Worley Limited (WOR) Earnings Call Transcript & Summary

Hello, and thank you for joining us for our Investor Day. I'm Verena Preston, Head of Investor Relations for Worley. Today, our Investor Day will be a little bit different to what you've previously seen. We're going to provide you with an operational update and some deeper insights into how we are delivering on our strategy. Today, you'll hear from our CEO, Chris Ashton, and 5 of our group executives. And at the end, we'll move into Q&A. The virtual platform that we're using allows for us a limited number of people to join us in the green room to ask their questions directly. And our sell-side analysts have been invited to ask their questions live. For everyone on the call, you can type your questions at any time via the chat field, which you can find at the bottom of your screen, and I will then pose these questions directly to our presenters. A recording of the event will be uploaded within 48 hours. And as we always do, we'll start with a safety moment, which will be presented by Chris Jansen, who has recently joined our IR team from our Digital business. Chris?

I'd like to share with you my insights into how I've seen safety evolve over the past 10 years since I entered the ECI industry, as a graduate chemical engineer at an oil refinery in Brisbane, fresh from Udi, I vividly remember an incident that occurred just days after I have joined, a worker had stepped backwards while out in the plan while without looking. The hole he stepped into was full of boiling water from a leaking steam trap, he was never able to return to work because of the extent of the burns. At the time, I remember the safety ethos being all about personal responsibility. 5 years later, the messaging had evolved. The study of human factors have become widely adopted. This is the concept that humans will make mistakes, and it is the responsibility of the facility operator to ensure that processes and procedures are in place to protect people. What it didn't cover fully is the human performance link. In more recent times, I've seen a further shift, psychological safety is now embedded as being a driver of outstanding team performance. What I've seen in the workplace is people are now encouraged to raise ideas, questions, concerns or mistakes around safety-related issues. This has made a noticeable difference to the workplace. Our recent safety week conversations were testament to this. Physical safety, mental health and well-being are now at the very core of our safety culture. I'm empowered by this as it allows me to be my genuine self when I come to work each day.

First of all, can everyone hear me?

Yes.

Okay. Great. Well, look, thanks, everyone, and welcome to Worley's Investor Day. We appreciate you joining us. Before I begin, I want to just acknowledge the traditional owners of the lands on which we meet. Their unique ability to tap the country and their deep spiritual connection to it. Here in Houston, the land I'm on, has long served as the site of meeting an exchange for indigenous people, specifically, the Apache, Caddo, Comanche, Kiowa and Wichita nations. In Australia, we join you from our North Sydney office and the land of the Aboriginal people. The Aboriginal and Torres Strait Islander peoples have cared for and maintained the thousands of years the lands on where -- on which and where our business provides its services. I pay respect to the elders past, present and emerging and recognize their knowledge and wisdom have made sure the continuation of culture and traditional practices and extend respect to other Aboriginal and Torres Strait Islander people present on the call today. I want to remind you to review our disclaimer shown here. Today, I'm pleased to be joined by a number of the group executives. I've made a few changes, and I'd like to introduce you to Sue Brown, who was appointed as the Head of Sustainability. And Mark Trueman, who will be leading the Americas business as Karen Sobel is heading into retirement. And finally, Adrian Smith is our Interim Head of Growth taking over from Mark Trueman. Together, we'll take you through a business update. A review from our regions and will provide deep insight into specific areas to share more with you on the business of the future. Today, I want to leave you with 3 key messages. First, our transformation is well progressed, and we're positioned for growth. Second, we're leaders in growing markets and our existing and emerging customers are increasing their traditional and sustainability investments. And third, our strategy is gaining traction as the strategic imperative to meet Net Zero continues to build momentum. I'll now take you through our business update. Over the last 2 years, we've made significant moves to reshape and transform the company. Our purpose, delivering a more sustainable world is owned by our people who were integral in its development. Together with our supporting values, it puts our solution at the center of the planet's biggest sustainability challenges as we support our customers' own transition to a lower carbon future. We know the world is changing at an ever increasing pace. We continue to witness emerging events that shape our environment, shape society and shape the economy. These provide a background of challenge, but also an opportunity for our business. I've just returned from the meeting with the leaders at the World Economic Forum in Davos. The mood was monopole of collaboration towards an inclusive transition and building on momentum of climate change commitments. Of course, there was a discussion around the mounting challenges around supply chain disruption, shifts in labor markets and the impact of inflation as well as different speeds of adoption of the green transition between OECD and non-OECD countries. But one thing was clear that was a continued commitment from our energy customers to drive forward the energy transition. And while we are seeing increased spend in this area, we believe the bell wave of sustainability spend is yet to come. We've witnessed the impact of Russia's invasion on Ukraine on energy markets as regions grapple to secure energy outside of Russian supply. Currently, approximately 40% of gas, 30% of oil and 50% of coal are being supplied by Russia to the European Union. We expect to see an acceleration in the development of diverse energy supplies, including energy from low carbon sources and, of course, a spike in gas in the near to medium term to reduce reliance on Russia. This provides us with opportunity considering our global reach and expertise in delivering the project required. The recently announced U.K. windfall taxes designed to encroach capital investment and disincentivize abandonment. The European Union announcement just today to reduce reliance on Russian oil by 90% by year-end signals the need to invest elsewhere to ensure security of supply. There's no doubt that we're seeing workforce movement across society and business and delivering in this environment is underpinned by our people. We're committed to an inclusive culture and developing our people as we transform and build the critical skills and capabilities to strengthen our business resilience and, of course, accelerate growth. Last year, I established digital and our process technology groups. Our focus on embedding digital in how we deliver our work has been a foundational element of our business transformation. We recognize that delivering solutions smarter and faster is necessary to achieve the scale of the challenge ahead. We've continued to make great progress on our ambition and have a relentless focus on driving this forward. I've previously shared with you our 5-year ambition. This sets the direction for our transformation, and we'll continue to report our progress against it. I'm pleased with the achievements we've made this last quarter. Our people are key to our success and our unique Worley culture is what differentiates us. This quarter, we started an inclusive leadership development program and are underway with our first 500 participants. We've had embedded behaviors into our performance management process across the entire business to drive the strategy execution. Our portfolio articulates what our business will look like in 5 years in terms of sustainability related growth. We've continued to make progress in line with our aspiration of deriving 75% of our revenue from sustainability-related business. As you can see, sustainability is growing in our backlog and now represents 52% of our sales pipeline. We're ahead in delivering against our own Net Zero emissions targets, and we've updated our climate change position statement with deeper commitments, which Sue will present later in our session. We indicated at the half year that our business was at an inflection point with increased activity returning across all the markets we serve. Our global head count at the end of April is 50,900, up 7% year-to-date. Our business mix remains steady and our utilization continues to be above target. I reiterate that the outlook presented at the time of the half year results remains consistent with what we are experiencing for this financial year. We're seeing positive indicators for improved revenue and earnings in the second half in line with these expectations. Some of the positive indicators I mentioned include the fact that our backlog has increased to $15.4 billion, up from $14.3 billion at June '21. And the growth is after removing $400 million of backlog associated with the Russia work that we will no longer be consuming. Contributing to this 8% year-to-date growth rate is an increase in both traditional and sustainability work consistent with our customers investing in both areas as they transition their businesses and address the pressing supply demand gap. We continue to see growth in our factored sales pipeline, and the chart shown here provides an indication that we're starting to see the benefits flowing from our strategic investment in targeted areas by the strong increase in sustainability opportunities. Of the entire pipeline, we expect over 60% to be awarded in the next 12 months. The rolling 12-month bookings chart shows an upward trend and is an early indicator of revenue growth opportunity for our business. We're seeing that our business recovery from the impact of COVID is underway. But of course, we remain cautious considering geopolitical tensions. We're winning a growing amount of work in both sustainability and traditional projects across all stages of the project life cycle. And this is in line with the increase in CapEx investment across all sectors. The value of all wins this financial year as of Q3 is up 30% on the prior comparative period. We continue to build on the strength of our traditional work through our long-standing customer relationships. We've had numerous wins with long-term service contract renewals and project awards, including a contract with Shell, providing services for their Gulf of Mexico assets. We're also securing a large number of strategic wins in sustainability. The number of wins in sustainability in Q3, this financial year is up 10% compared to the same period in FY '21. And the average project size by revenue in Q3 increased by over 67%, which reflects the projects moving from early phases into subsequent phases. This diagram shows the number of sustainability wins in different project phases in the third quarter of the financial year. Each prong of the fan represents one of our sustainability subsectors and the different colors represent the different project phases from feasibility due to design through the construction ambience. We're securing strategic wins in sustainability in their early phases, and our targeted growth areas such as low carbon hydrogen, power networks, energy storage, carbon capture and low carbon fuels. While we don't generally announce the early phase awards, you can see there are a large number of wins, which is a good indicator of future growth. Typically, we would anticipate working on subsequent phases of many of these projects. And as the project size grows, we would also move through the latter phase of the project with the customer. I'm now going to hand over to our leaders in the Americas and EMEA and APAC, who will provide some further insights into our regional activities and trends that we're seeing. So Mark Brantley, it's over to you. Sorry, Mark Trueman, over to you.

Too many Marks. Thanks, Chris, and good morning, everyone. As you may know, for the last couple of years at Worley Investor Days, I've presented in my capacity as the leader of growth. As Chris mentioned, he's recently asked me to take up the role of Group President for the Americas, succeeding Karen Sobel, who is moving to a well-earned retirement. As I speak with leadership and customers in the region, I'm excited about the opportunity ahead of us. We've got fantastic people. We've got a clear strategy and an engaged customer base with a market that's starting to turn up. There's 3 highlights, I'd like to share with you with my first impressions. Firstly, we're seeing large project opportunities with our key IOC customers in our core markets as they respond to improved market conditions and accelerate their energy transition programs. This includes the U.S. Gulf Coast and Alberta in Canada. Secondly, we're seeing our growth markets gaining traction, including winning more hydrogen, renewables, battery storage and battery material projects and we're also seeing increased business in our mining, minerals and metals business. We're also seeing activity in nuclear small modular reactor projects in both North and South America. Thirdly, our enhanced engineering, procurement, fabrication and construction, or EPFC, capabilities are increasingly being sought out by our customers. Our new Houston fabrication yard, supported by our team in Canada is a critical part of this. Its ability to complete fabrication projects for small schedule-driven projects is being recognized by our customers. While our markets are undoubtedly providing increasing opportunity, global challenges, including inflation, supply chain disruptions are causing some of our customers to rethink the timing of their projects. We're very focused on these challenges, and we're well positioned with the right contracting model, strong market position and strategy. And importantly, the hard work we did to rebaseline the business during COVID has set us up well. Looking at the market environment. Improved commodity prices are leading to more activity in our core oil and gas markets, partly as a result of the Russia-Ukraine conflict, as Chris mentioned. As European gas availability has tightened, we're seeing more support for U.S. gas and LNG projects. In Canada, we expect sustaining CapEx, maintenance and turnaround activity to remain robust as work deferred during COVID is moved to completion. Chemicals and fuels projects also continue to be delivered, including moving into the delivery phase of renewable fuels and sustainable aviation fuels projects. The U.S. energy transition market is at a point of inflection. The Biden administrations and infrastructure programs are starting to drive investment in many parts of our markets, including direct air capture, distributed energy and battery systems, CCUS and a number of other areas. While Europe has led the energy transition markets today, many of our customers in the Americas are now seeking to tap our sustainability and decarbonization expertise that we've honed in the European and APAC markets. We're working with a number of our customers on decarbonization strategies and road maps to chart their move to lower carbon operations. The feedback from a number of our customers is that they're engaging Worley because our purpose and sustainability goals are in line with their own. These customers are looking for early partnership commitments from Worley around our ability to manage and deliver a portfolio of their projects. Our strategy is clear, and it is resonating. If we look now into the pipeline and some specific wins, we're increasing our partnership globally with Shell, including the recent signing of an engineering and procurement contract to support their offshore operations in the Gulf of Mexico. We have recently signed a multiyear global agreement with another major international energy company to support its growth and transition journeys in upstream, midstream and downstream areas. We will provide engineering and project-related services to onshore and offshore assets and work with their digital enablement specialists to improve efficiencies. We will also support them on CCUS hydrogen and renewable energy strategies. So we believe we're setting ourselves apart. We're leaders in the carbon capture industry. Our partnership with Oxy Low Carbon Ventures increasingly sets the global pace in the direct air capture market. As an example, with Oxy, we've partnered with Constellation Energy to win a U.S. government brand to explore the benefits of constructing direct air capture technology at Constellation's Byron nuclear energy plant in Illinois. We've won several projects in lithium, copper and gold and other battery materials in North and South America. And indications are that the long expected mining, minerals and metals wave of capital investment is now underway. The longer term fundamentals for this market are solid, and they're driven largely by the energy transition demand for those commodities. An example of our recent wins in chemicals and fuels market is our work with Heartwell Renewables. We're providing detailed and field engineering services for a greenfield renewable fuels plant in Hastings, up in Nebraska. The new plant will produce an estimated 80 million gallons of renewable diesel per year from feedstocks, including vegetable oils and tallow. So in summary, we're well positioned to address the opportunities and challenges in the Americas. Our pipeline is strengthening, and we expect to deliver some great strategic projects in both our core and growth markets over the coming 12 months. I'll now pass to the other Mark, Mark Brantley, to provide an update on EMEA and APAC. Thank you.

Thank you, Mark. And hello, everyone. I'd like to share a few highlights of the EMEA, APAC region. First, the region has done very well, maintaining a focus and priority on our employees as we navigated a challenging time with COVID-19 and Russian and Ukraine. A critical area of focus is onboarding, training and oversight of employees as we move more projects into the execute and construction phases. Touching on growth, we are seeing a steady pace of growth across the region. We're seeing customers moving forward with their Net Zero plans with investments. Our GID, our Global Integrated Delivery, is growing at a steady pace to meet the needs of projects globally. Our key focus area is in our project delivery and predictable outcomes for our customers. Automation, digitalization and replication for all areas of focus for continued efficiency improvements across the projects. Customers are sharing that they see Worley as their strategic partner, with a shared commitment to Net Zero. Our global footprint will support them with consistency and execution globally. The concern that we are hearing from them is around geopolitical and supply chain impacts. We have a healthy pipeline in our sales funnel with 56% of the pipeline focused on sustainability type projects. Overall, a nice steady trend for the region. I would like to highlight a case study on a project we are partnered with Avantium. On April 20, we held the groundbreaking ceremony in Delfzijl, in Netherlands. It's an exciting project, it's 100% plant-based feedstock that will produce 100% recyclable and degradable plastics. We look forward to a successful project and partnership. Thank you. And with that, I'll hand it back to Chris after a short break. [Break]

So you've heard from Mark and Mark on the business. So now I would like to turn our attention to how we're advancing our ambition and what you can expect from our business in the future. As mentioned earlier, we're facing into a buoyant talent market. It's one of the most challenging time market has been placed for some time. So what have we done? We've sharpened our people strategy focus on 2 very clear areas. The first area is strengthening the Worley experience. Our Worley culture is what we're most proud of, and it sets us apart. We're continuing to evolve our culture in an inclusive way. Our focus on safety and well-being was evident during our recent safety week where we connected our office-based people with our site-based teams around the world. We had almost 10,000 people participating across the week. Our Pinnacle awards recognize excellence in project delivery and our recent award winners and nominees demonstrated that we've been embedding our ESG commitments in all of our projects and in the solutions we're developing for our customers. The second area of focus is that we're building the right environment to both attract and retain critical capabilities at scale. Our digital learning platforms are enabling the reskilling of our people to mobilize talent in new and agile ways. We're also deploying diversified powering strategy by investing in new partnerships and new tools like our virtual career paths. We have the ability to hire up to 3,000 people per month. To date, our time to hire has increased only slightly from 30 to 32 days. Meanwhile, our retention is at industry average levels. People want to join us and stay with us because of the compelling story we have underpinning our purpose and values. As leaders in the energy, chemicals and resources sectors, we have a responsibility to shape and support the future of our markets in the energy transition. Our customers are transitioning their businesses, and we're supporting them as they straddle 2 worlds through traditional and the transformational. Let's delve into this a little bit deeper. We're accelerating sustainability focus growth in both traditional and hard-to-abate areas as well as emerging markets. According to Mackenzie, hard-to-abate industry represents 81% of the global economy's carbon footprint. And we've been delivering on our ambition by helping existing markets rapidly reduce emissions. This is why as leaders in sustainability solutions, we also work and will continue to work in our traditional markets as it's essential if we're going to meet the challenges of the energy transition ahead of us. Our approach to growing new business opportunities designed to bring focus to what we're doing by harnessing the strengths of our current business while building critical new capabilities at scale. The energy transition is changing our customers' notary above. Our customers are facing critical business challenges as they themselves navigate through the energy transition and respond to technology, market, regulatory and social change. Our customers trust us to bring our deep expertise and innovation to address their complex challenges. Our market leadership, global scale and experiences allow us to bring the best technical and advisory solutions across the entire value chain to our customers. Data and digital is a foundational element allowing us to deliver faster and smarter solutions. And let me illustrate this through a few examples. We're currently piloting blockchain technology with our customers for smart contracts and material tracking these cases. Through our green hydrogen partnership with ABB and IBM, we aim to develop an integrated, digitally enhanced solution for facility owns to build leading hydrogen assets more quickly, cheaply and operate them more efficiently. And our offshore wind holistic design tool streamlined the concept to operational life cycle of wind assets by performing simulations to achieve levelized cost of energy for the customer. I'm now going to hand over to Sue Brown, our Global Head of Sustainability, who will talk to our sustainability journey and our thought leadership and will launch our climate change position statement. Sue Brown, over to you.

Thanks, Chris. I'd like to first share with you an update on our sustainability journey. So for many years now, we've delivered on our own sustainability commitments as well as helping our customers to progress their sustainability efforts. Worley is increasingly taking a leadership position on ESG and using our influence to inform thinking and drive change within governments, our industry and with our customers. Today, I'll take you through our new top climate change position statement, where we outlined both our internal goals, but also our biggest contribution to the energy transition, which will be supporting our customers to get to Net Zero. To achieve our purpose of delivering a more sustainable world, we've transformed our business and we're building a sustainability culture. There's been a concerted effort over the past decade to achieve this. This includes disclosure under the CDP, becoming a signatory to the UN Global Compact and launching the Worley Foundation. More recently, we adopted the UN Sustainable Development Goals and refreshed our company purpose to focus on sustainability. We've set ambitious Net Zero targets across our Scope 1, 2 and 3 emissions, and we've established flagship programs such as our thought leadership partnership with Princeton University. Worley is also in gross novel financing. For example, we were the first Australian company to issue a sustainability-linked bond. The EUR 500 million bond is linked to our Scope 1 and 2 emissions, reduction target. We're embedding sustainability focused thinking in everything we do across the business, including the way we approach asset design and delivery. We've also been working on our business to make it more inclusive and diverse and specifically have been taking action towards reconciliation with First Nations in Australia and in Canada. And our leadership in this space has been recognized. Worley saw the AAA rating with MSCI for over 6 years and our CDP rating improved in 2021 to a B. Our partnership with Princeton is also helping us to remain at the forefront of thinking around sustainability. Last year, we worked with Princeton's Andlinger Center to publish our groundbreaking joint thought leadership from ambition to reality. In it, we explored the practical shifts required to develop and deliver the energy infrastructure that the world needs to achieve mid-century Net Zero targets. The insights from this collaboration continue to influence the transformation of how we deliver for our customers. Working collaboratively and learning from each other is central to our approach and is necessary to address the complexity of the sustainability issues facing the world. Later this year, our next piece of industry thought leadership with Princeton will dive deeper into the how of Net Zero delivery and provide a tangible measurement framework. We're excited about our continuing partnership with Princeton and the impact of this strategic relationship. Finally, I wanted to share with you, as Chris mentioned on the update Worley's made to our position on climate change. This increases our ambition on decarbonization and our focus responding to the physical impacts of climate change. We're transforming the way we design, build and operate assets and make the challenge of decarbonizing the energy, chemicals and resources sectors. But we're also focused on making assets more resilient and supporting the protection of biodiversity along the way. We have 5 strategic actions that support our increased ambition. Firstly, in addition to our 2030 Net Zero commitment on Scope 1 and 2 emissions, we've now also committed to Net Zero on our Scope 3 emissions by 2050. We're also setting science-based target -- a science-based target road map to Net Zero that's aligned with limiting warming to 1.5 degrees. Next, we will continue to forge industry-leading partnerships, and we aspire to derive 75% of our revenue from sustainability-related business within the next 4 years. Thirdly, we're making strategic investments, which accelerate growth in targeted areas. We're also transforming our culture by providing opportunities to learn and to drive sustainability solutions with our customers. As part of this, we've already issued more than 9,000 training accreditations through our people by sustainability themed learning passports. And finally, we recognize the global significance of biodiversity and nature loss, we're committed to developing a plan to elevate the issue of biodiversity loss and to support nature positivity in our project work. So in summary, we're future-proofing our business by embedding sustainability initiatives across our operations, as well as partnering closely with our customers to deliver the new solutions and new thinking they require to transition their businesses to Net Zero. I'm now going to hand over to Tiernan, who's hopefully sounding a little less croaky than me, and he will talk us through how we're building our business for the future. Over to you, Tiernan.

Thanks, Sue, and I get well soon. Hello, everyone. Today, I'm going to take you through how we see our business in the future as the successful delivery of our ambition emerges. And I'll provide insights into a number of the priority areas that will contribute to this success. I want to cover 3 things. First, a view of our current business and the sustainability journey emerging. Second, the actions we have taken today to support future earnings. And third, what you can expect to see as we deliver on our ambition. The strategic progress on our transformation, as Chris said, is well advanced. The actions we've taken over the past number of years have established a truly diversified business. In particular, the acquisition of Jacobs ECR and its successful integration has created a stable contribution from each of energy, chemicals and resources providing consistency of income delivery and the visibility of our forward pipeline. We hold leading positions in the sectors we serve and across both our customers' CapEx and OpEx spend. As one of the few global scale services companies with capabilities in both traditional and sustainable technologies, we are already well positioned to benefit from increasing customer investment because of the current energy, chemicals and resources supply gaps and the sustainability mega trend. The work we are doing in our 9 growth markets is creating opportunities for us to gain first-mover advantage in these important segments. Sustainability revenue was 32% of total revenue at the half. This is now on par with our traditional Energy & Chemicals group revenues, indicating the progress we've made so far. Our sustainability work is clearly defined and is growing across all the sectors we serve. In resources, 50% of our revenue already comes from sustainability work. And we have a balance sheet that supports the strategic investments needed to accelerate our growth. Looking at our business mix, excluding procurement revenue, professional services income represents 70% of the business, and we're seeing this start to grow as we recover from COVID and as the world's targets Net Zero by 2050. We're applying low-risk commercial models. And importantly, we don't competitively tender lump sum turnkey projects and will not in the future. I remind you that we disclose full details of the commercial models we use in the half year results. Importantly, inflation risk is mitigated through our use of our reimbursable contract model. I want to share 3 data points as an examples of the stable platform we've created in the business from which we are growing. First, we're focusing our growth in areas which tracked higher margins. Our value offering in Sustainability Solutions is delivering more favorable gross margins compared with our traditional work. We expect this trend to continue. However, we are yet to experience multiple contract cycles sufficient to predict what the actual delta will be long term, but our early experience is certainly positive. With sustainability now greater than 50% of our expected sales pipeline, we expect the contribution from sustainability work to continue to grow, which should translate to higher quality of earnings. Our first-mover advantage, global scale, reputation and unique capabilities also allow us to optimize margin. Secondly, we expect our higher margin professional services work to continue to increase at a faster rate than other parts of the business. Our business mix comprised of 66% professional services revenue in the first half, up from 64% in FY '21. And thirdly, we have a scalable business. During COVID, we accelerated our transformation to streamline our business operations, and we've now delivered the majority of our cost benefits which will flow for years to come. I've outlined our current business and the areas that underpin growth. Now I'd like to share with you what you can expect to see as we deliver on our ambition. Our leading market position in the sectors we serve together with our capabilities and our early strategic move to sustainability have set us up as a truly global player that can deliver at scale. You can expect to see our traditional business continue to be strong, and we'll bring a sustainability lens across all the work we do. In finding solutions for our customers' complex problems, we have the ability to straddle both worlds effectively helping customers with their energy transition journey to 2050 and beyond. This leads me into our other areas of focus, which will help in delivering increased margins. We have a structure we believe will deliver operating leverage as we grow. As you know, our global integrated delivery team in India work on projects anywhere in the world and seamlessly transition between projects, allowing us to achieve high rates of utilization and consistently high quality of work. And our transferable and flexible skill base in country and on project sites are also trying to optimize the creation of value. Sue just mentioned the new project delivery paradigm where our technology efficiencies allow us to design one and build many. This is one example of how we will implement value-based pricing that supports growth in the quality of earnings. Finally, you can expect to see our business scale up and deliver in line with increasing customer investments. As you've already heard, attracting and retaining talent in a very hot market is a real issue, and we are actively taking steps to address this. We've grown our GID over 20% this financial year and now have a workforce in India close to 6,000 people. But we aren't stopping there. We must continue to provide a holistic approach to attraction and retention of people in all our markets including offering competitive terms and conditions, development opportunities, a values-driven culture and challenging projects to work on. Optimizing the hard to retire journey for our most important asset is a priority of ours. In closing, as the world deals with some current geopolitical disruption and its journey towards Net Zero, Worley is getting into a position to benefit from an emerging buoyant market as we return to pre-COVID levels and beyond. As you heard, we're focusing on delivering improved earnings and margins in line with our growing sectors. Now I'd like to hand back to Chris, who will talk about the trends we're seeing across all of our other sectors. Chris?

Thanks, Tiernan. And also thanks to Sue. You may have picked up there. That Sue is not well actually she is in Holland. Calling in from her hotel room. It's in the middle of the night, I just want to recognize Sue for staying up and going -- taking us all through her section of the Investor Day presentation. So thanks, Sue. And thanks, Tiernan, again. So let's start with low carbon energy. To get on track for Net Zero, the required annual investment from '22 to '25 is estimated to be approximately triple that of 2021, and then double again to the end of the decade. And with energy security and energy independence becoming a key focal point of discussion in Europe and the U.K., the regions are trying to decouple themselves as fast as possible from Russian hydrocarbons. The published energy security strategies are pushing an accelerated deployment of clean and affordable energy, including offshore wind, low carbon hydrogen and nuclear policies to shorten furthering cycles are being prepared to reduce project development time lines and enable an accelerated build in Europe with extensive experience across renewables, gas and nuclear. Here, you can see an example of a recent win for Kepple's large-scale onshore wind substation platforms. The second platform will be a replica of the first by using digital replication and 3D modeling technology. It's a more sustainable way of designing assets by saving on time, resource and costs. We're very excited about the work we're doing with Green Energy Oman on their low carbon fuels projects. This early phase work is across the full powder x value chain from renewables generation, electrical infrastructure, water desalination, green hydrogen and ammonia production as well as export facilities. The project expects to support the local economy and demand through local employment and manufacturing, and its aim is to produce over 1.8 million tons of low-carbon green hydrogen and produce up to 10 million tons of green ammonia per annum. In conventional energy, we've seen a rebalancing of global oil markets as the crisis in Ukraine had a substantive impact on supply. There's wide recognition that the shift to energy security can coexist with energy transition. In the short term, however, companies across Europe will be looking for immediate energy of service, which will likely include a focus on oil and of course, importantly, gas. Ørsted Energy expects the global upstream investments will grow around 11% for 2022. In the medium term, western governments have encouraged increased investment in traditional upstream conventional projects in domestic market as a bridge to provide energy security, while new low-carbon alternatives are developed. This will include the need for significant new upstream supply and midstream energy infrastructure. Industry forecasts all our project's sanctioning activity will continue to increase through 2023 and 2024, exceeding pre-COVID levels and reaching a decade high. The majority of this will be in offshore deepwater projects and onshore LNG projects. The oil industry remains on the cusp of a significant transformation towards sustainability. The importance of successful pivoting towards sustainability has been emphasized by the turbulence felt across the globe after Russia's invasion. A relevant example of this is our work to support and the support of Shetland's Island and Shetland's Net Zero journey to becoming the world's first-ever green energy island hub. We continue to win important projects in the upstream offshore spaces as evidenced by our recent award from Shell in the Gulf of Mexico. This award is a great example of how we're utilizing our sustainability solutions and digitalization capability to support customers in lowering their carbon intensity of their assets. In chemicals, the knock-on effects of the Russian conflict have accelerated the regionalization of chemical supply chains already underway from geopolitical factoring and pandemic. As a result, we continue to see growing investment that is linked to both overall GDP growth and an increased focus on regional supply resilience. The leading thing across the year in chemicals and fuel was decarbonization, both of end products and of processes. In both markets, we observed most customers committing the 2030 and 2050 emissions reductions targets, which resulted in investment commitment for existing as well as new facilities. For example, we're involved in developing a first-of-a-kind chemical recycling solution for Trinseo in Belgium. We continue to undertake traditional work in the chemical sector. And an example of this is our recent announcement on Borouge 4. Once complete, it will be the single largest polyolefins complex in the world. Global fuel supply has rebounded to 2019 levels. Over the near term, global rebouncing is underway to address energy security and to meet their sanctions impact. In the medium term, it is expected that the low carbon fuel market will continue its rapid expansion. And this is a market Worley is well positioned in. Low carbon fuels have moved favorably as they have the potential to decarbonize sectors such as trucking and aviation. We have extensive experience in this, and we are a leader in this market. We are working on 13 low carbon fuel projects around the world. A recent win in the ethanol low-carbon fuel project in the U.K., which will convert residual solid waste, just a sustainable aviation fuel as well as sustainable diesel is a great example. Another key aspect in decarbonizing the fuel market is through carbon capture. We continue to win a large percentage of the global carbon capture markets. Our front-end engineering service contracts with Phillips 66 at their Humber Refinery is our latest example. In resources, financial sanctions and supply chain disruptions are driving increased investment in traditional as well as sustainability projects. New sources of material will be required as manufacturers come to terms with the damaged supply chains. Demand for energy transition materials continues to grow with regions seek to secure supply of critical metals to feed a Net Zero economy. According to an analysis by WoodMackenzie, the metals and mining industry need to invest cumulative of USD 1.7 trillion from 2020 to 2035 to meet the additional demand so far. And we're seeing signs of this growth across all major mining regions. We've been successful this year in adding new customers in the fast-moving subsector of active materials such as our award from Syrah for an active anode material facility here in the U.S. Across our top 15 global resources customers, we've seen an increase in new awards of over 100% year-on-year. Our FY '22 sales pipeline is growing, and we're currently undertaking early phase work on projects with over $30 billion of total installed cost. Large greenfield development projects have returned to the pipeline in addition to asset expansion projects. Copper demand is set to increase significantly across the group. We continue to work on large-scale public projects such as the recent win with Glencore to expand their Kidd Creek mine in Canada. The project's depth, geotechnical characteristics and temperature requires innovative technical solutions to enable the safe and economic development of the mine. I'm now going to hand over to Adrian Smith, who is the interim leader for growth part of the business. Adrian, over to you.

Thanks, Chris, and hello, everyone. I'm pleased to be reporting to you on growth today, having worked closely with Mark as part of the team for some time. Let me begin with a quick recap of Worley's priority growth areas. While we're growing our strong foundation across energy, chemicals and resources, we are strengthening our position in new areas of business where we have strategic advantages, allowing us to build these businesses at scale. Those new areas of business are the 9 accelerated growth areas you see on the left of the slide. Our customers continue to focus on the energy transition with increasing demand and potential earnings growth in each of these markets and capabilities. On the right of the slide, we have listed 8 areas for continued growth focus, which are aligned with our customer spend. Today, I'll conduct deep dives into 2 markets: hydrogen and integrated gas. Hydrogen is an area where we are seeing accelerated opportunities further enabled through our investment spend. Integrated gas is already prominent in our portfolio, but has gained further importance in the wake of the Ukraine Russia conflict. Before we go into our key growth markets, I'd like to update you on our strategic investment in organic growth. We are future-proofing our business through a very targeted process involving 3 phases. During the initial phase, we've defined the scope and estimated the addressable market of each of the growth units, and we're planning our approach to scaling up the offering in each of these. This is now complete for 7 out of the 9 growth areas. In the second phase, we're building our market proposition, strengthening our core capabilities and testing these with customers. In areas such as hydrogen, carbon capture use and storage and offshore wind, the scaling up phase is progressing rapidly. We know that growth units are transitional structures. In the third phase, we'll determine how to integrate each growth unit into our operations, making them part of the core proposition. Already, we are seeing results from this organic investment. Here, we have selected 6 of our growth areas to demonstrate some of the early benefits that we're seeing. The demand projections and our traction to date suggest these markets could become billion-dollar businesses for us. Just to touch on a few of the highlights. In CCUS, awards are up 230% in FY '22 across 5 continents. In copper, we've been awarded projects with total revenue that is 390% up compared with our wins in FY '21. And in plastics, we've seen a 300% increase in the factored sales pipeline. This is strong market validation that we're on the right track. I'll now take you through 2 of these key growth areas, starting with low-carbon hydrogen. Global demand for hydrogen is expected to accelerate dramatically given the low-carbon hydrogen's likely role in our future energy systems and the push towards energy independence following the Ukrainian Russia conflict. We've long been a market leader in hydrogen with a track record of high-quality project advisory and project delivery. Our experience on nearly 200 hydrogen projects is allowing us to scale up this business. We see that the cost of green hydrogen production will continue to trend downwards with business and technical innovation. But achieving cost parity with right hydrogen will continue to be a stretch goal for some time. Blue hydrogen production will also feature strongly, especially in North America, the U.K. and the Middle East. Concerns over emissions from blue hydrogen production will push the market to improve pricing and verification. Most projects moving forward through to the final investment decision are balance sheet financed and underpinned by an industrial base load. Europe is leading with subsidies essential for other projects and the market is assessing how to make green hydrogen commercially viable. Stakeholders are taking positions on potential future hubs, such as the Port of Rotterdam. We're seeing an increasing number of projects integrated with downstream derivatives. Most projects require multisector integration. For example, the intersection of hydrogen with wind, solar or other renewable sources as well as an abundant supply of water. We're seeing increased traction in our major customer relationships like Shell, BP and Ørsted. Shell is investing in multiple projects, including the Holland Hydrogen 1 project where we are providing services for the development of a 200-megawatt electrolysis-based green hydrogen facility at the Port of Rotterdam. Our investment in this growth unit and our strong relationship with major customers is resulting in the continued growth of our revenues at greater than 50% year-on-year. Our number of wins are up 70% compared with the same time last year, and the total expected value from these wins is up 190%. This highlights that not only are we winning more projects, but the size of these projects is also increasing. We expect this trend to continue as per our increasing factored sales pipeline. While many industries want to invest in green hydrogen, high production costs pose a barrier to driving market adoption and achieving scale over gray hydrogen. And production facilities require an accessible and abundant renewable energy supply along with a reliable water source. Innovation will be critical to driving down costs. This chart highlights our approach to achieving this. With each project iteration, we're enhancing the use of automation and design, state-of-the-art fabrication solutions and digital and data-driven asset management. For example, as Chris mentioned earlier, we're partnering with IBM and ABB to collaborate on helping energy companies build and operate green hydrogen facilities more efficiently and at scale. This collaboration aims to help customers address these challenges by scaling up the technologies and reducing production costs to enable green hydrogen to become more widely used. We're creating a highly automated solution, adopting a modular approach that simplifies and accelerates engineering whilst delivering a standardized design. Our execution approach will deliver a connected fabrication, delivery and installation solution, which accelerates asset delivery time lines. By creating a digitally connected approach at all stages in the life cycle, will help our customers reduce the levelized cost of hydrogen as they start to operate commercial businesses in the low-carbon hydrogen ecosystem. Worley is supporting Ørsted to develop green hydrogen production facilities to be delivered to Yara's ammonia production facility in the Netherlands. We're supporting Ørsted's project Haddock, which aims to replace fossil hydrogen with renewable hydrogen in the production of ammonia. This is truly a pioneering project with the potential to abate more than 100,000 tonnes of CO2 per year, which is the equivalent of taking 50,000 conventional cars off the road. This project will help mature the technology for the wider decarbonization of the industries and it's a prime example of the multi-sector integration I mentioned previously. I'll now turn to another growth market, Integrated Gas. There has been a dramatic short-term recalibration of the global energy market, triggered by Russia's invasion of Ukraine. Russian gas markets make up approximately 40% of Europe's total gas supply. Europe's push to reduce the reliance on Russian commodities is creating strong demand for oil and gas in Western and Middle Eastern producing nations, such as the U.K., Norway, the U.S., Australia, Saudi Arabia, Qatar and the UAE. Worley has a strong footprint with established customers in all of these locations. Global LNG market is now expected to remain tight with a growing supply gap through the end of the decade. As demonstrated here in the center graphic, the growth rate for integrated gas capacity is forecast to grow significantly through 2026. This forecast capacity growth is supported by our customers and their adoption of CCUS technology being used in unison with their integrated gas facilities. This map highlights our global footprint where we have demonstrated the following capabilities. We have extensive experience in the front end of new LNG projects. Although we're not doing lump sum turnkey for the proprietary refrigeration process, we support all interconnecting services at the LNG facilities outside battery limits, including power, bauxites and utilities. We're deeply involved in the delivery of upstream gas facilities. We have many long-term brownfield contracts, which include major modifications and expansions to facilities and interconnecting infrastructure. And we're a leader in providing EPCM services for major pipelines, including mega transcontinental projects. All of these capabilities are those that will be required for the EU to gain energy independence from Russia. Our competencies and global reach mean we can rapidly support market opportunities as evidenced by our affected sales pipeline for Integrated Gas, which is up 190% since May 2020. We've already won a contract for early phase work on an LNG regasification terminal in Europe. This is a fast-track project. In summary, we have a clear strategy, the right skill sets and the resources to accelerate our growth across both core and emerging market opportunities. We're particularly excited about the potential that lays ahead of us in relation to scaling new areas of our business to capitalize on the energy transition. Back to you, Chris.

Thanks, Adrian. In summary, we've demonstrated today a few things. Our transformation is well progressed, and we're positioned to grow. Our headcount continue grow, and our backlog has increased this quarter, and we're expecting improved earnings in the end of this financial year, in line with our expectations. We're leaders in growing markets and our customers are increasing their traditional and sustainability investments. The current geopolitical environment is driving increased investment in traditional forms of energy. However, our customers remain committed to a low-carbon future, and we continue to win accelerating levels of work in sustainability. We expect our margin to continue to improve as we benefit from operational leverage and target higher-margin growth there. Momentum continues to build around the strategic imperative to meet net zero and our strategy is gaining traction, and we are seeing our own benefits from our strategic investments. We're now going to have a short break before moving into the Q&A session. But thanks for your time for now, and we will be happy to answer questions in that session. [Break]

Thank you, everyone, for joining us for the Q&A session. I've received a number of questions online already, and I will start with those questions. The first, Chris, is to you. And there are a couple around inflation, and they have slightly different [ slides ] to them. So the first question is from Rohan Sundram of MST. And he says, how is Worley managing inflationary pressures? And how would you rate the ability to pass on inflation pressures to customers?

Well, first of all, I think if you step back and look at the work we do, it's a reimbursable environment. And so our direct costs are reimbursed by our customers. So someone is crossing a $100 an hour and they get a pay adjustment in inflation and be paid like $110, then the base cost to the customer will come to $110. So -- and the majority of our contracts are framed or structured in a way where we will be able to passthrough the inflation impacted costs to them. So look, it's something which we have to actively manage. It's not something that we take lightly, it's something that you've really got to look at and ensure that when there is an adjustment of someone's salary that you pass that through. Now the reality is, as we recruit people and bring them in, we're going to have to pay them the market expectation. And when we bring them in the organization, that then becomes the base upon which we would provide services to our customers. So it's something we've got to manage. On the materials and the equipment side, again, majority of that is direct. We manage and buy and procure on behalf of our customers. And where we do our own, generally speaking, we've got inflation indexes in the contracts so that we can get recovery on both and on materials, on commodities. And the large pieces of tag equipment more technically complex than they, in most part are again, reimbursable to the customer as a pass through. So while it's something we have, something we recognize, it's something that we will actively manage and we're comfortable in that we can do so.

Chris, I would add to that as well that we actively monitor the health of our customers' markets and their business. And of course, it's been a pretty robust market in many sectors. So it gives us some added confidence that we'll be able to pass that through because it's likely that some or all of that inflation is being passed through to the end customer at the moment.

Just adding on to that, there was a slight addition to a question from Scott Ryall. He was also asking with Worley's policy around lump sum contracts, does this create risk of loss of market share? And this is all related to the issue that we're talking about inflation and being able to pass that on.

Well, at Worley, we don't do a huge amount of lump sum work on a negotiated basis, it's less than 20%. And we don't do it as Tiernan said, we do not do, and we will not ever do competitively bid lump sum turnkey received any materiality. In terms of market share, I think that we've got what some an inflationary environment, everyone is going to be subject to the same inflationary pressures. So I don't think our relative competitiveness will shift. I think that the customers come to us because we have a highly capable workforce. We've got a track record of working with them. We've got a track record of delivering good outcomes. And look, the pressures that we face will be the same pressures that our competitors face. So I don't see it as being anything that will impact the relative attractiveness of us as a supplier in the market. And therefore, I don't see our market share being impacted negatively by the inflationary pressures that all of the market, all the supply chain are experiencing.

Thanks, Chris. I'm going to actually test our participants in the live room now. And just calling by order really alphabetical order of company as best I can. So I'm going to hand to you, Dan Butcher from CLSA.

Just a very quick question really to Chris or maybe Tiernan. With your backlog of $15.4 billion, just sort of curious how that would compare in constant currency to last backlog you disclosed? Do you have other backlog being in constant currency versus December '21 or even June '21?

I'm going to hand that one over to Tiernan.

Yes. Thanks, Chris. No, I don't have it to hand, but the currency actually has been quite volatile in the early part of this calendar year, but it has now stabilized again. So there has been a shift in currency between years. But no, I don't have that to hand. We can get that for you after the event.

Okay. And maybe if we could follow up with that, okay. Your headcount is up about 5% in the last 4 months, I was sort of curious, do you see a bit of a slow period in January after Christmas in terms of hiring? And should we expect a bit of a faster rate or overall rate for rest of the calendar year?

Yes. Look, actually, what we always see a seasonality impact. And certainly, as we look at the first half and second half numbers, then you normally see in Northern Hemisphere, Southern Hemisphere impact. But the hiring is driven by the amount of work that we're winning. And typically, customers will budget on an annual -- on a calendar year basis. So we'll prepare budgets or submit them to get approved and then Jan 1, the project will be released. And that's typically what we experience.

I'll hand on to Sandy James now.

Great. Probably start with you, Chris, on this one. I think you've touched on it a little bit in the presentation already, but interested in your view on how the Ukraine crisis has altered your outlook for both kind of legacy energy and sustainable themed energy CapEx? And how you see we'll be positioned for this moving forward?

Well, look, if you think of things from a [indiscernible] energy transition, energy affordability, energy security and the interconnectivity of all 3 of those then we certainly see it spring and bring to the market new opportunities. Adrian mentioned, an early phase piece of work for an LNG regas terminal in Europe. We actually state that we're very well positioned for gas as well as oil, so we're well positioned for the traditional. Clearly, Europe making the decision today by the end of the year to reduce its dependency on Russian oil by 90%, it's a significant shift. Now some of that will be filled with supplies coming from elsewhere. Russia came out today and said look, they'll divert supply to other places. But what it means is that we will see investment in conventional or traditional forms of energy in order to close the gap that is -- even though we just said it will supply, say, China or India and therefore India's demand and China's demand will be due to other supplies, you'll see an increase in investments, specifically in gas, we're very well positioned. But I was -- as I said, I was at the World Economic Forum in Davos last week, and one of the meetings I was -- in one meeting, I have 9 of our customer CEOs in one meeting, we're talking about Scope 1 and Scope 2 emissions reduction. And the commitment to reaching net zero remains. And so why we're going to see a near-term impact spike in investment in the traditional -- the conventional energy, you're going to see continued commitment to those organizations pivoting their own assets, their own investments towards allow me to get to next year or so, and we're well positioned in both. And so I actually think that what is happening in Ukraine is more opportunity than it is risk to us.

Okay. And just a quick follow-up, if I may, on that is, when do you think you might see some change, I guess, in your bottom revenue line from those opportunities going forward?

Well, one of the challenges is these things take a long time to from when you do an own pace study to -- if you got to an own pace into the FEED and the field engineering. But one of the things we have to do is work with our customers to accelerate the delivery life cycle. We talked earlier in the presentation around government reducing the permitting cycle because the permitting and the environmental impact assessment are often just extended, not because you can't do the work technically to assess the environmental impact or risk because of government [indiscernible], and that's going to be stripped away. So what I expect as we move into FY '23 and beyond, we're going to see the feasibility, the old base concept work emerge and go through the FEEDs and detailed engineering. And I think it's going to be on a compress schedule. Also, we'll be looking at bringing more oil, more gas on to market through existing assets. And the U.K. win for the windfall profit or the windfall tax announced last Thursday is interesting because they increased the corporate tax from 40% to 65%, but then they allowed CapEx investments to be deducted off the 65% overall tax rate. What they're not allowing is for the same to be deducted if it's abandonment expenditures, so the decommissioning of facilities. So what that's doing is it's actually saying, look, don't decommission the facility, okay? See what more you can get out of it and invest in new greenfield capacity. So I think there's some near-term decisions to be made at the government level to help accelerate the pace at which capital will be deployed. But FY '23 and beyond, we will see the benefit of the increased investments. But it's going to follow the -- it's going to follow the cycle of feasibility of FEED and then detailed engineering, but I believe it's going to be on a shorter life cycle.

I'm now going to pass to Richard Johnson of Jefferies.

Can I just return to the backlog? And really, the question I have around that is it's obviously building nicely and was continued to build nicely. But I was just thinking about it in relation to the number of contract awards you made in the second half. And I think I'm right in saying that it's dropped -- they dropped away in number quite materially. In fact, in the last quarter, I don't think there were any at all. So I'm just wondering if there's an implication to the mix of the backlog or what really explains that?

Yes. Well, look, we have announced them. In fact, we've announced a number of in the last quarter. Happy to share those again, Richard, but we have announced a number. And look, let me just explain the folks that we get an award or we're approaching award and we're being given a verbal. We then have to develop the announcement. It then has to go through the customer for approval. And then when the announcement is being approved, we will release. We have 8 in the pipeline, okay, 8 in the pipeline. But we have announced them this quarter. And there's just -- there's no necessary uncertainty. You can't say, well, you've announced 10 this quarter and 5 last quarter. We have a materiality threshold that we announced above, but we have a number that will be coming to the market in the very near term.

Great. That's helpful. And then just, sorry...

Sorry, Richard, can I just add to that? In the slide deck that we just presented, there is an indication of the amount of feasibilities and FEED work that we've done. These are the smaller style of projects that we're doing that ultimately lead to the larger contracts. As we've committed in the last few months, we're going to start to aggregate those smaller wins so that you get a bit of a sense of the emerging volume of contracts in addition to the ASXs. And the ASXs are really they are timing base, as Chris has just described, but a customer approval and so on. So I wouldn't read too much into the first quarter and the dearth of announcements in that period. But it is important that you understand, if you see that slide with the sort of fan-shaped diagram that shows around about 1,600 feasibilities and FEED contracts that we've won that are being done at the moment and that many of which will ultimately flow through into other contracts. So you will see going forward, more regular aggregation of the smaller ones that will ultimately lead to the backlog, and you'll also see on a regular basis, the ASXs.

That's very clear. While you've got the floor, can I just ask -- and I apologize in advance for going over old ground. But your chart on gross margins and the difference between sustainability and traditional. Can you remind me what the principal reasons are behind the difference firstly? And secondly, if you did that chart at the EBITDA level, is there any reason to think it would look any different?

Sorry, I just missed the last bit, a difference in what, sorry?

So if you did that chart, not at the gross level but at the EBITDA level, would it look any different?

Well, okay. Just on the first part of your question, I mean, it's really down the capability and the uniqueness of this new market and the energy transition. We have capabilities that -- and skills that -- there aren't a lot of those capabilities or skills globally. We don't have many global competitors. We clearly have regional competitors. So it's really down to supply and demand that allows us to increase the margin on the sustainability work. So that's the answer to the first part of the question, it's a simple answer. On the second, because we have stabilized and restructured as part of our transformation, the cost base of the organization. The only difference below the gross level will be inflationary pressures. We believe we now have a scalable business. And as we add to the top line, the base should be -- should allow us to flex. And so I don't think there'll be a material difference as you go down. Clearly, we need to scale optimally as the business grows because there are lumpy movements in cost. But no, I don't think there'll be too material a difference as you go down from the top line into that level.

John Purtell from Macquarie.

Well, just the first question, if we sort of just sit back and look at, I suppose, earnings over the last sort of few years, I mean your fiscal '22 earnings are obviously still quite a long way below pre-COVID levels. So the question along those lines is how realistic is the return to pre-COVID revenue and profits in the medium term?

Look, John, I'd be careful to define a medium term, but I'm absolutely confident our revenue numbers will return to pre-COVID levels in the medium term. I have no doubt about that. I'm absolutely confident that given all the indications we're seeing from our customers, from the research we do, from the conversation we're having that we will return to pre-COVID level revenue numbers.

And does profits go with that, Chris?

Well, that's right. I mean one of the things we've talked about, John, is operational leverage. We spent 2 years restructuring the business, refocusing it, rolling out a new strategy, and we're talking about this as the [ revenue ] topline growth then we'll -- we should be and expect to see operational leverage deliver improved margins. There's always going to be some overhead comes back in because it's not a -- you do have some variable costs that will come back. But we expect that given the impact, the positive impact of operational leverage that in that medium term, we'll see margins improve.

John, there's another data point in this graph just on the confidence in returning to pre-COVID levels. And it's a new graph that we put in there, which is our rolling 12-month bookings. And one of the lenses that I have really been looking at this from is how do we get better visibility of the aging of the backlog. And so, this is an emerging process for us in terms of getting that visibility. But you'll see from that graph that the rolling 12-month billings have been increasing steadily. And that sort of gives you a bit of a trajectory and some confidence that, that's building nicely towards that end. And it's really important to us that we increase transparency about the information, all the information that we're disclosing. And I think you will agree that you're starting to see that from us. We're using our new system. We put sales force in a couple of years ago, and we're starting to draw out some insights around the aging of the pipeline and when it's going to be delivered. And it gives us confidence for the answer Chris just gave.

If I could just ask one follow-up, if I may. Just around the refining sector and market. Obviously, refining spreads have opened up here and in the U.S. So the question is along those lines, again, are you seeing sort of renewed investment in the refinery sector after what's been a fairly long period of underinvestment?

John, what we're seeing and what I'm -- I was in Holland 3 weeks ago, and that part of the business is doing early phase work on 10 sustainable aviation fuel conversions around the world. And we're seeing the large companies invest in either converting or expanding their capability or capacity around low carbon fuel. So I think the opportunities are there. We're spot on. We're right in the center of the relationship with our customers, so we're spending in that space, and it's incredible. I mean I came back from -- I'm starting to get out and about now to the world and our offices around the organization globally. And when you get there and you talk to our people and we give you briefings on some of the detail -- around the detail on the project. It's mind blowing. And this was -- our team give me a briefing on what we're doing in the sustainable aviation fuel space, which you're now converting. It's amazing, John. And so look, yes, there's opportunity growing after a period of very much of being quiet and we're really well positioned. I was with the customer in Vancouver, there we've announced a project last week with the Heartwell. Obviously, we've done [indiscernible] project. We've got 2 major customers that were doing 5 each for, 5 each, the 2 major IOCs. So John, opportunity there in the fuel space.

So I'm going to hand on to Rohan Sundram from MST.

Just one question for you, Chris, on the outlook and really keen to understand how the tone of conversation with your customers has changed maybe over the last 3 or 6 months, including the intent from the customers? And do you feel there's still more to go on that? How far into that are we?

It's an interesting question from a few perspectives. Let me give you a couple of them to give some context. You have the [indiscernible] can you do this work? How do you help us? What capacity do you have? We've got to get these projects moving. We've made commitments to the Board. The nature of the conversation is one where they are looking to us to help them deploy their capital. And it's quite a shift, Rohan. It's quite a shift from during COVID where clearly there was so much uncertainty, there was pullback, and there was lots of discretion maybe around the planning of it. What we're seeing now is customers moving to the reality of needing to invest and the relation we've got with our customers is Worley, what can you do now to help us, what kind of team have you got, how would you help us execute this. So yes, look, they've changed. And I see I was in -- meetings in Europe last week at the World Economic Forum and the conversation that is being held in the room with our major customers is one of commitment to Scope 1 and 2 reduction. And with that, the need for investment. And with that, the need to partner and [indiscernible] partner with their supply chain. I think we're moving to an environment where -- and this is [indiscernible] continually internally within Worley. We want to work with customers who want to work with us rather than have us work for them. And that's what we're experiencing. We're experiencing the shift in the nature of a conversation with increased emphasis on partnering where they want us to work with them in partnership rather than for them in a contractual relationship only. And that for me is a key shift that we experienced probably over the last probably 6 to 8 months.

I'll now hand on to Nathan Reilly from UBS.

Chris, a question for you. Just a question on technology partnerships. Just noting at the back of the recent announcement with Avantium and its bioplastics project. Sounds like you've taken an equity position in that technology and are assisting on the scale commercialization of that technology. So can you just talk about the longer-term potential for that particular technology. And I'm just wondering, are there any other examples around technology licensing or partnerships that you're working on that could support some of the work in those growth markets that you're targeting, particularly around carbon management and low-carbon hydrogen?

Yes. So let's maybe talk about Avantium. So what is Avantium, the way that the equity participation has been [ waived ] within that reduction phase gave us an enhanced element of profit. And then that profit actually is converted to equity. So we're not selling out any equity. It's a contractual arrangement where a part of our profit is convertible equity. I think there's opportunity, John, for more of that and what that has allowed us to develop a much deeper relationships with some of our customers. I hope that answers your first question. If I move on to the second part, in July 1 last year, we launched our technology silicon business. And at the heart of that decision, John, was the answer to the question you've just asked. We believe there's an opportunity for Worley to become more present, more prevalent in the technology space or the technology arenas that are relevant to the [indiscernible] sustainability. And that's going to be one of three ways. We've also got technology already, and we'll continue to do our R&D in that, we develop it and invest and evolve it, and do that organically. We're going to partner as well, and we're a partner with some of our customers [indiscernible] technology. But we do believe that there's an opportunity going forward where technologies will help us drive our strategy in the area of sustainability where if that was the sense then, we would consider an acquisition. So I think technology is being key to our future. We're either going to develop what we thought organically now to continued R&D. We'll partner with the licensed providers to help us expand and differentiate offering. But also, again, it is this technology to help us close the gap of [indiscernible] technology strategy, then that can be on to comfortable [indiscernible].

Got it. And just my final question then, Chris. So maybe if you could just speak to what benefits you're expecting to obtain from the $100 million OpEx investment program you just commenced. Just interested how that might impact margins going forward, but also if it's been influencing capabilities and project win rates lately?

Well, look, the $100 million, one of the things we've been asked a number of times is this just the kind of a simple way of letting $100 million trade back into your long-term prospects, and the answer is no. This is an investment to help us turbocharge our position in markets that are emerging and growing rapidly. And if I look at the profile that we are generating in areas such as carbon capture, hydrogen, as examples. Then it's clear that, that investment is already beginning to pay off. If we look at the profile that we've got delivered the amount of hydrogen work we've gotten. And we were -- we've been without naming any companies, we've been awarded 5 hydrogen studies with one major, two in Australia, one in Europe, Well, one in Europe, one in the U.K., one in Germany yes, that's five. Two of them in the U.S. -- in Australia, one is about 150 megawatts, but one was 1.5 gigawatts. These are -- and this is the major IOC committing to hydrogen. And they came to us because they said there's no one. There's no one comes close to what you're doing. What's interesting as well, John, is when we -- Nathan, when we talk to our customers around our purpose and our ambition and that we're committing a $100 million, they step back and they say, that is evidence to them that we're truly committed to the strategic pivot. So we are getting a return on it. I'm going to -- I'll pass to Tiernan, but at some point, we want to be able to say, look, for X million dollars invested, we are seeing our pipeline incrementally grow by Y million to demonstrate the return on that $100 million investment. But certainly, John, even now after just 7 months, 8 months, we're seeing -- we're seeing the return, we're seeing pay benefits even if just it's raising our profile and generating interest from our customer base.

It is Nathan I'm talking to, isn't it, Nathan?

Yes, that's it. John is my middle name.

I thought you might have changed your name, you got a nickname, John. That's all right. There's a lot of questions there. But I just wanted to add there, one of the things that we are getting already, Nathan, early is really good visibility of the addressable markets in all these growth markets. We're getting a good understanding of the size of the market and the part of that market -- most importantly a part of that market that we want to play in. So that will allow us to get a real laser focus on where we're going to put our resources and our investment. I think that's a really important first move. We're on track to spend about 1/3 of that this year. And so I think that initial investment in FY '22 has really gone not only to what Chris said in early mover advantaged in hydrogen, but more particularly across all of the growth markets, got good visibility about what we're going to get and what kind of impact we could have in those areas. And that will set us up really well for the next few years.

Got it. If I can just sneak one final question in there. Just in terms of that [indiscernible] of sustainability projects that you sort of saying hasn't even been broken yet. Just how you're thinking about resourcing for that level of work just given current headcount and anticipated headcount that would be required?

A couple of ways. One is, we pre-invested this year in increasing our talent acquisition capabilities, either physical people in the talent acquisition space with new tools and new partnerships to allow us to get access to the market. And the other thing, John, is -- Nathan, is we've got to leverage automation. So we've historically may have taken 100 people to do a project, well, by leveraging automation, you may only need 75 people who do that same project. So we've got to leverage automation into our resource to enable us to execute more work with the same people than we would have done traditionally without it. But look, our culture, the purpose that we've got, the ambition, our culture, these are all attractors and differentiators. When COVID hit, we took decisive action very, very early on. And I think what that allowed us to do is come out of COVID match fit. And when you are match fit, you can focus on the future and not be focused on what you need to do today with survival because we made those all decisions back in really April, May 2020, and we implemented this through COVID, we came out of COVID, we match fit. We're focusing on the future. We've got a strong purpose, strong ambition, strong culture, and is becoming an attractor. Now we shouldn't be naive. The market is heading up. We're hiring some great people. We're hiring people. We're also losing people. People there's attrition, our attrition in industry average rates. But we've got a focus on creating the environment within which people want to come and join us and they want to stay with us. And that's a continued part of the journey. So talent, leveraging automation is going to be critical to being able to deploy -- help our customers deploy capital going forward.

I'm just going to move to a few questions that we've had online. And Chris, this is from Janelle Morrison of Ausbil. And the question is what percentage of future sustainable projects do you expect to have fuel -- fossil fuels, gas in particular? Some might argue that gas wouldn't fall under sustainability and would prefer to see Worley involved in renewables or zero carbon projects only?

Well, that's not going to happen, if I'm blunt, yes. I mean, look, the European Union taxonomy for the energy transition includes gas and the reality is we can't get to net zero without gas. If you look at the dependency -- if you look at what's happening in Europe, and the dependency on oil in Europe, yes, it highlights that what we're facing into is a transition. It's a transition. We cannot just stop the consumption of hydrocarbon molecules. It has to occur, and it's going to occur over decades. And that's just the reality. And I know people would like to think that we can just switch to 100% renewal, but we can't. Only 20% of energy in the world just under 20% is consumed in the form of electrons. The rest is consumed in the form of hydrocarbon molecules. And bear in mind, okay, a large portion of oil and gases FEEDstock into the chemicals manufacturing process. So if you think of the cloths you're wearing, the car you're driving, the seat you're sitting on, the computing you use, they're all products that if you look back at their manufacturing process are based on hydrocarbon molecules. So we can't switch it up. That's the reality. What we're focused on is enabling our customers make that transition, but it's a decade-long transition. But gas and oil will be a part of our future. And we talk about our aspirations to drive 75% of our revenue from in the context of sustainability within 5 years. That includes gas. And I know people debate it, and now there's abatement. But the European Union, which is the most progressive, I would say, of economies in the world recognize and embrace gas as a necessary part of the energy transitions feature.

The next question is related to our Scope 3 commitment, and it is from Stefan Hansen of Tyndall Asset Management. And the question is, can you please expand on the commitment to net zero Scope 3 by 2050? And how will Worley's Scope 3 targets impact its work with customers who don't have Scope 1 and 2 net zero targets as yet? Or the customer's timeframe for net zero is beyond 2050?

90% of our customers have already committed to net zero, Scope 1 or 2. So that for me is a given and it's at 90%, and that's only going to increase. So I'm not concerned. So we discussed Scope 3 emissions last week in the World Economic Forum. And there's a lot of technical complexity around Scope 3. One of the biggest thing is double counting and how do you effectively measure Scope 3 in a way that incentivizes or let people understand and therefore make the business [indiscernible]. We're taking -- we're adopting the science-based target approach. But it's a big area of debate. It's a big area of description. It's certainly not as clean and as clean -- it's not as clear and as clean cut as Scope 1 and 2. But coming back, 90-plus percent of our customers have already committed to Scope 1 and 2, so I don't see a [ problem ] there.

The next question is from Nathan Chan of Toroa Management. And this really relates to EBITDA margins on smaller projects versus large. So how does the large number of smaller transition projects versus a small number of larger transition projects affect EBITDA margins? And does the formats of the small ones, does the format require more overhead costs affecting EBITDA margins?

I mean the size of the project from an overhead point of view is almost say independent. The smaller projects tend to be feasibility, concept, pre-FEED [ not ] when you've got your high-powered individuals, you're leader so your margin is going to be higher there typically because there's a saying in our business, define the right project agree on the right project, then do the project right and not agreeing what the right project is and what the shape and nature of it is. I mean you're putting your best foot on that where the margin's high. It doesn't attract any more or less overhead than that work would be. I mean the consulting business is different, but the overhead. Now when you get the larger projects, you're moving into the detailed engineering, you're moving into construction management, you're moving into procurement and the margin mix is different there. But the overheads impact is not something -- the better margin comes from the feasibility work because EBITDA margin -- because you've got higher gross margin. That's because you're using your best people, and you've got to leverage them, you expect to charge more for them. But of course, we do a lot of smaller projects in the field. So asset services type work, and that would be -- the margin on those would be, it's probably similar to what we generate on larger projects as a percentage [indiscernible].

I would repeat the point too, Chris, that we made earlier that we've spent over $350 million savings, $375 million a year. So we've established -- structurally established a very strong platform, overhead platform which we need to protect going forward, and we need to be scalable, as we've mentioned quite a few times today. That gives us some confidence that the EBITDA margins are controllable. And I'll also point out back to the Global Integrated Delivery service too, that gives us a lot of flexibility in how we allocate smaller or larger projects in a seamless and efficient way. And that's our job. I mean, that's what we've been doing for decades very effectively. So we've got a lot of confidence, smaller or larger projects. We will be able to manage them as efficiently.

The next question is going to be for you, Tiernan. It's regarding the rolling 12-month chart that was in the pack. This is from Jordan Woods of Ausbil. And the question is, can you please explain the rolling 12-month chart? Is that the focus -- is that the forecasted revenue for the next 12 months as of April '22?

Yes, that's a great question, Jordan. And it's obviously one that we've been debating internally. And as I mentioned earlier, this is part of a journey to increase visibility of the delivery of our income on an annual basis. So it's not a forecast for the next 12 months. What it's showing is that the bookings that we have been accumulating on a rolling 12-month basis. It just shows, first of all, that those bookings are increasing at a nice trend. But the delivery of those bookings will be during FY '23 and beyond. It doesn't say that it's all going to be delivered in the next 12 months, albeit our estimate is that a good percentage of it will be delivered in the next 12 months as long as the customer brings that to market in the next 12 months. So our customers control the timing of our contracts. We obviously maintain visibility of that through our customer management systems. But it is a way of seeing how we've accumulated bookings, and then we are really trying to focus on when the aging of that when actually it's going to be delivered. But the key issue is it's increasing, and it will be delivered not only in FY '23, but beyond. In time, as we refine this process, we will get even more visibility of when it will be delivered. But as I said, we are in the hands of our customers, and it is up to us to try and work with them to try and get that real certainty over a range of timings of the delivery of that revenue.

Thank you, Chris and Tiernan. That concludes the question that I've received online. I do acknowledge that we received other questions that were answered through the earlier questions asked by the analyst. So thank you, everybody, for participating from the Q&A perspective. And if there is anything further that I can help up with, please use the Worley Investor Relations e-mail and I will get back to you. But thank you very much.

Thanks, everyone, for joining. I appreciate the time and the questions asked, and I look forward to meeting many of you when I'm next in Australia.