REG - Wood Group (John)PLC - Half Year Results 2023
22/08/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230822:nRSV9931Ja&default-theme=true
RNS Number : 9931J Wood Group (John) PLC 22 August 2023
Half year results for the six months ended 30 June 2023
22 August 2023
This announcement contains inside information
Clear strategic progress, strong growth and increasing full year guidance
Notes HY23 HY22 restated $m Movement At constant currency %
$m %
HEADLINE RESULTS 1,2,3
Revenue (pre-exceptional) Continuing 4 2,986 2,571 16.2% 19.7%
Adjusted EBITDA Continuing 5 202 186 8.5% 12.3%
Adjusted EBITDA margin Continuing 6 6.8% 7.2% (0.4)ppts (0.4)ppts
Adjusted EBIT Continuing 7 89 82 9.2%
Adjusted EBIT margin Continuing 8 3.0% 3.2% (0.2)ppts
Adjusted diluted EPS Total group 9 1.1c 5.7c (80.7)%
Adjusted operating cash flow Total group 10 39 (82) n/a
Free cash flow Total group 11 (219) (352) (37.8)%
Net debt including leases Total group 980 2,156 54.5%
Net debt excluding leases Total group 654 1,756 62.8%
Net debt / adjusted EBITDA Continuing 12 2.0x 4.0x n/a
Order book Continuing 13 5,991 6,424 (6.7)% (4.3)%
Headcount Continuing 14 35,636 34,079 4.7%
STATUTORY RESULTS
Revenue Continuing 4 2,986 2,563 16.5%
Operating profit Continuing 23 31 (25.7)%
(Loss) / profit for the period Total group (27) 89 n/a
Basic EPS Total group (4.3)c 13.0c n/a
Cash flow from operating activities Total group (7) (117) 93.9%
Built Environment Consulting (sold in September 2022) is treated as a
discontinued operation and its results are included within the "Total group"
measures. Continuing results exclude its results. HY22 results have been
restated to include Built Environment Saudi Arabia. See notes on page 4.
Ken Gilmartin, CEO, said:
"When we announced our growth strategy in November last year, we set out a
plan for Wood to deliver on its significant potential, and I am delighted that
our results show the clear progress we are making. We have made a good start
to the year, delivering growth in revenue, EBITDA, headcount and our pipeline,
all while furthering our inspiring culture, as evidenced by our highest-ever
employee net promoter score.
"As we look ahead, we are confident that our actions, the business model we
have implemented and the market growth opportunities to which we have aligned,
support the momentum we are building in our business. As such, we are
increasing our full year guidance for the year for revenue and EBITDA."
Delivering on our profitable growth strategy
· Well-positioned for growth across energy and materials
o Market growth opportunity of c.5% CAGR with addressable market of c.$235bn
in 2025
o Double-digit revenue and pipeline growth in HY23 across majority of our
key markets
o Excellent growth across Carbon Capture and Hydrogen
o Order book of $6 billion, up 5% compared to December 2022 (at constant
currency and excluding the divested Gulf of Mexico labour operations business)
o Significant contract wins across energy and materials
· Growing and improving our pipeline
o Right business model in place, predominantly services-based cost
reimbursable business
o Double-digit growth in the 24-month factored pipeline versus December
2022, following strategic clean up last year that removed lump sum turnkey
(LSTK) and largescale lump sum EPC work
o This pipeline growth reflects the strength of our markets and our client
offering
o Positive trends in pipeline gross margin reflecting selectivity of our
bidding, and market conditions
· Engaged and energised people
o Headcount up 5% to around 36,000 people
o Highest recorded employee net promoter score scores to date
· Growing our sustainable business (see note 15)
o Over $600 million of sustainable solutions revenue in HY23, up 20% on last
year
o Represented 20% of Group revenue
o 33% of sales pipeline from sustainable solutions, up from 31% at year end
Headline financial highlights
· Revenue and adjusted EBITDA ahead of expectations set out in HY23
trading update on 13 July
· Revenue of $3.0 billion was up 16% (+20% at constant currency)
with growth in all business units
o c.$160 million increase in pass-through revenue, which generates only a
small or nil margin
o This increase in pass-through revenue represented around a third of the
revenue growth
· Adjusted EBITDA of $202 million was up 9% on last year (+12% at
constant currency)
· Adjusted EBITDA margin of 6.8%, down 0.4ppts on last year,
reflecting increased low margin pass-through revenue and our previously guided
opex investments across the Group to deliver future growth
· Adjusted EBIT up 9% to $89 million following the EBITDA growth
· Adjusted diluted EPS of 1.1c was down 81% on last year, mainly
reflecting the absence of Built Environment Consulting (sold in 2022) which
contributed $57 million of adjusted profit after tax in HY22
· Adjusted operating cash flow of $39 million was significantly
improved on last year, with improved working capital and lower utilisation of
provisions more than offsetting the sale of Built Environment Consulting
· Free cash flow of $(219) million reflects phasing of exceptional
cash outflows ($99 million vs.
c.$140 million expected for FY23) as well as the typical working capital
seasonality of our business
· Net debt (excl. leases) at 30 June 2023 was $654 million,
significantly down on last year following the reset of our business, but
higher than December 2022 ($393 million) given the free cash outflow and the
payment of $62 million of tax on the sale of Built Environment Consulting
Statutory results
· Operating profit of $23 million was down 26%, mainly reflecting
exceptional items of $31 million which include around $5 million of
Apollo-related costs and a $20 million receivables write-down in the Power and
Industrial EPC business which was closed in 2022
· Loss for the period of $27 million reflects the lower level of
profit from discontinued operations (Built Environment Consulting), the
exceptional items and the tax charge in the period
· Basic EPS of (4.3)c reflects the loss in the period
Full year guidance
· Revenue is expected to continue to grow in the second half,
albeit at a lower rate than the first half, which included the benefits of
higher pass-through activity and a weak 2022 comparator. Overall, revenue for
FY23 is now expected to be around $6 billion
· Our adjusted EBITDA margin is expected to be flat in the nearer
term at around 7%, partly reflecting investments being made in the business
and the level of low margin pass-through revenue activity
· As such, adjusted EBITDA for FY23 is expected to be ahead of our
previous expectations and within our medium-term target of mid to high single
digit growth
· Free cash flow is expected to be positive in the second half,
with no change to our expectations for net debt at the end of the year and no
change to legacy liability cash outflows, which mostly end in 2024
CFO succession
We announced today that David Kemp, Chief Financial Officer (CFO), has advised
the Board of his intention to retire as CFO. The process to appoint his
successor is now underway and David will remain in his role until a successful
candidate is in place.
Presentation
A virtual meeting for investors and analysts will be held today at 8:00am (UK
time) with Ken Gilmartin (CEO) and David Kemp (CFO). The webcast will be live
at https://edge.media-server.com/mmc/p/ynic2uvs
(https://edge.media-server.com/mmc/p/ynic2uvs) .
To join the conference call, and ask any questions, please register via:
https://register.vevent.com/register/BI45bf1976d92d431483dd798b9be6d546
(https://register.vevent.com/register/BI45bf1976d92d431483dd798b9be6d546) .
The webcast and transcript will be available after the event at
www.woodplc.com/investors (http://www.woodplc.com/investors) .
For further information:
Simon McGough, President, Investor Relations +44 (0)7850 978 741
Vikas Gujadhur, Senior Manager, Investor Relations +44 (0)7855 987 399
Alex Le May, Ariadna Peretz, FTI Consulting +44 (0)20 3727 1340
FTI_Wood@FTIconsulting.com (mailto:FTI_Wood@FTIconsulting.com)
The person responsible for arranging the release of this announcement on
behalf of Wood is Martin McIntyre, Group General Counsel and Company
Secretary.
NOTES
Adjustments between statutory and underlying information
The Group uses various alternative performance measures (APMs) to enable users
to better understand the performance of the Group. The Directors believe the
APMs provide a consistent measure of business performance year-to-year and
they are used by management to measure operating performance and for
forecasting and decision-making. The Group believes they are used by investors
in analysing business performance. These APMs are not defined by IFRS and
there is a level of judgement involved in identifying the adjustments required
to calculate them. As the APMs used are not defined under IFRS, they may not
be comparable to similar measures used by other companies. They are not a
substitute for measures defined under IFRS.
Note 1: HY22 results are restated to include the results of Built Environment
Consulting Saudi Arabia, which was previously classified as held for sale. For
HY22, this business contributed $10 million of revenue and $1 million of
adjusted EBITDA. For FY22, this business contributed $27 million of revenue
and $3 million of adjusted EBITDA.
Note 2: Percentage growth rates are calculated on actuals and not the rounded
figures shown throughout this statement. Growth rates shown at constant
currency are calculated by comparing HY23 to HY22 restated at HY23 currency
rates.
Note 3: Built Environment Consulting (sold in September 2022) is treated as a
discontinued operation and its results are included within the "Total group"
measures. Continuing results exclude its results.
Note 4: Revenue includes an exceptional item in HY22 of $(8.0) million related
to contract losses in respect of the closure of the Power and Industrials EPC
business. Revenue (pre-exceptional items) is an APM that is used throughout
this Report as the Group believes it provides a more useful measure of
performance.
Note 5: A reconciliation of adjusted EBITDA to operating profit is shown in
note 2 to the financial statements.
Note 6: Adjusted EBITDA margin is adjusted EBITDA shown as a percentage of
revenue. This measure is used by management to measure the performance of
business, and is one of our medium term targets.
Note 7: Adjusted EBIT shows the Group's adjusted EBITDA after depreciation and
amortisation. This measure excludes amortisation of acquired intangibles and
is therefore aligned with our measure of adjusted EPS. A reconciliation of
adjusted EBIT to operating profit/loss is shown in the Financial Review on
page 12.
Note 8: Adjusted EBIT margin is adjusted EBIT shown as a percentage of
revenue. This measure is used by management to measure the performance of
business.
Note 9: A reconciliation of adjusted diluted EPS to basic EPS is shown in note
7 of the financial statements.
Note 10: Adjusted operating cash flow refers to adjusted cash generated from
operations excluding leases, as shown on page 19 of the Financial Review.
Note 11: Free cash flow is defined as all cash flows before acquisitions,
disposals and dividends. It includes all mandatory payments the Group makes
such as interest and tax, and all exceptional cash flows. It excludes the
impacts of IFRS 16 (Leases) accounting and FX. A reconciliation of free cash
flow to our statutory cash flow statement is shown on page 19.
Note 12: Net debt / adjusted EBITDA ratio (covenant basis) is calculated on
the existing basis prior to the adoption of IFRS 16 in 2019 and is based on
net debt excluding leases. It includes a series of covenant adjustments to
both net debt and EBITDA. The calculation is shown in the Financial Review on
page 23.
Note 13: Order book comprises revenue that is supported by a signed contract
or written purchase order for work secured under a single contract award or
frame agreements. Work under multi-year agreements is recognised in order book
according to anticipated activity supported by purchase orders, customer plans
or management estimates. Where contracts have optional extension periods, only
the confirmed term is included. Order book disclosure is aligned with the IFRS
definition of revenue and does not include Wood's proportional share of joint
venture order book. Order book is presented as an indicator of the visibility
of future revenue.
Note 14: Headcount is a measure of total employees working for Wood, including
Wood employees and contractors. This measure excludes employees in our joint
ventures.
Note 15: Estimated share of revenue as defined by Wood. This figure is
referred to across this document. Sustainable solutions consist of activities
related to: renewable energy, hydrogen, carbon capture & storage,
electrification and electricity transmission & distribution, LNG, waste to
energy, sustainable fuels & feedstocks and recycling, processing of energy
transition minerals, life sciences, and decarbonisation in oil & gas,
refining & chemicals, minerals processing and other industrial processes.
In the case of mixed scopes including a decarbonisation element, these are
only included in decarbonisation if 75% or more of the scope relates to that
element, in which case the total revenue is recorded in decarbonisation.
CEO STATEMENT
We made a good start to the year, with growth in revenue and EBITDA, and clear
momentum across our business. We grew our headcount and our pipeline, and have
made great progress in building our inspiring culture. The cash performance in
the half reflects the turnaround journey we are on, and we remain on track to
be free cash flow positive in the second half of this year, and in 2024 as a
whole.
Good financial performance in the first half
Revenue growth across all businesses
Group revenue of $3.0 billion was up 16% on last year (up 20% at constant
currency) with good growth across all of our business units and demonstrating
that our strategy is delivering. Revenue growth benefited from increased low
margin pass-through activity. This increase in pass-through revenue
represented around a third of the revenue growth.
Profitability in line with expectations
Our adjusted EBITDA of $202 million was up 9% on last year, and up 12% at
constant currency. This reflects the strong revenue growth combined with a
lower margin, partly reflecting increased low margin pass-through revenue but
also reflecting the opex investments we are making in our business.
Our adjusted EBIT was up 9% on last year at $89 million, reflecting the growth
in EBITDA. Our adjusted diluted EPS was 1.1 cents, down 81% on last year. This
mainly reflects the absence of Built Environment Consulting which was sold in
September 2022 and contributed $57 million of adjusted profit after tax in the
first half of 2022. Our adjusted diluted EPS also reflects a high adjusted tax
rate, covered in detail in the Financial Review.
Statutory results
Our operating profit was down 26% to $23 million with the reduction mainly
reflecting two exceptional items in the period. Firstly, we incurred around $5
million of costs related to unsolicited bids from Apollo Management Holdings,
L.P which ultimately ended with its decision to not move forward. Secondly, we
recognised a non-cash receivable impairment of $20 million in relation to one
large Power and Industrial EPC contract, a business area we was closed in
2022.
The loss for the period was $27 million and reflects the exceptional items and
the high tax charge in the period. Given this, our basic loss per share was
4.3 cents.
Cash performance reflects our turnaround
We saw a significant improvement in our adjusted operating cash flow,
generating $39 million, despite a typical seasonal working capital outflow in
our business. We expect our adjusted operating cash flow to be stronger in the
second half.
Our free cash outflow of $219 million includes $99 million of outflows related
to legacy liabilities. The movement in net debt also includes an adverse FX
movement and the payment of $62 million of tax on the sale of the Built
Environment business.
Looking ahead, the cash outflows from legacy liabilities will continue to
reduce as previously described, and we expect positive free cash flow in the
second half of this year, and into 2024 as a whole.
Delivering on our profitable growth strategy
We set out our profitable growth strategy in November 2022 and we are
delivering on each of the three pillars: inspired culture, performance
excellence, and profitable growth.
Engaged and energised people
We are very pleased that employee engagement continues to increase, with our
employee net promoter score (NPS) now at its highest recorded level. Our
headcount at June 2023 was around 36,000 people, up 5% on last year. This is
an important growth metric with our focus on a services-led business model and
we expect to continue growing into the second half. We also continue to grow
our Global Execution Centres, with more than 3,000 skilled employees in India
and Colombia.
Well-positioned for growth across energy and materials
Wood holds an exciting position across our key markets, with a total
addressable market of around $235 billion in 2025 and a market growth
opportunity that remains at around a 5% CAGR, that we expect to outperform. We
saw double-digit revenue growth in HY23 across the majority of our key
markets, with excellent growth across Carbon Capture and Hydrogen (together
around 1.5% of Group revenue). Wood is a leading global player in both of
these areas, having performed over 175 carbon capture studies and designed
over 130 hydrogen plants.
Growing our pipeline and improving commercial focus
In line with our strategy, in 2022 we cleaned up our pipeline of opportunities
to remove LSTK and large EPC work. Since then, we have seen consistent
pipeline growth, with the 24-month factored pipeline up over 20% at June 2023
compared to December 2022. Encouragingly, we are seeing positive trends in
pipeline gross margin reflecting our new selectivity around our bidding
process, as well as improved market conditions.
Growing our sustainable business
Wood is an enabler of net zero, providing solutions across decarbonisation,
energy transition, and materials for a net zero world. In addition, our life
sciences solutions are aligned to the UN Sustainable Development goal of
ensuring good health and well-being. Wood has an AA MSCI rating, in the top
quartile of peers.
We had over $600 million of sustainable solutions revenue in HY23, up 20% on
last year and representing around 20% of Group revenue. Furthermore, 33% of
our sales pipeline is now from sustainable solutions, up from 31% at December
2022.
Right business model in place
We are now a services-led business with the majority of our contracts cost
reimbursable (c.80% of revenue, c.85% of order book), with the remainder
mostly fixed price services (c.20% of revenue, c.15% of order book).
This contract mix represents our risk-appetite following our strategic move
away from LSTK activity (now only around 3% of revenue and around 1% of our
order book).
Optimising our portfolio
As outlined in March 2023, we are evaluating our portfolio and have identified
underperforming businesses that do not fit with our focused strategy and
generate negative margin, representing around 4% of Group revenue. We continue
to consider options in respect of these businesses.
In March 2023, we completed the sale of the Gulf of Mexico labour operations
business for a cash consideration of $17 million.
Momentum across our business
The first half continued the positive momentum we saw at the end of 2022,
including strong trading across both quarters. Our order book at June 2023 was
around $6 billion, up 5% compared to December 2022 at constant currency and
excluding the Gulf of Mexico labour operations business which was sold in the
period.
Significant contract wins across Energy in the year included:
· c.$250 million contract extension in Southeast Asia for
operations and brownfield engineering services
· New global framework agreement with Shell for Wood to deploy our
expertise in decarbonisation, digitalisation and asset life extension to
enhance Shell's assets worldwide
· Pre-FEED for blue ammonia and carbon capture for a confidential
client in the Middle East
Significant contract wins in the year in Materials included:
· Large engineering services contract with Euro Manganese for
sustainable mineral processing
· c.$50 million life sciences engineering contract in the USA with
GSK
· FEED and EPCm contract for Clean Planet Energy's plastics
recycling facilities across the USA
Full year guidance ahead of previous expectations
Revenue is expected to continue to grow in the second half, albeit at a lower
rate than the first half, which included the benefits of higher pass-through
activity and a weak 2022 comparator. Overall, revenue for FY23 is now expected
to be around $6 billion.
Our adjusted EBITDA margin is expected to be flat in the nearer term at around
7%, partly reflecting investments being made in the business and the level of
low margin pass-through revenue activity. As such, adjusted EBITDA for FY23 is
expected to be ahead of our previous expectations and within our medium-term
target of mid to high single digit growth.
Free cash flow is expected to be positive in the second half, with no change
to our expectations for net debt at the end of the year, and no change to
legacy liability cash outflows, which we expect to mostly end in 2024.
On track for our medium-term targets: margin expansion and stronger cash flow
When we announced our profitable growth strategy in November 2022, we set out
our medium financial targets:
· Adjusted EBITDA margins to be flat in the nearer term, partly as
we reinvest in the business to secure growth. In the medium term, we see
opportunity for margin improvement
· Adjusted EBITDA to grow at mid to high single digit CAGR over the
medium term, with momentum building over time as our strategy delivers
· Return to positive free cash flow from 2024 as strong underlying
cash flows offset reducing legacy liabilities
We expect to expand our margin in the medium term, supported by:
· Improved pricing expectations across our markets, reflecting the
selectivity of work undertaken and the significant demand for our services
· The continued shift to our services-led model
· Addressing the small remaining number of underperforming
businesses in our portfolio
· Delivering on the IT and property savings previously announced:
o Annualised property savings of $15 million to $20 million by the end of
2025, with benefits accruing from 2024. EBIT will benefit by $10 million to
$15 million per year
o IT cost savings of $10 million to $15 million from licence rationalisation
and other efficiency measures, with material benefit accruing from 2024
onwards
BUSINESS REVIEWS
CONSULTING
Our Consulting business provides technical consulting, digital consulting,
energy asset and technology solutions. It also provides a range of
decarbonisation solutions and opens opportunities across our other business
units.
Financial review
HY23 HY22 Movement At constant currency %
Restated(1) $m
$m %
Revenue 356 312 13.9% 17.3%
Adjusted EBITDA(2) 38 40 (5.6)% (3.3)%
Adjusted EBITDA margin 10.6% 12.8% (2.2)ppts (2.3)ppts
Adjusted EBIT 28 27 3.0%
Adjusted EBIT margin 7.8% 8.7% (0.9)ppts
Order book 584 554 5.4% 8.1%
Headcount 3,938 3,637 8.3%
1. Restated to include the Built Environment Consulting Saudi Arabia business,
see note on page 4.
2. Adjusted EBITDA includes $nil from JVs (HY22: $nil). Revenue does not
include any contribution from JVs.
Revenue of $356 million was 14% higher than last year, with growth led by
technical consulting across energy and continued growth in digital consulting.
We continue to see high growth across hydrogen and carbon capture.
Adjusted EBITDA of $38 million was 6% lower than last year and 3% lower on a
constant currency basis, reflecting the revenue growth offset by a lower
margin. This lower margin of 10.6% partly reflects the exit of high-margin
work in Russia in 2022, as well as the opex investments we have made to secure
future growth. In addition to this, the performance of our energy assets
development business within Consulting is weighted to the second half in 2023.
The order book at 30 June 2023 was $584 million, up 5% on last year and up 8%
at constant currency.
Operational review
Following the sale of the Built Environment business, the business unit
completed an internal restructure in the period to better align with the
growth trends across technical consulting, digital consulting and
decarbonisation.
Business growth was led by energy, with solutions addressing both energy
security and energy transition, as well as growth across digital consulting.
Encouragingly, we continue to see significant increases in demand for our
consulting offering across hydrogen, carbon capture and other decarbonisation
activities. Key awards in the period across Consulting included:
· Digital consulting services for National Grid in the UK
· Supporting Chevron Renewable Energy Group's Biorefinery
· Feasibility, FEED and supply of Coking Technology for a SOCAR
refinery expansion
Sustainable solutions revenue was c.$90 million, up 21% and representing
around 24% of Consulting revenue.
Outlook for 2023
We expect to see continued revenue growth in the second half and a stronger
margin, helped by the performance of the energy assets development business.
PROJECTS
Our Projects business mainly provides complex engineering design and project
management across energy and materials markets including oil and gas,
chemicals, metals and minerals and life sciences.
Financial review
HY23 HY22 Movement At constant currency %
$m
$m %
Revenue(1) 1,245 990 25.8% 29.6%
Adjusted EBITDA(2) 92 81 12.6% 21.6%
Adjusted EBITDA margin 7.4% 8.2% (0.8)ppts (0.4)ppts
Adjusted EBIT 47 35 36.5%
Adjusted EBIT margin 3.8% 3.5% 0.3ppts
Order book 2,131 2,128 0.1% 2.4%
Headcount 14,138 13,097 7.9%
1. Pass-through revenue, which generates only a small or nil margin, increased
from c.$90 million in HY22 to c.$220 million in HY23.
2. Adjusted EBITDA includes $2 million from JVs (HY22: $2 million). Revenue
does not include any contribution from JVs.
Revenue of $1,245 million was 26% higher than last year, and 30% higher on a
constant currency basis, with strong growth across oil and gas and chemicals
offsetting the run-down of our LSTK activities. Around half of the revenue
growth came from the increase in pass-through revenue from higher activity on
certain contracts. Revenue growth also reflects the recovery in the business,
especially compared to a weak first half in 2022.
Adjusted EBITDA of $92 million was 13% higher than last year, and 22% higher
on a constant currency basis. This reflected the revenue increase combined
with a lower margin, which decreased to 7.4%. The main driver for this lower
margin was the increased low-margin pass-through revenue, combined with higher
operating expenses as we invest for growth. The margin also benefited from the
gradual roll-off of our LSTK portfolio.
In addition to these headline results, a $20 million exceptional charge was
taken in relation to the impairment of a receivable from one large EPC Power
and Industrial contract, see details in the Financial Review.
The order book at 30 June 2023 was $2,131 million, flat on last year and up 2%
at constant currency.
Operational review
The strategic move away from large lump sum work is now mostly complete. The
business continues to make excellent progress in growing across our
services-led business model including expanding our presence across metals and
minerals, and life sciences.
Business growth was balanced across both energy and materials market. Key
awards in the period included:
· Large engineering services contract with Euro Manganese for
sustainable mineral processing
· Significant life sciences engineering contract in the USA with
GSK worth c.$50 million
Sustainable solutions revenue was c.$350 million, up 16% and representing
c.30% of Projects revenue.
Outlook for 2023
We continue to expect strong growth for the year, though growth in the second
half is expected to be at a significantly lower level, mainly reflecting the
strong comparator in 2022. Revenue growth will also be subject to the level of
low margin pass-through activity. The adjusted EBITDA margin is expected to be
broadly similar in the second half.
OPERATIONS
Our Operations business manages and optimises our customers' assets including
decarbonisation, maintenance, modifications, brownfield engineering, and asset
management through to decommissioning.
Financial review
HY23 HY22 Movement At constant currency %
$m
$m %
Revenue(1,2) 1,244 1,177 5.7% 9.2%
Adjusted EBITDA(3) 77 76 1.0% 2.8%
Adjusted EBITDA margin 6.2% 6.4% (0.2)ppts (0.3)ppts
Adjusted EBIT 49 48 3.4%
Adjusted EBIT margin 3.9% 4.0% (0.1)ppts
Order book 3,129 3,584 (12.7)% (10.2)%
Headcount 15,135 15,836 (4.4)%
1. Pass-through revenue, which generates only a small or nil margin, increased
from c.$250 million in HY22 to c.$280 million in HY23.
2. Includes the results of the Gulf of Mexico labour operations business that
was sold in March 2022. In HY23, this business contributed $21 million of
revenue (HY22: $49 million) and $2 million of adjusted EBITDA (HY22: $2
million).
3. Adjusted EBITDA includes $6 million from JVs (HY22: $7 million). Revenue
does not include any contribution from JVs.
Revenue of $1,244 million was 6% higher than last year, and 9% higher at
constant currency. This reflects continued increases in activity levels in oil
and gas across our geographies. Revenue growth also includes an increased
level of pass-through revenue and the impact of the sale of the Gulf of Mexico
labour operations business in the period.
Adjusted EBITDA of $77 million was 1% higher than last year, and 3% higher at
constant currency, reflecting the revenue growth and a reduction in margin to
6.2%. This lower margin mainly reflects the increased pass-through revenue.
The order book at 30 June 2023 was $3,129 million, 13% lower than last year.
Excluding the Gulf of Mexico offshore labour operations business, the order
book was down 7% at constant currency, reflecting the phasing of large
multi-year awards.
Operational review
The Operations business continued to benefit from higher activity levels
across geographies. Key awards in the period included:
· c.$250 million contract extension in SE Asia for operations and
brownfield engineering services
· Renewal of brownfield engineering contract with BP in Iraq
· Brownfield EPCm contract with Woodside in Australia
Sustainable solutions revenue was c.$140 million, up 29% and representing
around 11% of Operations revenue.
Outlook for 2023
We expect continued growth in the second half of the year combined with an
improved margin, driven by lower pass-through revenue and good operational
performance
INVESTMENT SERVICES
Our Investment Services business unit manages a number of legacy activities
and includes our Turbines joint ventures. The most notable areas are
activities in industrial power and heavy civil engineering.
Financial review
HY23 HY22 Movement At constant currency %
$m
$m %
Revenue 141 91 54.2% 54.9%
Adjusted EBITDA(1) 26 27 (2.6)% (3.2)%
Adjusted EBITDA margin 18.5% 29.3% (10.8)ppts (11.1)ppts
Adjusted EBIT 15 24 (37.2)%
Adjusted EBIT margin 10.7% 26.2% (15.5)ppts
Order book 148 157 (6.1)% (6.1)%
Headcount 845 500 69.0%
1. Includes results from our two Turbines joint ventures. Adjusted EBITDA from
these JVs was $25 million in HY23 and $18 million in HY22. Revenue does not
include any contribution from JVs.
Revenue of $141 million was 54% higher than last year, and 55% higher at
constant currency. This growth primarily reflects strong activity growth in
our heavy civils business and the transfer of a facilities business into
Investment Services in 2023 from Projects.
Adjusted EBITDA of $26 million almost entirely represents the share of results
from our Turbines joint ventures of $25 million, up significantly on last year
with a strong performance across both Ethos and RWG. Excluding these Turbine
JVs, adjusted EBITDA was down significantly due to contract provisions taken.
The order book at 30 June 2023 was $148 million, down 6% on last year.
Outlook for 2023
As is typical, performance in our Turbines joint ventures is weighted to the
second half of the year.
CENTRAL COSTS
HY23 HY22 Movement At constant currency %
$m
$m %
Adjusted EBITDA (31) (38) (19.8)% (15.4)%
Adjusted EBIT (50) (51) (2.7)%
Central costs, not allocated to business units, decreased to $31 million,
partly reflecting the benefits of our cost reduction programme in 2022.
Outlook for 2023
We expect central costs included within adjusted EBITDA for FY23 to be higher
than the level in FY22 ($74 million) due in part to inflationary pressures on
salaries and costs. The phasing between the first and second half includes the
phasing of bonus and share-based payments charges.
FINANCIAL REVIEW
Trading performance
Trading performance is presented on the basis used by management to run the
business with adjusted EBITDA including the contribution from joint ventures.
A reconciliation of operating profit to adjusted EBITDA is included in note 2
to the financial statements. A calculation of adjusted diluted EPS is shown on
page 42.
HY23 HY22 FY22
(restated) (restated)
$m $m $m
Continuing operations
Revenue (pre-exceptionals) 2,986.2 2,570.7 5,469.3
Adjusted EBITDA(1) 201.7 185.8 388.2
Adjusted EBITDA margin % 6.8% 7.2% 7.1%
Depreciation (PPE) (15.1) (14.2) (29.3)
Depreciation on right of use asset (IFRS 16) (44.8) (43.6) (90.5)
Impairment of joint venture investments and property, plant and equipment (0.4) (0.4) (2.4)
Amortisation - software and system development (52.0) (45.7) (89.0)
Adjusted EBIT 89.4 81.9 177.0
Amortisation - intangible assets from acquisitions (27.2) (35.0) (64.4)
Tax and interest charges on joint ventures (8.3) (5.2) (14.3)
Exceptional items (31.1) (11.0) (121.2)
Impairment of goodwill and intangible assets - - (542.3)
Operating profit/(loss) 22.8 30.7 (565.2)
Net finance expense (40.3) (53.7) (109.8)
Interest charge on lease liability (8.5) (7.5) (16.4)
Loss before taxation from continuing operations (26.0) (30.5) (691.4)
Tax (charge)/credit (30.4) 32.0 (10.9)
(Loss)/profit for the period from continuing operations (56.4) 1.5 (702.3)
Profit from discontinued operations, net of tax 29.4 87.4 350.6
(Loss)/profit for the period (27.0) 88.9 (351.7)
Non-controlling interest (2.3) (0.4) (4.6)
(Loss)/profit attributable to owners of parent (29.3) 88.5 (356.3)
Number of shares (basic) 684.9 678.8 680.4
Basic (loss)/earnings per share (cents) (4.3) 13.0 (52.4)
In the table above depreciation and amortisation include the contribution from
joint ventures. The comparative information has been restated due to the
reclassification of Built Environment Consulting Saudi Arabia from
discontinued into continuing operations. This relates to the sale of a
subsidiary, previously classified as held for sale, which did not complete
during the first half of 2023 and will now be retained by the Group. The
revenue of this business for the period to 30 June 2022 was $9.8 million
(December 2022: $27.1 million) and Adjusted EBITDA was $1.0 million (December
2022: $3.1 million).
Revenue for periods to June 2022 and December 2022 includes an exceptional
item of $(8.0) million related to contract losses in respect of the closure of
the Power and Industrials EPC business. Revenue (pre-exceptional items) is an
APM that is used throughout this Report as the Group believes it provides a
more useful measure of performance. There are no exceptional revenue items
during the first half of 2023.
During the period, Adjusted EBITDA increased by $15.9 million to $201.7
million primarily due to increased activity levels. Adjusted EBITDA margin
decreased from 7.2% to 6.8% due in part to increased low margin pass-through
revenue in Projects. Operating profit of $22.8 million (June 2022: $30.7
million) has reduced mainly due to higher exceptional items of $31.1 million
(June 2022: $11.0 million). The $29.4 million profit from discontinued
operations, net of tax includes the final proceeds from the Built Environment
Consulting business following agreement of the completion balance sheet
between the Group and WSP. The increase in the tax charge to $30.4 million
(June 2022: $32.0 million credit) is primarily driven by actuarial movements
in the UK pension scheme and largely explains the loss for the period of $27.0
million, compared with a profit of $88.9 million in the period to 30 June
2022.
The review of our trading performance is contained on pages 5 to 7.
Reconciliation of Adjusted EBIT to Adjusted diluted EPS
HY23 HY22 FY22
(restated) (restated)
$m $m $m
Adjusted EBIT 89.4 81.9 177.0
Tax and interest charges on joint ventures (8.3) (5.2) (14.3)
Adjusted net finance expense (34.8) (50.9) (103.9)
Interest charge on lease liability (8.5) (7.5) (16.4)
Adjusted profit before tax 37.8 18.3 42.4
Adjusted tax charge (28.3) (34.0) (59.2)
Adjusted profit from discontinued operations, net of tax - 56.5 60.2
Adjusted profit for the period 9.5 40.8 43.4
Non-controlling interest (2.3) (0.4) (4.6)
Adjusted earnings 7.2 40.4 38.8
Number of shares (m) - diluted 684.9 706.1 680.4
Adjusted diluted EPS (cents)(2) 1.1 5.7 5.7
See notes on page 24
Reconciliation to GAAP measures
HY23 HY22 FY22
(restated) (restated)
$m $m $m
Loss before tax from continuing operations (26.0) (30.5) (691.4)
Impairment of goodwill and intangible assets - - 542.3
Exceptional items 31.1 11.0 121.2
Exceptional items - net finance expense 5.5 2.8 5.9
Amortisation - intangible assets from acquisitions 27.2 35.0 64.4
Adjusted profit before tax 37.8 18.3 42.4
Tax charge/(credit) 30.4 (32.0) 10.9
Tax in relation to acquisition amortisation 2.5 1.8 11.9
Tax on exceptional items (4.6) 64.2 36.4
Adjusted tax charge 28.3 34.0 59.2
Profit from discontinued operations, net of tax 29.4 87.4 350.6
Discontinued operations, gain on disposal (29.4) - (297.1)
Discontinued items, exceptional items - (30.9) 6.7
Adjusted profit from discontinued operations, net of tax - 56.5 60.2
The reconciliation from Adjusted EBIT of $89.4 million (June 2022: $81.9
million) to Adjusted earnings of $7.2 million (June 2022: $40.4 million) has
been provided to show a clear reconciliation to Adjusted diluted EPS, which is
a key performance measure of the Group. The reconciliation to GAAP measures
highlights that the adjusted measures remove exceptional items, including
impairment charges against goodwill and intangible assets, the exceptional
items on discontinued operations and the associated tax charges on the basis
that these are disclosed separately due to their size and nature to enable a
full understanding of the Group's performance. Please refer to commentary on
exceptional items and associated tax charges on pages 15 and 16. In addition,
amortisation on intangible assets from acquisitions and the associated tax
credit has been excluded to allow a more useful comparison to Wood's peer
group.
Amortisation, depreciation and other impairments for continuing operations
Total amortisation for the first half of 2023 of $79.2 million (June 2022:
$80.7 million) includes $27.2 million of amortisation of intangibles
recognised on the acquisition of Amec Foster Wheeler ("AFW") (June 2022: $35.0
million). Amortisation in respect of software and development costs was $52.0
million (June 2022: $45.7 million) and this largely relates to engineering
software and ERP system development. Included in the amortisation charge for
the year is $0.7 million (June 2022: $0.8 million) in respect of joint
ventures.
The total depreciation charge in the first half of 2023 amounted to $59.9
million (June 2022: $57.8 million) and includes depreciation on right of use
assets of $44.8 million (June 2022: $43.6 million). Included in the
depreciation charge for the period is $5.4 million (June 2022: $5.5 million)
in respect of joint ventures.
Net finance expense and debt
HY23 HY22 FY22
$m $m $m
Interest on bank borrowings 27.5 22.9 47.2
Interest on US Private Placement debt 8.2 26.1 40.3
Discounting relating to asbestos, deferred consideration and other liabilities 6.9 3.6 6.8
Other interest, fees and charges 11.0 4.0 22.4
Total finance expense excluding joint ventures and interest charge on lease 53.6 56.6 116.7
liability
Finance income relating to defined benefit pension schemes (9.7) (0.4) (2.4)
Other finance income (3.6) (2.5) (4.5)
Net finance expense 40.3 53.7 109.8
Interest charge on lease liability 8.5 7.5 16.4
Net finance charges in respect of joint ventures 3.5 2.1 4.4
Net finance expense including joint ventures, continuing Group 52.3 63.3 130.6
Interest on bank borrowings of $27.5 million (June 2022: $22.9 million)
primarily relates to interest charged on borrowings under the $1.2 billion
Revolving Credit Facility ('RCF') which matures in October 2026 and the United
Kingdom Export Facility ('UKEF') term loan which is now expected to be repaid
in September 2024. Despite the reduction in average net debt during the
period, there was a $4.6 million increase in interest on bank borrowings. The
increase in the interest expense is driven by higher interest rates due to a
combination of higher margin and higher floating interest rates. The higher
margin, which is driven by the net debt excluding leases to adjusted EBITDA
(excluding leases) ratio, was in effect throughout the first quarter of the
year until the year-end covenant certificate was submitted.
The interest charge on US Private Placement debt decreased by $17.9 million to
$8.2 million primarily due to the total repayment of around $450 million to
the USPP noteholders during the second half of 2022, which was comprised of
the early settlement of notes following the disposal of the Built Environment
Consulting business and the $35 million tranche which fell due in July 2022.
The Group had $352.5 million (December 2022: $352.0 million) of unsecured loan
notes outstanding at 30 June 2023, maturing between 2024 and 2031 with around
75% due in 2025 or later.
Other interest, fees and charges amount to $11.0 million (June 2022: $4.0
million) and principally relates to the interest on bank overdrafts and
interest on the receivables factoring facilities totalling $9.1 million and
amortisation of bank facility costs of $1.9 million (June 2022: $2.1 million).
The increase in interest on other facilities is driven by an increase in
floating rates.
In total, the Group had undrawn facilities of $1,040.1 million as at 30 June
2023, of which $899.1 million related to the revolving credit facility.
The Group recognised interest costs in relation to lease liabilities of $8.5
million (June 2022: $7.5 million) which relates to the unwinding of discount
on the lease liability.
Included within the discounting balance of $6.9 million (June 2022: $3.6
million) is the unwinding of discount on the asbestos provision of $5.5
million (June 2022: $2.8 million).
Net debt excluding leases to adjusted EBITDA (excluding the impact of IFRS 16)
at 30 June was 2.0 times on a covenant basis (December 2022: 1.3 times)
against our covenants of 3.5 times. This is calculated pre IFRS 16 as our
covenants are calculated on a frozen GAAP basis, see note 4 on page 23.
Interest cover (see note 5 on page 24) was 4.3 times on a covenant basis
(December 2022: 4.2 times) against our covenant of 3.5 times.
Exceptional items
HY23 HY22 FY22
$m $m $m
Power and Industrial EPC losses (revenue) - 8.0 8.0
Power and Industrial EPC losses (cost of sales) 1.2 12.3 17.0
Impairment of Power and Industrial EPC receivables 20.0 - -
Impairment of goodwill and intangible assets - - 542.3
Apollo related costs 4.6 - -
Redundancy, restructuring and integration costs - 15.3 30.1
Investigation support costs and provisions - (2.8) (4.2)
Enterprise settlement - - 35.6
Asbestos yield curve and costs 5.3 (21.8) 21.5
Russia exit costs and charges - - 13.2
Exceptional items included in continuing operations, before interest and tax 31.1 11.0 663.5
Unwinding of discount on asbestos provision 5.5 2.8 5.9
Tax (credit)/charge in relation to exceptional items (5.2) (4.6) 5.2
Release of uncertain tax provision (7.4) - -
Recognition of deferred tax assets due to UK pension actuarial movements 17.2 (59.6) (41.6)
Exceptional items included in continuing operations, net of interest and tax 41.2 (50.4) 633.0
Exceptional items are those significant items which are separately disclosed
by virtue of their size or incidence to enable a full understanding of the
Group's financial performance.
Power and Industrial EPC losses
Additional costs on a fixed price EPC contract of $1.2 million were recorded
as an exceptional charge through cost of sales on the basis that the Group no
longer operates within this sector. This follows previous write downs made
during 2022 following the strategic decision to exit this market.
Impairment of Power and Industrial EPC receivables
The non-cash charge of $20.0 million relates to a write down of receivable
balances arising from a fixed price contract in the Power and Industrial EPC
business. The Group had expected to recover these balances but these have
since been disputed by the client and will likely progress to a legal or
commercial negotiation. By virtue of its size and nature of these projects
being within a sector that the Group no longer operates, this was recorded as
an exceptional charge through impairment losses on trade receivables in the
income statement.
Apollo related costs
During the period to 30 June 2023, $4.6 million was incurred in relation to
legal and advisor costs incurred in relation to Apollo's preliminary approach
to potentially acquire the ordinary share capital of the Group, which did not
ultimately lead to an offer.
Asbestos
All asbestos costs have been treated as exceptional on the basis that
movements in the provision are non-trading and can be large and driven by
market conditions which are out with the Group's control. Excluding these
charges from the trading results improves the understandability of the
underlying trading performance of the Group.
The charge before interest and tax of $5.3 million (June 2022: $21.8 million
credit) in 2023 comprises of a $2.0 million yield curve charge (June 2022:
$23.8 million credit) and $3.3 million (June 2022: $2.0 million) of costs in
relation to managing the claims. The 30-year US Treasury rate has decreased to
3.85% from 3.97% at the end of December 2022, and led to the income statement
charge.
$5.5 million of interest costs which relate to the unwinding of discount on
the asbestos provision over time are shown as exceptional (June 2022: $2.8
million).
Tax
An exceptional tax charge of $4.6 million (June 2022: $64.2 million credit)
has been recorded during the period. It consists of a $5.2 million tax credit
on exceptional items (June 2022: $4.6 million credit), a $7.4 million credit
in relation to the release of an uncertain tax provision created through
exceptional items on the disposal of the Well Support business in 2011, offset
by an exceptional charge of $17.2 million recognised due to the actuarial loss
in relation to the UK defined benefit pension scheme. As deferred tax
liabilities support the recognition of deferred tax assets, the reduction of
$17.2 million of deferred tax assets has been charged through exceptional
items based on its size.
Taxation
The effective tax rate on profit before tax, exceptional items and
amortisation and including Wood's share of joint venture profit on a
proportionally consolidated basis is set out below, together with a
reconciliation to the tax charge in the income statement.
HY23 HY22 FY22
(restated) (restated)
$m $m $m
Loss from continuing operations before tax (26.0) (30.5) (691.4)
Profit from discontinued operations, net of tax and before exceptional items - 56.5 60.2
Tax charge in relation to joint ventures 4.8 3.1 9.9
Amortisation (note 11) 78.5 79.9 151.9
Exceptional items (continuing operations) 36.6 13.8 669.4
Tax charge in relation to discontinued operations - 6.5 7.9
Profit before tax, exceptional items and amortisation 93.9 129.3 207.9
Effective tax rate on continuing operations (excluding tax on exceptional 36.00% 33.70% 36.84%
items and amortisation)
Tax charge (excluding tax on exceptional items and amortisation) 33.8 43.6 76.6
Tax charge in relation to joint ventures (4.8) (3.1) (9.9)
Tax (credit)/charge in relation to exceptional items (continuing operations) (12.6) (4.6) 5.2
Derecognition/(recognition) of deferred tax assets due to UK pension actuarial 17.2 (59.6) (41.6)
movements
Tax credit in relation to amortisation (3.2) (1.8) (11.5)
Tax charge on discontinued operations - (6.5) (7.9)
Tax charge/(credit) from continuing operations per the income statement 30.4 (32.0) 10.9
The effective tax rate reflects the rate of tax applicable in the
jurisdictions in which the Group operates and is adjusted for permanent
differences between accounting and taxable profit and the recognition of
deferred tax assets. Key adjustments impacting on the rate in 2023 are
withholding taxes suffered on which full double tax relief is not available,
controlled foreign company charges and the impact of the accounting expense
for share based payments being in excess of the tax deduction, less the
release of uncertain tax provisions reflecting the positive outcomes in
relation to specific risks.
We anticipate that the tax rate on profit before exceptional items and
amortisation will be 34% to 36% going forward reflecting the tax rates of the
countries the Group operates in along with the withholding taxes in excess of
double tax relief. There are factors that would impact on this on an annual
basis such as changes in deferred tax asset recognition and uncertain tax
provisions.
In addition to the effective tax rate, the total tax charge in the income
statement reflects the impact of exceptional items and amortisation which by
their nature tend to be expenses that are more likely to be not deductible
than those incurred in ongoing trading profits. The income statement tax
charge excludes tax in relation to joint ventures. The increase in the tax
charge for the first half of 2023 when compared to June 2022 is largely a
result of the exceptional tax charge of $17.2 million (June 2022: $59.6
million credit) on deferred tax assets as a result of actuarial movements on
the UK pension scheme.
Earnings per share
The calculation of basic earnings per share is based on the earnings
attributable to owners of the parent divided by the weighted average number of
ordinary shares in issue during the year excluding shares held by the Group's
employee share trusts. For the calculation of adjusted diluted earnings per
share, the weighted average number of ordinary shares in issue is adjusted to
assume conversion of dilutive potential ordinary shares, only when there is a
profit per share. Adjusted diluted earnings per share is disclosed to show the
results excluding the impact of exceptional items and amortisation related to
acquisitions, net of tax.
For the period ended 30 June 2023, the Group reported a basic loss (December
2022: loss) per ordinary share, therefore the effect of dilutive ordinary
shares are excluded (December 2022: excluded) in the calculation of diluted
earnings per share. Where profits have been made when disaggregating
discontinued and continuing operations, the calculation of diluted earnings
per share was performed on the same basis as the whole Group.
HY23 HY22 FY22
Continuing Dis- Total Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
operations continued operations (restated) (restated) (restated) (restated)
$m $m $m
$m $m $m $m $m $m
(Losses)/earnings attributable to equity (17.5) - (17.5) (49.3) 56.5 7.2 (73.9) 60.2 (13.7)
shareholders (basic pre-exceptional)
Exceptional items, net of tax (41.2) 29.4 (11.8) 50.4 30.9 81.3 (633.0) 290.4 (342.6)
(Losses)/earnings attributable (58.7) 29.4 (29.3) 1.1 87.4 88.5 (706.9) 350.6 (356.3)
to equity shareholders (basic)
Number of shares (basic) 684.9 684.9 684.9 678.8 678.8 678.8 680.4 680.4 680.4
Number of shares (diluted) 684.9 684.9 684.9 706.1 706.1 706.1 680.4 680.4 680.4
Basic (losses)/earnings per share (cents) (8.6) 4.3 (4.3) 0.0 13.0 13.0 (103.9) 51.5 (52.4)
Diluted (losses)/earnings per share (cents) (8.6) 4.3 (4.3) 0.0 12.5 12.5 (103.9) 51.5 (52.4)
(58.7) 29.4 (29.3) 1.1 87.4 88.5 (706.9) 350.6 (356.3)
(Losses)/earnings attributable
to equity shareholders (diluted)
Exceptional items, net of tax 41.2 (29.4) 11.8 (50.4) (30.9) (81.3) 633.0 (290.4) 342.6
Amortisation of intangibles on acquisition, 24.7 - 24.7 33.2 - 33.2 52.5 - 52.5
net of tax
Earnings/(losses) attributable 7.2 - 7.2 (16.1) 56.5 40.4 (21.4) 60.2 38.8
to equity shareholders (adjusted diluted)
Earnings/(losses) attributable 7.2 - 7.2 (16.1) 56.5 40.4 (21.4) 60.2 38.8
to equity shareholders (adjusted basic)
Number of shares (diluted) 684.9 684.9 684.9 706.1 706.1 706.1 680.4 680.4 680.4
Number of shares (basic) 684.9 684.9 684.9 678.8 678.8 678.8 680.4 680.4 680.4
Adjusted diluted (cents) 1.1 - 1.1 (2.3) 8.0 5.7 (3.1) 8.8 5.7
Adjusted basic (cents) 1.1 - 1.1 (2.4) 8.4 6.0 (3.1) 8.8 5.7
Basic loss per share for the year was (4.3) cents (June 2022: earnings 13.0
cents). The reduction in earnings per share is driven by the increase in
exceptional items, the higher tax charge in the period and the reduction in
profit from discontinued operations, net of tax to $29.4 million as a result
of the disposal completing during the second half of 2022.
Capital allocation
Our capital allocation policy remains unchanged and starts with having a
strong balance sheet. We look to manage our target leverage over the medium
term within a range of around 0.5 to 1.5 times net debt (excluding leases) to
adjusted EBITDA (pre-IFRS 16). Beyond this, we consider how best to create
value for our shareholders from dividends, share buybacks or attractive
acquisitions.
Given the free cash outflow in the period, the Board decided not to recommend
any dividends in relation to the period.
Cash flow and net debt
The cash flow for the year is set out below and includes both continuing and
discontinued operations:
Excluding leases Impact of Excluding leases Impact of Leases
HY23 Leases Total HY22 HY22 Total Total
$m HY23 HY23 $m $m HY22 FY22
$m $m $m $m
Adjusted EBITDA 151.3 50.4 201.7 189.5 60.5 250.0 458.0
Less JV EBITDA (25.2) (3.6) (28.8) (19.5) (2.9) (22.4) (58.5)
JV Dividends 8.0 - 8.0 15.6 - 15.6 30.1
Adjusted decrease in provisions (note 6) (11.9) - (11.9) (73.7) - (73.7) (43.7)
Other 10.8 - 10.8 14.6 1.2 15.8 28.1
Cash flow generated from operations pre working capital
133.0 46.8 179.8 126.5 58.8 185.3 414.0
Increase in receivables (164.4) - (164.4) (31.7) - (31.7) (97.5)
Adjusted increase/(decrease) in payables (note 7) 68.7 - 68.7 (169.6) - (169.6) (267.6)
Decrease/(increase) in inventory 1.9 - 1.9 (6.9) - (6.9) (1.6)
Adjusted working capital movements (93.8) - (93.8) (208.2) - (208.2) (366.7)
Adjusted cash generated /(outflow) from operations (note 6) 39.2 46.8 86.0 (81.7) 58.8 (22.9) 47.3
Purchase of property, plant and equipment (9.2) - (9.2) (9.5) - (9.5) (27.6)
Proceeds from sale of property, plant and equipment 1.4 - 1.4 1.4 - 1.4 7.1
Purchase of intangible assets (68.0) - (68.0) (49.1) - (49.1) (109.2)
Interest received 3.6 - 3.6 2.5 - 2.5 4.5
Interest paid (44.8) - (44.8) (53.3) - (53.3) (98.1)
Adjusted tax paid (43.0) - (43.0) (29.2) - (29.2) (81.9)
Non-cash movement in leases - (27.7) (27.7) - (40.7) (40.7) (14.7)
Other 0.2 - 0.2 (30.2) - (30.2) (20.4)
Free cash flow (excluding exceptionals) (120.6) 19.1 (101.5) (249.1) 18.1 (231.0) (293.0)
Cash exceptionals (98.7) 5.6 (93.1) (102.4) 8.0 (94.4) (304.2)
Free cash flow (219.3) 24.7 (194.6) (351.5) 26.1 (325.4) (597.2)
FX movements on cash and debt facilities
(21.9) (7.5) (29.4) (11.8) 24.1 12.3 (25.5)
Divestments (19.8) - (19.8) - - - 1,729.4
(Increase)/decrease in net debt (261.0) 17.2 (243.8) (363.3) 50.2 (313.1) 1,106.7
Opening net debt (393.2) (342.9) (736.1) (1,393.0) (449.8) (1,842.8) (1,842.8)
Closing net debt (654.2) (325.7) (979.9) (1,756.3) (399.6) (2,155.9) (736.1)
Closing net debt at 30 June 2023 including leases was $979.9 million (December
2022: $736.1 million). Included within closing net debt is the IFRS 16 lease
liability which is the net present value of the lease payments that are not
paid at the commencement date of the lease and subsequently increased by the
interest cost and reduced by the lease payment made. The lease liability as at
30 June 2023 was $325.7 million (December 2022: $342.9 million). All covenants
on the debt facilities are measured on a pre-IFRS 16 basis.
Closing net debt excluding leases as at 30 June 2023 was $654.2 million
(December 2022: $393.2 million). The monthly average net debt excluding leases
in H1 2023 was $820.9 million (December 2022: $1,489.1 million). The cash
balance and undrawn portion of the Group's committed banking facilities can
fluctuate throughout the year. Around the covenant remeasurement dates of 30
June and 31 December the Group's net debt excluding leases is typically lower
than the monthly averages due mainly to a strong focus on collection of
receipts from customers.
Cash generated from operations pre-working capital reduced by $5.5 million to
$179.8 million from $185.3 million in the period to June 2022. The movement in
provisions in 2023 includes utilisations of the provision of around $15
million partially offset by the net non-cash charge to EBITDA compared to a
credit in 2022. The net non-cash charge of around $3 million in 2023 is driven
by the Group recognising some additional project related provisions. The other
movement of $10.8 million (June 2022: $15.8 million) is principally comprised
of non-cash movements through EBITDA including share-based charges of $9.8
million (June 2022: $8.5 million), FX movements of $2.8 million (June 2022:
$6.3 million), partially offset by a gain on disposal of the Gulf of Mexico
business of $1.9 million.
There was a working capital outflow of $93.8 million (June 2022: $208.2
million). The outflow in receivables of $164.4 million was driven by an
increase to revenue in the first half of 2023 and higher closing DSO. The
adverse movement in receivables was partially offset by an inflow in the year
due to payables of $68.7 million. The payables inflow is driven by increasing
activity levels during 2023 following the normalisation of payables in
December 2022.
The Group has receivables financing facilities totalling $200.0 million. The
amount utilised at 30 June 2023 was $200.0 million (June 2022: $198.4 million,
December 2022: $200.0 million). The facilities are non-recourse to the Group
and are not included in our net debt.
Cash exceptionals of $93.1 million are broadly in line with the first half of
2022 and mainly relates to the settlement of known legal claims and asbestos
payments, including the historic SFO investigation payments of around $38
million which were provided for in FY20 and asbestos payments of around $28
million. The remaining cash exceptional mainly relates to the legacy Aegis
contract of $15 million and other legacy contracts of around $10 million.
The free cash outflow of $194.6 million (June 2022: $325.4 million) has
reduced by $130.8 million, largely due to the $108.9 million improvement in
adjusted cash generated from operations. The remaining movement of $21.9
million in free cash flow is mainly explained by:
· Other net debt movements reduced by $30.4 million to a $0.2
million inflow mainly due to movements on prepaid debt fees and accrued
interest charges totalling $0.2 million (June 2022: $30.0 million).
· An increase of $18.9 million related to the purchase of
intangible assets, including software and investment in ERP improvements
throughout the Group.
· An increase in tax payments during 2023 of $13.8 million which
was mainly due to the settlement of various withholding tax liabilities and
uncertain tax provisions ("UTPs"), which had been provided for in previous
periods.
· A reduction in cash interest paid of $8.5 million due to lower
average net debt during the period.
· A reduction in the non-cash movement in leases totalling $13.0
million due to continued rationalisation of the lease portfolio.
Net cash from divestments of $19.8 million includes final proceeds from the
disposal of the Built Environment Consulting ($23 million) and proceeds from
the sale of the Gulf of Mexico business ($17 million). These are offset by
taxes paid on the Built Environment Consulting disposal.
Cash conversion, calculated as cash generated from operations as a percentage
of adjusted EBITDA (less JV EBITDA) increased to 49.7% (June 2022: -10.1%,
December 2022: 11.8%) primarily due improved working capital performance.
Summary balance sheet
HY23 HY22 FY22
$m $m $m
Goodwill and intangible assets 4,356.7 4,905.7 4,309.1
Right of use assets 258.4 282.0 276.0
Other non-current assets 890.3 1,047.1 918.0
Trade and other receivables 1,699.6 1,490.2 1,545.0
Net held for sale assets and liabilities (excluding cash) - 1,099.3 0.4
Trade and other payables (1,797.6) (1,630.2) (1,687.6)
Net debt excluding leases (654.2) (1,756.3) (393.2)
Lease liabilities (325.7) (339.5) (342.9)
Asbestos related litigation (302.2) (302.7) (311.4)
Provisions (129.2) (225.0) (148.3)
Other net liabilities (295.1) (383.0) (435.6)
Net assets 3,701.0 4,187.6 3,729.5
Net current (liabilities) / assets (111.7) 801.2 (235.0)
At 30 June 2023, the Group had net current liabilities of $111.7 million (June
2022: $801.2 million assets). The net current asset position in June 2022 was
impacted by the classification of the total assets and liabilities of the
Built Environment Consulting business to held for sale. Following the sale,
the proceeds received have been used to repay long term debt.
Goodwill and intangible assets include $2,514.5 million (December 2022:
$2,523.5 million) of goodwill and intangibles relating to the acquisition of
Amec Foster Wheeler. The reduction of $9.0 million is principally related to
the amortisation charge of $27.2 million offset by FX movements of $18.2
million.
Right of use assets and lease liabilities amount to $258.4 million (December
2022: $276.0 million) and $325.7 million (December 2022: $342.9 million)
respectively.
Trade and other receivables increased to $1,699.6 million partially reflecting
the increased revenues in H1'23 compared with H1'22 and higher DSO. Trade and
other payables increased to $1,797.6 million reflecting the increasing
activity levels and follows the normalisation of the balance as at December
2022.
Largely as a result of the acquisition of AFW, the Group is subject to claims
by individuals who allege that they have suffered personal injury from
exposure to asbestos primarily in connection with equipment allegedly
manufactured by certain subsidiaries during the 1970s or earlier. The
overwhelming majority of claims that have been made and are expected to be
made are in the USA. The asbestos related litigation provision amounts to
$302.2 million (December 2022: $311.4 million).
The net asbestos liability at 30 June 2023 amounted to $317.3m (December 2022:
$335.4m) and comprised $302.2m in provisions (December 2022: $311.4m) and
$49.6m in trade and other payables (December 2022: $59.5m) less $25.5m in long
term receivables (December 2022: $24.4m) and $9.0m in trade and other
receivables (December 2022: $11.1m).
The Group expects to have net cash outflows of around $38 million as a result
of asbestos liability indemnity and defence payments in excess of insurance
proceeds during 2023. The Group has worked with its independent asbestos
valuation experts to estimate the amount of asbestos related indemnity and
defence costs at each year end based on a forecast to 2050.
Other provisions as at June 2023 were $129.2 million (December 2022: $148.3
million) and comprise of project related provisions of $57.3 million (December
2022: $63.3 million), insurance provisions of $43.0 million (December 2022:
$46.2 million), property provisions of $26.7 million (December 2022: $26.0
million) and litigation related provisions of $2.2 million (December 2022:
$12.8 million).
Full details of provisions are provided in note 12 to the Group financial
statements.
Pensions
The Group operates a number of defined benefit pension schemes in the UK and
US, alongside a number of defined contribution plans. At 30 June 2023, the UK
defined benefit pension plan had a surplus of $393.1 million (December 2022:
$432.4 million) and other schemes had deficits totalling $70.4 million
(December 2022: $73.2 million).
The Group's largest pension scheme, the UK Pension Plan, has total scheme
assets of $2,697.5 million (December 2022: $2,690.1 million) and pension
scheme obligations of $2,304.4 million (December 2022: $2,257.7 million) and
is therefore 117% (December 2022: 119%) funded on an IAS 19 basis. There was a
reduction in scheme liabilities arising from a higher discount rate used in
the actuarial assumptions, however this was offset by a larger foreign
exchange movement.
In assessing the potential liabilities, judgement is required to determine the
assumptions for inflation, discount rate and member longevity. The assumptions
at 30 June 2023 showed an increase in the discount rate which results in lower
scheme liabilities. However, this was outweighed by poor investment
performance on scheme assets resulting in an overall decrease to the surplus
compared to December 2022. Full details of pension assets and liabilities are
provided in note 9 to the Group financial statements.
The UK defined benefit pension plan is estimated to have a surplus on a
Technical Provisions basis at 31 March 2023, subject to finalisation of the
scheme accounts during 2023 and consistent with the assumptions used at the
last triennial actuarial valuation. The Group is currently working closely
with the Trustee to agree a preferred direction regarding the future of the
plan. Options being assessed include moving to a buy-in insured basis and
eventual buy-out with a third party as soon as is reasonably practical, or to
continue to run the WPP on for a limited number of years to potentially
generate further surplus. Any surplus could benefit both the Group and pension
members, ensuring that appropriate safeguards for both the funding position
and members' interests are taken into account at all times.
Contingent liabilities
Details of the Group's contingent liabilities are set out in note 18 to the
financial statements.
Divestments
The final proceeds from the disposal of the Built Environmental Consulting
business were agreed during the first half of 2023 upon agreement of the
completion balance sheet between the Group and WSP. This has resulted in an
additional gain of $34.6 million, comprising largely of $23.1 million of cash
proceeds being and the release of completion accruals, being recognised in
discontinued operations.
Notes
1. A reconciliation of operating profit/(loss) to adjusted EBITDA is
presented in table below and is a key unit of measurement used by the Group in
the management of its business.
HY23 HY22 FY22
(restated) (restated)
$m $m $m
Operating profit/(loss) per income statement 22.8 30.7 (565.2)
Share of joint venture finance expense and tax 8.3 5.2 14.3
Exceptional items (note 4) 31.1 11.0 663.5
Amortisation (including joint ventures) 79.2 80.7 153.4
Depreciation (including joint ventures) 15.1 14.2 29.3
Depreciation of right of use assets 44.8 43.6 90.5
Impairment of PP&E and right of use assets 0.4 0.4 2.4
Adjusted EBITDA (continuing operations) 201.7 185.8 388.2
Discontinued operation
Operating profit (discontinued) - 42.1 63.1
Exceptional items (note 6) - 22.1 6.7
Adjusted EBITDA (discontinued operation) - 64.2 69.8
Total Group Adjusted EBITDA 201.7 250.0 458.0
2. Adjusted diluted earnings per share ("AEPS") is calculated by
dividing earnings attributable to owners before exceptional items and
amortisation relating to acquisitions, net of tax, by the weighted average
number of ordinary shares in issue during the period, excluding shares held by
the Group's employee share ownership trusts and is adjusted to assume
conversion of all potentially dilutive ordinary shares. In the period to 30
June 2023, AEPS was not adjusted to assume conversion of all potentially
dilutive ordinary shares because the unadjusted result is a loss.
3. Number of people includes both employees and contractors at 30 June
2023.
4. Net Debt to Adjusted EBITDA cover on a covenant basis is presented in
the table below:
HY23 HY22 FY22
$m $m $m
Net debt excluding lease liabilities (reported basis) (note 14) 654.2 1,756.3 393.2
Covenant adjustments 15.7 11.9 16.2
Net debt (covenant basis) 669.9 1,768.2 409.4
Adjusted EBITDA (covenant basis) 329.4 445.8 315.1
Net debt to Adjusted EBITDA (covenant basis) - times 2.03 3.97 1.30
Adjusted EBITDA (covenant basis) is on a rolling 12 month period and excludes
Adjusted EBITDA from the discontinued operation and the impact of applying
IFRS 16. The funding agreements require that covenants are calculated by
applying IAS 17 rather than IFRS 16. The covenant adjustment to net debt
relates to finance leases which would be on the balance sheet if applying IAS
17. Note: the covenant basis shown above refers to the measure as calculated
for our RCF. The measure used for our USPP and UKEF is not materially
different from the covenant measure shown above.
5. Interest cover on a covenant basis is presented in the table below:
HY23 HY22 FY22
$m $m $m
Net finance expense 96.4 107.4 109.8
Covenant adjustments (5.2) (6.5) (4.4)
Non-recurring net finance expense (21.7) - (37.5)
Net finance expense (covenant basis) 69.5 100.9 67.9
Adjusted EBITA (covenant basis) 299.9 412.2 285.9
Interest cover (covenant basis) - times 4.3 4.1 4.2
The difference between Adjusted EBITDA (covenant basis) and Adjusted EBITA
(covenant basis) is $29.5 million (June 2022: $33.6 million) and is mainly
explained by 12-month rolling pre-IFRS 16 depreciation charges of $30.2
million (June 2022: $32.0 million).
6. Reconciliation to GAAP measures between consolidated cash flow
statement and cash flow and net debt reconciliation
HY23 HY22 FY22
$m $m $m
Decrease in provisions (11.9) (73.7) (123.1)
Prior year cash exceptionals - - 79.4
Adjusted movement in provisions (11.9) (73.7) (43.7)
Decrease in payables (19.3) (235.4) (398.9)
Prior year cash exceptionals 88.0 65.8 131.3
Adjusted increase/(decrease) in payables 68.7 (169.6) (267.6)
Tax paid (105.1) (29.2) (103.9)
Tax paid on disposal of business 62.1 - 22.0
Adjusted tax paid (43.0) (29.2) (81.9)
Disposal of businesses (net of cash disposed) 42.3 - 1,751.4
Tax paid on disposal of business (62.1) - (22.0)
Divestments (19.8) - 1,729.4
Adjusted cash generated/(outflow) from operations 86.0 (22.9) 47.3
Cash exceptionals (93.1) (94.4) (304.2)
Cash outflow from operations (7.1) (117.3) (256.9)
Purchase of property, plant and equipment (9.2) (9.5) (27.6)
Proceeds from sale of property, plant and equipment 1.4 1.4 7.1
Purchase of intangible assets (68.0) (49.1) (109.2)
Interest received 3.6 2.5 4.5
Interest paid (44.8) (53.3) (98.1)
Adjusted tax paid (43.0) (29.2) (81.9)
Non-cash movement in leases (27.7) (40.7) (14.7)
Other 0.2 (30.2) (20.4)
Free cash flow (194.6) (325.4) (597.2)
Decreases in provisions and payables, cash generated from operations and tax
paid have been adjusted to show exceptional items separately, in order to
present significant items separately from the rest of the cash flow either by
virtue of size or nature and reflects how the Group evaluates cash performance
of the business.
Prior year cash exceptionals is defined as cash payments made in the current
period in respect of amounts provided for in prior periods.
John Wood Group PLC
Interim Financial Statements 2023
Group income statement
for the six month period to 30 June 2023
Unaudited Interim June 2023 Unaudited Interim June 2022 (restated*) Audited Full Year December 2022 (restated*)
Note Pre- exceptional items Exceptional items Total Pre- exceptional items Exceptional items Total Pre- exceptional items Exceptional items Total
(note 4)
$m
(note 4)
$m
$m
$m
$m
$m (note 4)
$m $m
$m
Continuing operations
Revenue 2,3 2,986.2 - 2,986.2 2,570.7 (8.0) 2,562.7 5,469.3 (8.0) 5,461.3
Cost of sales (2,639.5) (1.2) (2,640.7) (2,266.8) (12.3) (2,279.1) (4,800.6) (17.0) (4,817.6)
Gross profit 346.7 (1.2) 345.5 303.9 (20.3) 283.6 668.7 (25.0) 643.7
Administrative expenses (300.2) (9.9) (310.1) (273.2) 9.3 (263.9) (600.8) (96.2) (697.0)
Impairment loss on trade receivables and contract assets 4 (7.0) (20.0) (27.0) - - - - - -
Impairment of goodwill and intangible assets - - - - - - - (542.3) (542.3)
Share of post-tax profit from joint ventures 14.4 - 14.4 11.0 - 11.0 30.4 - 30.4
Operating profit/(loss) 2 53.9 (31.1) 22.8 41.7 (11.0) 30.7 98.3 (663.5) (565.2)
Finance income 13.3 - 13.3 2.9 - 2.9 6.9 - 6.9
Finance expense (56.6) (5.5) (62.1) (61.3) (2.8) (64.1) (127.2) (5.9) (133.1)
Profit/(loss) before tax from continuing operations 10.6 (36.6) (26.0) (16.7) (13.8) (30.5) (22.0) (669.4) (691.4)
Taxation 8 (25.8) (4.6) (30.4) (32.2) 64.2 32.0 (47.3) 36.4 (10.9)
(Loss)/profit from continuing operations (15.2) (41.2) (56.4) (48.9) 50.4 1.5 (69.3) (633.0) (702.3)
Discontinued operation
Profit from discontinued operations, net of tax 6 - 29.4 29.4 56.5 30.9 87.4 60.2 290.4 350.6
(Loss)/profit for the period (15.2) (11.8) (27.0) 7.6 81.3 88.9 (9.1) (342.6) (351.7)
(Loss)/profit attributable to:
Owners of the parent (17.5) (11.8) (29.3) 7.2 81.3 88.5 (13.7) (342.6) (356.3)
Non-controlling interests 2.3 - 2.3 0.4 - 0.4 4.6 - 4.6
(15.2) (11.8) (27.0) 7.6 81.3 88.9 (9.1) (342.6) (351.7)
Earnings per share (expressed in cents per share)
Basic 7 (4.3) 13.0 (52.4)
Diluted 7 (4.3) 12.5 (52.4)
Earnings per share - continuing operations (expressed in cents per share)
Basic 7 (8.6) 0.0 (103.9)
Diluted 7 (8.6) 0.0 (103.9)
The notes on pages 33 to 54 are an integral part of the interim financial
statements.
* The comparative information has been restated in line with the requirements
of IFRS 5, paragraph 36, due to the reclassification of Built Environment
Consulting Saudi Arabia from discontinued into continuing operations following
a decision not to dispose of that business (note 6).
Group statement of comprehensive income
for the six month period to 30 June 2023
Unaudited Unaudited Audited
Interim
Full Year
Interim
December
June June
2022
2023 2022
$m $m $m
(Loss)/profit for the period (27.0) 88.9 (351.7)
Other comprehensive (expense)/income from continuing operations
Items that will not be reclassified to profit or loss
Re-measurement (losses)/gains on retirement benefit schemes (65.5) 231.9 168.0
Movement in deferred tax relating to retirement benefit schemes 17.2 (57.9) (41.6)
Total items that will not be reclassified to profit or loss (48.3) 174.0 126.4
Items that may be reclassified subsequently to profit or loss
Cash flow hedges (0.1) 8.4 5.1
Tax on derivative financial instruments - (2.0) (1.7)
Exchange movements on retranslation of foreign operations 36.7 (158.8) (165.1)
Total items that may be reclassified subsequently to profit or loss 36.6 (152.4) (161.7)
Other comprehensive (expense)/income from continuing operations for the (11.7) 21.6 (35.3)
period, net of tax
Other comprehensive (expense)/income from discontinued operations
Re-measurement (losses)/gains on retirement benefit schemes - (1.1) 2.9
Movement in deferred tax relating to retirement benefit schemes - 5.3 -
Exchange movements on retranslation of foreign operations - (32.2) (57.9)
Other comprehensive expense from discontinued operations for the period, net - (28.0) (55.0)
of tax
Total comprehensive (expense)/income for the period (38.7) 82.5 (442.0)
Total comprehensive (expense)/income for the period is attributable to:
Owners of the parent (41.0) 82.1 (446.6)
Non-controlling interests 2.3 0.4 4.6
(38.7) 82.5 (442.0)
Exchange movements on the retranslation of foreign currency net assets would
only be subsequently reclassified through profit or loss in the event of the
disposal of a business.
The notes on pages 33 to 54 are an integral part of the interim financial
statements.
Group balance sheet
as at 30 June 2023
Unaudited Unaudited Audited
Interim
Full Year
Interim
June
June December
2023 2022 2022
Note $m $m $m
Assets
Non-current assets
Goodwill and other intangible assets 11 4,356.7 4,905.7 4,309.1
Property plant and equipment 79.6 82.6 82.4
Right of use assets 258.4 282.0 276.0
Investment in joint ventures 166.9 154.2 156.5
Other investments 52.8 62.6 56.0
Long term receivables 155.8 111.8 129.5
Retirement benefit scheme surplus 9 393.1 474.8 432.4
Deferred tax assets 42.1 161.1 61.2
5,505.4 6,234.8 5,503.1
Current assets
Inventories 15.7 21.0 11.1
Trade and other receivables 1,699.6 1,490.2 1,545.0
Financial assets 1.2 5.8 10.8
Income tax receivable 56.9 66.3 40.7
Assets held for sale - 1,420.8 21.0
Cash and cash equivalents 14 450.2 404.5 536.7
2,223.6 3,408.6 2,165.3
Total assets 7,729.0 9,643.4 7,668.4
Liabilities
Current liabilities
Borrowings 14 261.2 321.5 345.9
Trade and other payables 1,797.6 1,630.2 1,687.6
Income tax liabilities 149.5 224.3 218.1
Lease liabilities 14 90.8 88.2 83.2
Provisions 12 36.2 30.2 44.9
Liabilities held for sale - 313.0 20.6
2,335.3 2,607.4 2,400.3
Net current (liabilities)/assets (111.7) 801.2 (235.0)
Non-current liabilities
Borrowings 14 843.2 1,847.8 584.0
Deferred tax liabilities 75.5 57.0 100.1
Retirement benefit scheme deficit 9 70.4 76.8 73.2
Lease liabilities 14 234.9 251.3 259.7
Other non-current liabilities 10 73.5 118.0 106.8
Asbestos related litigation 12 302.2 302.7 311.4
Provisions 12 93.0 194.8 103.4
1,692.7 2,848.4 1,538.6
Total liabilities 4,028.0 5,455.8 3,938.9
Net assets 3,701.0 4,187.6 3,729.5
Equity attributable to owners of the parent
Share capital 41.3 41.3 41.3
Share premium 63.9 63.9 63.9
Retained earnings 1,407.4 1,701.8 1,224.4
Merger reserve 2,290.8 2,540.8 2,540.8
Other reserves (105.8) (163.6) (142.4)
3,697.6 4,184.2 3,728.0
Non-controlling interests 3.4 3.4 1.5
Total equity 3,701.0 4,187.6 3,729.5
The notes on pages 33 to 54 are an integral part of the interim financial
statements.
Group statement of changes in equity
for the six month period to 30 June 2023
Note Equity attributable to owners
of the parent
$m Non-controlling interests
$m
Share Share Retained Merger Other
reserves
Capital Premium Earnings Reserve $m Total
$m $m $m $m
equity
$m
At 1 January 2022 41.3 63.9 1,415.0 2,540.8 21.0 4,082.0 3.3 4,085.3
Profit for the period - - 88.5 - - 88.5 0.4 88.9
Other comprehensive income/(expense):
Re-measurement gains on retirement benefit schemes - - 231.9 - - 231.9 - 231.9
Movement in deferred tax relating to retirement benefit schemes - - (57.9) - - (57.9) (57.9)
Re-measurement losses on retirement benefit schemes (discontinued) - - (1.1) - - (1.1) - (1.1)
Movement in deferred tax relating to retirement benefit schemes (discontinued) - - 5.3 - - 5.3 - 5.3
Cash flow hedges - - - - 8.4 8.4 - 8.4
Tax on derivative financial instruments - - - - (2.0) (2.0) - (2.0)
Net exchange movements on retranslation of foreign currency operations - - - - (158.8) (158.8) - (158.8)
Net exchange movements on retranslation of foreign currency operations - - - - (32.2) (32.2) - (32.2)
(discontinued)
Total comprehensive income/(expense) - - 266.7 - (184.6) 82.1 0.4 82.5
Transactions with owners:
Dividends paid 5 - - - - - - (0.8) (0.8)
Share based charges 15 - - 8.5 - - 8.5 - 8.5
Purchase of company shares by Employee Share Trust for the Share Incentive 15 - - 0.6 - - 0.6 - 0.6
Plan (SIP)
Exchange movements in respect of shares held by employee share trusts - - 11.0 - - 11.0 - 11.0
Transactions with non-controlling interests - - - - - - 0.5 0.5
At 30 June 2022 41.3 63.9 1,701.8 2,540.8 (163.6) 4,184.2 3.4 4,187.6
At 1 January 2023 41.3 63.9 1,224.4 2,540.8 (142.4) 3,728.0 1.5 3,729.5
(Loss)/profit for the period - - (29.3) - - (29.3) 2.3 (27.0)
Other comprehensive income/(expense):
Re-measurement losses on retirement benefit schemes - - (65.5) - - (65.5) - (65.5)
Movement in deferred tax relating to retirement benefit schemes - - 17.2 - - 17.2 - 17.2
Cash flow hedges - - - - (0.1) (0.1) - (0.1)
Tax on derivative financial instruments - - - - - - - -
Net exchange movements on retranslation of foreign currency operations - - - - 36.7 36.7 - 36.7
Total comprehensive (expense)/income - - (77.6) - 36.6 (41.0) 2.3 (38.7)
Transactions with owners:
Dividends paid 5 - - - - - - (0.8) (0.8)
Share based charges 15 - - 9.8 - - 9.8 - 9.8
Purchase of company shares by Employee Share Trust for the Share Incentive 15 - - 0.8 - - 0.8 - 0.8
Plan (SIP)
Transfer from merger reserve to retained earnings - - 250.0 (250.0) - - - -
Transactions with non-controlling interests - - - - - - 0.4 0.4
At 30 June 2023 41.3 63.9 1,407.4 2,290.8 (105.8) 3,697.6 3.4 3,701.0
The figures presented in the above tables are unaudited.
In June 2023, John Wood Group Holdings Limited paid $250.0m to John Wood Group
PLC in a partial settlement of the promissory note, which was put in place
during 2019. The repayment represented qualifying consideration and as a
result the Company transferred an equivalent portion of the merger reserve to
retained
earnings.
Other reserves include the capital redemption reserve, capital reduction
reserve, currency translation reserve and the hedging reserve. The notes on
pages 33 to 54 are an integral part of the interim financial statements.
Group cash flow statement
for the six month period to 30 June 2023
Unaudited Unaudited Audited
Interim
Interim
Full Year
June 2022
June 2023 Dec 2022
Note $m $m $m
Reconciliation of loss before tax to cash used in operating activities:
(Loss)/profit for the period (27.0) 88.9 (351.7)
Adjustments (excluding share of joint ventures)
Depreciation 13.6 12.1 25.2
Depreciation on the right of use assets 40.9 40.2 82.3
Loss/(gain) on disposal of property plant and equipment 0.1 0.9 (1.6)
Impairment of goodwill and intangible assets - - 542.3
Impairment of property plant and equipment 0.4 0.4 0.4
Impairment of joint ventures - - 2.0
Amortisation of intangible assets 11 78.5 79.9 151.9
Share of post-tax profit from joint ventures (14.4) (11.0) (30.4)
Gain on disposal of business (36.5) - (514.5)
Net finance costs 48.8 62.4 127.9
Share based charges 15 9.8 8.5 20.7
Decrease in provisions (11.9) (73.7) (123.1)
Dividends from joint ventures 8.0 15.6 30.1
Other exceptional items - non-cash impact 26.0 4.7 35.3
Tax charge/(credit) 8 35.6 (78.5) 236.2
Changes in working capital (excluding effect of acquisition and divestment of
subsidiaries)
Decrease/(increase) in inventories 1.9 (6.9) (1.6)
Increase in receivables (164.4) (31.7) (97.5)
Decrease in payables (19.3) (235.4) (398.9)
Exchange movements 2.8 6.3 8.1
Cash outflow from operating activities (7.1) (117.3) (256.9)
Tax paid (105.1) (29.2) (103.9)
Net cash used in operating activities (112.2) (146.5) (360.8)
Cash flows from investing activities
Disposal of businesses (net of cash disposed) 42.3 - 1,751.4
Purchase of property plant and equipment (9.2) (9.5) (27.6)
Proceeds from sale of property plant and equipment 1.4 1.4 7.1
Purchase of intangible assets (68.0) (49.1) (109.2)
Interest received 3.6 2.5 4.5
Net cash used in investing activities (29.9) (54.7) 1,626.2
Cash flows from financing activities
Repayment of short-term borrowings 14 (105.5) 12.9 (35.0)
Proceeds from short-term borrowings - - 88.0
Proceeds from long-term borrowings 14 257.0 231.4 -
Repayment of long-term borrowings - - (1,039.1)
Payment of lease liabilities 14 (52.4) (66.8) (121.6)
Proceeds from SIP shares 0.8 0.6 1.7
Interest paid (44.8) (53.3) (98.1)
Dividends paid to non-controlling interests (0.8) (0.8) (1.1)
Net cash generated from/(used in) financing activities 54.3 124.0 (1,205.2)
Net (decrease)/increase in cash and cash equivalents 14 (87.8) (77.2) 60.2
Effect of exchange rate changes on cash and cash equivalents 14 1.3 (12.8) (26.5)
Opening cash and cash equivalents 536.7 503.0 503.0
Closing cash and cash equivalents 450.2 413.0 536.7
Cash at bank and in hand at 30 June 2023 includes $243.5m (December 2022:
$328.4m) that is part of the Group's cash pooling arrangements. For internal
reporting and for the purposes of the calculation of interest by the bank,
this amount is netted with short-term overdrafts. However, in preparing these
financial statements, the Group is required to gross up both its cash and
short-term borrowings figures by this amount. Movement in short-term
overdrafts are presented as part of the cash flows from financing activities
as the overdraft facilities form part of the Group's financing.
The proceeds of long-term borrowings of $257.0m includes additional borrowings
under the Revolving Credit Facility.
Payment of lease liabilities includes the cash payments for the principal
portion of lease payments of $43.9m (June 2022: $58.2m) and for the interest
portion of $8.5m (June 2022: $8.6m). The classification of interest paid
within financing activities is in line with the Group accounting policy.
The Group has elected to present a cash flow statement that includes an
analysis of all cash flows in total, including both continuing and
discontinued operations. Amounts related to the discontinued operation by
operating, investing and financing activities are disclosed in note 6.
The cash and cash equivalents balance of $413.0m at 30 June 2022 included cash
held for sale of $8.5m.
The notes on pages 33 to 54 are an integral part of the interim financial
statements
Notes to the interim financial statements
for the six month period to 30 June 2023
1. Basis of preparation
This condensed set of financial statements for the six months ended 30 June
2023 have been prepared in accordance with IAS 34 Interim Financial Reporting
as adopted for use in the UK. The interim report and condensed consolidated
financial statements should be read in conjunction with the Group's 2022
Annual Report and Accounts which have been prepared in accordance with
UK-adopted international accounting standards and delivered to the Registrar
of Companies. The audit opinion contained within the 2022 financial statements
is unqualified.
As required by the Disclosure Guidance and Transparency Rules of the Financial
Conduct Authority, the interim report and condensed consolidated financial
statements have been prepared applying the accounting policies that were
applied in the preparation of the Group's Annual Report and Accounts for the
year ended 31 December 2022. The interim report and condensed consolidated
financial statements do not comprise statutory accounts within the meaning of
section 434 of the Companies Act 2006. The results for the six months to 30
June 2023 and the comparative results for the six months to 30 June 2022 are
unaudited. The comparative figures for the year ended 31 December 2022 do not
constitute the statutory financial statements for that year.
The interim condensed financial statements were approved by the board of
directors on 21 August 2023.
Going concern
The directors have undertaken a rigorous assessment of going concern and
liquidity over a period of at least 12 months from the date of approval of
these interim financial statements (the going concern period), which includes
financial forecasts up to the end of 2024 including severe, but plausible
scenarios. The directors have considered as part of this assessment the impact
of the events that happened post balance sheet date and up to the date of
issue of these financial statements.
In order to satisfy themselves that they have adequate resources for the going
concern assessment period, the directors have reviewed the Group's existing
debt levels, the forecast compliance with debt covenants and the Group's
ability to generate cash from trading activities. As of 30 June 2023, the
Group's principal debt facilities comprise a $1,200.0m revolving credit
facility maturing in October 2026; a $200.0m term loan which is now expected
to be repaid in September 2024 following agreement with UKEF, but subject to
final agreement on repayment terms with the syndicate, and $352.5m of US
private placement debt repayable in various tranches between July 2024 and
July 2031, with around 75% due in 2025 or later. At 30 June 2023, the Group
had headroom of $899.1m under its principal debt facilities and a further
$141.0m of other undrawn borrowing facilities. The Group also expect to have
sufficient levels of headroom in the severe but plausible downside scenario
modelled.
At 30 June 2023, the Group had net current liabilities of $111.7m (June 2022:
$801.2m assets). The net current asset position in June 2022 was impacted by
the classification of the total assets and liabilities of the Bult Environment
Consulting business to held for sale. Following the sale, the proceeds
received have been used to repay long term debt.
The directors have considered a range of scenarios on the Group's future
financial performance and cash flows. These scenarios reflect our outlook for
the broad range of end markets that the Group operates in, whilst also
considering the order book visibility and the financial strength of the
Group's balance sheet. The Group anticipates growth in priority markets and
geographies including conventional energy, which the directors have increased
confidence in due to the current market focus on energy security. In
addition, the process and chemicals business have strong growth drivers
including decarbonisation of facilities and population growth, which
facilitates increased demand for chemicals products. The performance during
the first half of 2023 and order book as at 30 June 2023 together provide 90%
revenue coverage of the 2023 base board approved scenario and give the
directors confidence in achieving the underlying forecasts.
The directors have also considered severe, but plausible downside scenarios
which reflect material reductions in H2 2023 and 2024 revenue of between 4%
and 10% and material reductions of between 0.5% and 1% in gross margin
percentage from the base board approved scenario. This could result from a
worsening economic climate which could lead to deferrals or cancellations of
contracts by our clients. In the severe, but plausible downside scenario the
interest cover ratio has lower headroom at the June and December 2024 test
dates with a ratio closer to the covenant limit of 3.5 times. There are
mitigations available to management due to the asset light model to respond to
adverse changes in activity levels of the Group, which could protect cash flow
and profitability. In addition, the directors considered a further extreme
downside sensitivity which assumes the removal of the receivables financing
facilities (which are not committed) of $200m and adverse movements in working
capital. The Group still had sufficient liquidity headroom to meet its
liabilities as they fall due, even with these additional sensitivities.
Consequently, the directors are confident that the Group and company will have
sufficient funds to continue to meet its liabilities as they fall due for at
least 12 months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern basis.
Significant accounting policies
The Group's significant accounting policies adopted in the preparation of
these financial statements are set out in the Group's 2022 Annual Report.
Updates since the 2022 Annual Report are noted below. These policies have been
consistently applied to all the periods presented.
Discontinued operations
The Group classified its Built Environment Consulting business as a
discontinued operation for the reporting period ending 30 June 2022. A
discontinued operation is a component of the Group's business, the operations
and cash flows of which can be clearly distinguished from the rest of the
Group and which:
- represents a separate major line of business or geographic area
of operations;
- is part of a single co-ordinated plan to dispose of a separate
major line of business or geographic area of operations; or
- is a subsidiary acquired exclusively with a view to resale.
During 2022 a separate management team and reporting structure was put in
place to manage the Built Environment Consulting business and financial
information showing the performance of the Built Environment Consulting
business was shared with the directors on a monthly basis. The Built
Environment Consulting business was therefore considered a separate, major
line of business which was disposed of during 2022 and therefore met the
definition of a discontinued operation.
As per the terms of the agreement, the Group had a residual element of the
transaction classified as held for sale in the 2022 Annual Report. The sale of
the remaining underlying subsidiary, residing in Saudi Arabia, did not
complete during the first half of 2023 and will now be retained by the Group.
The results in the comparative periods arising from discontinued operations
have been restated in note 6, with the performance of this subsidiary now
showing within the Group income statement as part of continuing operations.
Classification as a discontinued operation occurs at the earlier of disposal
or when the operation meets criteria to be classified as held for sale. When
an operation is classified as a discontinued operation, the comparative income
statement and statement of comprehensive income are presented as if the
operation had been discontinued from the start of the comparative period.
Taxation
The tax charged in relation to pre-exceptional profits for the six months
ended 30 June 2023 has been calculated by applying the effective rate of tax
which is expected to apply to the Group for the year ending 31 December 2023,
using rates substantively enacted by 30 June 2023 as required by IAS 34
'Interim Financial Reporting'. Tax in relation to exceptional items and
movements through Other Comprehensive Income is calculated based on the actual
results for the six months ended 30 June 2023. Policies in relation to tax are
applied consistently with those outlined in the 2022 Group Annual Report and
Accounts when calculating the effective tax rate and exceptional tax charge.
The Group has applied the exception in the Amendments to IAS 12 issued in May
2023 and has neither recognised nor disclosed information about deferred tax
assets or liabilities relating to Pillar Two income taxes.
Judgements and Estimates
In preparing these interim condensed financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty are the same as those applied to the
consolidated financial statements for the year ended 31 December 2022.
Functional currency
The Group's earnings stream is primarily US dollars and the principal
functional currency is the US dollar, being the most representative currency
of the Group. The Group's financial statements are therefore prepared in US
dollars.
The following exchange rates have been used in the preparation of these
accounts:
June 2023 June 2022 December 2022
Average rate £1 = $ 1.2327 1.2952 1.2324
Closing rate £1 = $ 1.2713 1.2145 1.2029
Disclosure of impact of new and future accounting standards
The Group is required to comply with the requirements of IFRS 17 Insurance
Contracts for reporting periods beginning on or after 1 January 2023. The new
accounting standard sets out the requirements that the Group should apply in
reporting information about insurance contracts it issues and reinsurance
contracts it holds. The Group has undertaken an assessment of its insurance
contracts including those held under its captive insurance company, Garlan
Insurance Limited. The impact of the accounting standard does not have any
material impact on the Group financial statements.
The Group has early adopted the amendments to IAS 1 - Classification of
Liabilities as Current or Non-current and Non-current Liabilities with
Covenants which are required to be effective from 01 January 2024. The impact
of the amendments does not have any material impact on the Group financial
statements.
Amendments to other existing standards do not have a material impact on the
financial statements.
2. Segmental reporting
The Group monitors activity and performance through four operating segments;
Projects, Operations, Consulting, Investment Services ('IVS') plus the legacy
Built Environment Consulting segment (divested in September 2022).
Under IFRS 11 'Joint arrangements', the Group is required to account for joint
ventures using equity accounting. Adjusted EBITDA as shown in the table
below includes our share of joint venture profits and excludes exceptional
items, which is consistent with the way management review the performance of
the business units.
The segment information provided to the Group's Chief Executive for the
reportable operating segments for the period included the following:
Reportable operating segments
Revenue Adjusted EBITDA ((1)) Operating profit/(loss)
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full Interim Interim Full
June June Year June June Year June June Year
2023 2022 2022 2023 2022 2022 2023 2022 2022
$m $m $m $m $m $m $m $m $m
Projects 1,245.3 990.0 2,211.2 91.6 81.3 168.7 11.4 (5.1) (125.3)
Operations 1,244.3 1,176.9 2,406.9 76.7 76.0 147.6 33.3 47.6 (344.3)
Consulting ((4)) 355.8 312.5 652.4 37.8 40.1 76.2 23.4 20.6 (3.1)
Built Environment Consulting (discontinued) ((4)) - 586.5 854.0 - 64.2 69.8 - 42.1 63.1
Investment Services 140.8 91.3 198.8 26.2 26.6 69.3 8.3 5.1 46.2
Central costs ((2)) - - - (30.6) (38.2) (73.6) (53.6) (37.5) (138.7)
Total Group 2,986.2 3,157.2 6,323.3 201.7 250.0 458.0 22.8 72.8 (502.1)
Elimination of discontinued operation ((4)) - (586.5) (854.0) - (64.2) (69.8) - (42.1) (63.1)
Total (continuing operations) 2,986.2 2,570.7 5,469.3 201.7 185.8 388.2 22.8 30.7 (565.2)
Finance income 13.3 2.9 6.9
Finance expense (62.1) (64.1) (133.1)
Loss before taxation from continuing operations (26.0) (30.5) (691.4)
Taxation (30.4) 32.0 (10.9)
(Loss)/profit for the period from continuing operations (56.4) 1.5 (702.3)
Profit from discontinued operation, net of tax 29.4 87.4 350.6
(Loss)/profit for the period (27.0) 88.9 (351.7)
Notes
1. A reconciliation of operating profit/(loss) to Adjusted EBITDA is
provided in the table below. Adjusted EBITDA is provided as it is a unit of
measurement used by the Group in the management of its business. Adjusted
EBITDA is stated before exceptional items (see note 4).
2. Central includes the costs of certain Group management personnel,
along with an element of Group infrastructure costs.
3. Revenue arising from sales between segments is not material and
does not include the impact of the exceptional item disclosed on the face of
the income statement of $nil (December 2022: $8.0m) which is in respect of
revenue for the Projects operating segment.
4. The comparative periods have been restated due to a
reclassification of a business operation from discontinued into continuing
operations for the period ending 30 June 2023 (see note 6). The revenue of
this business for the period to 30 June 2022 was $9.8m (December 2022: $27.1m)
and Adjusted EBITDA was $1.0m (December 2022: $3.1m).
Reconciliation of Alternative Performance Measures
Unaudited Audited
Interim
Unaudited Full Year
June 2023
Interim
December 2022 (restated)
June 2022 (restated)
$m $m $m
Operating profit/(loss) per income statement 22.8 30.7 (565.2)
Share of joint venture finance expense and tax 8.3 5.2 14.3
Exceptional items (note 4) 31.1 11.0 663.5
Amortisation (including joint ventures) 79.2 80.7 153.4
Depreciation (including joint ventures) 15.1 14.2 29.3
Depreciation of right of use assets 44.8 43.6 90.5
Impairment of joint venture investments, PP&E and right of use assets 0.4 0.4 2.4
Adjusted EBITDA (continuing operations) 201.7 185.8 388.2
Discontinued operation
Operating profit (discontinued) - 42.1 63.1
Exceptional items (note 6) - 22.1 6.7
Adjusted EBITDA (discontinued operation) - 64.2 69.8
Total Group Adjusted EBITDA 201.7 250.0 458.0
Depreciation in respect of joint ventures totals $1.5m (June 2022: $2.1m),
depreciation in respect of joint venture right of use assets totals $3.9m
(June 2022: $3.4m) and joint venture amortisation amounts to $0.7m (June 2022:
$0.8m).
Analysis of joint venture profits by segment Adjusted EBITDA Operating profit
Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full
June June Year June June Year
2023 2022 2022 2023 2022 2022
$m $m $m $m $m $m
Projects 1.8 2.2 3.9 1.6 2.0 3.5
Operations 6.2 6.6 15.2 5.4 6.0 13.0
Investment Services 20.8 13.6 39.4 15.7 8.1 28.2
Total 28.8 22.4 58.5 22.7 16.1 44.7
The turbines business was reclassified during 2022 to be reported under
Investment Services.
3. Revenue
In the following table, revenue is disaggregated by primary geographical
market and major service line. The tables provided below analyses total
revenue excluding our share of joint venture revenue.
Projects Projects Operations Operations Consulting Consulting Built Environment Consulting (discontinued) Built Environment Consulting (discontinued) IVS IVS Total Total
Primary geographical market Unaudited Interim June 2023 Unaudited Interim June 2022 Unaudited Interim June 2023 Unaudited Interim Unaudited Interim June 2023 Unaudited Interim Unaudited Interim Unaudited Interim Unaudited Interim June 2023 Unaudited Interim Unaudited Interim June 2023 Unaudited Interim
June 2022 June 2022 (restated) June 2023 June 2022 (restated) June 2022 June 2022
$m $m $m $m $m $m $m $m $m $m $m $m
US 292.8 261.6 209.9 223.1 138.1 116.5 - 369.9 118.8 124.9 759.6 1,096.0
Europe 206.4 193.0 424.0 410.4 92.5 83.4 - 54.3 2.4 (44.0) 725.3 697.1
Rest of the world 746.1 535.4 610.4 543.4 125.2 112.6 - 162.3 19.6 10.4 1,501.3 1,364.1
Total revenue 1,245.3 990.0 1,244.3 1,176.9 355.8 312.5 - 586.5 140.8 91.3 2,986.2 3,157.2
Major service lines
Energy
Oil & Gas 423.4 331.0 1,050.5 952.0 176.6 167.6 - - 16.0 - 1,666.5 1,450.6
Power, Renewables, Hydrogen and Carbon Capture 75.6 99.3 64.8 63.5 45.9 35.6 - - 25.8 18.5 212.1 216.9
Materials
Refining & Chemicals 467.6 343.8 108.8 110.4 44.0 32.2 - - - 0.1 620.4 486.5
Minerals, Processing and Life Sciences 188.4 193.9 10.1 9.7 15.5 20.0 - - 15.5 14.5 229.5 238.1
Other
Built Environment 3.6 2.5 6.7 35.9 26.2 7.0 - 586.5 67.8 58.2 104.3 690.1
Industrial Processes 86.7 19.5 3.4 5.4 46.6 47.1 - - 15.7 - 152.4 72.0
Other - - - - 1.0 3.0 - - - - 1.0 3.0
Total revenue 1,245.3 990.0 1,244.3 1,176.9 355.8 312.5 - 586.5 140.8 91.3 2,986.2 3,157.2
Sustainable solutions 350.1 301.1 138.7 107.6 86.3 71.5 - n/a 25.7 18.5 600.8 498.7
Sustainable solutions consist of activities related to renewable energy,
hydrogen, carbon capture & storage, electrification and electricity
transmission & distribution, LNG, waste to energy, sustainable fuels &
feedstocks and recycling, processing of energy transition minerals, life
sciences, decarbonisation in oil & gas, refining & chemicals, minerals
processing and other industrial processes. In the case of mixed scopes
including a decarbonisation element, these are only included in
decarbonisation if 75% or more of the scope relates to that element, in which
case the total revenue is recorded in decarbonisation. Sustainable solutions
with respect to the discontinued operation has not been captured.
The Group's revenue is largely derived from the provision of services over
time.
For the 6 months to 30 June 2023, 78% (June 2022: 78%) of the Group's total
revenue (including discontinued operations) came from reimbursable contracts
and 22% (June 2022: 22%) from lump sum contracts. The calculation of revenue
from lump sum contracts is based on estimates and the amount recognised could
increase or decrease.
Continuing operations Discontinued operations Total
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full Interim Interim Full
June June Year June June Year June June Year
2023 2022 (restated) 2022 (restated) 2023 2022 (restated) 2022 (restated) 2023 2022 2022
$m $m $m $m $m $m $m $m $m
Total revenue 2,986.2 2,570.7 5,469.3 - 586.5 854.0 2,986.2 3,157.2 6,323.3
Total revenue at June 2022 and December 2022 does not reflect the $8.0m
exceptional item as disclosed on the Income Statement. This exceptional item
is relating to the Projects business unit.
Contract assets and liabilities
The following table provides a summary of receivables, contract assets and
contract liabilities arising from the Group's contracts with customers, which
are not held for sale at 30 June 2023:
Unaudited Unaudited Audited
Interim Interim Full Year
June 2023 June 2022 December 2022
$m $m $m
Trade receivables 754.7 594.1 679.6
Non-current contract assets 121.2 74.6 97.0
Gross amounts due from customers 593.0 489.8 556.9
Gross amounts due to customers (136.6) (115.2) (113.0)
1,332.3 1,043.3 1,220.5
The contract asset balances include amounts the Group has invoiced to
customers (trade receivables) as well as amounts where the Group has the right
to receive consideration for work completed which has not been billed at the
reporting date (gross amounts due from customers). Gross amounts due from
customers are transferred to trade receivables when the rights become
unconditional which usually occurs when the customer is invoiced. Gross
amounts due to customers primarily relates to advance consideration received
from customers, for which revenue is recognised over time.
Trade receivables increased by $75.1m since December 2022 and this is
primarily due to the increasing activity levels during the first half of 2023
and higher closing DSO. Gross amounts due from customers has increased by
$36.1m to $593.0m. The increase is largely explained by the increase in
activity levels during the first half of 2023.
Non-current contract assets of $121.2m (December 2022: $97.0m) includes $82.0m
of gross amounts due from customers and $16.5m of trade receivables, both of
which are in relation to the Aegis contract. Refer to note 12 for further
details.
Trade receivables and gross amounts due from customers are included within the
'Trade and other receivables' heading in the Group balance sheet. Gross
amounts due to customers and deferred income is included within the 'Trade and
other payables' heading in the Group balance sheet.
Revenue recognised in 2023 which was included in gross amounts due to
customers and deferred income at the beginning of the year of $117.5m
represents amounts included within contract liabilities, including $20.6m
previously disclosed within held for sale liabilities, at 1 January 2023.
Revenue recognised from performance obligations satisfied in previous periods
of $5.6m (June 2022: $10.6m) represents revenue recognised in 2023 for
performance obligations which were considered operationally complete at 31
December 2022.
As at 30 June 2023, the Group had received $200.0m (June 2022: $198.4m) of
cash relating to non-recourse financing arrangements with its banks. An
equivalent amount of trade receivables was derecognised on receipt of the
cash.
Transaction price allocated to the remaining performance obligations
The transaction price allocated to the remaining performance obligations
(unsatisfied or partially unsatisfied) as at 30 June 2023 was as follows:
$m
Year 1 Year 2 Year 3 Total
Revenue (continuing operations) 2,027.6 2,013.2 1,020.6 5,061.4
The Group has not adopted the practical expedients permitted by IFRS 15,
therefore all contracts which have an original expected duration of one year
or less have been included in the table above. The estimate of the
transaction price does not include any amounts of variable consideration which
are constrained. Amounts disclosed above include continuing operations only.
4. Exceptional items
Exceptional items are those significant items which are separately disclosed
by virtue of their size or incidence to enable a full understanding of the
Group's financial performance.
Unaudited Unaudited Audited
Interim
Interim
Full Year
June 2023 June 2022
December 2022
$m $m $m
Exceptional items included in continuing operations
Power and Industrial EPC losses (revenue) - 8.0 8.0
Power and Industrial EPC losses (cost of sales) 1.2 12.3 17.0
Impairment of Power and Industrial EPC receivables 20.0 - -
Impairment of goodwill and intangible assets - - 542.3
Apollo related costs 4.6 - -
Redundancy, restructuring and integration costs - 15.3 30.1
Investigation support costs and provisions - (2.8) (4.2)
Enterprise settlement - - 35.6
Asbestos yield curve and costs 5.3 (21.8) 21.5
Russia exit costs and charges - - 13.2
Exceptional items included in continuing operations, before interest and tax 31.1 11.0 663.5
Unwinding of discount on asbestos provision 5.5 2.8 5.9
Tax (credit)/charge in relation to exceptional items (5.2) (4.6) 5.2
Release of uncertain tax provision (7.4) - -
Recognition of deferred tax assets due to UK pension actuarial movements 17.2 (59.6) (41.6)
Exceptional items included in continuing operations, net of interest and tax 41.2 (50.4) 633.0
Power and Industrial EPC losses
Additional costs on a fixed price EPC contract of $1.2m were recorded as an
exceptional charge through cost of sales on the basis that the Group no longer
operates within this sector. This follows previous write downs made during
2022 following the strategic decision to exit this market.
Impairment of Power and Industrial EPC receivables
The non-cash charge of $20.0m relates to a write down of receivable balances
arising from a fixed price contract in the Power and Industrial EPC business.
The Group had expected to recover these balances but these have since been
disputed by the client and will likely progress to a legal or commercial
negotiation. By virtue of its size and nature of these projects being within a
sector that the Group no longer operates, this was recorded as an exceptional
charge through impairment losses on trade receivables in the income statement.
Apollo related costs
During the period to 30 June 2023, $4.6m was incurred in relation to legal and
advisor costs incurred in relation to Apollo's preliminary approach to
potentially acquire the ordinary share capital of the Group, which did not
ultimately lead to an offer.
Asbestos
All asbestos costs have been treated as exceptional on the basis that
movements in the provision are non-trading and can be large and driven by
market conditions which are out with the Group's control. Excluding these
charges from the trading results improves the understandability of the
underlying trading performance of the Group. The charge of $5.3m (June 2022:
$21.8m credit) in 2023 comprises of a $2.0m yield curve charge (June 2022:
$23.8m credit) and $3.3m (June 2022: $2.0m) of costs in relation to managing
the claims. The 30-year US Treasury rate has decreased to 3.85% from 3.97% at
the end of December 2022, and led to the income statement charge. $5.5m of
interest costs which relate to the unwinding of the discount on the asbestos
provision over time are shown as exceptional.
Tax
An exceptional tax charge of $4.6m (June 2022: $64.2m credit) has been
recorded during the period. It consists of a tax credit of $5.2m on
exceptional items (June 2022: $4.6m), a $7.4m credit in relation to the
release of an uncertain tax provision created through exceptional items on the
disposal of the Well Support business in 2011, offset by an exceptional charge
of $17.2m recognised due to the actuarial loss in relation to the UK defined
benefit pension scheme. As deferred tax liabilities support the recognition of
deferred tax assets, the reduction of $17.2m of deferred tax assets have been
recognised through exceptional items based on its size.
5. Dividends
Our capital allocation policy remains unchanged and starts with having a
strong balance sheet. We look to manage our target leverage over the medium
term within a range of around 0.5 to 1.5 times net debt (excluding leases) to
adjusted EBITDA (pre-IFRS 16). Beyond this, we consider how best to create
value for our shareholders from dividends, share buybacks or attractive
acquisitions.
6. Discontinued operation
In September 2022, the Group announced it had completed an agreement to sell
the Built Environment Consulting business, which is included within the Built
Environment Consulting operating segment. The Built Environment Consulting
business was classified as a discontinued operation from 1 January 2022, at
which point the conditions under IFRS 5 were met. The Group income statement
and statement of comprehensive income were restated to show the discontinued
operation separately from continuing operations.
As per the terms of the agreement, the Group had a residual element of the
transaction classified as held for sale in the 2022 Annual Report. The sale of
the remaining underlying subsidiary, residing in Saudi Arabia, did not
complete during the first half of 2023 and will now be retained by the Group.
The results in the comparative periods arising from discontinued operations
have been restated in the table below, with the performance of this subsidiary
now showing within the Group income statement as part of continuing
operations. This restatement is in accordance with the requirements of IFRS 5
paragraph 36.
(i) Results of discontinued operation
Unaudited Unaudited Audited
Interim Interim Full Year
June 2023 June 2022 (restated) December 2022 (restated)
Note $m $m $m
External revenue - 586.5 854.0
Cost of sales - (494.8) (735.8)
Gross profit - 91.7 118.2
Administrative expenses - (27.5) (48.4)
Exceptional items - administrative expenses - (22.1) (6.7)
Operating profit - 42.1 63.1
Finance expense - (1.2) (1.7)
Profit before tax - 40.9 61.4
Taxation - (6.5) (7.9)
Exceptional items - taxation - 53.0 -
Results from operating activities, net of tax - 87.4 53.5
Gain on sale of discontinued operation 34.6 - 514.5
Income tax on gain on sale of discontinued operation (exceptional) (5.2) - (217.4)
Profit from discontinued operation, net of tax 29.4 87.4 350.6
Earnings per share (cents)
Basic 7 4.3 13.0 51.5
Diluted 7 4.3 12.5 51.5
The profit from the discontinued operation, net of tax of $29.4m (June 2022:
$87.4m) is attributable entirely to the owners of the Company.
The final proceeds from the disposal of the Built Environmental Consulting
business were agreed during the first half of 2023 upon agreement of the
completion balance sheet between the Group and WSP. This has resulted in an
additional gain of $34.6m, comprising $23.1m of cash proceeds and the release
of completion accruals, being recognised in discontinued operations.
(ii) Cash flows from / (used in) discontinued operation
Unaudited Unaudited Audited
Interim Interim Full Year
June 2023 June 2022 December 2022
Note $m $m $m
Net cash used in operating activities (62.1) (6.2) (6.0)
Net cash generated from/(used in) investing activities 23.1 (3.3) 1,748.4
Net cash flows for the period (39.0) (9.5) 1,742.4
The net cash used in operating activities for the period to June 2023 includes
$62.1m of tax paid on the sale of the Built Environment Consulting business
which completed in September 2022.
7. Earnings per share
Unaudited Interim Unaudited Interim Audited Full Year
June 2023 June 2022 December 2022
(Losses)/ Earnings (Losses)/
earnings attributable Number /(losses) attributable earnings attributable
to equity shareholders of shares Earnings to equity shareholders Number of shares Earnings to equity shareholders Number of shares (millions) Earnings
($m) (millions) per share ($m) (millions) per share ($m) per share
(cents) (cents) (cents)
Basic pre-exceptional (17.5) 684.9 (2.6) 7.2 678.8 1.1 (13.7) 680.4 (2.0)
Exceptional items, net of tax (11.8) - (1.7) 81.3 - 11.9 (342.6) - (50.4)
Basic (29.3) 684.9 (4.3) 88.5 678.8 13.0 (356.3) 680.4 (52.4)
Effect of dilutive ordinary shares - - - - 27.3 (0.5) - - -
Diluted (29.3) 684.9 (4.3) 88.5 706.1 12.5 (356.3) 680.4 (52.4)
Adjusted diluted earnings per share calculation
Basic (29.3) 684.9 (4.3) 88.5 678.8 13.0 (356.3) 680.4 (52.4)
Effect of dilutive ordinary shares - - - - 27.3 (0.5) - - -
Diluted (29.3) 684.9 (4.3) 88.5 706.1 12.5 (356.3) 680.4 (52.4)
Exceptional items, net of tax 11.8 - 1.8 (81.3) - (11.5) 342.6 - 50.4
Amortisation of intangibles on acquisition, net of tax 24.7 - 3.6 33.2 - 4.7 52.5 - 7.7
Adjusted diluted 7.2 684.9 1.1 40.4 706.1 5.7 38.8 680.4 5.7
Adjusted basic 7.2 684.9 1.1 40.4 678.8 6.0 38.8 680.4 5.7
i) (Losses)/earnings attributable to equity
shareholders
Unaudited Interim Unaudited Interim Audited Full Year
June 2023 June 2022 December 2022
Continuing operations (restated) Discontinued operations Continuing operations Discontinued operations
Continuing Discontinued operations Total $m (restated) Total (restated) (restated) Total
operations $m $m $m $m $m $m $m
$m
Earnings/(losses) attributable to equity (17.5) - (17.5) (49.3) 56.5 7.2 (73.9) 60.2 (13.7)
shareholders (basic pre-exceptional)
Exceptional items, net of tax (41.2) 29.4 (11.8) 50.4 30.9 81.3 (633.0) 290.4 (342.6)
Earnings/(losses) attributable (58.7) 29.4 (29.3) 1.1 87.4 88.5 (706.9) 350.6 (356.3)
to equity shareholders
Number of shares (basic) 684.9 684.9 684.9 678.8 678.8 678.8 680.4 680.4 680.4
Number of shares (diluted) 684.9 684.9 684.9 706.1 706.1 706.1 680.4 680.4 680.4
Basic earnings per share (cents) (8.6) 4.3 (4.3) 0.0 13.0 13.0 (103.9) 51.5 (52.4)
Diluted earnings per share (cents) (8.6) 4.3 (4.3) 0.0 12.5 12.5 (103.9) 51.5 (52.4)
(58.7) 29.4 (29.3) 1.1 87.4 88.5 (706.9) 350.6 (356.3)
Earnings/(losses) attributable
to equity shareholders (diluted)
Exceptional items, net of tax 41.2 (29.4) 11.8 (50.4) (30.9) (81.3) 633.0 (290.4) 342.6
Amortisation of intangibles on acquisition, 24.7 - 24.7 33.2 - 33.2 52.5 - 52.5
net of tax
Earnings/(losses) attributable 7.2 - 7.2 (16.1) 56.5 40.4 (21.4) 60.2 38.8
to equity shareholders (adjusted diluted)
Earnings/(losses) attributable 7.2 - 7.2 (16.1) 56.5 40.4 (21.4) 60.2 38.8
to equity shareholders (adjusted basic)
Number of shares (diluted) 684.9 684.9 684.9 706.1 706.1 706.1 680.4 680.4 680.4
Number of shares (basic) 684.9 684.9 684.9 678.8 678.8 678.8 680.4 680.4 680.4
Adjusted diluted (cents) 1.1 - 1.1 (2.3) 8.0 5.7 (3.1) 8.8 5.7
Adjusted basic (cents) 1.1 - 1.1 (2.4) 8.4 6.0 (3.1) 8.8 5.7
The calculation of basic earnings per share is based on the earnings
attributable to owners of the parent divided by the weighted average number of
ordinary shares in issue during the year excluding shares held by the Group's
employee share trusts. For the calculation of diluted earnings per share,
the weighted average number of ordinary shares in issue is adjusted to assume
conversion of dilutive potential ordinary shares, only when there is a profit
per share. The Group's dilutive ordinary shares comprise share options granted
to employees under Executive Share Option Schemes and the Long Term Retention
Plan, shares and share options awarded under the Group's Long Term Plan and
shares awarded under the Group's Employee Share Plan. Adjusted basic and
adjusted diluted earnings per share are disclosed to show the results
excluding the impact of exceptional items and acquisition related
amortisation, net of tax.
For the period ended 30 June 2023, the Group reported a basic loss (December
2022: loss) per ordinary share, therefore the effect of dilutive ordinary
shares are excluded (December 2022: excluded) in the calculation of diluted
earnings per share. Where profits have been made when disaggregating
discontinued and continuing operations, the calculation of diluted earnings
per share was performed on the same basis as the whole Group. Had the result
been a profit, an additional 17.6m of dilutive potential shares would have
been used in the calculation of diluted EPS metrics, which would have reduced
the adjusted diluted EPS by 0.1 cents.
8. Taxation
Reconciliation of applicable tax charge at statutory rates to tax charge Audited
Unaudited Interim Unaudited Full Year
June 2023 Interim December
June 2022 (restated) 2022 (restated)
$m $m $m
Loss before taxation from continuing operations (26.0) (30.5) (691.4)
Profit before taxation from discontinued operations (note 6) - 40.9 61.4
Gain on sale of discontinued operation (note 6) 34.6 - 514.5
Less: Share of post-tax profit from joint ventures (14.4) (11.0) (30.4)
Loss before taxation from total operations (excluding profits from joint (5.8) (0.6) (145.9)
ventures)
Applicable tax charge at statutory rates 2.1 6.3 36.5
Effects of:
Non-deductible expenses 2.4 3.2 8.2
Non-taxable income (0.4) (1.5) (1.0)
Non-deductible expenses - exceptional - 3.0 332.8
Non-taxable income - exceptional 0.3 - (0.3)
Deferred tax recognition:
Recognition of deferred tax assets not previously recognised (0.7) (55.0) (4.3)
Utilisation of tax assets not previously recognised (2.1) (5.2) (12.4)
Current year deferred tax assets not recognised 17.9 22.0 37.7
Write off of previously recognised deferred tax assets - 0.1 5.2
Recognition due to UK pension actuarial loss/(gain) 17.2 (59.6) (41.6)
Utilisation of unrecognised deferred tax assets due to the Built - - (145.5)
Environment Consulting disposal
Irrecoverable withholding tax 6.5 6.7 20.4
US Base Erosion and Anti-abuse Tax - - 6.7
CFC charges 1.1 0.5 2.3
Uncertain tax provisions (0.5) 0.8 7.5
Uncertain tax provisions prior year adjustments (0.7) (1.0) (26.7)
Uncertain tax provisions prior year adjustments - exceptional (7.4) - 1.5
Prior year adjustments (0.9) - 7.7
Prior year adjustments - exceptional - - 2.5
Impact of change in rates on deferred tax 0.8 1.2 (1.0)
Total tax charge/(credit) 35.6 (78.5) 236.2
Comprising
Tax charge/(credit) on continuing operations 30.4 (32.0) 10.9
Tax charge/(credit) on discontinued operations 5.2 (46.5) 225.3
Total tax charge/(credit) 35.6 (78.5) 236.2
Factors affecting the current tax charge
The weighted average of statutory tax rates is (36.2%) in 2023. The negative
tax rate reflects the overall profit before tax being a small loss, and the
geographical split resulting in tax on profits exceeding credits on losses.
The actuarial loss in relation to the UK defined benefit pension scheme has
resulted in a decrease in deferred tax liabilities of $17.2m through Other
Comprehensive Income. As deferred tax liabilities support the recognition of
deferred tax assets, a reduction of $17.2m of deferred tax assets recognition
has been recognised through exceptional items in the Income Statement. A
credit of $41.6m (June 2022: $59.6m) of the same nature as a result of an
actuarial gain was included within exceptional items in 2022.
Additional deferred tax has been recognised in the period reflecting forecast
profits of the US business for one year in excess of assets supported by
deferred tax liabilities. The impact on the half year results of the
additional recognition of $3.1m. The US business is expected to be profitable
in 2023, but for the disposal of the Built Environment business it has been
loss making in recent years.
Factors affecting future tax charges
There are a number of factors that may affect the Group's future tax charge
including the resolution of open issues with the tax authorities, corporate
acquisitions and disposals, the use of brought forward losses and changes in
tax legislation and rates. The following outlines key factors that may impact
on future tax charges.
On 20 June 2023 the UK Finance Bill was substantively enacted in the UK,
including legislation to implement the OECD Pillar Two income taxes for
periods beginning on or after 1 January 2024. The Group has applied the
exception in the Amendments to IAS 12 issued in May 2023 and has neither
recognised nor disclosed information about deferred tax assets or liabilities
relating to Pillar Two income taxes. Based on forecast profits for 2023 we
anticipate an additional tax charge of $2.1m for future years as a result of
the minimum 15% tax rate applicable under Pillar 2.
Actuarial valuations of the UK defined benefit pension scheme create
volatility in the tax charge due to revaluations of the net pension asset
impacting on the related deferred tax liability. This is because the movement
in the deferred tax liability in respect of the pension surplus is taken to
Other Comprehensive Income whilst the corresponding movement in deferred tax
asset recognition is taken to the income statement.
9. Retirement benefit obligations
The Group operates a number of defined benefit pension schemes which are
largely closed to future accrual. The surplus or deficit recognised in respect
of each scheme represents the difference between the present value of the
defined benefit obligations and the fair value of the scheme assets. The
assets of these schemes are held in separate trustee administered funds. As at
30 June 2023, 97.2% (December 2022: 113.7%) of total scheme assets in the
principal schemes have quoted prices in active markets.
At 30 June 2023, the largest schemes were the Wood Pension Plan ('WPP'), the
Foster Wheeler Inc Salaried Employees Pension Plan ('FW Inc SEPP') and the
Foster Wheeler Inc Pension Plan for Certain Employees ('FW Inc PPCE'). An
interim revaluation of these schemes has been carried out at 30 June 2023 and
the related actuarial losses of $65.5m (June 2022: gains $230.8m) are recorded
in the Group statement of comprehensive income. The losses are largely as
result of a reduction in the market value of assets outweighing the increase
in the discount rate in the period. The discount rate is outlined in the table
below. The discount rate is determined by the scheme actuaries and reflects
the return on high quality corporate bonds. An increase in the discount rate
will decrease the defined benefit obligation.
No changes to future contribution levels have been agreed for the Wood Pension
Plan.
The principal assumptions used in calculating the Group's defined benefit
pension schemes are as follows:
June June June June 2022 June 2022 June 2022 December 2022 December 2022 December
2023 2023 2023 2022
Wood Pension Plan FW Inc SEPP FW Inc PPCE Wood Pension Plan FW Inc SEPP FW Inc PPCE Wood Pension Plan FW Inc SEPP FW Inc PPCE
% % % % % % % % %
Discount rate 5.3 5.1 5.1 3.8 4.6 4.6 5.0 5.2 5.2
Rate of retail price index inflation 3.2 N/A N/A 3.1 N/A N/A 3.1 N/A N/A
Rate of consumer price index inflation 2.7 N/A N/A 2.6 N/A N/A 2.6 N/A N/A
Sensitivity to discount rate and inflation rate
The impact of changes to the key assumptions on the retirement benefit
obligation is shown below. The sensitivity is based on a change in an
assumption whilst holding all other assumptions constant. In practice, this is
unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to
significant actuarial assumptions, the same method has been applied as when
calculating the pension obligation recognised in the Group balance sheet.
June 2023 June 2023 June 2023 June 2022 June 2022 June 2022 December 2022 December 2022 December 2022
Wood FW FW Wood FW FW Wood FW FW
Pension Inc Inc Pension Inc Inc Pension Inc Inc
Plan SEPP PPCE Plan SEPP PPCE Plan SEPP PPCE
$m $m $m $m $m $m $m $m $m
Discount rate
Plus 0.5% (129.6) (3.3) (5.4) (184.6) (3.3) (6.4) (134.0) (3.2) (5.4)
Minus 0.5% 143.9 3.5 5.7 206.4 3.6 6.9 151.5 3.5 5.7
Inflation
Plus 0.1% 13.3 N/A N/A 22.8 N/A N/A 13.3 N/A N/A
Minus 0.1% (13.3) N/A N/A (22.6) N/A N/A (13.2) N/A N/A
10. Other non-current liabilities
Unaudited Unaudited Audited
Interim
Interim
Full Year
June 2023 June 2022
December 2022
$m $m $m
Other payables 73.5 118.0 106.8
Other non-current liabilities 73.5 118.0 106.8
Other payables mainly relate to the US SERP pension arrangement and amount to
$52.7m (December 2022: $55.6m). At December 2022, other payables also included
$33.6m relating to penalties agreed and payable after 1 year to the various
authorities as described in note 12.
11. Goodwill and other intangible assets
Software and development costs Customer Order Brands Total
backlog
Goodwill contracts and relationships
$m $m $m $m $m $m
Cost
At 1 January 2023 4,277.4 343.2 656.1 157.0 479.4 5,913.1
Exchange movements 35.3 22.5 2.6 1.0 4.5 65.9
Additions - 100.6 - - - 100.6
Disposals (15.0) (1.0) - - - (16.0)
At 30 June 2023 4,297.7 465.3 658.7 158.0 483.9 6,063.6
Amortisation and impairment
At 1 January 2023 488.8 239.4 547.7 157.0 171.1 1,604.0
Exchange movements 5.3 16.8 0.9 1.0 1.4 25.4
Amortisation charge - 51.3 13.1 - 14.1 78.5
Disposals - (1.0) - - - (1.0)
At 30 June 2023 494.1 306.5 561.7 158.0 186.6 1,706.9
Net book value at 30 June 2023 3,803.6 158.8 97.0 - 297.3 4,356.7
Software and development costs Customer Order Brands Total
backlog
Goodwill contracts and relationships
$m $m $m $m $m $m
Cost
At 1 January 2022 5,226.2 288.8 815.7 183.9 661.0 7,175.6
Exchange movements (138.5) (39.2) (13.3) (2.3) (10.6) (203.9)
Additions - 83.0 - - - 83.0
Disposals - (0.8) - - - (0.8)
Reclassification to assets held for sale (792.2) (17.5) (127.9) (25.6) (178.6) (1,141.8)
At 30 June 2022 4,295.5 314.3 674.5 156.0 471.8 5,912.1
Amortisation and impairment
At 1 January 2022 0.8 205.7 581.2 171.7 140.9 1,100.3
Exchange movements - (32.2) (8.2) (2.2) (2.4) (45.0)
Amortisation charge - 44.9 10.6 8.0 16.4 79.9
Reclassification to assets held for sale - (16.6) (47.8) (25.6) (38.0) (128.0)
Disposals - (0.8) - - - (0.8)
At 30 June 2022 0.8 201.0 535.8 151.9 116.9 1,006.4
Net book value at 30 June 2022 4,294.7 113.3 138.7 4.1 354.9 4,905.7
In accordance with IAS 36 'Impairment of assets,' goodwill and other
non-current assets were reviewed for indicators of impairment at 30 June 2023.
The Group has five CGUs (December 2022: five) and goodwill is monitored by
management at the CGU level. The impairment testing that was performed at
December 2022 highlighted that a reasonable change in assumptions would have
resulted in an additional impairment for the Projects and Operations CGUs, as
well as the central Group test. The key assumptions used in the impairment
model for these CGUs were discount rate, long-term growth rate and revenue
growth.
During the first half of 2023, the Group completed the mid-year forecast
("MYF") update, which highlighted that revenues and EBITDA were expected to
remain in line with or above the original budget. Trading performance in the
first half of 2023 is also ahead of budget. The medium-term forecasts also
remain supported by a strengthening pipeline since the year end and good
momentum in work won and so the Group's view of the markets remain
unchanged. Therefore, the Group remain confident in the cash flow forecasts
that underpinned the impairment testing performed at year end.
Management considered the impact of market volatility on the discount rates
used in the impairment test. An increase in the discount rates, particularly
for the Projects and Operations CGUs and the overall Group position could lead
to further impairment charges. The discount rates remain broadly unchanged
since the year end impairment test and reflects that the risks within the
medium term forecasts have not changed significantly since the year end.
Management also considered the impact of the revocation of the conditional
offer made by Apollo during the first half of 2023, which did not
significantly change the market capitalisation of the Group as at 31 December
compared with 30 June. The Group is performing in line with the forecasts
underpinning the 2022 impairment test; 2023 year to date performance is ahead
of the budget; and the latest MYF highlights that 2023 revenue and EBITDA
performance is expected to be in line or above the original budget. Hence,
combined with broadly unchanged discount rates this indicates that a full
impairment review would not be required at this time, and that no impairment
charge should be recognised at June 2023.
The disposal of $15.0m of goodwill relates to the Gulf of Mexico business that
completed during the first half of 2023.
12. Provisions
Litigation related provisions Total
Asbestos related litigation Insurance Property Project related
provisions
2023 $m $m $m $m $m $m
At 1 January 2023 311.4 46.2 26.0 12.8 63.3 459.7
Reclassifications 10.5 1.2 (0.2) (0.2) (1.7) 9.6
Utilised (37.9) - (0.3) (10.9) (10.4) (59.5)
Charge to income statement 17.5 6.5 0.8 0.2 13.7 38.7
Released to income statement (0.4) (10.9) (0.1) - (7.8) (19.2)
Exchange movements 1.1 - 0.5 0.3 0.2 2.1
At 30 June 2023 302.2 43.0 26.7 2.2 57.3 431.4
Presented as
Current - - 2.4 0.2 33.6 36.2
Non-current 302.2 43.0 24.3 2.0 23.7 395.2
Litigation related provisions Total
Asbestos related litigation Insurance Property Project related
provisions
2022 $m $m $m $m $m $m
At 1 January 2022 342.1 55.3 32.3 93.3 112.2 635.2
Reclassifications 10.3 - 0.2 - 1.3 11.8
Utilised (23.5) (3.1) (1.1) (7.0) (34.9) (69.6)
Charge to income statement 2.9 - (0.1) 0.1 3.3 6.2
Released to income statement (25.4) (8.1) (0.3) - (14.1) (47.9)
Exchange movements (3.7) - (1.0) (0.1) (3.2) (8.0)
At 30 June 2022 302.7 44.1 30.0 86.3 64.6 527.7
Presented as
Current - - 5.0 0.3 24.9 30.2
Non-current 302.7 44.1 25.0 86.0 39.7 497.5
Asbestos related litigation
The Group assumed the majority of its asbestos-related liabilities when it
acquired Amec Foster Wheeler in October 2017. Whilst some of the asbestos
claims have been and are expected to be made in the United Kingdom, the
overwhelming majority have been and are expected to be made in the United
States.
Some of Amec Foster Wheeler's US subsidiaries are defendants in numerous
asbestos-related lawsuits and out-of-court informal claims pending. Plaintiffs
claim damages for personal injury alleged to have arisen from exposure to, or
use of, asbestos in connection with work allegedly performed during the 1970s
and earlier. The estimates and averages presented have been calculated on the
basis of the historical US asbestos claims since the initiation of claims
filed against these entities.
The number and cost of current and future asbestos claims in the US could be
substantially higher than estimated and the timing of payment of claims could
be sooner than estimated, which could adversely affect the Group's financial
position, its results and its cash flows.
The Group expects these subsidiaries to be named as defendants in similar
suits and that new claims will be filed in the future. For purposes of these
financial statements, management have estimated the indemnity and defence
costs to be incurred in resolving pending and forecasted claims through to
2050. Although we believe that these estimates are reasonable, the actual
number of future claims brought against these subsidiaries and the cost of
resolving these claims could be higher.
Some of the factors that may result in the costs of asbestos claims being
higher than the current estimates include:
· an increase in the rate at which new claims are filed and an
increase in the number of new claimants;
· increases in legal fees or other defence costs associated with
asbestos claims; and
· increases in indemnity payments, decreases in the proportion of
claims dismissed with zero payment and payments being required to be made
sooner than expected.
The Group has worked with its advisors with respect to projecting asbestos
liabilities and to estimate the amount of asbestos-related indemnity and
defence costs at each year-end through to 2050. Each year the Group records
its estimated asbestos liability at a level consistent with the advisors'
reasonable best estimate. The Group's advisors perform a quarterly and
annual review of asbestos indemnity payments, defence costs and claims
activity and compare them to the forecast prepared at the previous year-end.
Based on its review, they may recommend that the assumptions used to estimate
future asbestos liabilities are updated, as appropriate.
The total liability recorded in the Group's balance sheet at 30 June 2023 is
based on estimated indemnity and defence costs expected to be incurred to
2050. Management believe that any new claims filed after 2050 will be
minimal.
A net interest charge of $5.5m for the time value of money (June 2022: $2.8m)
and a yield curve charge of $2.0m (June 2022: $23.8m credit), which is driven
by the reduction in the 30-year US Treasury Bond rate in the first half of
2023, is included within exceptional items on the basis that movements in the
provision are non-trading and driven by market conditions out with the Group's
control. An additional $10.0m increase in the provision, offset by a
corresponding increase in the insurance receivable has been recorded to
reflect amounts receivable in the first half of the year from insurance
providers. Asbestos related receivables represents management's best estimate
of insurance recoveries relating to liabilities for pending and estimated
future asbestos claims through to 2050. The receivables are only recognised
when it is virtually certain that the claim will be paid. The Group's
asbestos-related assets have been discounted at an appropriate rate of
interest.
The net asbestos liability at 30 June 2023 amounted to $317.3m (December 2022:
$335.4m) and comprised $302.2m in provisions (December 2022: $311.4m) and
$49.6m in trade and other payables (December 2022: $59.5m) less $25.5m in long
term receivables (December 2022: $24.4m) and $9.0m in trade and other
receivables (December 2022: $11.1m).
Insurance provisions
The Group has liabilities in relation to its captive insurance companies of
$43.0m (December 2022: $46.2m).
The Group currently has one captive insurance company, Garlan Insurance
Limited, which is active and is based in Guernsey. The company provides
insurance solely to other Group companies and does not provide any insurance
to third parties. The provisions recorded represent amounts payable to
external parties in respect of claims, the value of which is based on
actuarial reports which assess the likelihood and value of these claims.
These are reassessed annually, with movements in claim reserves being recorded
in the income statement.
Property provisions
Property provisions total $26.7m (December 2022: $26.0m). Property provisions
mainly comprise of dilapidations relating to the cost of restoring leased
property back into its original, pre-let condition. The estimate of costs is
the greatest area of uncertainty and the timing of future cash outflows is
linked to the term dates of numerous individual leases.
Litigation related provisions
The Group is party to litigation involving clients and sub-contractors arising
from its contracting activities. Management has taken internal and external
legal advice in considering known or reasonably likely legal claims and
actions by and against the Group. Where a known or likely claim or action is
identified, management carefully assesses the likelihood of success of the
claim or action. A provision is recognised only in respect of those claims
or actions where management consider it is probable that a cash outflow will
be required.
Provision is made for management's best estimate of the likely settlement
costs and/or damages to be awarded for those claims and actions that
management considers are likely to be successful. Due to the inherent
commercial, legal and technical uncertainties in estimating project claims,
the amounts ultimately paid or realised by the Group could differ from the
amounts that are recognised in the financial statements.
Investigations
Under the terms of the investigation resolutions concluded in 2021, the Group
paid approximately $38m in compensation, disgorgement and prejudgment
interest, fines and penalties in instalments, including its final payment to
the Crown Office and Procurator Fiscal Service in Scotland in the first half
of 2023. The Group will pay the remaining amounts due to the SFO in 2024.
At 30 June 2023, the Group continues to recognise the final instalment of
outstanding penalties of $35.3m (December 2022: $37.3m) within Trade and other
payables. The non-current portion at 30 June 2023 is now $nil (December 2022:
$33.6m).
Other litigations
Other items relating to litigation are included within the overall provision,
none of which are individually material.
Project related provisions
The Group has numerous provisions relating to the projects it undertakes for
its customers. The value of these provisions relies on specific judgements in
areas such as the estimate of future costs or the outcome of disputes and
litigation. Whether or not each of these provisions will be required, the
exact amount that will require to be paid and the timing of any payment will
depend on the actual outcomes.
Aegis Poland
This legacy AFW project involves the construction of various buildings to
house the Aegis Ashore anti-missile defence facility for the United States
Army Corps of Engineers ("USACE"). Wood's construction scope is now complete
and has been formally handed over to USACE. There has been no change in
management's assessment of the loss at completion which remains at $222m. The
full amount of this loss has been recognised to date.
The Group's assessment of the ultimate loss includes change orders which have
not been approved by the customer. They are estimated based on the amount that
is deemed to be highly probable to be recovered. That estimation is made
considering the risks and likelihood of recovery of change orders. The Group's
assessment of liquidated damages involves an expectation of relief from
possible obligations linked to delays on the contract. These liquidated
damages and relief assumptions are estimates prepared in conjunction with the
change orders estimates noted above. The range of possible outcomes in respect
to the change orders that are highly likely to be recoverable and the
liquidated damages for which a relief will be obtained is material. The Group
has classified the receivable balances as non-current due to the element of
uncertainty surrounding the timing of the receipt of these balances. The
ultimate loss also includes the Group's assessment of the total legal costs
necessary to achieve recovery of the amounts believed to be recoverable and
defend our position on liquidated damages. At this point in time this is an
estimate based on a weighted average of several possible outcomes and the
actual costs could be materially higher or lower depending on actual route to
settlement.
If the amounts agreed are different to the assumptions made, then the ultimate
loss could be materially different. At 30 June 2023, provisions of $8.8m
(December 2022: $15.6m) are recognised which represent the element of the full
contract loss which has been recognised through the income statement to date
but for which revenue has not yet been recognised or costs incurred. In
reaching its assessment of the ultimate loss, management have made certain
estimates and assumptions relating to the recovery of costs from USACE and the
final costs to complete. If the actual outcome differs from these estimates
and assumptions, the ultimate loss will be different.
Other project related provisions
Certain of the jurisdictions in which the Group operates, in particular the US
and the EU, have environmental laws under which current and past owners or
operators of property may be jointly and severally liable for the costs of
removal or remediation of toxic or hazardous substances on or under their
property, regardless of whether such materials were released in violation of
law and whether the operator or owner knew of, or was responsible for, the
presence of such substances. Largely as a consequence of the acquisition of
Amec Foster Wheeler, the Group currently owns and operates, or owned and
operated, industrial facilities. It is likely that, as a result of the Group's
current or former operations, hazardous substances have affected the property
on which those facilities are or were situated.
In the past the Group has received and may continue to receive claims pursuant
to indemnity obligations from the present owners of facilities we have
transferred, which may require us to incur costs for investigation,
remediation and monitoring. As at 30 June 2023, the Group has a $0.2m
provision (December 2022: $6.9m) for the currently understood cost of
monitoring and estimated environmental clean-up costs in relation to
industrial facilities that it no longer operates.
As described in note 18, the Group agreed to indemnify certain third parties
relating to businesses and/or assets that were previously owned by the Group
and were sold to them. These principally relate to businesses that were sold
by Amec Foster Wheeler prior to its acquisition by the Group. The Group had
recognised legacy provisions which comprised many individually immaterial
provisions relating to a large number of contracts and exposures. The
Group manages its exposure to these liabilities within Investment Services and
the provision was increased during the first half of 2023 based on our latest
assessment of the probable outflow required to settle the exposures.
The balance of project related provisions relates to a number of provisions
which are not individually material or significant.
13. Related party transactions
The following transactions were carried out with the Group's joint ventures in
the six months to 30 June. These transactions comprise sales and purchase of
goods and services in the ordinary course of business. The receivables
include loans to certain joint venture companies.
Unaudited Unaudited Audited
Interim
Interim
Full Year
June 2023 June 2022
December 2022
$m $m $m
Sales of goods and services to joint ventures 0.4 7.3 12.2
Purchase of goods and services from joint ventures 1.8 0.1 4.3
Receivables from joint ventures 7.6 9.9 8.9
Payables to joint ventures 0.1 1.3 0.3
The Group operates a number of defined benefit pension arrangements and seeks
to fund these arrangements to ensure that all benefits can be paid as and when
they fall due. The Group has an agreed schedule of contributions with the UK
plan's trustees where amounts payable by the Group are dependent on the
funding level of the respective scheme. The US plans are funded to ensure that
statutory obligations are met and contributions are generally payable to at
least minimum funding requirements. Note 9 sets out details of the Group's
pension obligations under these arrangements.
14. Analysis of net debt
At 1 January 2023 Cash Other Exchange movements Unaudited
flow at 30 June
2023
$m $m $m $m $m
Short term borrowings (345.9) 105.5 2.1 (22.9) (261.2)
Long term borrowings (584.0) (257.0) (1.9) (0.3) (843.2)
(929.9) (151.5) 0.2 (23.2) (1,104.4)
Cash and cash equivalents 536.7 (87.8) - 1.3 450.2
Net debt before leases (393.2) (239.3) 0.2 (21.9) (654.2)
Leases (342.9) 52.4 (27.7) (7.5) (325.7)
Net debt including leases (736.1) (186.9) (27.5) (29.4) (979.9)
At 1 January 2022 Cash Other Exchange movements Unaudited
flow at 30 June
2022
$m $m $m $m $m
Short term borrowings (281.9) (12.9) (27.9) 1.2 (321.5)
Long term borrowings (1,614.1) (231.4) (2.1) (0.2) (1,847.8)
(1,896.0) (244.3) (30.0) 1.0 (2,169.3)
Cash and cash equivalents 503.0 (85.7) - (12.8) 404.5
Cash and cash equivalents included in assets held for sale - 8.5 - - 8.5
Net debt before leases (1,393.0) (321.5) (30.0) (11.8) (1,756.3)
Leases (449.8) 66.8 (40.7) 24.1 (399.6)
Net debt including leases (1,842.8) (254.7) (70.7) 12.3 (2,155.9)
Cash at bank and in hand at 30 June 2023 includes $243.5m (December 2022:
$328.4m) that is part of the Group's cash pooling arrangements. For internal
reporting and the calculation of interest, this amount is netted with
short-term overdrafts and is presented as a net figure on the Group's balance
sheet. In preparing these financial statements, the Group is required to gross
up both its cash and short-term borrowings figures by this amount.
The cash and cash equivalents balance includes amounts classified as
restricted cash totalling $11.5m (June 2022: $18.0m and December 2022:
$15.0m). $9.3m of the balance represents cash held in jurisdictions where
there is insufficient liquidity in the local market to allow for immediate
repatriation (December 2022: $10.0m). The remaining $2.3m (June 2022: $7.6m
and December 2022: $5.0m) relates to balances held within Russia that are
potentially exposed to the sanctions associated with Russia's invasion of
Ukraine but are expected to be used to settle in-country liabilities.
Management considers it appropriate to include the restricted cash balance in
the Group's net debt figure on the basis that it meets the definition of cash,
albeit is not readily available to the Group.
The lease liability at 30 June is made up of long term leases of $234.9m (June
2022: $251.3m) short term leases of $90.8m (June 2022: $88.2m) and held for
sale lease liabilities of $nil (June 2022: $60.1m).
The other movement of $27.5m (June 2022: $70.7m) in the above table represents
new leases entered into of $23.1m (June 2022: $32.1m) and disposals of $3.9m
(June 2022: $nil) during the first half, interest expense of $8.5m (June 2022:
$8.6m), amortisation of bank facility fees of $1.9m (June 2022: $2.1m)
partially offset by a reduction in accrued interest on short-term borrowings
of $2.1m (June 2022: $27.9m increase).
As at 30 June 2023, the Group had received $200.0m (December 2022: $200.0m) of
cash relating to non-recourse financing arrangements. An equivalent amount of
trade receivables was derecognised on receipt of the cash. At 30 June 2023,
$76.1m (December 2022: $113.6m) had been received from customers in the normal
course of business in relation to the same amounts received from the
factors. This $76.1m (December 2022: $113.6m) is due to be paid over to the
factors and is included in trade payables. The impact of both the cash
received from the facility and the cash received from customers is included
within cash generated from operations.
15. Share based payment arrangements
Share based charges for the period of $9.8m (June 2022: $8.5m) relate to
options granted under the Group's executive share option schemes and awards
under the Long-Term Plan. The charge is included in administrative expenses
in the income statement.
For the period to 30 June 2023, $0.8m (June 2022: $0.6m) of shares have been
acquired by employee share trusts in the open market using funds provided by
the Group to meet obligations under the Share Incentive Plan ('SIP').
16. Financial risk management and financial instruments
Financial risk factors
The Group's activities expose it to a variety of financial risks: market risk
(including foreign exchange and cash flow interest rate risk), credit risk and
liquidity risk. The condensed interim financial statements do not include all
financial risk management information and disclosures required in the annual
financial statements and should be read in conjunction with the Group's 2022
Annual Report and Accounts.
There have been no material changes in the risk management function or in any
risk management policies since 31 December 2022.
Fair value of non-derivative financial assets and financial liabilities
The fair value of short-term borrowings, trade and other payables, trade and
other receivables, short-term deposits and cash at bank and in hand
approximates to the carrying amount because of the short maturity of interest
rates in respect of these instruments.
Derivative financial assets and liabilities
The Group enters into forward contracts to hedge foreign exchange exposures
arising in the normal course of business. The Group also hedges against
changes in interest rates by entering into interest rate swaps. The fair
values of these derivative financial instruments are included in financial
assets and trade and other payables in the Group balance sheet. The fair
values at 30 June 2023 are not significant.
17. Capital commitments
At 30 June 2023, the Group has entered into contracts for future capital
expenditure amounting to $53.8m relating to property plant and equipment and
intangible assets. These capital commitments mainly relate to various existing
software packages which are subsequently amortised over their useful lives.
These capital commitments have not been provided for in the financial
statements.
18. Contingent liabilities
Cross guarantees
At the balance sheet date, the Group had cross guarantees without limit
extended to its principal bankers in respect of sums advanced to subsidiaries.
Legal Claims
From time to time, the Group is notified of claims in respect of work carried
out. For a number of these claims the potential exposure is material. Where
management believes we are in a strong position to defend these claims no
provision is made. This includes a civil administrative determination, made
by the Contraloría General de la República de Colombia against two Amec
Foster Wheeler subsidiaries, along with 22 others, in relation to work carried
out for Refineria de Cartagena, S.A ("Reficar") between 2009 and 2016. We are
continuing to vigorously challenge this determination and we are confident in
our ability to prevail.
At any point in time there are a number of claims where it is too early to
assess the merit of the claim, and hence it is not possible to make a reliable
estimate of the potential financial impact.
The group carries insurance coverage and in the event of future economic
outflow arising with respect to any of these contingencies, an element of
reimbursement may occur, subject to any excess or other policy restrictions
and limits.
Investigations
Following the settlement of the various regulatory investigations in 2021, it
remains possible that there may be other adverse consequences for the Group's
business including actions by authorities in other jurisdictions. At this
time, however, these consequences and likelihood of potential further
investigations cannot be reliably estimated, and therefore no provision has
been made in respect of them in the financial statements.
Employment claims
The Group received assessments from HMRC into the historical application of
employer's National Insurance Contributions to workers on the UK Continental
Shelf. The assessments have been appealed and our case is stayed pending the
outcome of a similar case with another Group. We believe it is more likely
than not that we will be able to defend this challenge and therefore as a
result do not expect that it is probable a liability will arise. The maximum
potential exposure to the Group in relation to tax and interest should we be
unsuccessful in our position is approximately $30m.
Indemnities and retained obligations
The Group has agreed to indemnify certain third parties relating to businesses
and/or assets that were previously owned by the Group and were sold to them.
Such indemnifications relate primarily to breach of covenants, breach of
representations and warranties, as well as potential exposure for retained
liabilities, environmental matters and third party claims for activities
conducted by the Group prior to the sale of such businesses and/or assets. We
have established provisions for those indemnities in respect of which we
consider it probable that there will be a successful claim, to the extent such
claim is quantifiable. The Group sold its Built Environment Consulting
business to WSP in late 2022 and the share purchase agreement provided an
indemnity for losses on three specified contracts. No provisions were
considered necessary for these contracts as at 30 June 2023.
Tax planning
HMRC have challenged the deductibility of certain interest expenses previously
considered as part of the EU State Aid investigation into the UK controlled
foreign company regime. HMRC are currently at the information gathering stage.
We believe that the interest deductions have been appropriately taken in line
with tax legislation and guidance and therefore do not expect any outflow as a
result, however we continue to monitor case law in the area and will consider
the challenges of HMRC when raised. The maximum potential exposure to the
Group including interest in relation to the interest deductions is
approximately $39m and in the event of any amount ultimately being payable
there is no prospect of any reimbursement.
19. Post balance sheet events
The directors have reviewed the position of the Group, up to the date
authorised for issue of these financial statements and have not identified any
events arising after the reporting period which require disclosure.
Statement of directors' responsibilities
for the six month period to 30 June 2023
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' as adopted for use in the
UK;
· the interim management report includes a fair review of the
information required by:
a) DTR 4.2.7R
(https://alex.kpmg.com/AROWeb/document/lfc/find/UK_XLNUK_FSA_DR_DTR_BODY_para4_2_7R)
of the Disclosure Guidance and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
b) DTR 4.2.8R
(https://alex.kpmg.com/AROWeb/document/lfc/find/UK_XLNUK_FSA_DR_DTR_BODY_para4_2_8R)
of the Disclosure Guidance and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
The directors of John Wood Group PLC are listed in the Group's 2022 Annual
Report and Accounts.
K Gilmartin
Chief Executive
D Kemp
Chief Financial Officer
21 August 2023
Independent review report to John Wood Group PLC
Conclusion
We have been engaged by John Wood Group plc ("the Company") to review the
condensed set of financial statements in the half-yearly financial report for
the six months ended 30 June 2023 which comprises the Group income statement,
the Group statement of comprehensive income, the Group balance sheet, the
Group statement of changes in equity, the Group cash flow statement and the
related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2023 is not prepared, in all
material respects, in accordance with IAS 34 Interim Financial Reporting as
adopted for use in the UK and the Disclosure Guidance and Transparency Rules
("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the
UK. A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other
information contained in the half-yearly financial report and consider whether
it contains any apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis of conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Paul Glendenning
for and on behalf of KPMG LLP
Chartered Accountants
1 Marischal Square
Aberdeen
AB10 1DD
21 August 2023
Shareholder information
Officers and advisers
Secretary and Registered Office Registrars
M McIntyre Equiniti
John Wood Group PLC Aspect House
15 Justice Mill Lane Spencer Road
Aberdeen Lancing
AB11 6EQ West Sussex
BN99 6DA
Tel: 01224 851000 Tel: 0371 384 2649
Stockbrokers Independent Auditor
JPMorgan Cazenove Limited KPMG LLP
Morgan Stanley Chartered Accountants and Statutory Auditors
1 Marischal Square
Company solicitors Aberdeen
Slaughter and May AB10 1DD
The Group's Investor Relations website can be accessed at www.woodplc.com.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR NKDBQKBKBAFBRecent news on John Wood
See all newsREG-Wood Group (John) Plc: Director/PDMR Shareholding
AnnouncementREG-Wood Group (John) Plc: Director/PDMR Shareholding
AnnouncementREG - Wood Group (John)PLC - Wood Appoints New Director
AnnouncementREG-Wood Group (John) Plc: Director/PDMR Shareholding
AnnouncementREG-Wood Group (John) Plc: Director/PDMR Shareholding
Announcement