the go from the get, we multiply them together to get a go-get. And that wait and that's what we call the factored pipeline, yes. And we have a -- I think we've got a good track record of that, and we've got Mark who is responsible for the growth side of the business. And Mark is intimately familiar with this. And Mark maybe want to comment on how we view our performance against the fact that go gets?

Yes. Sure, Chris. As Chris summarized pretty well the macro process that we have now, we run a very sophisticated database around this, and it links into our -- all the way through into our finance system. We monitor it on a daily basis. And as the fact that we put a risk on the go and the get for every project, means that some of them, yes, we don't win them. and some of them that we weren't expecting to win that we do win. And we monitor that. And obviously, I think Chris said earlier on, we look at the pipeline, that then flows into backlog and then that flows into revenue, and we monitor that in an increasingly sophisticated way as we mature the data that we have.

Yes. And let me add to that. We use that process for budgeting. So obviously we have confirmed backlog, so we confirmed how that backlog is burned across the financial year. We then look at the opportunity pipeline and the go get, and we overlay one against the other, and that helps us as a starting point for the budget. So the process Mark refers to from pipeline to backlog to revenue is a critical part of our budgeting process. So as you would imagine, we take it very seriously. Obviously, discontinuity such as COVID upset things but didn't COVID upset everyone around the world in some ways, so -- but a very rigorous process we've got.

All right. Great, with this conversation live, I would -- there's a great conversation going and follow-up questions. So Chris, I do have to take you back to the IOC question again. This is from Joe McCarthy at Elston, just seeking some information on that. Any customer feedback from the IOCs and why there's not been a material return in investment in newer replacement projects despite the strong recovery in prices?

Look, I don't have insight to that. That's a question you'd have to pose to the operators. One of the challenges that occurred for a number of years and anomaly was the cost to deliver a project even when -- if you go back to 2013, oil was $190, $100 a barrel, and projects weren't getting the economic return that they expected because there was so much inefficiency in how they went about that. I think the operator -- the industry has learned a lot from that. But specific return on investment on a project that would have to be pointed toward our customers.

Great. Dan Butcher of CLSA has asked about -- you mentioned that upstream oil and gas will move towards short cycle investment, which implies shale. Worley implied it gets 1% of revenue from shale once. Any plans to move into shale services like Wood Group did back in the first half of 2010? I think I don't know if that's wrong.

Shale is a really interesting play. And the shale plays are being very conservative at the moment. The free cash flows they're generating, they're not going into expansive expansion or expansion of their production. They're using it to pay down their debt. So we're not -- what I'm talking -- when I'm talking to, we're not seeing some of the smaller shale or the classic shale plays that we often think of expanding their production. But there are big companies now moving in. Big companies now moving into the shale play, and we'll work with the big companies. If you look at what we're doing with OXY and the Direct Air Capture, that's all in the Permian Basin. If you look at some of the major plays in the consolidation of the shale play in the U.S., we'll absolutely work with those players. Yes.

All right. Great. This is a follow-up question as well on the discussion around the factored sales pipeline. It's from Joe McCarthy at Elston. The factored pipeline for projects and sustainability has been disproportionately large for some time, but seemingly slow in terms of conversion to revenue. Any customer feedback around what might be holding them back?

I'm not sure it's been slow in conversion. I'm not sure I would necessarily support that perception. Look, I think that there's probably a move towards the sustainability, if you look at like renewable fuels or hydrogen or carbon capture, I'd say it's moving more quickly than it did. But I don't think it was necessarily slow. I think it was just a natural emergence of the studies, the work that the customers have been doing. But I also think things like COP 26, the sort of like 75% of the world's economies have now committed to net-zero 2050. And so what we're doing is we're removing degrees of uncertainty that once perhaps held back the investment in this space. So I actually think it's probably just more about the nature of where the investment evaluation is rather than necessarily a slow rather just maybe a hesitancy. I think it's just a natural flow of the study work that has been considered by our customers. But if you look at some of the commitments made, you look at what Shell is doing in hydrogen, what Shell is doing in renewable, sustainable aviation fuels, what Phillips is doing, what BP is doing in their space with Net Zero Humber, Net Zero Teesside with their carbon capture. These big players are moving. And that's what we're hearing internally from. And we're actually bidding work to them. We're bidding work in this space. So I think it's actually what you'll see is a higher profile of this work coming to the surface. If you look at some of the wins that we've announced, I think that's evidence of that shift.

Yes. No, that sounds good. I think another along that same bank, Chris, from Adam Martin at Morgan Stanley. He's asking what is likely to grow quicker in terms of revenue for Worley? Hydrogen or CCUS, particularly in relation to years 2023 to 2025?

I think that was a question I think I answered earlier as well, maybe by someone else and look, I think they both got a great opportunity, but I would say carbon capture is happening here now, whether it's the Direct Air Capture or the more conventional that we think of. They're here and now. Yes, look at the project, Acorn, Drax in the U.K., Net Zero Teesside, Humber side investment, just an example, you talk about ExxonMobil and the industrial carbon capture hub in the ship channel in the U.S., you look Wheatstone. So carbon capture is here now, it exists, it will give an immediate benefit of very -- relatively speaking a near-term benefit to carbon emission reductions. Hydrogen, we're doing a lot of work in hydrogen, both in the study phase, and we're moving towards the delivery phase with some of our major customers. So I think in the time frame you're talking about, I would say, carbon capture, but following up very quickly behind that, you're going to see hydrogen, green and blue.

Okay, great. And maybe just a slight clarification on this, and I think you might have answered this one already, Chris. I just wanted to reiterate. So John Purtell from Macquarie is asking in terms of -- in broad terms, what sort of market share does Worley have in hydrogen and carbon capture or offshore wind? And they -- would like to get a sense of what's a realistic share of addressable markets that may be achievable for Worley in these spaces?

I would say if we look at hydrogen and where the work is where in its development life cycle, I would say that we have a higher share than any of our competitors. And Mark, maybe you can comment on that. But for offshore wind, offshore wind is an interesting one, offshore wind, depending on the contracting model, that's used. Some of that may not be of interest to us. But if we look at hydrogen, I think we've got more than our fair share, carbon capture. If you look at some of the announcements have been made by OXY with the Direct Air Capture with the Permian and also the Direct Air Capture fuels project in British Columbia. I look at what we're doing with OXY, what we're doing in the CCUS space with our customers globally. I think we've got a really good position for -- relative to the opportunities that are out there now and going forward. And Mark, do you want to comment on market share percentages, maybe you can give a better answer than me. It's a difficult one, John, just because of the nature of the emerging market. But I will say, I believe we've got more than our fair share in that space -- in those spaces.

Yes. Look, Chris, I don't think we've ever declared a quantitative market share ever. And I think it's really hard. In fact, it's impossible to be able to work out what it is in hydrogen and CCUS, we have more than our fair share. We're a clear leader. I would say, in offshore wind as we look to different delivery models and it's -- actually a more mature sector. The competition is there, and we would be -- we're one of a number of competitors. I think also, you raised a really important point around as these industries develop what will be the delivery models. And as Worley -- as we talk more about solutions, we're spending a lot of time about, well, what are the delivery models and how we're going to participate in them. So as the industry is mature, we'll be looking at -- we are looking for how we develop the scale and create value that we can share with our customers.

Yes. I do want to just address the point I mentioned earlier. And I know at the full year results, I talked about alternative commercial models. And I read a report from one of the analysts. I don't remember which one, but it said something along the lines of we're always looking at alternative commercial models, and that sounds like they're moving into lump sum turnkey PC. We're not. We never have been. We're not now. We never will move into the lump sum turnkey EPC environment. We do conversions. We'll do engineering and lump sum conversion. But the competitively bid lump sum turnkey EPC is not a space we play in. And if you ask a number of the CEOs of former organizations that no longer exist, would they repeat the decisions they made that took them down in that space? The answer is no, they wouldn't. It is not a game we play in, and it's not a game that we will ever play in. And I think that's true. So when we talk about alternative commercial models, we're talking about something different to what we're doing now. But what we're not talking about is that space, too much risk, not enough return, too many companies going to the grave as a result of thinking they can manage the risk.

All right. Thank you. There's a follow-on question from John Purtell, again at Macquarie. Just saying in terms of potential acquisitions, are these likely to be bolt-on in nature rather than large and aimed outside of areas where you're really strong, such as hydrogen, CCUS. So that aimed at areas where Worley is not as strong?

So look, there's a couple of reasons you do acquisitions, scale being one or market differentiation, niche opportunities that allow you then to grow. And look, we've got scale. We're certainly 50,000 people globally. We're in 49 different countries. We can grow from a pretty large base. But if there's an opportunity to differentiate ourselves, a niche acquisition that helps us put forward a strongly differentiated value proposition, and it helps drive the strategy in the areas that we're talking about, the 9 areas such as carbon capture or hydrogen or offshore wind. If there are areas in that -- the 9 areas that we talk at all, the 7 areas that we're talking about in our core, then we'll consider that. So look, the scale and niche differentiation I think we've got scale, John. I think that if there's an opportunity, probably more in the niche differentiation space. That allows us to really pull ahead of our competition in the areas that we've identified in the presentation earlier. We're talking about investing $100 million of our own money in that space over the next 3 years to help build capability, but that's about building organic capability or building capability organically. We'll partner, and of course, as I said, to answer your question, if there's an acquisition opportunity that helps us pull away further from the pack than we are, then we'll consider that.

Okay. There's another question from Joe McCarthy at Elston, saying again on sustainability. As you move through the investment process, so from early feasibility to FID in development. Will your revenue from these projects increase? So assuming you stay on the project, will revenue increase as it moves along?

Yes. So typically, obviously, if you look at the revenue associated feasibility, or concept, then you've got the front-end design, then you go into the delivery of the project, your revenue stream actually increases exponentially as you go through those phases. So one of the things we want to do is partner with our customers. If you look at Shell as an example, it's a great partnership relationship. You look at OXY with the Direct Air Capture, a great partnership relationship. And there's opportunities when you have those deep trust-based relationships to move from feasibility through to feed through to EPC delivery. And yes, look, to answer your question in short, yes, the revenue stream increases exponentially as you move to the subsequent phases.

All right. Look, thank you. I have really appreciated all of the questions that I have received and I have not seen any new ones continue to come in. So we're very close to time. And I do want to just thank everybody for your participation and your interest in sending all the questions through. So I'll close out the Q&A session, and thank you all very much for attending.

Yes. Thanks, everyone. I appreciate your time today and wherever you're doing, wherever you are be safe and look forward to connecting soon.