John Wood Group PLC
Annual Report and Accounts 2021
Unlocking solutions
to the world’s most
critical challenges.
Contents
Strategic report
Highlights
02
At a glance
04
Our business model
06
Our strategy in action
08
Stakeholder engagement
14
Key performance indicators
22
Chair’s statement
26
Chief Executive review
27
Segmental review
31
Financial review
35
Building a sustainable business
42
Principal risks and uncertainties
68
Governance
Letter from the Chair of the Board
75
Directors’ report
78
Board of Directors
88
Corporate governance
90
Remuneration
110
Group inancial statements
Independent auditor's report
136
Consolidated income statement
150
Consolidated statement of
comprehensive income/expense
151
Consolidated balance sheet
152
Consolidated statement of
changes in equity
153
Consolidated cash low statement
154
Notes to the inancial statements
155
Company inancial statements
Company balance sheet
226
Statement of changes in equity
227
Notes to the Company inancial
statements
228
Five year summary
235
Information for shareholders
236
Full year results for the year ended 31 December 2021
View and download our Annual
Report online:
woodplc.com/ar21
Wood is a global leader in consulting
and engineering across energy and
the built environment.
Key messages
• 2021 was a challenging year with the ongoing pressures of the
pandemic, mixed market conditions and continued challenges in
our Projects business
• Despite a decline in revenue we improved our margin
• Trading momentum improved during the year and
our order book is up signiicantly
• Cash performance relects exceptional cash lows
and a large working capital outlow
See page 28 for details
• We recognised exceptional charges, most notably a new charge
of $99m on our Aegis Poland contract
See page 28 for details
•
We made some progress in 2021 to reduce risk across our
contract portfolio
See pages 28-29 for details
• The proposed sale of the built environment business will,
we believe, deliver signiicant value for shareholders
See page 29 for details
• We are well placed in our markets for future opportunities
in energy transition and industrial decarbonisation, with
a wide range of engineering capabilities
See page 30 for details
• We continue to make good progress towards our sustainability
targets and are proud to have been awarded a rating of
“AA Leader” from MSCI for the seventh consecutive year
See pages 24-25 for details
• We are making progress in creating an inclusive
working environment that celebrates diversity and
supports the wellbeing of our people
See pages 58-63 for details
Revenue
Adjusted EBITDA
3
$554
m
(2020: $630m)
Adjusted EBITDA margin
8.6%
(2020: 8.3%)
$6,400
m
(2020: $7,564m)
15.4%
Operating proit before
exceptional items
$192
m
(2020: $214m)
10.3%
Revenue
(pre-exceptional items)
1
$6,426
m
(2020: $7,564m)
(like-for-like)
(like-for-like)
15.0%
14.2%
12.1%
0.3ppts
$(136)
m
(2020: $(228)m)
Loss for the year
Operating proit / (loss)
Net cash (used in) / generated
from operating activities
Net debt / adjusted EBITDA
(reported basis)
7
Free cash low (new deinition)
$32
m
$(60)
m
3.3x
$(398)
m
(2020: $(33)m)
(2020: $303m)
(2020: 2.1x)
(2020: $(46)m)
Adjusted diluted EPS
4
17.5
cents
(2020: 23.2cents)
24.6%
41.3%
42.5%
Net debt
excluding leases
6
Net debt including leases
$1,393
m
$1,843
m
(2020: $1,014m)
(2020: $1,556m)
37.4%
18.4%
Order book
8
$7,748
m
(2020: $6,524m)
18.8%
Basic EPS
(20.6)
cents
(2020: (34.1)cents)
movement:
n/a
movement:
n/a
movement:
n/a
movement:
n/a
9.8%
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
01
Governance Financial statements
Financial highlights
•
Revenue
down 14% on a like-for-like
basis, with growth in Consulting and
Operations more than offset by a
signiicant decline in Projects
•
Stronger sequential H2 performance:
H2 revenue was 4% higher than H1
with Projects stabilising and growth
across Consulting (up 4%) and
Operations (up 10%)
•
Adjusted EBITDA
down 10% on a like-
for-like basis, with improved EBITDA
in Consulting offset by lower EBITDA in
Projects and Operations (see also note
9 on page 3 for details)
•
Margin improvement
(like-for-like) of
0.4ppts including cost eficiencies,
revenue mix and improved overall
execution
•
Exceptional items
of $160 million
(2020: $247 million) includes the
previously announced $99 million write
down of our Aegis Poland contract (see
page 28 for details) and $78 million of
restructuring costs
•
Adjusted diluted EPS
of 17.5c relects
the lower adjusted EBITDA
•
Free cash low (new deinition)
of
$(398) million includes a working
capital outlow of $306 million and
exceptional cash costs of $159 million.
Our deinition of free cash low
includes all cash lows before dividends
and M&A
•
Working capital outlow
includes a
$265 million outlow in our Projects
business as signiicantly lower activity
levels in the year led to a signiicant
working capital unwind
Balance sheet
•
Net debt
of $1.4 billion at 31 December
2021 relects the negative free cash
low in the year
•
Net debt / adjusted EBITDA (reported
basis)
at 3.3 times at 31 December
2021, within our covenant level for the
Group’s borrowings, which are set at
3.5x and measured twice per year
Operational highlights
•
Order book up 19% year-on-year to
$7.7 billion
• Strong growth in both Consulting
(up 24%) and Operations (up 27%)
• Lower growth (up 2%) in Projects,
partly relecting our move away
from higher risk lump sum contracts
and with an improving trend as the
year progressed
• Strong recovery in the order book in
the conventional energy market (up
45%) across both Consulting and
Operations including several multi-
year renewals
• At December 2021, revenue in our
order book for 2022 was $4,655
million (December 2020: $4,399
million)
•
Continue to reduce costs and reduce
project risk exposure
• Around $40 million of cost savings
realised from our Future Fit
Programme in the year
• Continue to reduce our risk exposure
across Projects business (see pages
28 to 29 for details)
•
Progress on our ESG strategy
• Multiple contract wins across energy
transition and decarbonisation
throughout the year as we continue
to help our customers deliver on their
own ESG commitments
• 31% reduction in scope 1 and 2
emissions (target 40% reduction by
2030 on a 2019 baseline)
• Maintained our “AA Leader” rating
from MSCI
• Increased female representation in
senior leadership roles, targeting
40% by 2030
Delay to results and Aegis
Poland review
• On 21 February 2022, we announced
that a delay to the publication of
our results was necessary to inalise
our reported results and to conclude
the year-end audit process with
our auditor, KPMG LLP. The delay
was required to allow an external
investigation and review to be
undertaken, principally in relation to
the historical carrying value of the
Aegis Poland project contract and the
process by which this was determined
• The investigation and review have
been concluded and there is no
change to the historical carrying
value of the Aegis Poland contract
or to the previously communicated
year-end exceptional charge of $99
million announced in our release of 21
February 2022
Outlook for 2022
• We expect higher revenue across our
business supported by the growth in
our order book, with revenue in our
order book for 2022 of $4,655 million
(up 6% on comparable igure last year)
• The proposed sale of the built
environment business will have a
signiicant impact on our reported
results and, as such, we are not
providing detailed inancial guidance
at this stage
• Cash performance will be impacted
by ongoing exceptional cash drags
(including SFO payments, restructuring
costs, onerous leases and outlows on
our Aegis Poland contract). As such
we expect any improvement in our net
debt to come from the proceeds from
the sale of built environment
• As usual in our business, we expect a
working capital outlow in the irst
half of the year. As such our net debt
is expected to be higher at June 2022
than at December 2021
Update on built environment sale
• Sale process progressing well, sale
agreement expected to be announced
in late Q2
• Sale is expected to deliver signiicant
value for our shareholders, strengthen
our balance sheet and provide the
inancial lexibility to deliver our
strategy
Update on activities in Russia
•
In March 2022, we took the decision to
exit Russia and have begun the process
of withdrawing from operations in the
country
• Operations in Russia accounted for
around 1% of Group revenue in 2021
CEO succession
•
We announced today that Robin
Watson, Chief Executive, has advised
the Board of his intention to retire as
Chief Executive
• The Company has initiated the process
to appoint his successor and Robin will
remain in his role until his successor is
in place
Capital Markets Day
• We plan to hold a Capital Markets
Day at a later date and following the
sale of the built environment business.
This will include how Wood can
best take advantage of the growth
opportunities across energy security
and sustainability
• This Capital Markets Day will include
an updated view on the medium-term
growth and margin prospects for the
Group
Improving business momentum and sale of built
environment progressing well
Notes
Adjustments between statutory and
underlying information
The Group uses various alternative
performance measures (APMs) to
enable users to better understand the
performance and earnings trends 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 deined
by IFRS and there is a level of judgement
involved in identifying the adjustments
required to calculate them. As the APMs used
are not deined under IFRS, they may not
be comparable to similar measures used by
other companies. They are not a substitute for
measures deined under IFRS.
1. Revenue for FY21 includes an exceptional
item of $(25.4) million related to Aegis
Poland. 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
year-to-year.
2. Revenue on a like-for-like basis is
calculated as revenue less revenue from
disposals executed in 2021, and adjusted
EBITDA on a like-for-like basis is calculated
as adjusted EBITDA less the adjusted
EBITDA from those disposals. These
amounts are presented as a measure of
underlying business performance excluding
businesses disposed. In FY21 executed
disposals consisted of our joint venture
interest in Sulzer Wood. Comparative
igures also exclude revenue and adjusted
EBITDA from the disposals of our nuclear
and industrial services businesses, YKK and
our joint venture interest in TransCanada
Turbines (TCT) completed in 2020. These
disposals accounted for $nil revenue in
FY21 (FY20: $76 million) and adjusted
EBITDA of $nil in FY21 (FY20: $16 million).
Like-for-like revenue growth refers to
revenue (pre-exceptional items).
3.
A reconciliation of adjusted EBITDA to
operating proit (pre-exceptional items) is
shown in note 1 to the inancial statements.
4.
A reconciliation of adjusted diluted earnings
per share to basic earnings per share is
shown in note 8 to the inancial statements.
5. Free cash low is deined as all cash
lows before acquisitions, disposals and
dividends. It includes all mandatory
payments the Group makes such as
interest and tax, and all exceptional cash
lows. It excludes the impacts of leases.
A reconciliation of free cash low to our
statutory cash low statement is shown
on page 38.
6. Net debt excluding leases is total group
borrowings, offset by cash and cash
equivalents. Borrowings comprise loans
drawn on the Group’s revolving credit
facility (RCF), the UKEF, overdrafts and
unsecured senior loan notes issued in the
US private placement market (USPP).
Cash and cash equivalents include cash
at bank and in hand and short-term bank
deposits. A reconciliation of net debt
excluding leases to net debt including
leases is show in note 29 to the inancial
statements.
7.
The majority of the Group’s borrowings
have inancial covenants (RCF, USPP,
UKEF – as shown in note 6). The two
covenant measures are: (i) net debt to
adjusted EBITDA not exceeding 3.5 times,
(ii) adjusted EBITA not less than 3.5 times
interest. These covenants are measured
on 30 June and 31 December each year.
The net debt / EBITDA ratio is calculated
on the existing basis prior to the adoption
of IFRS 16 in 2019 and is based on net
debt excluding leases. These measures are
presented as they closely aligned to the
measure used in our inancing covenants.
See calculations on page 41.
8. 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 conirmed term is included. Order
book disclosure is aligned with the IFRS
deinition 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.
9.
Adjusted EBITDA in 2021 beneited from
a change in the classiication of Aegis
Poland contract losses. Previously these
were included within adjusted EBITDA
($11 million in FY20, $9 million in HY21)
and now have been classiied (from H2
2021 onwards, including adjusting HY21) as
exceptional items.
Highlights
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
03
John Wood Group PLC
Annual Report and Accounts 2021
02
Governance Financial statements
Consulting
Wood is a global leader in
consulting and engineering across
energy and the built environment.
c
39
k
people
60+
countries
c
$6
bnrevenue
160+
year history
Three service lines:
Find out more about our markets at:
woodplc.com/solutions/key-markets
Notes
End market includes:
1. Renewable power (solar and wind), mining and minerals, industrial
processes and power
2. Petrochemicals (including hydrogen and carbon capture), speciality
chemicals and reining
3. Upstream and midstream oil and gas
4. Infrastructure, water and waste and environmental
End market breakdown:
Geographic breakdown:
Consulting
Specialist consultancy services delivered through a diverse,
high-performing team of leading technical experts and project
advisors. Delivers innovative solutions to complex technological
challenges in the planning, design, build and operation of assets,
facilities and infrastructure to ensure they are optimised for
a transforming energy system, are more productive, eficient,
reliable and are resilient for a changing world.
Projects
Full suite of solutions from programme and project
management, to engineering and design, procurement,
construction and project delivery, across any major capital
project lifecycle.
Operations
Management and optimisation of our clients’ assets. From
maintenance, modiications, brownield engineering, asset
operations and management through to decommissioning.
Revenue:
$1.8
bn
Revenue:
$2.3
bn
• Environmental consulting
• Specialist engineering
• Infrastructure development
•
Project management and delivery
• Engineering design
• Construction
• Asset optimisation
• Modiications
• Maintenance
Key services:
Key services:
Key services:
Read more on page 31
Read more on page 32
Read more on page 33
End market breakdown:
End market breakdown:
Our organisational structure
Middle East & Africa 10%
Asia Paciic 18%
Americas 51%
Europe 21%
Two broad end markets:
Green-to-green lifecycle of solutions:
Our service deined operating model
Find out more about our business at:
woodplc.com/company/our-business
c30%
c35%
38%
23%
22%
17%
Proposed sale of Wood’s built environment business
In November 2021, we announced the initiation of a strategic review of the part of the Consulting business unit that faces the
built environment end market. The review considered a range of options to best deliver value from this part of the business for
our shareholders whilst also assessing how best to take advantage of positive trends and investment opportunities in energy
transition and industrial decarbonisation.
In January 2022, the Board concluded that a full sale process for the built environment business is the best option. A process
is underway with an expectation of the announcement of a sales agreement in Q2 2022. We will outline an updated strategy
later in 2022. As part of preparing for the proposed sale of the built environment business, in Q1 2022 we began preparing
for the future separation of that business by taking steps to create two distinct divisions within our Consulting business
unit. These divisions are Consulting; consisting of our energy focused consulting activities, and Environment & Infrastructure
Consulting; which is the subject of the proposed sale.
Projects Operations
Energy
Plan
Consulting
Projects
Operations
BuildDesign Operate/Optimise
Repurpose
Built environment
We have an operating model that is service
deined. We deliver three principal services:
• Consulting
• Projects
• Operations
Across two broad end markets:
• Energy
• Built environment
Our internal organisational structure is aligned to
our operating model, with three service deined
global business units:
Consulting
, Projects
and Operations
. Through these three complementary
business units we have capabilities that span
the entire “green-to-green” asset lifecycle from
planning through design, build and operate to
repurpose.
At a glance
Conventional energy 13%
Conventional energy 24%
Process & chemicals 5%
Process & chemicals 32%
Renewables & other 12%
Renewables & other 38%
Energy: 30%
Energy: 94%
Built environment:
Built environment:
A global business of breadth and scale
Conventional energy 38%
Process & chemicals 17%
Renewables & other 22%
Energy: 77%
Built environment:
Sustainable infrastructure 23%
Sustainable infrastructure 70%
Sustainable infrastructure 6%
10%
18%
21%
51%
Revenue:
$2.1
bn
End market breakdown:
c35%
Conventional energy 78%
Process & chemicals 11%
Renewables & other 8%
Energy: 97%
Built environment:
Sustainable infrastructure 3%
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
05
John Wood Group PLC
Annual Report and Accounts 2021
04
Governance Financial statements
Creating value through our differentiated model
We create value by delivering differentiated
consultancy and engineering solutions
throughout the asset life cycle across energy
and built environment markets.
Our purpose and strategy, underpinned by
our culture, is fundamental to sustaining
value over the longer-term.
Our strategic objective:Inputs
Performance driven and
innovative solutions
Flexible commercial
model with a balanced
risk appetite
Capital structure
and allocation
Robust risk governance
and operations assurance
policies and processes
Sustainability strategy
aligned with UN goals
See pages 24 to 25
Talented, lexible
and motivated workforce
Operating structure
optimised for sustainability,
cross-service line opportunities
and growth
See page 58
See pages 4 to 5
To be a premium, differentiated business delivering
exceptional returns for our clients, our team, our
investors and the communities in which we work.
Unlocking solutions to the
world’s most critical challenges.
Our purpose:
Four primary trends shape our markets and drive our strategy:
Our ive medium-term priorities:
Future skills
Developing inclusive, agile and high-
performing teams, with the right skills,
in the right place, at the right time to
remain competitive and well positioned for
growth with the lexibility to respond to
evolving client demands.
Sustainable infrastructure
Capabilities to enable more sustainable
and resilient living, including the planning,
design, build and operation of connected
and resilient infrastructure.
Technology and digitisation
Utilising technology to create
future-ready industry through
optimising asset performance
and digital innovation.
Energy transition and industrial
decarbonisation
Engineering solutions supporting energy
delivery, the transition to a low-carbon
future and addressing complex industrial
decarbonisation challenges.
Targeting margin
improvement
Optimise and standardise
service delivery model
to achieve exceptional
execution
Optimising our portfolio
mix of services and
markets in line with our
strategic objectives
Technology differentiation
through internal R&D,
strategic partnerships and
scalable solutions
Improved risk/reward
on contracts in line with
balanced risk appetite
Our culture:
Our vision
Inspire with ingenuity,
partner with agility,
create new possibilities...
Care
Commitment Courage
Listen up Lift others up Stand up
Team up Speak up Don't give up
Our values
Our behaviours
Agile teams
We deploy our most talented
people with agility to deliver the
right solutions now and in the
future. Our ability to adapt keeps
us relevant and offers great
opportunities for our people.
For investors
• Total shareholder return
• Growth and cash generation
For our people
• Rewarding careers and
employee retention
•
A workplace where different
backgrounds, experience and
expertise are welcomed and
celebrated
For clients
• Best-in-class delivery,
consistently
•
Global reach with balanced
portfolio of long-term partner
relationships with clients
• Leading technical services and
smarter, more sustainable
solutions
• Track record on industry-leading
projects
For communities
Signiicant contribution to local
employment and communities
Employee matched funding &
community support
c$1.4m
Value outputs
Our strategic enablers:
Technological advantage
We deliver greater eficiencies
and create new solutions through
combining our deep domain
knowledge with leading-edge,
enabling technology. We provide
solutions to some of the world's
most complex projects and draw on
our extensive expertise and know-
how to bring new perspectives on the
challenges these projects present.
Exceptional execution
We are differentiated by our shared
commitment to consistently delivering
exceptional outcomes that add value and
build trust. We have around 90% repeat
business and have developed leading
market positions from our long track
record of delivering safe and
best-in-class projects.
Commercial acumen
We employ an asset light, lexible model
allowing us to respond quickly to changes
in market conditions and allocate capital
where it impacts most. Our contracting
structures are largely reimbursable with
a range of speciic contracting structures
to align with client needs within our
measured risk appetite. We have a broad
client base with a wide mix across sectors
giving us low individual client dependency.
Read more on page 58
Read more on page 64
Our business model
Capabilities levered to structural
growth in energy transition,
industrial decarbonisation and
sustainable infrastructure
See pages 8 to 13
To ind out more visit:
woodplc.com/company/our-business
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
07
John Wood Group PLC
Annual Report and Accounts 2021
06
Governance Financial statements
Decarbonisation of energy and industry
Climate change is one of the biggest challenges of our time and the decarbonisation of
industrial processes is one way to counter this and a key objective for policy makers and
hard-to-abate industries.
Wood has a wide range of capabilities to help clients achieve decarbonisation targets,
from low investment projects that improve eficiency or reduce oil and gas laring
to larger investments in the electriication of assets using renewables such as solar,
onshore and offshore wind as well as carbon capture and storage (CCS) and hydrogen.
The opportunity lies in smart technology and solutions to help deliver existing industrial
processes and conventional energy sources as cleanly, eficiently and securely as possible,
whilst also charting the pathway to newer, cleaner sources.
Utilising solar power
for cleaner energy
production in the US
Wood has signed an engineering,
procurement and construction (EPC)
contract for a package of four solar
projects, to provide renewable power for
Chevron’s onshore oil and gas operations
in the USA.
This project is an example of how Wood
can help clients decarbonise oil and
gas operations using our renewables
expertise. Conventional energy will
remain an important part of the
energy mix for decades to come and it
is important we can partner to make
production as clean as possible.
Unlocking innovative solutions for energy
transition and industrial decarbonisation
We work as a trusted partner across many aspects of the energy
transition from decarbonising energy and industrial activity, to
delivering solutions for renewable energy and low-carbon fuels
and contributing to the development of new energy policy.
Decarbonising the
largest gold-producing
complex in the world
Wood is working with long-term
client, Nevada Gold Energy LLC, to
install a solar power plant, substation
and transmission lines to deliver
approximately 120 MWac of solar energy
to help decarbonise activities resulting in
a zero-emissions mining project.
Our strategy in action
Visit our energy transition hub:
woodplc.com/solutions
Delivering a UK
carbon capture hub
Wood is the integration project
management contractor (IPMC)
for Humber Zero, one of the leading
industrial decarbonisation projects in
the UK.
As the most carbon-intensive
industrial cluster in the UK, the
Humber emits 12.4 million tonnes a
year. Humber Zero is a hybrid carbon
capture and storage (CCUS) and
hydrogen project which will provide
a cost effective, low-carbon supply
of energy and storage opportunities
to industry in the Immingham area.
The project could decarbonise the
Immingham industrial complex by
capturing up to 8 million/tCO
per annum for transportation and storage
in nearby offshore storage locations.
operations as it shifts away from
using its adjacent coal-ired power
plant, which is approaching 220
million pounds of coal burned, or the
equivalent of over 42,000 passenger
vehicles driven for a year.
This is an excellent example of a
company leading the charge with a
clear commitment to reduce carbon at
its global operations and demonstrates
how Wood can deliver added value
with decarbonisation and renewables
expertise to support client goals.
Following feasibility and pre-FEED
studies carried out by Wood to support
the development of the Humber
Zero project, a multidisciplinary team
from across Wood are facilitating the
development and integration of the
designs across the FEED packages
including interface management, safety
studies, licensor selection and scoping
of future services. In addition, Wood will
support VPI Immingham and Phillips 66
through the subsequent FEED delivery
and EPC contractor tendering process.
Carbon capture and storage is one
of the components of the 10-point
plan for the UK Government’s Green
Industrial Revolution, and is critical to
the UK achieving its legislated goal of
net-zero carbon emissions by 2050.
The UK Government has also set a
target to remove 10 million tonnes of
the UK’s annual CO emissions by 2030.
This igure is equivalent to all industrial
emissions from the Humber region and
means the Humber Zero project is set
to become the UK’s gateway carbon
capture project.
The plant near Elko, Nevada, will
comprise of 320,000 solar modules and
produce upwards of 277,000 MWh of
electricity every year for the next two to
three decades.
It is estimated up to 250 people will
be employed within the scope of this
contract, the majority of which will
be Nevada residents from Elko or
surrounding Nevada towns.
This engineering, procurement and
construction agreement will directly offset
carbon emissions from Nevada Gold's
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
09
John Wood Group PLC
Annual Report and Accounts 2021
08
Governance Financial statements
Accelerating the development of low-carbon fuels
To deliver a net-zero future, accelerating the development of low-carbon fuel
solutions in urban mobility and transportation, including heavy vehicle and aviation
sectors, is essential.
Transport is more than just getting from A to B, it fundamentally impacts our quality
of life, health and shapes our cities, towns and countryside.
As more countries across the globe set ambitious targets, Wood focuses on solving
challenges in vehicle decarbonisation and sustainable fuels including hydrogen.
Putting air travel on a
light path to net-zero
Wood is working with long-standing
partner, Honeywell UOP, to combine
technologies to produce carbon-neutral,
and carbon-negative, renewable fuels
which could transform the aviation
industry in the near-term.
Honeywell UOP’s Ecoining™ process
converts non-edible natural oils, animal fats
and other waste feedstocks into Honeywell
Green Diesel™ and Honeywell Green Jet
Fuel™, which are chemically identical to their
petroleum-based counterparts.
The process requires signiicant volumes
of hydrogen and with more than 60
years’ of experience in the hydrogen
sphere, Wood’s Steam Methane
Reformer (SMR) technology is combined
with Ecoining to produce biofuels.
These fuels not only offer improved
performance over commercial petroleum-
based diesel and jet fuels but can be used
as a drop-in replacement in vehicles and
aircraft with no equipment modiications.
Our strategy in action
continued
Accelerating the
production of green
hydrogen for transport
Wood has agreed a Memorandum
of Understanding (MoU) with HyGen
Energy to develop solutions for
future hydrogen production plants to
decarbonise transportation in the UK.
The partnership begins with the
conceptual design for one of the UK’s
largest facilities at Herne Bay, Kent.
Advancing US
renewable fuels
Wood is delivering a project for
Renewable Energy Group (REG)
that will expand REG’s renewable
diesel fuel offering to help meet the
world’s growing demand for lower-
carbon fuels.
The engineering, procurement, and
construction management services
contract will support REG’s Geismar
improvement and expansion project
at its renewable diesel bioreinery in
Geismar, Louisiana.
The project will take total site
production capacity from 90 million to
340 million gallons, enhance existing
operations and improve operational
reliability and logistics.
The carbon dioxide (CO
) that is
generated from the production of
the hydrogen can be captured and
routed for permanent underground
sequestration using the Honeywell
H2 Solutions technology suite, further
reducing lifecycle GHG emissions an
additional 10% when compared to
the total GHG emissions produced
by conventional petroleum jet fuel.
The combination of technologies
will result in an aviation fuel that is
effectively carbon-neutral.
The plant will generate green hydrogen
from existing offshore wind farms, with
a production capacity of between eight
and nine tonnes of green hydrogen
per year, to be used in zero emission
mobility transport solutions in the
Southeast of England.
This project marks a tangible step
towards delivering the UK Government’s
strategy to achieve 5GW of low-carbon
hydrogen production capacity by 2030.
When using a feedstock such as used
cooking oils, lifecycle GHG emissions
can be reduced by 80% at this stage
compared to conventional petroleum
jet fuel.
These technologies combined are
currently delivering the irst advanced
biofuels project in South America at
the Omega Green production facility
in Paraguay to produce up to 20,000
barrels per day of renewable diesel and
jet fuel.
As the next step in enhancing the
Ecoining process technology offering,
Wood’s technology will be integrated
to use the by-products of the UOP
Ecoining process technology to produce
renewable hydrogen, reducing lifecycle
GHG emissions a further 10% when
compared to the total GHG emissions
produced by conventional petroleum
jet fuel. The renewable hydrogen is
then injected back into the Honeywell
Ecoining process to remove feed
impurities and create a cleaner burning
renewable fuel.
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Unlocking the hydrogen revolution
Hydrogen has the highest energy content of any fuel we use today. It produces zero emissions or pollutants during the
combustion process, making it a key component in the race to net-zero.
Wood has more than 60 years of experience in the hydrogen industry and has supplied hydrogen production units worldwide,
based on its proprietary steam reforming process.
Wood is now evolving this technology to provide class-leading blue and bio hydrogen solutions. It also has expertise in renewable
power and associated green hydrogen solutions and is developing solutions for both smaller niche application and larger scale
industrial developments.
In 2021, Wood became a steering group member of the Hydrogen Council, a group of leading companies working together to
ensure hydrogen plays a key role in accelerating the energy transition and the journey towards a low-carbon future.
This places Wood at the heart of industry-led debate, with further inluence on the role that hydrogen will play in future energy
policy, and informing the development of a uniied approach to energy transition and decarbonisation.
Advancing towards a
lower carbon economy
Wood is working on Cadent’s HyNet
North-West project which, from 2025,
will produce, store, and distribute
hydrogen as well as capture and store
carbon from industry in the North-West
of England and North Wales.
This irst-of-its-kind, hydrogen storage
and distribution pipeline infrastructure
project aims to unlock a lower carbon
economy for the region and reduce
carbon dioxide (CO) emissions by
10 million tonnes a year by 2030, the
equivalent of taking 4 million cars off
the road.
Our strategy in action
continued
Propelling the transition
in the Middle East
Wood has signed an agreement with
the Abu Dhabi National Oil Company
(ADNOC) to perform Pre Front-End
Engineering and Design (FEED) work for
a world-scale blue ammonia production
facility in Ruwais, Abu Dhabi.
Blue ammonia is made from nitrogen
and blue hydrogen derived from natural
gas feedstocks, with the carbon
dioxide by-product from the hydrogen
production captured and stored.
Blue ammonia can be used as a low-
carbon fuel across a wide range of
industrial applications, including
transportation, power generation and
industries including steel, cement and
fertiliser production. The facility’s capacity
will be 1,000 kilotons per annum.
This pioneering project will help drive the
UAE’s leadership in creating local and
international hydrogen value chains and
deliver new ways for the region to unlock
the potential of its natural resources
whilst supporting the move towards a
low-carbon economy.
Leading the charge
on exporting green
hydrogen
Wood is leading on a project,
alongside other key industry players,
to explore export opportunities for
green hydrogen produced in Scotland.
The 'Scot2Ger' collaboration was
commissioned by Scottish Enterprise
to examine the emerging and
substantial German demand for
zero-emission hydrogen.
Exporting green energy to Europe
could result in £25bn gross value
added (GVA) and over 300,000 jobs
for Scotland by 2045. Wood’s role on
the project involves working together
with partners to assess locations,
scale, transportation and future
green hydrogen customers.
The project will use state-of-the-
art technology to build new energy
infrastructure, whilst also upgrading and
reusing existing infrastructure currently
used in fossil fuel production.
As part of the scope of work, a
multidisciplinary Wood team will lead the
design, consenting and consultation of a
new 85km hydrogen pipeline and above
ground installations.
Wood will also provide land rights
consultation and engagement services to
support the application for consent.
As well as reducing CO emissions
from industry, the project will provide
fuel for transport, heating homes and
businesses and could put the region
at the forefront of the UK’s drive to
reach net-zero by 2050.
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Employees
Our employees are fundamental to the delivery of Wood’s
services and therefore to the long-term success of the business.
It is important to develop our employees and keep them
engaged and motivated to ensure that we create inclusive, agile
and high-performing teams. We engage with our workforce so
that we can understand and address areas where we need to
improve to ensure we deliver rewarding careers and retain our
talented people.
How we engage
We discuss our workforce engagement activities on page 58.
Areas of engagement and outcomes
The Company carries out global employee pulse surveys in
addition to an all-employee global survey which is carried out
bi-annually. These surveys ask what we do well and what could
be done better. In addition, during 2021 surveys were conducted
to seek feedback on our lexible working arrangements and how
we could better support our employees' wellbeing.
The Company has a Listening Group Network (LGN) with
meetings, attended by directors and members of the Executive
Leadership Team (ELT), held throughout the year. The LGN
grew in membership by over 20% during 2021.
Investors and lenders
It is important that our investors have conidence in
the Company, how it is managed, and in its strategic
objectives, to ensure that we have a stable, long-term
shareholder base. By providing updates on our strategy and
performance we can aid investor understanding and gain
an insight into their priorities. The Company’s long-term
success is also dependent on its good relationship with its
lenders and their continued willingness to lend.
How we engage
We have an active investor relations programme led by
the Chief Executive, Chief Financial Oficer (CFO) and the
Investor Relations team. Our main engagement activities
include:
• Meetings or calls with investors around the interim and
full year results
• Investor roadshows
• Investor days and presentations
• Ad hoc calls or meetings with investors
•
Meetings with the Chair of the Board around the AGM
• Meetings with Chairs of the Committees of the Board
With our lenders a mixture of formal and informal meetings
and presentations are held. Key topics include inancial
performance, strategy and risk management. Presentations
are given to our banks and US Private Placement Investors
after the interim and full year results are announced to
update them on inancial performance and give them the
opportunity to ask further questions.
Areas of engagement and outcomes
In addition to routine engagement on inancial
performance, strategy delivery and governance, we
undertook engagement on certain speciic matters in 2021
as outlined below.
Maintaining our leading position in Environment, Social and
Governance (ESG) disclosure matters through measurable
targets embedded in executive remuneration
Through our regular engagement activities with investors,
and ESG rating agencies, we are able to understand their
evolving approaches and information requirements around
ESG matters. As a result, we continue to enhance disclosure
of our strategic approach to ESG matters in our results
announcements and presentations and have focused on
enabling the measurement of our performance on ESG
matters that are material to Wood and our stakeholders.
In 2020, Wood committed to a set of targets aligned to the
UN Sustainable Development Goals (SDGs) to measure
performance against our sustainability strategy in key areas
of inclusion and diversity; fair working practices; and our
impact on communities and the environment. Through our
engagement with investors, we identiied an emerging focus
on linking ESG performance with executive remuneration
and consequently ESG targets were embedded in the
2021 annual bonus and long-term incentive plans for
Wood’s executive directors. We informed investors of this
approach and will continue to consider their feedback for
future remuneration plans. Our approach demonstrates
the importance of our ESG and sustainability programme
and enables investors to better assess our non-inancial
performance both individually and relative to our peers.
Securing funding through the UK government backed Export
Development Guarantee Facilities (UKEF scheme) with
continued support of lenders
We undertook engagement with our lenders to apply for a
term loan through the UKEF Transition Export Development
Guarantee (EDG) scheme, allowing Wood to diversify its
funding sources.
As a result of extended engagement with UKEF by Wood’s CFO
and the Treasury, Sustainability and Business Development
teams, we were able to present our Climate Transition Plan to
the UK government that fully satisied their support criteria
resulting in a successful application for a $600m ive-year term
loan from a group of six of Wood’s existing relationship banks,
80% guaranteed by UK Export Finance. The facility provides
Wood with a source of working capital to invest in unlocking the
many low-carbon growth opportunities across the business and
represents the irst Transition EDG signed by UKEF.
The facility includes KPIs linked to growing export revenue
related to energy transition and sustainable infrastructure
and reducing scope 1 and 2 carbon emissions, relecting the
conidence and support that UKEF and our relationship banks
have in our strategy aligned to delivering solutions for a net-
zero future and enabling sustainable and resilient living.
Wood has always endeavoured to maintain and develop long-
term relationships with its banks and their continued support is
evidenced by the successful application for funding through the
UKEF scheme.
Ensuring continued support of lenders to secure sustainability
linked Revolving Credit Facility (RCF)
We undertook engagement with our lenders to negotiate a new
ive-year committed sustainability linked RCF. The sustainability
KPIs mirror those negotiated for the UKEF facility and the
Wood Treasury team worked with BBVA as sustainability
coordinator to present a detailed insight into Wood’s strategy
linked to energy transition and sustainable infrastructure to the
banking group.
As a result of the engagement, Wood secured a $1.2bn, ive-year
committed RCF with a group of 14 of its existing relationship
banks plus 2 new participants, maturing in October 2026
and priced at the same margin as our maturing facilities. The
facility extends the maturity proile of Wood’s debt facilities by
replacing the existing $1.75bn RCF that was due to step down to
$1.5bn in May 2022 and then mature in May 2023.
The level of commitment offered by our banks was
signiicantly more than the $1.2bn that we requested which
demonstrates the strong support we continue to receive from
our banking partners.
The Board recognises that the medium and long-term
sustainability of the Company is linked with delivering value for
our stakeholders. In order to successfully deliver our strategy and
create value for our stakeholders it is important to understand
what matters to them.
Through regular engagement, we gain insight into the different perspectives of our diverse
stakeholders, who often represent competing interests. Considering their insights and
opinions builds strong, constructive relationships and enables robust and sustainable decision
making at both executive and Board level.
Employee surveys and Listening Group Network
Feedback from the employee surveys and views from the
LGN are reported to the Board to ensure their perspective is
heard, strengthening the ‘employee voice’ in the boardroom,
with any actions implemented to address the points raised.
Feedback from our employees highlighted that there was
room for improvement with regard to mentoring, career
development and learning opportunities. In response, the
MentorConnect app was developed in-house to provide
an agile digital solution to globally connect and accelerate
access to mentors across our business. The app was
launched in May 2021 following a successful pilot with 68%
of users reporting career development beneits. In addition,
internal training solutions are being developed and delivered
through the Wood Academy in order to address future skills
and learning needs.
Board engagement with leaders and high potential
employees
The Board usually holds dinners with members of the wider
leadership team, beyond ELT level, as well as with high
performing employees. These sessions allow the Board to
understand the views of and issues faced by the leadership
team so that they can be factored into the Board’s
decision making. Meeting with high performing employees
provides the opportunity to engage with employees on the
issues that matter to them whilst also giving the Board
oversight of the talent pipeline for the purposes of senior
management succession planning. Unfortunately, due to
continuing Covid-19 challenges during 2021, these physical
meetings have not taken place, but established mentoring
relationships have continued.
More information describing the matters raised and
outcomes of engagement can be found on page 60
Stakeholder engagement
Effective engagement
with our stakeholders
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Clients
The Company’s long-term success is underpinned by our clients
and consistent, best-in-class delivery that is aligned to their
requirements. To achieve our purpose of unlocking solutions to
the world’s most critical challenges, we listen to our clients to
make sure we are leveraging our capability, scale, global reach
and leading solutions.
How we engage
Client engagements are managed through our structured
Client Management Framework (CMF) by dedicated account
managers with speciic account planning and objectives as well
as established growth targets. Senior leadership meetings,
annual sponsor meetings and other key connections with
clients were conducted in 2021 both virtually and in person,
where it was possible to do so safely. During 2021 we saw a
measured return to face-to-face conferences with COP26 being
the most signiicant. At COP26, Wood’s CEO, ELT, and other
senior leadership hosted international clients, partners, and
government oficials in forums dedicated to discussing climate
change and other sustainability issues.
Our primary focus is:
• Safe and best-in-class outcomes
•
Enduring relationships underpinned by deep understanding of
our clients challenges, trust and performance
• Delivering sustainable and digitally-enabled solutions
Suppliers
Our suppliers are fundamental to our ability to deliver services
to our clients safely, on time, within budget and to the quality
standards we and our clients expect.
How we engage
Relationships with suppliers are developed at all levels within
the organisation through daily business activities and regular
meetings, however we engage in Supplier Relationship
Management (SRM) to manage relationships with strategic
suppliers at an enterprise level.
Areas of engagement and outcomes
We review a number of KPIs/performance measures (e.g. Health,
Safety, Security & Environment (HSSE) incidents, quality, delivery
and spend) as well as utilising due diligence to identify risks and
work with our suppliers to close any gaps. We discuss matters
including performance issues, training and innovation and
upcoming projects to help us align business goals.
Environment
Managing, protecting and enhancing our environment
is imperative to the sustainability of our business and
the standards we set and help shape the performance,
proitability and the reputation of the Company. As a
solutions provider it is critical for us to engage with a broad
array of stakeholders from a strategic level down to individual
project level on a wide range of environmental topics.
How we engage
We engage with a wide range of stakeholders including
regulatory and industry bodies, shareholders, banks &
lenders, employees and clients. Our integrated HSSEA
management system provides the framework for how we
manage environmental risks. However, our engagement
with stakeholders also focuses on our ability to deliver on
our purpose and strategy aligned to innovative solutions for
a net-zero future.
With such a broad range of stakeholders, using a diverse
range of engagement techniques has enabled us to
stimulate quality interactions, innovative thinking and work
with our stakeholders to exchange knowledge and ideas.
Our engagement processes include:
• Direct engagement
•
Collaborations with client and peer organisations
• Hosting and participation in webinars and events
• Social media
• Disclosures platforms (e.g. Carbon Disclosure Project)
driven by stakeholder engagement
This year Wood hosted a COP26 event in Glasgow, this was
a key engagement event bringing together global leaders,
CEOs and a range of industrial and community stakeholders
with a full schedule of events designed to accelerate action
towards combating climate change.
Further information on our COP26 event is contained on our
web pages at:
woodplc.com/cop26
Areas of engagement and outcomes
Client engagement sessions cover a broad range of
topics such as: safety, delivery performance, ESG and
sustainability topics, update on strategic themes and
exploring opportunities to jointly raise delivery outcomes
and co-create value-added solutions. These engagements
are an opportunity for Wood to listen to clients and vice
versa and resulting feedback helps us to continually improve
our performance. The insight from client engagement helps
to inform Company operational, business development and
long-term strategic direction.
Developing sustainability partnerships
Wood has a long history of collaboration with Honeywell.
Over the past several years we have strengthened this
relationship to focus our combined efforts to meet the
requirements of our respective clients in the areas of
sustainable aviation fuels, hydrogen and digitisation.
Based on client and market demands to signiicantly
reduce GHG emissions in the aviation industry, Wood
and Honeywell have recently announced a comprehensive
package of technologies to support the efforts of our
clients to produce carbon-neutral aviation fuel. When used
together, the technologies, which are based on Honeywell’s
UOP Ecoining™ process technology and Wood’s hydrogen
plant technology, could reduce lifecycle greenhouse gas
emissions by 100% when compared to traditional petroleum
aviation fuel (read more on page 10).
To meet the needs of our reining clients to increase
eficiency and improve proit margins, Honeywell UOP has
partnered with Wood to embed Wood's process models
for its Selective Yield Delayed Coking technology into
Honeywell's Connected Plant offering.
Together, we have jointly presented our value proposition
on both initiatives to potential clients and are inalising
proposals for numerous project opportunities.
Whilst partnering with Honeywell to provide sustainable
energy solutions, Wood remains a key supplier to Honeywell
of environmental remediation services, reducing Honeywell’s
own legacy liabilities. The Honeywell / Wood relationship is
long-standing with over 50 years of working together.
During 2021, Wood’s supply chain team engaged with
suppliers as part of a rationalisation programme aimed at
streamlining Wood’s relationships with suppliers to drive
better value and stronger relationships. By rationalising the
supply base we set a strong foundation for the delivery of our
target to ensure 100% of Wood’s labour suppliers sign up to
and comply with the Building Responsibly Principles to ensure
best-in-class safety performance. Wood’s supply chain team
is also engaging with suppliers to embed Supplier Relationship
Management (SRM) tools and processes with the rationalised
supply base to facilitate the achievement of our target.
Areas of engagement and outcomes
This year we saw a huge amount of activity around climate
change across numerous stakeholder groups, it has been
the dominant environmental issue for Wood and many of
our investors and clients. Highlights from just a few of these
engagements are discussed below:
•
During COP26 we joined the Climate Tech thought
leadership panel facilitated by ScotlandIS, the trade body
for Scotland's digital technologies industry. The panel
discussion focused on the role of climate technologies
in Scotland's journey towards its 2045 net-zero targets.
In addition, on “Transport Day” Wood’s Zero-Emission
Mobility team took part in a discussion of the challenges
and opportunities of electric mobility and how our transport
experts are producing roadmaps for leet decarbonisation
•
We engaged with UKEF and our lenders on our Climate
Transition plan to secure a term-loan 80% guaranteed by UKEF
and a 5-year sustainability linked Revolving Credit Facility
•
In response to engagement with our leadership, executives
and board and with investors and ESG rating agencies, we
embedded our sustainability targets in bonus and long-term
incentive plans for our executive and leadership teams
• We participated in the annual voluntary CDP questionnaire.
The CDP is an independent, not-for-proit organisation and
the largest published registry of corporate GHG emissions
in the world. Our involvement in the scheme allows us to
benchmark our performance against that of our industry
peers and global business community and has helped to
inform our approach to climate change issues. In addition,
CDP's disclosure platform provides the mechanism for
reporting in line with recommendations of the Task Force on
Climate-related Financial Disclosures.
•
We joined the Hydrogen Council, a group of leading companies
working together to ensure hydrogen plays a key role in
accelerating the energy transition, as a steering member
• We entered a strategic partnership with leading global
resilient infrastructure organisation, The Resilience Shift. The
multi-year agreement will focus on inluencing climate and
economic policy to ensure the delivery of resilience in critical
infrastructure development
•
Ongoing environmental regulatory engagement across the
business, from commenting on draft environmental legislation
to tactical discussions on projects such as Wood’s engagement
with the Scottish Environmental Protection Agency (SEPA)
on a project to stop a million tonnes of waste stone being
disposed of at landill (see page 52 for further details)
Further information on our environmental approach,
performance and ongoing strategy is contained in our annual
Sustainability Report which is available at:
woodplc.com/company/sustainability
Read more on our approach to environmental
management on pages 52 to 57
Stakeholder engagement
continued
Read more on our sustainability targets on pages 24 to 25
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Pension plans:
Current and deferred workforce
and pensioners
We are committed to offering our workforce suitable
retirement plans, where appropriate. We engage with
those who are currently employed to enable them to
understand the range of offering and make the right
choices.
In the UK, the Trustee of the pension plan is responsible
for engagement with members. In the USA and Canada,
the Beneits Committee is responsible for engagement
with members through the centralised beneits team.
How we engage
In the UK, USA and Canada we proactively engage
with new employees at the point of hire, detailing
the retirement savings options available to them.
Engagement is proactive via dedicated portals and
onboarding processes.
In the UK, we have member nominated trustees who
represent current, deferred, and retired members; these
are elected by participants in the pension plan. The
Company also has company nominated trustees. The
Trustee is responsible for detailed communications with
its members and works with the Company to ensure
communications are appropriate and relevant. During
2021 the UK pensions administration team undertook
additional engagement activities with members
including the development of an enhanced website,
an online feedback page, and an inclusive survey to
all deined contribution members. Feedback from the
survey will be used to inform Trustee decisions in 2022.
In the USA and Canada, we have 401k committees who
meet quarterly to fulil all iduciary requirements. In
the USA we proactively engage with employees along
all phases of their retirement journey. In 2021, the
U.S. retirement beneits team redesigned the suite of
enrolment materials, encouraged younger employees
to save through lunchtime webinar-based education
meetings, and inspired pre-retirees to evaluate how
health care costs could impact their retirement income
through a multichannel targeted campaign. We
leveraged our dedicated portals, such as Yammer, Wood
News, and a virtual beneit fair platform, to direct
employees to education and resources on a variety of
inancial wellness topics that were related to the overall
Wood Wellness Champions’ messaging.
The Company is responsible for engaging with the
401k committees and UK Trustee on company matters
which may impact the retirement plans e.g. inancial
performance, ESG reporting requirements, and
structural changes.
Areas of engagement and outcomes
Issues raised by the Trustee and Committees are
carefully considered by the executive leadership team
and referred to the Board as appropriate. This ensures
better understanding and alignment of Company and
Trustee/committee objectives. The Trustee and the
401k committees are proactively updated by Wood on
company performance.
Community
As a trusted partner in our shared communities, we seek
to create a sustainable future for the people and places
we impact.
Demonstrating our values, passion and commitment to
tackling the issues most important in our communities, our
efforts aim to deliver value and ultimately help to improve
lives.
How we engage
Our community investment programme provides the
framework for community engagement consisting of:
• Matching our employees’ fundraising efforts,
• Strategically uniting our people around a single Global
Cause, and
•
Placing a focus on the actions we take through
volunteering time, skills and expertise
Areas of engagement and outcomes
Our employees remain at the centre of our decision
making on community investment. They are best placed to
understand the needs of our communities, by consulting our
employees we seek to embed accountability for the actions
we take, ensuring an inclusive approach to all that we do.
In 2021, as Team Wood we contributed $1,380,137 to good
causes in our communities, through the donation of time,
money and resource, including employee efforts to fundraise
for causes close to their hearts. In addition, our third annual
global challenge in support our Global Cause of education
resulted in 26 applications for educational causes across 9
countries being supported. The annual challenge allows our
employees to have a say in how we support our Global Cause
and to identify which organisations we align and contribute to.
Also in 2021, through engaging with her community, an
employee in the Middle East helped to promote education
opportunities for women and girls in the region after
becoming aware that many were not given the opportunity
or were aware of the opportunities to inish their education,
pursue higher education or a career. Realising that the local
women from her ofice were excellent role models, she saw
an opportunity to reach the younger generation by visiting
local girls schools on several occasions and discussing with
them their studies, careers and journeys. She is also working
in collaboration with an Iraqi non-proit organisation, with
funding provided through the Wood Global Cause, on the
Empowerment Project, currently sponsoring 50 orphans
from Iraq and providing them with an education.
Covid-19 social distancing measures continued to affect
many of our employees’ planned community activities,
with many being cancelled or postponed, in turn reducing
the number of matched funding applications in 2021. To
increase engagement, and further promote Wood’s support
for employee fundraising efforts our central community
investment committee increased matching limits, to directly
match more applications, and allowing increased donations
to employees raising smaller amounts.
Further details on the outcome of community
activities are on pages 64 to 67
For details how we establish and deine our key
stakeholders groups see pages 14 to 18
The Board considers principal decisions to be those decisions that are
strategically important, with signiicant medium to long-term implications and
consequences for the Group or our key stakeholders.
Understanding and taking into account what matters to our stakeholders is an important part of our
planning and decision making and we consider these stakeholder priorities alongside our own assessments.
This is best achieved through proactive and effective engagement. In making the following principal decisions
the Board considered the impact of climate change, our stakeholders’ priorities as well as the need to
maintain a reputation for high standards of business conduct and the need to act fairly between members
as a whole.
Commitment to measurable
sustainability targets
At Wood we believe the power to create a better
tomorrow starts with us all and we recognise achieving a
sustainable future is one of the most signiicant challenges
facing our generation.
To meet that challenge the Board had oversight of the
development of a Sustainability Framework which included
the setting of a number of measurable targets for the
delivery of Wood's contribution to global sustainable
development. In addition to Wood’s carbon reduction target
that was announced in 2020, the Board approved eight
further sustainability goals in the key areas of delivering our
purpose aligned to solutions for a net-zero future; inclusion
and diversity; human rights and fair working practices;
community investment and environmental impact. See
pages 24 and 25 for further details on these targets.
Our regular engagement with a range of stakeholders
including employees, investors, lenders, rating agencies and
regulatory and industry bodies enabled the Board to consider
the competing priorities of these stakeholder groups as well
as the wider societal expectations. The Board recognised:
• The focus on inancial returns and risk management
amongst investors and lenders but also their increasing
expectations for companies to have a robust approach to
ESG matters
• The expectations of employees for their rights and welfare to
be respected and protected in a safe, transparent and ethical
working environment
• The increasing public awareness of global equitable
development and sustainability and the demand for more
action from companies and investors
As a result of this engagement, the Board approved targets
which it considers to meet the needs of these key stakeholder
groups whilst also being aligned to matters most material to
the business strategy and purpose. In reaching the decision the
Board supported strategic actions to identify targets that are
challenging but achievable. The Board also ensured the targets
were capable of being fully embedded into the approach to
deliver Wood’s strategy with appropriate governance in place to
review and evaluate progress.
By implementing these strategic actions, the Company
achieved, or aims to achieve in the medium to long-term, the
following outcomes:
• Maintenance of a reputation for high standards of business
conduct by consolidating and continuing the Company’s
contribution to global sustainable development
• Delivery of Wood's contribution to global sustainable
development, including climate-related matters
• Supporting the communities Wood operates in
• Delivering better opportunities for employees
Stakeholder engagement
continued
Our principal decisions
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Governance Financial statements
Strategic review of built environment business
Wood’s built environment business provides consulting and
engineering solutions that address environmental risks,
increase climate resilience, help to build more sustainable
infrastructure and improve mobility. It operates across
government, transportation, water, industrial, energy and
mining markets and has a track record of attractive growth
and resilient performance through Covid-19.
In November 2021, the Board initiated a strategic review
of our built environment business, part of our Consulting
business unit. In taking this decision the Board had regard to
the interests of:
• Investors and their focus on maximising the return on
their investment whilst also recognising the need for
sustainable solutions in order to ensure sustained returns
•
Lenders and their expectation for the Company to
safeguard their interests through adopting a sound
business and inancial strategy
• Society and the increasing demand for companies to
have due regard to climate change and global sustainable
development and to offer sustainable solutions
Through its decision to initiate the strategic review the
Board is focused on delivering value for all of Wood’s
stakeholders through:
• Assessing how best to take advantage of the positive
trends and investment opportunities in the energy
transition and industrial decarbonisation where the
Company is already a global leader
• Identifying a range of options to best deliver the value of
the built environment business which the Board considers
is not currently relected in Wood’s market capitalisation
Application for UK Export Development
Guarantee (EDG) Facilities
In 2021, Wood’s CFO and the Treasury, Sustainability and
Business Development teams engaged extensively with the
UK government and Wood’s relationship banks to present our
Climate Transition Plan, resulting in a successful application
for a $600m ive-year term loan from a group of six of Wood’s
existing banks. The term loan is 80% guaranteed through the UK
government backed Transition Export Development Guarantee
Facilities (UKEF scheme). The facility provides Wood with a
source of working capital to invest in unlocking the many low-
carbon growth opportunities across the business and represents
the irst Transition EDG signed by UK Export Finance (UKEF).
The facility includes KPIs linked to growing export revenue related
to energy transition and sustainable infrastructure and reducing
scope 1 and 2 carbon emissions relecting the conidence and
support that UKEF and our relationship banks have in our
strategy aligned to delivering solutions for a net-zero future and
enabling sustainable and resilient living.
In addition to the engagement with the UK government and
Wood’s existing lenders the Board gave consideration to the
perspectives of a range of stakeholders including:
• Maintaining investor conidence through ensuring balance
sheet strength and liquidity to safeguard our medium to long-
term success
• Safeguarding employee, client and supplier interests through
ensuring the Company is well managed with a resilient
inancial and borrowing strategy
Diversity, culture and inclusion
Organisations with a diverse workforce beneit from varied
perspectives, which can lead to better decision making resulting
in a competitive edge. Equal access to opportunities creates
an environment where openness, belonging, and respect allow
people to have an impact on the workplace in a meaningful
way and can lead to improvements in attraction, retention and
development of talent, as well as innovation and creativity.
The Group has made further commitments to diversity, culture,
and inclusion during the year. Diversity and inclusion are viewed
by our investors and wider society as a measure of fairness
and social progress which is fundamental to creating value in
the long-term. It is important that we relect the diversity of the
communities in which we operate and that our employees can
expect to be treated fairly and are not subject to unconscious bias.
During late 2020 we undertook an Organisational Health Index
(OHI) survey to determine the status of diversity, culture and
inclusion within the business through engagement with our
employees. The OHI survey was conducted to review how the
organisation aligns itself, executes with excellence and evolves
to sustainably achieve its performance aspirations related to
diversity, inclusion and maintaining an effective culture. The
survey received around 10,000 employee responses covering 51
countries. In addition to the OHI survey, in 2021 employees were
invited to participate in an all-employee survey which recorded
around 18,000 responses from 37 countries. The survey sought
feedback on our lexible working arrangements, mentoring,
career development and learning opportunities and how we
could better support our employees' wellbeing.
The results of both surveys were translated into strategic
actions which were considered by the Board with a focus
on enhancing the contribution of all employees to the
success of the business, raising awareness and prioritising
the wellbeing of our people and community. The strategic
actions endorsed by the Board include:
•
Educating and raising awareness on diversity, culture
and inclusion through training, including unconscious bias
training
• Increasing visibility of formal mentoring/sponsorship
and networking opportunities to enable employees to
maximise development potential
• Ensuring inclusive communications and role models
• Developing leadership opportunities across the workforce
• Promoting meritocracy by deining the relationships
between individual performance, accountability and
recognition
•
Engaging the communities where we operate to increase
the visibility of science, technology, engineering and
mathematics (STEM) careers
These strategic actions approved by the Board aim to
achieve in the medium to longer-term:
• Creation of an inclusive workforce who feel valued and
are aware of their development opportunities, including
mentoring and role models
• Development of a diverse pipeline of potential candidates
for leadership roles at all levels, challenging any perceived
“glass ceiling” to progression
• Increased focus in the business on investment to support
education and raise awareness
• Improved reporting and monitoring of behaviours, for
example, unconscious bias behaviours, to enable the
Board to assess the effectiveness of Wood’s culture and
take corrective action as appropriate
• Society’s increasing expectations that companies borrow
responsibly having due regard to the lenders’ record on
climate change and global sustainable development
• Maintaining long-term relationships with lenders, so
safeguarding their continued support
In approving the decision to apply for a term-loan under the
UKEF scheme, the Board concluded that this approach would
generate stakeholder value as participation in the scheme would
be conducive to attaining the Company’s strategic objectives,
would enhance the prospects of the business, would not result
in restrictions on other borrowings as it would not be regarded
as government support and would ensure the resilience of the
Company to create value for its stakeholders over time.
Through the Board’s support for this strategic action, the
Company achieved, or aims to achieve, the following outcomes:
• A successful application for funding under the UKEF scheme,
diversifying Wood’s sources of funding and providing access
to working capital to invest in unlocking low-carbon growth
opportunities
• Maintenance of the strong long-term relationship
with our lenders
• Maintaining investor, supplier, employee and client
conidence in the management of the Company and
its inancial structure
Stakeholder engagement
continued
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Governance Financial statements
Measuring our performance
To help the Group assess its performance, our leadership
team sets KPI targets and monitors and assesses
performance against these targets on a regular basis.
Linking our KPIs to our strategy
“Being a premium, differentiated business delivering
exceptional returns for our clients, our team, our
investors, and the communities in which we work.”
Being a premium, differentiated
business delivering for our clients
Delivering for our communities
Delivering for our team
Delivering for our investors
Financial:
Adjusted EBITDA margin is adjusted
EBITDA as deined on page 163 divided
by revenue. Adjusted EBITDA margin
demonstrates our ability to convert
revenue into proit before exceptional
items, interest, tax, depreciation
and amortisation. A reconciliation of
adjusted EBITDA to operating proit
is shown in note 1 to the inancial
statements.
2021 performance:
Adjusted EBITDA margin improved
during the year supported by improved
margins in Projects and Consulting
offset in part by reduced margin
performance in Operations. Adjusted
EBITDA margin across the business
beneitted from cost eficiencies,
improved execution, and revenue
mix. In addition, margin expansion in
Projects was helped by the gradual
roll-off of underperforming contracts. In
Operations, the lower margin relects a
lower level of proit upside from closing
out contract obligations in the year,
compared to a high level in 2020.
Target:
In line with our strategic objective to be
a premium, differentiated high margin
business we have committed to a
medium-term adjusted EBITDA margin
improvement target of 100 basis points
from the 2019 level of 8.6%*.
Adjusted EBITDA
margin
%
*It is likely that once the sale of the built
environment business completes, we will
revisit our margin improvement target for the
remaining business.
2021
8.6
2018 2019
6.9
8.6
8.3
2020
Total recordable
incident rate (TRIR)
per 200,000 work hours
We aim to deliver the highest standards
of health and safety. Total recordable
case frequency is the total of lost
work cases, restricted work cases and
medical treatment cases, per 200,000
work hours.
2021 performance:
In total there were 122 recordable
incidents across the business. This
represents 2% more recordable injuries
than the previous year and regrettably
there was one fatality in 2021 (see page
43). Whilst our TRIR performance of
0.18 represents a marginal increase
compared to 2020, overall performance
with respect to TRIR remains broadly
lat and indicative of consistently high
levels of focus on our safety programme.
Target:
Our target is for a 10% improvement
in Total Recordable Incident Rate
compared to the prior year.
Lost work case frequency measures lost
work cases per 200,000 work hours.
2021 performance:
Our LTIR improved in 2021 to 0.02.
In total there were 15 lost time
incident cases across the business,
which represents 10 fewer than the
previous year. The improvement in
LTIR is indicative of Wood’s focus on
risk exposure, targeted controls and
the strong focus of project teams
on support mechanisms. Strong
performance in this area suggests
that when injuries have occurred, they
have generally been less severe in
comparison to 2020.
Safety:
For more information on our safety
performance see pages 43 to 47
2021
0.18
2018
0.18
0.18
2019
0.17
2020
2021
0.02
2018
0.04
0.04
2019
0.04
2020
The cash conversion ratio is post working
capital cash low divided by adjusted
EBITDA. This measures our ability to
convert underlying earnings into cash.
2021 performance:
Cash conversion reduced compared
to 2020 primarily due to a large
working capital outlow during 2021 in
comparison to 2020.
*For 2020 onwards cash conversion is calculated
as cashlow from operations divided by adjusted
EBITDA (excluding JVs), on a post-IFRS 16 basis.
Cash
conversion
%
For further detail on the
factors that can affect cash
conversion see page 39
A calculation of net debt: adjusted
EBITDA is presented on page 41.
The net debt: adjusted EBITDA
ratio measures our debt relative to
our proitability, and is used in our
covenants. For the purposes of the
ratio net debt is stated excluding
liabilities related to leases (including
those recognised under IFRS 16).
Adjusted EBITDA is stated before the
impact of IFRS 16. This measure of net
debt: adjusted EBITDA is in line with
our inancing covenants.
2021 performance:
Net debt increased by $379m in
the year because of weak cash
performance which relects a
signiicant working capital outlow in
the Projects business, combined with
ongoing exceptional cash outlows
relating to legacy investigations,
restructuring costs and onerous leases.
At 31 December 2021, the Group’s
net debt to adjusted EBITDA ratio
measured on covenant basis was 3.3
times, within our covenant level for the
Group’s borrowings which are set at
3.5 times.
Target:
Our target leverage policy is a net
debt: adjusted EBITDA ratio of below
1.5 times.
Net debt: adjusted
EBITDA ratio
times
For more information on our inancial
performance see pages 35 to 41
Adjusted diluted EPS represents
earnings before exceptional items and
amortisation relating to acquisitions, net
of tax, divided by the weighted average
number of shares during the year.
2021 performance:
Adjusted EPS was lower in the year,
relecting the lower earnings before
exceptional items and amortisation
relating to acquisitions.
Adjusted diluted EPS
(AEPS)
cents
2021
17.5
2018
46.6
46.0
2019
23.2
2020
2021
3.3
2018
2.2
2.0
2019
2.1
2020
2021
3
2018
102
96
2019
62*
2020
Lost time incident
rate (LTIR)
per 200,000 work hours
The share of AEPS distributed to
shareholders.
2021 performance:
In response to the uncertainties
of Covid-19, the Board withdrew
its recommendation for dividend
payments in 2020. Given the high level
of net debt held by the Group, the
Board has decided not to recommend
dividends in relation to 2021. The Board
recognises the importance of dividends
to shareholders and is committed
to reviewing the policy in the future
following the proposed sale of our built
environment business.
Dividend per ordinary share
cents
2021
0
2018
35.0
35.3
2019
0
2020
Key performance indicators
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Governance Financial statements
Our aim: Our goals: 2021 progress:
Managing our
environmental
impact
To take
responsibility for
the impact of the
work we do and
how we deliver it
on the planet we
share
To reduce Wood’s
scope 1 and 2
carbon emissions
by 40% by 2030
on our journey
towards ‘net-zero’,
from a baseline
of 173,585 tonnes
CO
e in 2019
In 2021, our scope 1 and 2 carbon emissions were 75,629 tonnes CO
e.
This is a reduction of 31% from 2020, contributed in part by the
ongoing impact of Covid-19, which impacted emissions data for the
full year in 2021 compared to six months in 2020. Overall, our carbon
emissions have reduced by 56% compared to our 2019 baseline. The
reduction was achieved without the use of carbon offsets.
We also made signiicant progress in the purchase of renewable
energy across the business. We worked with clients and
stakeholders to target high electricity users and source renewable
tariffs. As a result, around 45% of the electricity we use is now
from certiied renewable energy sources.
To ensure all Wood
ofices are single
use plastic free by
2025
Our Consulting waste team conducted a review of our global
procurement data to produce a preliminary baseline measure.
Embedding fair
working practices
through our
business
partnerships
To work fairly,
transparently and
ethically through
the trusted
partnerships we
create
100% of Wood
labour suppliers
sign up and comply
with the Building
Responsibly
Principles by 2025
We focused on the development of a supply chain strategy for
delivery of our target, including:
•
Developing a consistent deinition of ‘labour supplier’
•
Analysing speciic worker welfare risks in order to develop a
proile of our highest priority labour suppliers to target our
engagement
•
Initiating the revision of supplier governance rules, pre-
qualiication and monitoring which will be completed in 2022
100% of our
suppliers
have Building
Responsibly
Principles
embedded into
their supply chains
by 2030
We initiated the process of engaging both existing and future
suppliers by holding a series of workshops, supported by EY, to
identify potential barriers to the implementation of the principals.
We also updated the modern slavery guidance we provide to
suppliers and completed a review of our Supplier Code of Conduct
in order to embed Building Responsibly Principals.
Positively
impacting on the
communities
we operate in
To lift up the
communities
around us using
our energy and
expertise to
improve lives
To contribute
$10 million to our
Global Cause by
giving our time,
energy, resources
and funding by
2030
To date, we have contributed $1,033,736 towards our goal,
including seed funding awards, employee matched funding, direct
inancial and resource donations and volunteering time.
Our aim: Our goals: 2021 progress:
Delivering
our purpose
To be trusted
to solve the
challenges of our
changing climate
and developing
populations
Consistently
ranked in the Top
Quartile ESG
investment ratings
within our sector
group by 2025
Awarded “AA Leader” rating from MSCI in 2021 for a seventh
consecutive year, within the top 25% for Energy, Equipment and
Services. Targeting further improvement:
• As part of the Climate Change Plan for our UK Export Finance
backed term loan, we have committed to a third-party
assessment of our carbon emissions data and our progress
against emissions targets
• We have initiated an evaluation of the Global Reporting
Initiative protocols published in November 2021 as well as SBTi
Pathway to net-zero to identify areas for improvement in our
disclosures
Doubling client
support aligned
to the energy
transition and
more sustainable
infrastructure by
2030
We have taken signiicant steps to consolidate our position as
leaders in the energy transition through:
• Establishing collaborative relationships to inform a global
approach to energy transition. Wood became a steering
member of the Hydrogen Council; a CEO-led initiative to
accelerate the energy transition through hydrogen solutions
• Forming strategic partnerships to develop low-carbon solutions.
We entered a partnership with Honeywell UOP to develop
solutions for the production of carbon-neutral aviation fuel
• Making strategic hiring decisions. We appointed a Vice
President of Hydrogen, Global Director of Decarbonisation and
a Senior Vice President of Sustainability Solutions
Developing an
inclusive &
diverse workforce
To recognise,
welcome and
celebrate
diversity of
thought,
experience and
background to
ind our boldest
solutions and
nurture our talent
To improve
gender balance
with 40% female
representation in
senior leadership
roles by 2030
Wood continues to value the rich diversity of expertise, skills,
backgrounds and beliefs that our people bring to our global
organisation. Whilst our aspirational goal is to achieve increased
representation in gender balance by 2030, we continue to be
committed to recruiting and promoting individuals with the
required skills and experience for each role, irrespective of their
characteristics.
We participated in the UN Gender Equality benchmarking group
and developed functional plans across the group to increase
inclusion and diversity. In 2021, female representation in senior
leadership roles increased to 33% (2020: 31%).
To educate and
inspire 100% of
our colleagues to
be inclusive every
day, by 2021
We rolled out conscious inclusion training for over 36,000 of our
colleagues across Wood.
The insightful feedback from these sessions has provided the
catalyst for our colleagues to engage in rewarding conversations
that further our understanding of different lived experiences.
Measuring our sustainability performance
Our goal is to be leaders in our ield in environmental,
social and governance (ESG) matters and sustainability.
Through our purpose of unlocking solutions to the world’s most critical challenges and our actions to embed a culture which is
passionate about making a positive impact in our society and environment and making proit in a fair and ethical way, we believe
we are building a sustainable and responsible business.
In 2020, the Board endorsed a set of targets, aligned to the UN Sustainable Development Goals material to our sustainability
impacts, to measure our performance against our sustainability strategy. Our focus in 2021 has been on setting in place the
foundations for successful delivery, including the appointment of sustainability leaders within our Business Units, engaging with our
Business Groups to develop plans to meet the challenge, and reviewing key processes and systems to ensure they support our goals.
Key performance indicators
continued
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Governance Financial statements
“The Board took the decision in 2021 to
conduct a strategic review of the built
environment consulting business, and
ultimately decided that a sale will be the
most effective way of delivering value to
our shareholders and changing our debt
proile. Under Robin’s leadership, Wood
enters 2022 with improving momentum
and well positioned for a leading role in
energy transition. Having advised the Board
of his intention to retire as Chief Executive,
I thank Robin for his years of service to the
Company.”
2021 was a challenging year for Wood,
with a continuation of pressures from
the Covid-19 pandemic and an uncertain
backdrop across many of our end
markets. Despite these challenges, Wood
enters 2022 with improving momentum
and the opportunity to unlock signiicant
shareholder value from the ongoing sale
of our built environment business.
The full year results were mixed, with
revenue growth across Consulting and
Operations but a signiicant decline
in our Projects business. This partly
relects the changes that management
has made to reduce risk in our Projects
business and partly relects the ongoing
challenges in our markets as customers
delayed some investment decisions.
We have taken a large charge related
to an updated view on the losses on our
Aegis Poland contract. This was also the
subject of external investigation and
review, and a resulting delay in publishing
our results. The work has now concluded
and we have a clear pathway to the
operational completion of this contract
later in 2022.
The cash performance in the year relects
the ongoing drags from exceptional
cash lows as well as a large working
capital outlow, mostly in relation to the
pressures in our Projects business. Linked
to this, the level of debt at the end of the
year was too high.
Chair's statement
Given the current level of debt, the Board
has decided not to declare dividends
in relation to the 2021 inancial year.
The Board recognises the importance
of dividends to shareholders and is
committed to reviewing the policy in the
future following the proposed sale of our
built environment business.
The Board took the decision in the year
to conduct a strategic review of the
built environment consulting business
to consider how we could best deliver
value for our shareholders. This review
concluded in January 2022 with the
decision to seek a full sale. We believe
this will deliver signiicant value for
our shareholders and provides the
opportunity to dramatically change our
debt proile.
Robin and his Executive Leadership Team
have responded swiftly and effectively to
the dynamic challenges of the pandemic
over the last two years while also making
good progress in addressing issues
and positioning Wood for a leading
role in energy transition and industrial
decarbonisation. Wood has a signiicant
role to play and the Executive team
looks forward to outlining our strategy
to capitalise on these opportunities in a
Capital Markets Day at a later date.
We have announced that Robin Watson
has advised the Board of his intention to
retire as Chief Executive. On behalf of the
Board, I thank Robin for his years of service
to the company. Under his leadership,
Wood has transformed into a global
consulting and engineering business that
operates across a wide range of energy
and industrial markets worldwide.
Robin has built a strong leadership
team around him and a solid portfolio
that provides us great opportunities
as we look ahead. A search process
is now underway, with both internal
and external candidates, and we are
conident a smooth transition will follow
later this year.
Thomas Botts, non-executive director,
will step down from the Board at
this year’s AGM after reaching the
recommended limit of nine years of
service. I thank Tom for his wise counsel
over the years and the experience he has
provided the Board over his tenure.
On behalf of the Board and the
Company, I thank you for your continued
support.
Roy A Franklin
Chair
Roy A Franklin
Chair
“2021 was a challenging year for the Group, with the
ongoing pressures of the pandemic, mixed market
conditions across our businesses and continued challenges
in Projects impacting our performance. Despite this, we
ended the year with positive momentum and a growing
order book (up 19% on last year) which gives us conidence
that activity levels will be higher in 2022.
The sale process of our built environment business is
progressing well and we continue to expect to announce a
sale agreement in the second quarter of this year. A sale
will deliver signiicant value for our shareholders and help
move the Group onto its next chapter.
We are now focused on the future for Wood beyond
this sale – to ensure we can fully capitalise on our deep
engineering knowledge and expertise to capture the growth
opportunities ahead across both energy security and
sustainability, as we help clients move towards net-zero.
I have shared with the Board that I consider the sale of
our built environment business as marking the start of the
next strategic phase for Wood and an appropriate time
for me to step down as Chief Executive. I look forward to
continuing to serve on the Board until my successor is in
place and I remain fully committed to our business delivery
and enabling a smooth transition.”
Robin Watson
Chief Executive
Chief Executive review
Overview
2021 was a challenging year for the Group
with continued disruption from Covid-19
and the pressures across our end markets
as customers deferred investment
decisions. Despite these challenges, we
made progress on our strategy and ESG
priorities, and saw good operational
performance across most of the business.
There were some areas of disappointment
however, most notably on our Aegis
contract as discussed below.
The Group’s strategic review, including the
proposed sale of our built environment
business, will lead to the next chapter for
Wood – an exciting future at the centre of
energy security and sustainability.
Financial performance in FY21
The full year results relect both
our broad market exposure, with
revenue growth across Consulting and
Operations but a signiicant decline
in Projects, and our focus on margin
improvement, with a higher margin
delivered despite the lower revenue.
Group revenue was down 14% on a like-
for-like basis with growth in Consulting
and Operations offset by a 34% decline
in Projects. This decline relects the
changes we have made in this business,
with a lower risk appetite, combined with
ongoing challenges as customers delayed
some investment decisions.
Group adjusted EBITDA was down
10% on a like-for-like basis. Adjusted
EBITDA grew in our Consulting business,
relecting our strong offering across
multiple sectors, while EBITDA was
lower in both Projects and Operations.
The decline in Projects adjusted EBITDA
relects lower revenue but improved
margin in the year. The decline in
Operations relects a lower margin
compared to 2021, that year having
beneited from proit upside from some
signiicant contract completions.
Strategic report
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Annual Report and Accounts 2021
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Annual Report and Accounts 2021
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Governance Financial statements
Progress on strategy
Our purpose remains to “unlock solutions
to the world’s most critical challenges”
and our strategic objective is to be
a premium, differentiated business
delivering exceptional returns for our
clients, our team, our investors and the
communities in which we work. We do
this by delivering our strategic priorities:
1. Margin improvement
2. Optimise and standardise service
delivery model
3. Optimise our portfolio mix of services
and markets
4.
Technology differentiation
5. Improve risk/reward on contracts in
line with our balanced risk appetite
1. Margin improvement
We increased our margin in the year
through both cost eficiencies and improved
business execution, as well as a beneit
from the revenue mix across our business.
Our Future Fit programme is designed to
strengthen Wood for the future through
a range of activities from cost reduction
through to exploring new growth
opportunities. It is aimed at improving
eficiency, transforming our project
and operations delivery, and improving
proitability through changes to our
supply chain and our digital capability.
Future Fit is an 18-month programme
which commenced during the irst half of
2021 and is due to complete in the irst half
of 2022. The total cost savings generated
in the year were around $40 million.
Improved overall business execution
in our Projects business, helped by the
gradual roll-off of some signiicantly
underperforming contracts, contributed
to margin expansion in the year. The
range of performance remains mixed
however, with a small number of
loss-making contracts remaining. We
will continue to reduce risk across our
contract portfolio in 2022.
2. Optimise and standardise
We created a new operating model at
the end of Q3 2020, moving to three
global business units: Consulting,
Projects and Operations. This simpliied
model is aligned to our service offering
and emphasises to our clients, our full
“green-to-green” asset lifecycle solutions.
This new operating model has helped
identify new growth opportunities and
we are seeing increased collaboration
across our business both in customer
delivery and in winning new work.
As part of this new operating model,
we created the position of a Chief
Operating Oficer (COO). Our new COO,
Ken Gilmartin, is driving a programme
of continual improvements in project
governance and delivery which we expect
will support business performance in the
future. Since 1 January 2022, business
unit Executive Presidents have reported
directly into Ken.
3. Optimise our portfolio mix
As we continue to evolve and sharpen our
customer focus, we have been optimising
our portfolio mix of both the services we
offer and the markets we serve. This has
resulted in the disposal of various assets
over the past few years including the
sale of our joint venture interest in Sulzer
Wood in 2021.
In January 2022, we announced that
we are seeking a sale of our built
environment business. Following this
sale, we will have a sharper focus on our
core markets to address the challenges
of energy security, energy transition and
industrial decarbonisation, where we
have unique capabilities to enable our
clients to meet their targets and goals.
4. Technology differentiation
We continue to invest in solutions to
enhance our digital capabilities and
digitalise the way we work, helping to
transform our customer delivery by bringing
greater eficiency and reducing risk.
We also continue to seek commercial
and strategic partnerships where we
can combine skills to deliver greater
results. A good example of this was
the partnership we formed in the year
with Honeywell to develop sustainable
aviation fuels.
5. Improve risk/reward on
Across the Group, the proportion of
revenue from ixed price contracts
reduced from 33% to 26% over the year,
with the remainder of our portfolio being
cost reimbursable.
Of the 26% of revenue from ixed price
contracts, 10% related to ixed price
consultancy work and 11% related
to limited scope lump sum projects,
primarily in our Process and Chemicals
markets. The amount of lump sum
turnkey (LSTK) revenue was around
$300 million in 2021, representing around
5% of Group revenue.
We made progress in continuing to
reduce the LSTK risk exposure in our
Projects business. We are no longer
bidding large EPC contracts outside
our focus markets and core capabilities
and are capping the size of our revenue
exposure to LSTK. As a result of this,
we have removed around $2 billion of
factored opportunities from our bidding
pipeline in Projects.
We do, however, have some signiicant
loss-making contracts remaining in our
portfolio, most notably Aegis Poland and
some renewables EPC LSTK contracts in
North America, that are now at a mature
stage of execution. We expect these to
conclude over 2022 and the performance
of these contracts, excluding Aegis,
improved overall in 2021 compared to
2020, albeit still generating losses.
This focus on contract risk is particularly
relevant with the inlationary and supply
pressures seen across the world today.
We limit our exposure to these risks
through various contract terms, including
inlation clauses and back-to-back
contracts for raw materials supply.
Delay to results and Aegis review
On 21 February 2022, we announced that
a delay to the publication of our results
was necessary to inalise our reported
results and to conclude the year-end
audit process with our auditor, KPMG
LLP. The delay was required to allow
an external investigation and review to
be undertaken, principally in relation to
the historical carrying value of the Aegis
Poland project contract and the process
by which this was determined.
The investigation and review have been
concluded and there is no change to the
historical carrying value of the Aegis
Poland contract or to the previously
communicated year-end exceptional
charge of $99 million announced in our
release of 21 February 2022. The underlying
results for FY21 remain in line with the
guidance provided on 13 January 2022.
The Audit Committee reviewed the
results of the external investigation,
the auditor’s comments on the
investigation and audit work carried out
during the period of the investigation,
and the accounting treatment of the
Aegis Poland project. The Committee
concluded that no changes to the
historical carrying value were required
and the $99 million exceptional charge
was appropriately recorded in 2021.
Chief Executive review
continued
Proposed sale of built environment
In November 2021 the Group initiated
a strategic review of the part of
our Consulting business facing the
built environment end market, which
accounts for around 70% of Consulting
revenue. This built environment business
generated revenue of around $1.2 billion
and adjusted EBITDA of around $150
million in 2021, with signiicant growth
expected in 2022.
The strategic review considered a range
of options to best deliver value for our
shareholders and to strengthen the
Group. The Board concluded that a full
sale process for the built environment
business was the best option. The sale
process is well underway and a sales
agreement is expected to be announced
in the second quarter of this year. Any
sales agreement will be subject to
shareholder approval at an EGM as well
as regulatory approvals.
This sale will allow for a reset of the
Group, strengthening our balance sheet
and providing options to improve our
cash generation. We will also consider
shareholders returns and opportunities for
investments to help deliver our strategy.
Order book progress in the year
Our order book at 31 December 2021
was $7.7 billion, an increase of $1.2 billion
(19%) compared to December 2020. This
increase represented c.$7.0 billion of new
awards and c.$750 million of contract
scope increases, which more than
replaced the $6.4 billion of revenue.
At 31 December 2021, revenue in our
order book for 2022 was $4,655 million,
an increase of 6% compared to the
prior year igure of $4,399 million to be
delivered in the year ahead.
We operate across four broad end markets:
• Conventional energy (38% of Group
revenue)
across upstream and
midstream oil and gas
• Process & chemicals (17% of Group
revenue)
across petrochemicals
(including hydrogen and carbon
capture), speciality chemicals and
reining
• Renewables and other (22% of Group
revenue)
including renewable power
(solar and wind), mining and minerals,
industrial processes and power
• Built environment (23% of Group
revenue)
across infrastructure, water
and waste, and environmental
Conventional energy
Our order book across conventional
energy was around $4.1 billion at
31 December 2021, including some
signiicant multi-year contracts.
Signiicant contract wins in the year
included:
• Over $500 million of contracts for
oil and gas operations work in the
North Sea
• Engineering and project management
services on the Safaniyah and Manifa
ields for Aramco
• Optimising operations in the
Norwegian North Sea for Equinor
Our work across conventional energy
increasingly has elements of helping our
customers decarbonise, for example
in optimising operations, increasing
production eficiency and supplying
renewable energy to operations.
Process & chemicals
Our order book across process &
chemicals was around $0.8 billion at 31
December 2021. Signiicant contract
wins in the year included:
• Framework to deliver large-scale green
hydrogen plants for NEL Hydrogen
• Pre-FEED analysis on world’s largest
carbon capture and storage projects
for Summit Carbon Solutions
• Pre-FEED work for ADNOC on a blue
ammonia facility to build hydrogen
supply across the Middle East
• Appointed integration project
management contractor for Humber
Zero, one of the UK’s leading industrial
decarbonisation projects
We continued to develop our presence
in hydrogen. We became a steering
member of the Hydrogen Council
and agreed a Memorandum of
Understanding with HYGEN Energy
to accelerate the production of
green hydrogen for decarbonising
transportation in the UK.
We announced a technology partnership
with Honeywell for sustainable aviation
fuel. The technologies could reduce
lifecycle greenhouse gas emissions by
100% using certain feedstocks when
compared to traditional petroleum
aviation fuel.
Exceptional items
We recognised exceptional items of $160
million in the year (2020: $247 million).
These exceptional items are summarised
below and are discussed in more detail in
our Financial Review. They relect, in part,
our steps to strengthen the Group for
the future.
This includes a $99 million write down of
our Aegis Poland contract to relect the
latest estimate of the full contract loss.
Due to the size of the loss, this charge was
recognised as exceptional (2020: loss of
$11 million included in adjusted EBITDA).
The Aegis Poland contract is a ixed price
construction contract awarded in February
2016 for the construction of an anti-missile
defence facility in Poland for the USA. The
project was around 90% complete by
value at 31 December 2021. We expect the
contract to be operationally complete in
H2 2022.
Our latest assessment is that the loss
at completion will be $222 million. Due
to the size and nature of the loss, this
charge was recognised as exceptional
(2020: loss of $11 million included in
adjusted EBITDA).
We incurred $78 million of restructuring
costs in 2021 (2020: $101 million)
including:
• c.$30 million of charges relating
to the conclusion of our Future Fit
programme and other rationalisaton
• c.$50 million of charges relating to the
closure of various businesses, including
our business in France, the power and
large industrial EPC business and the
ATG automation businesses
Exceptional items also include a gain on
the sale of Sulzer Wood. See page 36 for
more details.
Cash performance in the year
Our cash performance this year was
disappointing and relects the continued
drags from exceptional cash lows
combined with a signiicant outlow of
working capital, mostly in relation to
reduced activity in our Projects business.
As a result, our net debt remains too high
and we have a clear plan to substantially
reduce it from here from the sale of our
built environment business.
Further details of our inancial
performance are included in our Financial
Review on pages 35 to 41.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
29
John Wood Group PLC
Annual Report and Accounts 2021
28
Governance Financial statements
Chief Executive review
continued
Renewables & other
Our order book across renewables &
other was around $0.9 billion at 31
December 2021. Signiicant contract
wins in the year included:
• EPC projects to provide solar power
for a customer’s onshore oil and gas
operations in the USA and to power
the industrial activity for Shell in Oman
• EPC contract with Renewables Energy
Group to expand a renewable diesel
bioreinery in Louisiana, USA
• Pre-FEED work for Simply Blue Energy
on a loating offshore wind farm in
Ireland
• Appointed owner’s engineer for
Luxcara on Europe’s largest single-site
onshore wind farm
• Permitting and FEED contracts for
the UK’s irst hydrogen storage and
distribution pipeline infrastructure
project, HyNet NorthWest
• Framework agreement with Horisont
Energi to provide specialist engineering
and management consultancy services
across offshore and onshore clean
ammonia and hydrogen projects
Built environment
Our order book across built environment
was around $1.9 billion at 31 December
2021 (c.$1.7 billion across built
environment consulting). Signiicant
contract wins in the year included:
• A design and construction scope for
the remediation of a site impacted by
chromium
• A restoration construction
management project for the largest
abandoned mine in Nevada, US, with a
view to potential future use as a solar
energy site
• A programme management contract
with the US Postal Service for
the management of nationwide
programmes including site upgrades
• A programme management contract
with the US Environmental Protection
Agency for data collection, data
management, and quality assurance
for a nationwide air quality monitoring
Progress on our ESG strategy
During the year we have focused on
maintaining our position as leaders
amongst peers in environmental,
social and governance matters and
sustainability. We made more progress
on our ESG goals in the year, including:
• 31% reduction in scope 1 and 2
emissions in the year, progressing
towards our target of 40% reduction
by 2030 (on a 2019 baseline)
• Awarded “AA Leader” rating from
MSCI in 2021 for a seventh consecutive
year, within the top 25% for Energy,
Equipment and Services
•
Selected as the debut issuer for the
UK Export Finance backed energy
transition term loan. As part of this
process, we developed a Climate
Change plan which was reviewed
and endorsed by a third-party
consultant. For our renewed RCF,
we also committed to a third-party
assessment of our carbon emissions
data and our progress against
emissions targets
• Initiated an evaluation of the Global
Reporting Initiative protocols published
in November 2021 as well as SBTi
Pathway to Net Zero to identify areas
for improvement in our Disclosures
• Participated in the UN Gender Equality
benchmarking group and developed
functional plans across the group
to increase inclusion and diversity.
Throughout 2021 we increased female
representation in senior leadership
roles to 33%, with a target to reach
40% by 2030
•
Contributed over $1 million in time and
resources to charitable causes in the year
Looking ahead: the opportunities to
help the world reach net-zero
Energy security and sustainability offer
us huge opportunities. The world needs
engineering solutions to provide access
to energy and to transition to a low-
carbon future. Wood has a wide range
of capabilities to help clients achieve
decarbonisation targets including:
• Improving eficiency of existing assets
• Fuel substitution, e.g. bio-based
feedstocks
• Reducing oil and gas laring and
methane emissions
• Electriication of assets using
renewable power
• Carbon capture and storage (CCS)
and hydrogen
The opportunity lies in smart technology
and solutions, and potential commercial
partnerships, to help deliver existing
industrial processes and conventional
energy sources as cleanly, eficiently and
securely as possible, while also charting
the pathway to newer, cleaner sources.
For example Wood is working with long-
term client, Nevada Gold Energy LLC, to
install a solar power plant, substation
and transmission lines to deliver
approximately 120 MWac of solar energy
to decarbonise activities resulting in a
zero-emissions mining project.
Outlook for 2022
The proposed sale of the built
environment business will have a
signiicant impact on our reported
results in 2022 and as such we are not
giving detailed inancial guidance at this
stage. Excluding the impact of any sale,
we expect higher revenue in 2022 across
our business supported by the growth in
our order book, with revenue in our order
book for 2022 of $4,655 million, up 6% on
the equivalent igure last year.
Cash generation in 2022 is expected to
be impacted by:
• Exceptional cash costs related to our
SFO payment, restructuring costs and
onerous leases and the losses on the
Aegis Poland contract
• Further payments related to our
asbestos liability
• Increased capital expenditure across
our business
As such, we expect no improvement in net
debt over the year before the sale of our
built environment business. The typical
working capital outlow in our business
in the irst half is expected to lead to net
debt being higher at June 2022.
Board changes
We announced today that Robin Watson,
Chief Executive, has advised the Board of
his intention to retire as Chief Executive.
The Company has initiated the process to
appoint his successor and Robin will remain
in his role until his successor is in place.
Thomas Botts, non-executive director,
will not seek re-election at this year’s
AGM and will step down from the Board
after nine years of service.
Update on activities in Russia
In March 2022, we took the decision to
exit Russia and have begun the process
of withdrawing from operations in the
country. We are actively engaged in
efforts to do so, while safeguarding the
safety and welfare of any colleagues
affected. Operations in Russia accounted
for around 1% of Group revenue in 2021.
Future events
Our AGM will be held on 22 June 2022.
We expect to announce a sale agreement
for our built environment business in
the second quarter of 2022 and further
details will be shared in due course.
We plan to hold a Capital Markets Day at
a later date, and after the completion of
the sale of our built environment business.
Segmental review
Consulting
Adjusted EBITDA grew by 4% on a like-
for-like basis with revenue growth and
an expansion in margin to 12.7%. The
higher margin partly relects eficiency
improvements and increased utilisation
in the second half.
The order book at 31 December 2021
was up 24% on last year to $2.2 billion,
driven by energy and built environment
contract awards. The order book for
built environment alone was up 20% to
$1.7 billion.
At 31 December 2021, revenue in our
order book for 2022 was $1,479 million,
up 14% on 2021.
12%
5%
13%
Markets:
c30%
Consulting
% of Revenue:
70%
Conventional energy 13%
Process & chemicals 5%
Renewables & other 12%
Energy: 30%
Built environment:
Sustainable infrastructure 70%
Operational review
Our Consulting business provides specialist
engineering, infrastructure development
and environmental consulting.
Across the built environment market,
we saw strong revenue and order book
growth. Major projects wins included
contracts with Canadian Nuclear
Laboratories, BP, Honeywell, New Mexico
Oil Conservation Division and Duke Energy.
In climate resiliency, we were awarded a
major lood resiliency contract with the US
Federal Emergency Management Agency
(FEMA) as part of the ARC Joint Venture.
We have a signiicant consulting offering
across energy and industry. During the
year we grew our orderbook signiicantly
across our core energy markets with key
wins from Chevron, Woodside, TPAO
and the UK’s National Grid. In Energy
transition, signiicant new contract
awards included pre-FEED work across
carbon capture and storage and
hydrogen solutions. As owner’s engineers
we completed Oman Shell’s irst utility
scale solar project and were appointed
to Luxcara’s wind farm in Sweden which
is set to become Europe’s largest wind
farm. We agreed a Memorandum of
Understanding with HYGEN Energy
to accelerate the production of green
hydrogen, were appointed the owner’s
engineer for the UK’s irst commercial
green lithium factory and we announced
a technology partnership with Honeywell
for sustainable aviation fuel.
Outlook for 2022
We expect strong growth given the
higher activity levels through 2021 and
increase in our order book.
Revenue
$1,787
m
(2020: $1,823m)
2.0%
1.3%
Adjusted EBITDA margin
Adjusted EBITDA
$227
m
(2020: $224m)
12.7%
(2020: 12.3%)
Order book
8
$2,196
m
(2020: $1,771m)
24.0%
0.4ppts
(like-for-like)
(like-for-like)
1.6%
3.7%
Revenue grew by 2% on a like-for-like basis to $1,787
million, with a strong second half of trading compared to
both H1 2021 (growth of 4%) and H2 2020 (growth of 7%).
Revenue growth was led by higher activity across the built
environment market.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
31
John Wood Group PLC
Annual Report and Accounts 2021
30
Governance Financial statements
Segmental review
continued
Projects
Adjusted EBITDA was 18% lower,
relecting the revenue decline partly
offset by a higher margin. The expansion
in margin partly relects improved overall
project execution, with a lower level of
losses in underperforming contracts
in North America as these projects
gradually roll off. Margin expansion
was also supported by cost eficiencies,
higher utilisation levels, a shift in mix to
higher margin projects and proit upside
from contract close outs.
The range of performance continues to be
mixed, with a small number of contracts
continuing to make a substantial loss,
most notably some renewables EPC
projects in North America. Looking ahead,
we expect further beneits from our
continued focus on improved execution as
these underperforming contracts come to
an end.
The order book at 31 December 2021 was
up slightly to $1.8 billion, having improved
from Q1 throughout the year. The growth
in our order book is partly constrained
by our focus on de-risking the contracts
in our portfolio. At 31 December 2021,
revenue in our order book for 2022 was
$1,312 million, down 13% on 2021.
6%
3%
38%
11%
8%
Markets:
% of Revenue:
24%
78%
32%
Conventional energy 24%
Process & chemicals 32%
Renewables & other energy 38%
Energy: 94%
Built environment:
Sustainable infrastructure 6%
c35%
Projects
Operational review
Our Projects business provides project
management and delivery, engineering
design and construction.
We made a number of changes in the
year to reduce the level of contract risk
across our business. These changes
include selective bidding of new EPC
work and more balanced risk sharing
with our customers. Alongside this, we
have made changes to how we run our
business. We introduced new operational
and commercial governance models
and made changes to management.
Furthermore, we exited our business that
performed large industrial and power
EPC business.
Despite the topline growth challenges, the
business delivered for customers across
many contracts. We completed a large
EPC management project in Europe to
convert a traditional diesel production
unit to bio-diesel and successfully
completed a large EPC contract to build a
methanol plant for YCI.
Signiicant wins in the year included a
contract with Nevada Gold to install
a solar power plant, substation and
transmission lines to deliver solar
energy to help decarbonise their mining
activities, and an EPCm contract
with the Renewable Energy Group to
help them improve and expand their
renewable diesel bioreinery in Louisiana.
Outlook for 2022
We expect modest revenue growth,
supported by our higher order book,
though the level of growth will be
dependent on customer investment
decisions and will be weighted towards
the second half of the year.
Operations
Adjusted EBITDA was down 8% on a
like-for-like basis to $225 million with
revenue growth more than offset by a
lower margin. The lower margin relects
a lower level of proit upside from closing
out contract obligations in the year,
compared to a high level in 2020 across
multiple contracts. Adjusted EBITDA in
2021 beneited from c.$12 million of proit
recognised where there were no related
costs incurred in the year.
The disposal of our joint venture interests
in TransCanada Turbines (TCT) in Q4
2020 and the disposal of Sulzer Wood
in Q1 2021 impacted reported EBITDA
growth. Adjusted EBITDA includes the
share of JV EBITDA of $57 million (2020:
$65 million). Joint ventures are included
in our results at the adjusted EBITDA line
but not in revenue and as such beneit our
reported margin.
The order book at 31 December 2021 was
up 27% on last year to $3.6 billion, driven
by a recovery in demand in conventional
energy, including a number of multi-year
contract renewals.
At 31 December 2021, revenue in our
order book for 2022 was $1,764 million,
up 18% on 2021.
Markets:
c35%
Operations
% of Revenue:
Conventional energy 78%
Process & chemicals 11%
Renewables & other energy 8%
Energy: 97%
Built environment:
Sustainable infrastructure 3%
Operational review
Our Operations business manages
and optimises our customers’ assets
including maintenance, modiications,
brownield engineering, asset
operations and management through to
decommissioning.
Performance across Operations in
2021 improved as the year progressed,
supported by increased customer
activity, with growth across all regions.
We entered new markets in the year,
with the addition of services across
power and specialty chemicals.
Notable contract renewals in the year
included oil and gas contracts across
all regions including a c.$500 million
renewal for our work in Brunei.
Signiicant new contract wins included
a $130 million contract with Spirit
Energy focused on late life operations, a
contract for operations in the Norwegian
North Sea for Equinor, plus various oil &
gas wins across countries and some wins
in new areas.
Outlook for 2022
Revenue is expected to grow, supported
by the higher order book. EBITDA in 2022
is expected to see a smaller beneit from
contract close outs than in 2021, which
will particularly impact the half year.
3.2%
12.1%
Revenue
$2,098
m
(2020: $ 2,033m)
Adjusted EBITDA margin
Adjusted EBITDA
$225
m
(2020: $256m)
10.7%
(2020: 12.6%)
Order book
$3,625
m
(2020: $2,848m)
27.3%
1.9ppts
(like-for-like)
(like-for-like)
3.9%
8.2%
Revenue
$2,340
m
(2020 $3,569m)
34.4%
18.0%
Adjusted EBITDA margin
Adjusted EBITDA
$168
m
(2020: $205m)
7.2%
(2020: 5.7%)
(2020: $1,769m)
Order book
8
$1,807
m
1.5ppts
2.1%
(like-for-like)
(like-for-like)
34.4%
18.0%
Revenue grew by 4% on a like-for-like basis to $2,098 million,
relecting a stronger second half compared to both H1 2021
(growth of 10%) and H2 2020 (growth of 17%) as market
conditions in conventional energy continued to improve.
Revenue was 34% lower in the year at $2,340 million, though
H2 revenue was lat on H1. The decline in the year relects the
completion of some larger EPC contracts, our move away from
larger scale contracts and new work being limited to smaller
scopes such as early-stage work.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
33
John Wood Group PLC
Annual Report and Accounts 2021
32
Governance Financial statements
“Our 2021 results relect both our broad
market exposure, with revenue growth
across Consulting and Operations but a
signiicant decline in Projects, and our focus
on margin improvement, with a higher margin
delivered despite the lower revenue. Our cash
performance in 2021 was disappointing and
relects the continued drags from exceptional
cash lows combined with a signiicant
outlow of working capital.”
Segmental review
continued
Our Investment Services business unit
manages a number of legacy activities
and liabilities. The most notable areas
are activities in industrial power and
heavy civil engineering. In addition to this,
the results of our Aegis Poland contract,
which is managed through our Projects
business unit, are reported within
Investment Services.
Investment Services generated revenue
of $201 million and adjusted EBITDA
of $11 million. The primary driver for
the increase in revenue is the inclusion
of heavy civil engineering from 2021
onwards.
Investment Services Financial review
David Kemp
CFO
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 proit to adjusted EBITDA is included in note 1 to the
inancial statements. A calculation of adjusted diluted EPS is
shown on page 38.
2021
$m
2020
$m
Revenue 6,400.0
7,564.3
Revenue (pre-exceptional items)* 6,426.0
7,564.3
Adjusted EBITDA 553.9
630.4
Adjusted EBITDA margin %
8.6%
8.3%
Depreciation (PPE)
(39.1)
(45.4)
Depreciation (right of use asset)
(109.8)
(134.6)
Impairment of PPE and right of use assets
(6.0)
-Amortisation - software and system
development
(90.8)
(102.0)
Amortisation - intangible assets from
acquisitions
(100.9)
(125.7)
Adjusted EBIT 207.3
222.7
Tax and interest charges on joint ventures
included within operating proit but not in
adjusted EBITDA
(15.3)
(8.3)
Operating proit before exceptional items 192.0
214.4
Exceptional items
(159.7)
(247.3)
Operating proit/(loss) 32.3
(32.9)
Net inance expense
(92.6)
(86.7)Interest charge on lease liability
(20.3)
(29.0)Loss before tax
(80.6)
(148.6)
Taxation
(54.9)
(79.5)Loss for the period
(135.5)
(228.1)
Basic EPS (cents)
(20.6)
(34.1)
Adjusted diluted EPS (cents) 17.5
23.2
See notes on page 41
* Revenue for FY21 includes an exceptional item of $(25.4) million related
to Aegis Poland. 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 year-to-year.
In the table above, depreciation, amortisation and exceptional
items include the contribution from joint ventures.
Adjusted EBITDA decreased by $76.5 million to $553.9 million
mainly due to reduced revenues in the Projects business due
to deferrals of activity by our customers and our move away
from taking on large scale lump sum EPC work. The impact
of a reduction in revenue was partially offset by an increase in
EBITDA margin to 8.6% (2020: 8.3%).
The review of our trading performance is contained within the
Chief Executive Review on pages 27 to 30.
Amortisation, impairments and depreciation
Total amortisation for 2021 of $191.7 million (2020: $227.7
million) includes $97.9 million for Amec Foster Wheeler (“AFW”)
(2020: $107.9 million) and $3.0 million (2020: $17.8 million) of
amortisation relating to intangible assets arising from prior
year acquisitions. Amortisation in respect of software and
development costs was $90.8 million (2020: $102.0 million) and
this largely relates to engineering software and ERP system
development. Included in the amortisation charge for the year
above is $1.8 million (2020: $2.2 million) in respect of joint
ventures.
The total depreciation charge in 2021 amounted to $148.9
million (2020: $180.0 million) and includes depreciation on right
of use assets of $109.8 million (2020: $134.6 million).
Total impairment for 2021 of $6.0 million mainly related to
impairments recorded against properties in the USA that are
not being used by the Group, and whose expected market value
is below the carrying amount.
Revenue
$201
m
(2020 $139m)
44.6%
15.4%
Adjusted EBITDA margin
Adjusted EBITDA
$11
m
(2020: $13m)
5.5%
(2020: 9.4%)
(2020: $136m)
Order book
8
$120
m
3.9ppts
11.8%
(like-for-like)
(like-for-like)
44.6%
15.4%
Central costs, not allocated to business
units, increased from $68 million to $77
million in the year. Performance in 2021
includes a gain on sale of property of $11
million as part of our rationalisation of
the Group’s portfolio.
Central Costs
13.2%
Adjusted EBITDA
$(77)
m
(2020: $(68)m)
Outlook for 2022
Given the one-off beneit from the
property sale in the year, we expect
central costs to be higher in 2022.
Adjusted EBITDA in 2021 beneited
from a change in the classiication of
Aegis contract losses. Previously these
were included within adjusted EBITDA
($11 million in FY20, $9 million in HY21)
and now have been classiied (from H2
2021 onwards) as exceptional items, as
discussed on page 28.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
35
John Wood Group PLC
Annual Report and Accounts 2021
34
Governance Financial statements
Financial review
continued
Net inance expense and debt
2021
$m
2020
$m
Interest on bank borrowings
32.8
33.3Interest on US Private Placement debt
35.9
38.0
Discounting relating to asbestos, deferred
consideration and other liabilities
6.4
8.6
Other interest, fees and charges
20.8
19.1
Total inance expense excluding joint
ventures and interest charge on lease
liability
95.9
99.0
Finance income relating to deined beneit
pension schemes
(0.2)
(3.8)
Interest on uncertain tax provisions
-
(4.9)
Other inance income
(3.1)
(3.6)
Net inance expense
92.6
86.7Interest charge on lease liability
20.3
29.0
Net inance charges in respect of joint
ventures
3.6
3.5
Net inance expense including joint ventures
and interest charge on lease liability
116.5
119.2
Interest cover (see note 5 on page 41) was 4.5 times on a reported
basis (2020: 5.5 times) against our covenant of 3.5 times.
Interest on bank borrowings of $32.8 million (2020: $33.3
million) primarily relates to interest charged on borrowings
under the $1.2 billion Revolving Credit Facility (‘RCF’),
borrowings of $300 million under the bilateral loans which were
repaid during the year and the $600 million United Kingdom
Export Facility (‘UKEF’) which matures in July 2026. The total
available facility under the RCF reduced to $1.2 billion from
$1.75 billion in 2020 following an extension of the maturity to
October 2026.
The Group also has $803.3 million of unsecured loan notes
issued in the US private placement market which mature at
varying dates between 2022 and 2031, of which $35 million
matures in 2022 with the remainder weighted to later dates.
Interest is payable at an average rate of 4.2% on these loan
notes. The reduction in interest expense is due to the payment
of loan notes which matured during 2021.
In total the Group had undrawn facilities of $1,103.1 million at 31
December 2021.
The Group recognised interest costs in relation to lease liabilities
of $20.3 million (2020: $30.1 million) which relates to the
unwinding of discount on the lease liability.
The unwinding of discount on the asbestos provision is $6.3
million (2020: $8.0 million) and includes the unwinding of
discount on long-term asbestos receivables.
Net debt excluding leases to adjusted EBITDA (excluding the
impact of IFRS 16) at 31 December was 3.3 times (2020: 2.1
times) on a reported basis, 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 41.
Exceptional items
2021
$m
2020
$m
Gain on divestment of business
(14.4)
(59.1)Aegis contract loss (revenue)
25.4
-Aegis contract loss (cost of sales)
73.9
-
Impairment losses on non-core business
-
20.1
Redundancy, restructuring and integration
costs
77.9
100.8
Investigation support costs and provisions
-
161.6Asbestos yield curve and fees
(3.1)
19.8
Guaranteed Minimum Pension equalisation
-
4.1
Exceptional items, net of interest and tax
159.7
247.3
Unwinding of discount on asbestos provision
6.3
8.0
Tax (credit)/charge in relation to exceptional
items
(1.2)
0.7
Impact of change in UK rate on prior year
exceptional deferred tax
10.3
-
Derecognition of deferred tax assets due to
UK pension actuarial loss
-
27.3
Exceptional items, net of tax 175.1
283.3
Exceptional items are those signiicant items which are
separately disclosed by virtue of their size or incidence to enable
a full understanding of the Group’s inancial performance.
The gain on divestment of business relates to the disposal of
the Group’s interest in Sulzer Wood Limited for a consideration
of $19.3 million. The gain of $59.1 million in 2020 related to the
disposal of the nuclear and industrial services business and our
interest in the TransCanada Turbines joint venture.
The increase in the Aegis contract loss in 2021 was $99.3 million,
which relects the latest estimate of the full contract loss. The
increased loss recognised in the year was due to changes in the
best estimates of the outcome of the contract, based on the
director’s current strategy for completing this complex project.
The estimate relects an increase in the expected future legal
costs, along with increases in the expected costs to complete
and potential liquidated damages. The changes to these
estimates at 31 December 2021 are predominantly a result
of adverse events and circumstances in the current period.
These included additional delays on the contract as further
commissioning took place, updated assessments of variation
orders and a change to the expected process to recover
variation orders. By virtue of its size and the nature of Aegis
being a legacy contract in a sector where the group no longer
operates, this was recorded as an exceptional charge through
revenue and cost of sales. No revenue has been recognised
on the Aegis Poland contract in 2021. The negative revenue of
$25.4 million presented represents the impact of the reduction
in percentage completion and reduction in the total forecast
revenue on the contract. During 2020 a charge of $11 million
was taken to EBITDA to relect the estimated full loss as at 31
December 2020. The updated contract loss relects the Group’s
latest assessment of cost to complete, claims, liquidated
damages and legal costs.
During the year to 31 December 2021, $77.9 million was incurred
in relation to redundancy and restructuring activities. During
2021 the Group has continued to progress various initiatives
which support the improved eficiency and enhancement
of underlying group proitability in the medium to longer
term. These initiatives have included ‘Future Fit’, which is a
Group wide strategic initiative aimed at improving eficiency,
transforming our project and operations delivery, and improving
proitability through changes to our supply chain and our
digital capability.Future Fit is an 18-month programme which
commenced during the irst half of 2021 and is due to complete
in the irst half of 2022.
We have also taken steps to simplify our legal entity structure
and closed legal entities to make our business more eficient.
The direct costs of running this programme along with the
costs of redundancies and other investments are included in the
exceptional charge.
Furthermore, the Group has sharpened its focus on markets
where we know we can make an impact and deliver higher
margins, and those businesses where the returns are
commensurate to the risks involved. This has resulted in
strategic decisions to exit certain locations, and end markets
that do not it this proile, the most material of which were our
Paris engineering ofice, the Power and Industrial Large EPC
sector and the ATG automation businesses in the UK. Where
relevant, all staff were notiied prior to the year-end and no
new work is being undertaken by these businesses. In line with
our accounting policy on exceptional items the costs mainly
relate to redundancy of staff, which were calculated in line with
local regulations, the wind down of onerous contracts and write
down of receivables balances considered to be unrecoverable as
a result.
The regulatory investigations were all closed out during the irst
half of 2021 and the agreed settlements were materially in line
with the provision made at 31 December 2020.
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 amounts from the
trading results improves the understandability of the underlying
trading performance of the Group. The credit of $3.1 million
in 2021 relates to a $5.6 million yield curve credit (2020: $17.9
million charge) and $2.5 million (2020: $1.9 million) of costs in
relation to managing the claims. The 30-year US Treasury rate
has increased to 1.9% from 1.65% at the end of December 2020
and led to the income statement credit in 2021. $6.3 million of
interest costs which relate to the unwinding of discount on the
asbestos provision are shown as exceptional (2020: $8.0 million).
An exceptional tax charge of $9.1 million (2020: $28.0 million)
has been recorded in the period and consists of a $1.2 million
tax credit on pre-tax exceptional items (2020: $0.7 million
charge) and a $10.3 million tax charge relating to the change of
the UK tax rate impacting on deferred tax balances created in
prior years through exceptionals (2020: $nil). The 2020 charge
also included $27.3 million which relected an impairment of
deferred tax assets in the income statement arising from a
reduction in deferred tax assets through other comprehensive
income due to the UK pension actuarial loss.
Taxation
The effective tax rate on proit before tax, exceptional items
and amortisation and including Wood’s share of joint venture
proit on a proportionally consolidated basis is set out below,
together with a reconciliation to the tax charge in the income
statement.
2021
$m
2020
$m
Loss from continuing operations before tax
(80.6)
(148.6)
Tax charge in relation to joint ventures (note
12)
11.7
4.8
Joint venture exceptional items (note 12)
-
8.0
Amortisation (note 9)
189.9
225.5Exceptional items
166.0
247.3Proit from continuing operations before
tax, exceptional items and amortisation
287.0
337.0
Effective tax rate on continuing operations
(excluding tax on exceptional items and
amortisation)
26.4%
23.7%
Tax charge (excluding tax on exceptional
items and amortisation)
75.7
79.8
Tax charge in relation to joint ventures
(11.7)
(4.8)
Tax charge in relation to exceptional items
9.1
0.7
Derecognition of deferred tax assets due to
UK pension actuarial loss
-
27.3
Tax credit in relation to amortisation
(18.2)
(23.5)Tax charge per income statement
54.9
79.5The effective tax rate relects the rate of tax applicable in the
jurisdictions in which the Group operates and is adjusted for
permanent differences between accounting and taxable proit
and the recognition of deferred tax assets. Key adjustments
impacting on the rate in 2021 are the derecognition of deferred
tax assets, current year deferred tax assets not recognised
primarily in relation to the US, offset by the release of deferred
tax on undistributed reserves and a net credit relating to
provisions in relation to uncertain tax positions.
Due to the impact of the planned disposal of the built
environment business it is dificult to give guidance on the tax
rate for 2022. However, we anticipate that post disposal the
tax rate for the Group will increase. This anticipated increase
relects the utilisation of tax losses and other tax attributes to
mitigate the tax payable on disposal of the built environment
business, thus reducing their use elsewhere, as well as other
trends such as the OECDs minimum tax rate increasing overall
taxation rates.
In addition to the effective tax rate, the total tax charge in the
income statement relects 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 proits. The income statement tax charge excludes tax
in relation to joint ventures.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
37
John Wood Group PLC
Annual Report and Accounts 2021
36
Governance Financial statements
Financial review
continued
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 proit 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.
2021
2020
(Losses)/
earnings
attributable
to owners of
the parent
$m
Number
of
shares
m
(Losses)/
earnings
per
share
cents
(Losses)/
earnings
attributable
to owners of
the parent
$m
Number
of
shares
m
(Losses)/
earnings
per
share
cents
Basic (139.5) 675.6 (20.6)
(229.5) 672.5
(34.1)
Effect of
dilutive
ordinary
shares
- - -
- - -
Diluted
(139.5) 675.6 (20.6)
(229.5) 672.5
(34.1)
Exceptional
items, net of
tax
175.1 - 25.9
283.3 -
42.1
Amortisation
related to
acquisitions,
net of tax
82.7
- 12.2
102.2 - 15.2
Adjusted
diluted 118.3 675.6 17.5
156.0 672.5 23.2
Basic loss per share for the year was 20.6 cents per share
(2020: 34.1 cents). The loss for the year attributable to owners
of the parent of $139.5 million is lower than the loss reported in
2020 mainly due to the higher exceptional charge in 2020.
Dividend
In response to the uncertainties of Covid-19, the Board
withdrew its recommendation for dividend payments in 2020.
Given the high level of net debt held by the Group, the Board
has decided not to recommend dividends in relation to 2021.
The Board recognises the importance of dividends to shareholders
and is committed to reviewing the policy in the future following the
proposed sale of our built environment business.
Cash low and net debt
Excluding
leases
2021
$m
Impact
of leases
2021
$m
Total
2021
$m
Excluding
leases
2020
$m
Impact
of leases
2020
$m
Total
2020
$m
Adjusted
EBITDA
418.5 135.4 553.9 479.2 151.2 630.4
Less JV EBITDA
(54.0)
(6.7) (60.7) (60.1) (7.7)
(67.8)
JV Dividends
26.3 - 26.3 29.6 - 29.6
Decrease in
provisions
(75.6) - (75.6) (45.4) - (45.4)
Other
10.7
3.3
6.714.0
-
6.7Cash low
generated from
operations pre
working capital
325.9 132.0 553.5
457.9
143.5410.0
(Increase)/
decrease in
receivables
(70.1) - (70.1) 504.2 - 504.2
Decrease in
payables
(163.2) - (163.2)
.
(342.3) - (342.3)
.
Decrease
in advance
payments
(72.7) - (72.7) (276.8) - (276.8)
Decrease in
inventory
0.1
-
0.10.9
-
0.9Working capital
movements
(305.9) - (305.9) (114.0) - (114.0)
Cash
exceptionals
(159.1) 21.0 (138.1) (114.6) 21.3 (93.3)
Cash generated
from operations
(139.1) 153.0 13.9 181.4 164.8 346.2
Capex and
intangibles
(92.8) - (92.8) (81.6) - (81.6)
Interest paid
(84.4)
-
(84.4)(82.9)
-
(82.9)Tax paid
(73.5) - (73.5) (43.2) - (43.2)
Other
(8.2) 14.6 6.4 (19.2) 23.6
4.4
Non-cash
movement in
leases
- (76.0) (76.0) - (146.5) (146.5)
Free cash low
(398.0) 91.6 (306.4) (45.5)
41.9
(3.6)Divestments
19.3 - 19.3 455.2 - 455.2
(Increase)/
decrease in net
debt
(378.7) 91.6 (287.1) 409.7
41.9
451.6Opening net
debt
(1,014.3) (541.4) (1,555.7) (1,424.0) (583.3) (2,007.3)
Closing net
debt
(1,393.0) (1,014.3) (541.4) (1,555.7)
(449.8)
(1,842.8)Closing net debt at 31 December 2021 including leases was
$1,842.8 million (2020: $1,555.7 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 31 December 2021 was $449.8 million
(2020: $541.4 million). All covenants on the debt facilities are
measured on a frozen GAAP basis and therefore exclude the
impact of IFRS 16.
Closing net debt excluding leases as at 31 December 2021 was
$1,393.0 million (2020: $1,014.3 million). The increase in net debt
excluding leases of $378.7 million is mainly due to lower cash
generated from operations due to lower activity levels in 2021
compared with 2020 and a large working capital outlow.
The monthly average net debt excluding leases in 2021 was
$1,680.0 million (2020: $1,597.8 million). The cash balance and
undrawn portion of the Group’s committed banking facilities
can luctuate 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 to a combination of factors including a strong
focus on collection of receipts from customers and the timing of
payments to suppliers.
Cash generated from operations pre-working capital decreased
by $95.6 million to $457.9 million primarily as a result of the
reduction in EBITDA and the movement in provisions. The
movement in provisions in 2021 includes utilisations of the
provision and the net non-cash credit (2020: charge) to EBITDA
and is caused by releases to EBITDA exceeding the EBITDA
charge of new provisions recognised. The release in 2021 is
driven by the Group concluding on a number of historic litigation
and insurance and property provisions which are no longer
necessary following resolution of disputes or the underlying risk.
There was a working capital outlow of $305.9 million (2020:
$114.0 million). There was an improvement in activity levels
in the inal quarter of 2021 compared with 2020, and in
conjunction with higher days sales outstanding (“DSO”) led to a
higher combined trade receivables and gross amounts due from
customers compared with 2020, which resulted in an outlow
during 2021.
The outlow in the year due to payables of $163.2 million is
lower than 2020. The large outlow in 2020 was driven by a
reduction in activity levels in 2020 compared with 2019. Activity
levels recovered during the inal quarter of 2021 however the
increased activity was not suficient to cover the cash outlow
in the irst half of 2021 from lower activity.
The cash outlow due to advances payments in 2021 was $72.7
million and compares to $276.8 million in 2020. The reduced
outlow in 2021 is due to the unwind of advances in 2020
which were received in previous periods as contracts have been
completed in the Projects business. As a result of the Group
de-risking its portfolio of contracts by moving away from large
scale EPC contracts, the unwind in advances has not been
offset by new awards in 2021.
The Group uses a receivables inancing facility of $200.0
million. The amount utilised at 31 December 2021 was $200.0
million (2020: $190.0 million). The facility is non-recourse to the
Group and so is not included in our net debt.
Cash exceptionals have increased by $44.8 million to $138.1
million in 2021 and mainly relates to payments amounting to
around $75 million in respect of the investigation which was
provided for in 2020 and is stated net of insurance receipts of
around $2 million. The remaining cash exceptional relates to
the cash cost of restructuring of around $50 million and mainly
includes future it costs of around $29 million, the closure of
the Paris ofice of around $15 million and our ATG business of
around $6 million. In addition, payments of around $8 million
were made in respect of onerous property contracts.
Payments for capex and intangible assets were $92.8 million
(2020: $81.6 million) and included software licences and
expenditure on ERP systems across the Group. The increase is
mainly due to the resumption in the implementation of the ERP
system and other discretionary capital expenditure which was
paused during 2020 to preserve cash. We expect payments for
capex and intangible assets to be higher in 2022.
Tax payments during 2021 were $73.5 million (2020: $43.2
million). The increase partly relects the timing of payments
made in Canada.
Net cash from divestments of $19.3 million relates to the
disposal of our interest in the Sulzer Wood joint venture.
Cash conversion, calculated as cash generated from operations
as a percentage of adjusted EBITDA (less JV EBITDA) reduced
to 2.8% (2020: 61.5%) primarily due to large working capital
outlow during 2021 compared with 2020.
Sources and uses of cash
The decrease in cash generated from operations in 2021 to $13.9
million from $346.2 million relects the lower EBITDA in the year
and large working capital outlow.
There are a number of risks associated with net cash low from
operations, including:
• Market risks, such as variability in commodity prices which
impacts on activities by our customers;
• Project risks, which include delays and disputes which can
inluence our ability to collect cash from our customers; and
• Other risks, including the actions of governments and other
third parties which can affect our ability to service our
increasingly global customer base.
The Group remain committed to a strong balance sheet. Our
uses of cash include:
• Servicing and repayment of our debt facilities;
• Capital expenditure;
• Potential returns to our shareholders; and
• Potential acquisitions.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
39
John Wood Group PLC
Annual Report and Accounts 2021
38
Governance Financial statements
Financial review
continued
Summary balance sheet
2021
$m
2020
$m
Goodwill and intangible assets
6,075.3
6,216.2Right of use assets
356.1
408.9
Other non-current assets
790.6
831.1Trade and other receivables
1,791.3
1,698.6Trade and other payables
(1,998.6)
(2,019.7)
Net debt excluding leases
(1,393.0)
(1,014.3)
Lease liabilities
(449.8)
(541.4)Provisions
(635.2)
(942.6)Other net liabilities
(451.4)
(464.0)
Net assets 4,085.3
4,172.8
Net current liabilities (367.9)
(457.3)
At 31 December 2021, the Group had net current liabilities of
$367.9 million (2020: $457.3 million). The reduction in net current
liabilities is primarily due to the extension of the maturity of the
Group’s debt facilities following the new $1.2 billion Revolving
Credit Facility and $600 million UKEF facility issued during 2021.
Goodwill and intangible assets include $4,228.7 million (2020:
$4,354.7 million) of goodwill and intangibles relating to the
acquisition of Amec Foster Wheeler. The balance has decreased
during the year primarily because of the amortisation of
intangible assets.
Right of use assets and lease liabilities amount to $356.1 million
(2020: $408.9 million) and $449.8 million (2020: $541.4 million)
respectively.
The increase in trade and other receivables is primarily due
to increased activity levels in the inal quarter of the year
compared with the same period in 2020 and an increase in
DSO. There have been no instances of material default by our
customers as a result of the current market conditions.
Trade and other payables have decreased by $21.1 million
since December 2020 and this is mainly due to a reduction
in amounts due to customers and deferred income which
was primarily related to the unwind of advances received on
contracts in the Projects business. This was partially offset by
an increase in other payables due to the reclassiication of the
current portion of the investigations provision of $40.6 million.
The provisions balance reduced by $307.4 million to $635.2
million. The decrease in provisions is mainly driven by
reclassiications of $235.2 million, utilisations and releases of
$130.9 million and FX of $2.1 million partially offset by charges
of $60.8 million.
The reclassiications primarily relate to the investigations
provision which was recognised in full as at December 2020 and
has been subsequently reclassed to trade and other payables
following agreement with the authorities, with the non-current
portion being relected in other net liabilities.
Provisions utilised amounted to $65.2 million and mainly related
to asbestos of $42.5 million and various legal and project
related matters. Releases to the income statement amounted
to $65.7 million and was mainly related to a number of
historical project related and insurance and property provisions
which are no longer necessary following resolution of disputes
or the underlying risk.
Contract assets and liabilities
2021
$m
2020
$m
Trade receivables
729.6
646.9
Non-current contract assets
66.5
111.3Amounts due from customers
628.1
638.6
Amounts due to customers
(87.5)
(203.2)
Deferred income
(115.0)
(69.7)
1,221.7
1,123.9
The net increase in trade receivables and amounts due from
customers is due to increased activity levels in the inal quarter
compared with the same period in 2020 and higher DSO. There
have been no instances of material default by our customers
as a result of the current market conditions. The net reduction
in amounts due to customers and deferred income was $70.4
million and primarily related to the unwind of advances received
on contracts in the Projects business.
Non-current contract assets of $66.5 million includes $46.6
million of gross amounts due from customers and $19.9 million
of trade receivables in relation to the Aegis contract as at 31
December 2021. The corresponding balances as at 31 December
2020 amounted to $111.3 million, with $94.1 million included in
gross amounts due from customers and $17.2 million of trade
receivables. The decrease in the non-current contract assets
is mainly as a result of the Aegis contract loss recorded in
exceptional items. The Group’s current estimate is that these
will not be settled until 2023 at the earliest. Refer to note 20 for
further details of the additional provisions recognised in respect
of this contract.
Asbestos-related obligations
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. At 31 December 2021, the Group has net
asbestos related liabilities of $349.1 million (2020: $380.9 million).
The Group expects to have net cash outlows of around $35
million as a result of asbestos liability indemnity and defence
payments in excess of insurance proceeds during 2022. The
estimate assumes no additional settlements with insurance
companies and no elections to fund additional payments. 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.
Full details of asbestos liabilities are provided in note 20 to the
Group inancial statements.
Pensions
The Group operates a number of deined beneit pension
schemes in the UK and US and a number of deined
contribution plans. At 31 December 2021, the UK deined beneit
pension plan had a surplus of $259.6 million (2020: $188.8
million) and other schemes had deicits totalling $74.7 million
(2020: $124.4 million).
The Group has total pension scheme assets of $4,811.5 million
(2020: $4,844.3 million) and pension scheme obligations of
$4,626.6 million (2020: $4,779.9 million) and is therefore 104%
(2020: 101%) funded on an IAS 19 basis. The reduction in the
scheme liabilities is driven by a higher discount rate used in the
actuarial assumptions.
In assessing the potential liabilities, judgement is required
to determine the assumptions for inlation, discount rate
and member longevity. The assumptions at 31 December
2021 showed an increase in the discount rate which results in
lower scheme liabilities and higher RPI inlation rates, thereby
increasing the surplus compared to 2020. Full details of pension
assets and liabilities are provided in note 32 to the Group
inancial statements.
Contingent liabilities
Details of the Group’s contingent liabilities are set out in note 33
to the inancial statements.
Divestments
During 2021 the Group disposed of interest in Sulzer Wood for a
cash consideration of $19.3 million.
Notes to the inancial review
1. A reconciliation of operating proit/(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.
2021
$m
2020
$m
Operating proit/(loss) per income statement 32.3
(32.9)
Share of joint venture inance expense and tax
(note 12)
15.3
8.3
Exceptional items (note 5)
159.7
247.3Amortisation (including joint ventures)
191.7
227.7
Depreciation (including joint ventures)
39.1
45.4Depreciation of right of use assets
109.8
134.6
Impairment of PP&E and right of use assets
6.0
-Adjusted EBITDA 553.9
630.4
2.
Adjusted diluted earnings per share (“AEPS”) is calculated by dividing
losses attributable to owners ($139.5 million) before exceptional items
($175.1 million) and amortisation relating to acquisitions ($82.7 million),
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 (675.6 million). In 2021, 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 31
December 2021.
4. Net Debt to adjusted EBITDA cover on a covenant and reported basis is
presented in the table below:
2021
$m
2020
$m
Net debt excluding lease liabilities (reported
basis) (note 29)
1,393.0
1,014.3
Covenant adjustments
13.5
25.0Net debt (covenant basis) 1,406.5
1,039.3
Adjusted EBITDA
553.9
630.4
Adjustment to exclude the impact of IFRS 16
(135.4)
(151.2)Covenant adjustments
29.5
11.5
Adjusted EBITDA (covenant basis)
448.0
490.7
Net debt to adjusted EBITDA (covenant basis)
3.1
2.1
Adjusted EBITDA
553.9
630.4
Adjustment to exclude the impact of IFRS 16
(135.4)
(151.2)Adjusted EBITDA (reported basis) 418.5
479.2
Net debt to adjusted EBITDA (reported basis) 3.3
2.1
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 reported measure shown above.
5. Interest cover on a covenant and reported basis is presented in the
table below:
2021
$m
2020
$m
Net inance expense
92.6
86.7Covenant adjustments
(6.7)
(4.8)
Net inance expense (covenant basis) 85.9
81.9
Adjusted EBITA
405.0
450.4Adjustment to exclude impact of IFRS 16
(18.5)
(16.6)Covenant adjustments
22.1
11.5Adjusted EBITA (covenant basis) 408.6
445.3
Interest cover (covenant basis) 4.8
5.4
Net inance expense
92.6
86.7Adjusted EBITDA (reported basis)
418.5
479.2Interest cover (reported basis) 4.5
5.5
6. Reported to like-for-like reconciliation
2021
2020
Reported
$m
Impact
of
disposals
$m
Like-
for-like
$m
Reported
$m
Impact
of
disposals
$m
Like-
for-like
$m
Revenue
Consulting
1,787.5 - 1,787.5
1,823.2 (63.1) 1,760.1
Projects
2,339.8 - 2,339.8
3,569.3 - 3,569.3
Operations
2,098.1 - 2,098.1
2,033.2 (13.2)
2,020.0
Investment Services
200.6 - 200.6
138.6 - 138.6
Group total
6,426.0 - 6,426.0
7,564.3 (76.3) 7,488.0
Adjusted EBITDA
Consulting (5.4) 218.9
226.8 - 226.8
224.3Projects
167.7
-
167.7205.4 - 205.4
Operations
225.1 - 225.1
256.1
(11.0)
245.1Investment Services - 12.8
10.9
-
12.810.9
Central costs*
(76.6) - (76.6)
(68.2) - (68.2)
Group total
553.9 - 553.9
630.4 (16.4)
614.0
Adjusted EBITDA
margin %
Consulting
12.7% - 12.7%
12.3%0.1%
12.4%Projects
7.2% - 7.2%
5.7% - 5.7%
Operations (0.5)% 12.1%
10.7% - 10.7%
12.6%Investment Services
5.5% - 5.5%
9.4%
-9.4%
Group total
8.6% - 8.6%
8.3% (0.1)% 8.2%
* Central includes the costs of certain Group management personnel, along
with an element of Group infrastructure costs.
In FY21 executed disposals consisted of our joint venture interest in Sulzer
Wood. Comparative igures also exclude revenue and adjusted EBITDA from
the disposals of our nuclear and industrial services businesses, YKK and our
joint venture interest in TransCanada Turbines (TCT) completed in 2020. These
disposals accounted for $nil revenue in FY21 (FY20: $76 million) and adjusted
EBITDA of $nil in FY21 (FY20: $16 million).
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
41
John Wood Group PLC
Annual Report and Accounts 2021
40
Governance Financial statements
Creating a better tomorrow
The world we inhabit tomorrow will be born from the steps we take today.
Wood is committed to ensuring
sustainability remains embedded in our
strategy and purpose. We believe real
change will come from our efforts to
challenge the norm, address unsustainable
behaviours and drive accountability for the
sustainability goals we set.
A more detailed index of our disclosures against the TCFD
recommendations is available on our website:
woodplc.com/tcfd
* The timing of the Group’s Sustainability Report is aligned to the UN Global Compact Communication on Progress (COP) annual deadline.
Directors' duties in accordance
with s172(1) Companies Act 2006
Our approach to performance by the
directors of their statutory duties and
our application of s172(1) Companies
Act 2006 can be found throughout this
annual report:
Statement of compliance
85
Engagement with:
Employees
14, 60-61, 80-81
Clients
16, 80
Investors & Lenders
15, 80, 95
Pensions
18
Community
18, 64-67
Suppliers
16, 80
Environment
17, 50-57
Principal decisions
19-21
Non-inancial
information disclosures
The information required to be
contained in the non-inancial
reporting statement under section
414CA and 414CB Companies Act 2006
is contained in the strategic report as
set out in the table below:
Environmental matters
50-57
Employees
58-63
Human rights
63
Social matters
64-67
Anti-corruption & anti-bribery
48-49
Task Force on Climate-related Financial Disclosures (TCFD)
The information provided in this Annual Report, along with disclosures made in our Sustainability Report 2020 (SR)*, published
in Q3 2021, and CDP Climate Change questionnaire 2021 (CDP), includes the material climate-related inancial disclosures
consistent with our progress towards the four recommendations and the eleven recommended disclosures set. In the table below
is a cross reference to where the recommended disclosures can be found across each of the three documents.
However, as we try and align our approach to the updated TCFD additional guidance (Implementing the Recommendations of the
Task Force on Climate-related Financial Disclosures (2021 TCFD Annex), released in October 2021, there are some recommendations
in the '2021 TCFD Annex: All Sector Guide' that will require more time for us to fully consider. In line with the current Listing Rules
requirements (as referred to in Listing Rule 9.8.6R(8)), the areas where we require more time to implement are:
• We will look to include categorisation of the climate-related risks and opportunities which are considered to be short, medium
and long term time horizons in our 2021 SR;
• Exploration of the setting of an internal carbon prices is a signiicant aspect of our carbon reduction strategy, however this
requires further discussions with senior management prior to developing an implementation plan; and
• Explanation and disclosure of key assumptions used to model our pathway to net-zero and how the scenario analysis impact
inancial statements risks.
We will be working to implement the rest of the 2021 TCFD Annex recommendations over the course of 2022 and intend to apply
these more fully in our next TCFD disclosure as required by the Listing Rules for the next inancial year.
Our values of care, courage
and commitment set the tone
for what is most important
to our business, the safety
of our team and those who
work with and for Wood.
Central to these values is our
commitment to our people.
Ensuring the health, safety
and wellbeing of our teams is
at the heart of everything we
do, and we remain steadfastly
committed to providing a safe
workplace for all.
Health and safety
2021 has been a challenging year as our
Health, Safety, Security, Environment &
Sustainability (HSSES) function continued
to manage the impact to the Company of
the global pandemic, whilst maintaining
a strong focus on the key aspects of our
health and safety programme.
One of these key aspects was the
rebranding of Wood’s Safety Shield to
become ‘The Shield’. The Safety Shield
was implemented in 2019 to provide a
single safety standard that is simple
and understandable across countries
and cultures.
Health, safety & security
With the principals of the Safety Shield
fully embedded and operating effectively
across the business, our focus in 2021
was on expanding the principals to
encompass all disciplines within the
function of Health, Safety, Environment,
Sustainability, Security and Ethics &
Compliance. The Shield represents how
we protect our company, communities,
colleagues, and ourselves through the
simple and consistent application of
‘Prepare, Engage and Intervene’. This
aligns with our company values by asking
our employees to have the commitment
to prepare correctly, the care to engage
and the courage to intervene.
Whilst we delivered a relatively
consistent safety performance,
regrettably there was a fatal incident in
2021. On 15 January 2021 in the United
States, a fatal commercial motor vehicle
incident occurred within the Projects
business. An employee driving a Hydrovac
truck encountered a damaged section
of roadway which caused the cab to
overturn and unfortunately the driver
sustained fatal injuries.
An independent investigation team led
by a senior manager was deployed to
investigate the incident. In accordance
with all very serious incidents, all driving
activities globally were reviewed against
Wood’s standards as an immediate
response.
In 2021, John Wood Group PLC received a rating
of AA (on a scale of AAA-CCC) in the MSCI ESG
Ratings assessment.
The use by John Wood Group PLC of any MSCI
ESG Research LLC or its afiliates (“MSCI”) data,
and the use of MSCI logos, trademarks, service
marks or index names herein, do not constitute
a sponsorship, endorsement, recommendation,
or promotion of John Wood Group PLC by MSCI.
MSCI services and data are the property of MSCI
or its information providers, and are provided ‘as-
is’ and without warranty. MSCI names and logos
are trademarks or service marks of MSCI.
Wood’s Executive Leadership Team
attended the incident investigation
review which convened to validate the
quality of the investigation and its
indings and to agree on systematic
learnings consistent with the process
outlined in our investigation procedure.
The Safety, Sustainability, Assurance
& Business Ethics Committee provided
oversight to the incident investigation.
The purpose of this oversight was to
ensure the investigation was independent,
of high quality and that the root causes
and organisational learnings from this
tragic event were fully identiied.
Wood’s leadership ensured that the
employee’s family and teammates
were supported immediately by senior
leadership, and our thoughts remain
with the family and friends of our
colleague. This incident has been the
focus of quarterly engagements by
the Executive President - HSSES and
global leaders across the business. A
'stand-down' was coordinated with
the project management community.
Communication of the incident
to the business took place via the
HSSES Community webinar and
included the reinforcement of safe
driving behaviours and robust journey
management principles.
Building a sustainable business
Wood's disclosure
TCFD recommended disclosures
2021 Annual Report
OtherGovernance
Disclosure of the Group’s governance around climate-related issues
and opportunities.
pgs. 57, 95, 98,
101-102
SR (pgs. 22-24, 75)
CDP (sections C1.1b, C1.2, C1.2a)
Strategy
Disclosure of the actual and potential impacts of climate-related
risks and opportunities on the Group’s business, strategy and inancial
planning where such information is material.
pgs. 6-13, 56-57
SR (pgs. 77-80, 86-90 96-99)
CDP (sections C2.1a, C2.3, C2.3a.C2.4, C2.4a,
C3.1, C3.2, C3.2a, C3.3, C3.4)
Risk management
Disclose of how the Group identiies, assesses and manages climate-
related risks.
pgs. 56-57, 68-69, 72
SR (pgs. 24, 75)
CDP (sections C2.1, C2.2, C2.2a)
Metrics and targets
Disclosure of the metrics and targets used to assess and manage
relevant climate-related risks and opportunities where such
information is material.
pgs. 19, 24-25, 53-55
SR (pgs. 76, 107)
CDP (sections C4.1, C4.1a, C4.2, C6.1, C6.3,
C6.5, C9.1)
Further information is contained in our
annual Sustainability Report which is
available at:
woodplc.com/company/sustainability
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
43
John Wood Group PLC
Annual Report and Accounts 2021
42
Governance Financial statements
Managing the impact
of Covid-19
As Covid-19 has persisted throughout
2021, our focus has continued to be on
the safety and welfare of our employees.
Wood has continued to monitor, adjust
and apply our guidance and practices
as the pandemic has evolved in waves
across our global footprint. The business
has continued to follow the best
available advice and we have taken the
necessary steps to protect our employees
in what has been a continually evolving
situation.
Considerable effort has continued
throughout much of 2021 as the
phased return to Wood workplaces has
progressed in accordance with local
conditions and guidelines. Comprehensive
return to work plans, particularly in Q2
and Q3 ensured the safety and wellbeing
of Wood employees as they returned to
reopened ofices and sites. Our plans
were developed with the lexibility to de-
escalate as well as re-escalate controls in
accordance with local conditions, which
has enabled effective business continuity
for Wood.
In addition to our own safety measures,
the increasing availability of vaccines
throughout 2021 has been an important
factor in helping the business to continue
operations. With increasing numbers
of mandates coming from government
regulators and clients, Wood elected
to roll out its own mandate in Q4 on
vaccinations to ensure consistency of
approach and to protect employees and
their co-workers from the effects of the
Covid-19 virus, enabling them to come
back to Wood ofices and sites safely
and to support our client partnerships.
With a global reach, the vaccine
mandate is being applied where
jurisdictional legislation allows and where
there is good accessibility to vaccines.
The mandate also gives consideration to
those unable to participate for justiiable
grounds. It remains under regular review
by our subject matter experts in the face
of the evolving pandemic conditions.
Our Crisis Management Team consisting
of Wood senior leadership has also
continued to evolve Wood’s response to
this ongoing crisis as the rolling tide of
outbreaks across the globe has seen the
need for control measures to strengthen
as well as ease in response to local
situations. The Board have received
monthly updates on the situation within
the business as well as the control
measures implemented across the
enterprise to protect the safety and
wellbeing of Wood employees and those
under Wood’s control. It is anticipated in
2022 that we will continue to see similar
requirements for locally enacted control
measures at Wood sites and ofices and
that these measures will remain subject
to evolving government and regulatory
requirements.
The move to hybrid working that started
in 2020 has continued to help mitigate
the business continuity risk that changing
government and regulatory requirements
have brought and will likely continue to
do so in the medium-term. However,
in turn this also presents an additional
occupational health related risk in terms
of isolation and poor mental health
which requires additional measures to
prevent serious harm. To address this
risk a global Mental Health Strategy
has been developed to coordinate
mental health resources, including
the Employee Assistance Programme
as well as services provided by our
Occupational Health Providers, which will
be implemented in 2022.
In the meantime, management at
all levels has continued to engage
extensively with staff to understand
and respond to the stresses placed
on them as a result of the pandemic.
A conidential counselling service
through our global Employee
Assistance Programme is available
to help colleagues experiencing
the psychological impact of the
pandemic, and we continue to
provide resources to help people
manage their physical and mental
well-being though our ‘Living Well at
Wood’ programme.
Along with the rest of the global
community it is anticipated that in
2022 we will continue to see travel
disruptions regionally and potentially
locally. With an increasing need
to be able to respond to these
rapidly changing travel conditions,
particularly for those in-ield, Wood
will continue to develop and evolve
innovative digital platforms such
as the Connected Worker App and
HSSES App. These platforms will not
only aid our ability to better support
our travelers but also enable Wood
to be able to engage more rapidly
with our ield workers to ensure
agile implementation of our evolving
Covid-19 protocols.
We will also continue to closely
monitor the situation with respect
to emerging variants through our
Occupational Health monitoring
system. It is anticipated that in
the longer term we will continue
to require annual boosters to
mitigate the impact of Covid-19 and
to address the potential for new
variants that will always exist.
Continuous
improvement planning
Continually improving the health and
safety of our operations is one of the
fundamental objectives of our approach.
This is made possible through a risk-based
analysis of performance across all areas
of our operations on a regular basis.
The 3 focus areas of our 2021
improvement plan were:
Our 3 focus areas are underpinned
by a yearly plan of actions aligned to
our global safety targets. Despite the
pandemic, we continued to implement
our improvement plan which focused on:
•
Establishment of an HSSE Professional
Services capability, to simplify, drive
consistency, and reduce optionality
across the business. The newly
formed Professional Services Team is
designed to provide the eficient use
of centralised high value resources
to connect the function, provide
consistent critical data and intelligence
and share best practice through one
common way of working. Through
enhanced virtual engagement ability
and global oversight, the initiative also
provides enhanced professional career
development opportunities
• Successful development and
deployment of a new Emergency
Management Standard, equipping our
people with the resources to effectively
prepare for and respond to crises
• Analysis of our safety culture across
our operations conducted by way of
Cultural Maturity Engagement. The
activity is a follow up and extension
from 2020 where we conducted a
similar exercise to assess aspects of
our safety culture, to enable us to
direct more focused interventions
• Extensive and consistent leadership
engagement to understand and
respond to the stresses placed on the
workforce because of Covid-19, along
with sustained emphasis on the Living
Well at Wood programme
In 2021 we launched the Management
System Revitalisation Project which
aimed to capture disparate standards,
procedures, tools and work instructions
throughout Wood’s integrated and
non-integrated systems and in turn
provide a single consolidated enterprise
system back to the business. The
project commenced in Q1 2021 with an
anticipated completion in Q3 2022.
The new management system will
establish a simpliied programme that
will ultimately improve HSE performance,
risk management and provide a
consistent approach for management
of critical risks because necessary
and relevant information will be easily
available to our workforce when and
where they need it. An application to
deliver the Management System to
Wood employees and subcontractors,
throughout all layers of the organisation
is in development concurrently with the
content. The application along with Power
BI, a Microsoft AI technology used for
automation of reporting, will strengthen
Wood's ability to digitise processes and
predict incidents before they happen.
Wood determined at the end of
2020 that we would engage DuPont
Sustainable Solutions, as industry
specialists to help benchmark us against
other leaders in our ield and to help
us undertake a targeted assessment
of three business groups that had
historically underperformed compared
to the rest of the Company regarding
safety performance. The purpose of
the assessment was to consider how
effective our safety management
system, processes, leadership, and
culture was with respect to overall
performance. Three business groups
were chosen with the aim of conducting
a deep dive assessment by the end
of 2021. The assessment consists of
analysis, engagement and report out
stages and includes:
• The conduct of a safety perception
culture survey
• Benchmarking against leading HSSE
practice
• Serious incident frequency review
• Organisational effectiveness and
technology enablement review
The outcomes of the assessments are
currently under review and will form the
basis of improvement plans for the three
business groups.
Compliance
• Deployment of a digitised platform
for assurance action tracking and
system self-assessment giving
greater visibility of progress across
the business
Connection
•
Developing a “One Voice” approach.
With the ongoing challenges of
connecting in a virtual environment
and managing organisational
change, the HSSES leadership
team are committed to behaving
and communicating consistently
across the business to achieve a
uniied function
• A robust communications strategy,
the Health & Wellbeing initiative
and the development of the
Professional Services Team support
our endeavours for a connected and
collaborative HSSES function
• The Data and Technology Strategy
is aimed at delivering intelligent,
accessible data to anticipate and
isolate risk for our people
•
A learning culture that fosters
innovation is the focus of the
Connected Learning Project
Consistency
• The roll out of a Functional Connect
and Development Programme to
ensure knowledgeable leadership
and management teams, as well as
a skillful HSSES function
• Developing a it-for-purpose
monitoring and assurance
programme to achieve enterprise
consistency and reduction of
duplication, ultimately simplifying
Wood’s assurance activities
•
The Critical Risk Management
project provides support, resources
and tools to improve the health and
wellbeing of our people, whilst also
working in concert with Supply Chain
to manage critical risks of providers
Building a sustainable business
continued
Strategic report
John Wood Group PLC
Annual Report and Accounts 2021
45
John Wood Group PLC
Annual Report and Accounts 2021
44
Governance Financial statements
Health and safety performance
We established both leading and lagging
safety targets at the beginning of the
year, aligned to our 2021 improvement
plan:
• 10% improvement in Total Recordable
Incident Rate (TRIR) compared to the
prior year
• DuPont Sustainable Solutions –
Engagement to undertake targeted
assessment of three business groups in
our organisation
• Leadership engagement events
focused on safety visits by senior
managers
Total recordable incident rate (TRIR)
Performance is based on a rolling
12-month frequency rate and is inclusive
of contractors working under Wood’s
management system. In total there
were 122 recordable incidents across
the business. This represents 2% more
recordable injuries than the previous
year and regrettably there was one
fatality in 2021 (see page 43). Whilst our
TRIR performance of 0.18 represents a
marginal increase compared to 2020,
overall performance with respect to TRIR
remains broadly lat and indicative of
consistently high levels of focus on our
safety programme.
All recordable incidents are robustly
investigated and corrective and
preventative action plans established
dependent on the identiied root causes.
The primary root cause of these incidents
was identiied under the category of risk
management and a failure to identify
the hazard. This largely means that not
all hazards had been noted on the risk
assessments and therefore adequate
controls for those hazards were not
implemented.
The most common cause of injury (23%)
was contact with tools, equipment or
machinery. The next most common cause
was slips, trips and falls which accounted
for 18% of injuries.
Lost time incidence rate (LTIR)
Performance is based on a rolling
12-month incident rate and is inclusive
of contractors working under Wood’s
management system. In total there were
15 lost time incidence (LTI) cases across
the business. This represents 10 fewer
lost time incidents than the previous year.
The lower number of lost time incidents
in 2021 is indicative of Wood’s focus on
risk exposure, targeted controls and the
strong focus of project teams on support
mechanisms. Strong performance in this
area suggests that when injuries have
occurred, they have generally been less
severe in comparison to 2020.
The most common work activity
undertaken at the time an LTI occurred
was maintenance and manual handling.
Risk management issues were the most
common root cause, with inadequate
hazard identiication and inadequate
identiication of controls featuring
most often. All lost time incidents
were investigated, and corrective and
preventative action plans established to
prevent reoccurrence.
Focus on security
Wood operates in a variety of
countries with complex or challenging
security risk environments. Group
Security, part of Group HSSES, has
a focus on improving the Company’s
resilience from a security perspective.
They are responsible for providing
both forward-looking strategic
risk advice to leadership teams, as
well as the security risk mitigation
requirements for any activities in
areas where crime, terrorism or
political instability are a concern.
Group Security also has responsibility
for governance of the crisis,
emergency, and business continuity
management framework.
2018
0.18
0.18
2019
0.17
0.18
2020 2021
Total recordable incident rate (TRIR)
per 200,000 exposure hours
2018
0.04
0.04
2019
0.04
0.02
2020 2021
Lost time incident rate (LTIR)
per 200,000 exposure hours
Building a sustainable business
continued
Leadership engagements
2021
Target Achieved
No. leadership
engagements
1,274 1,552
The pandemic continued to impact our
leaders’ ability to undertake physical site
visits. However, they continued to engage
remotely with the teams by utilising
remote cameras, online townhalls and
virtual meetings. Our leaders’ continued
commitment to engaging with the
team resulted in them exceeding the
number of planned engagements for the
year. The introduction of a Leadership
Engagement application enables our
leaders to record their engagements
eficiently, which will allow for further
enhanced reporting and trend analysis
going forward.
Our focus on meaningful engagement
with the frontline across our critical
risk areas has continued throughout
the year. We have learned from our
workforce when revising our processes
and procedures, worked with them on
identifying and consolidating the tools
they need and collaborated with them
to better understand how technology
can empower them to work safely. We
have also developed digitally-enabled tools
to provide predictive analytics, allowing
management to anticipate future risk and
protecting our people from harm. During
2021 and into 2022, our focus on identifying
opportunities to ensure an incident free
environment for Wood employees and
contractors remains constant.
The team’s aim is to enable the business
to operate safely all over the world by
focusing on four areas that are key to
ensuring resilience.
During the year the Group Security
function was reorganised, moving away
from the business unit partnership
structure to a regional model to
enhance consistency. In addition, several
digitalisation projects were successfully
implemented in 2021 that increase
the eficiency and effectiveness of the
function in some operational areas
including security risk assessment.
Wood’s crisis and incident management
teams have remained convened
throughout the year to manage the
continuing challenges of the pandemic,
including vaccination and return to the
workplace policy implementation.
To improve resilience at project, ofice
and site level across the Company, a new
emergency management standard was
released at the start of the year with a
focus throughout the remainder of the
year on embedding the standard and
ensuring its application throughout the
business, ahead of upcoming internal
audit reviews of the business units.
Operationally, the team have continued
to provide remote support to our
projects in high-risk jurisdictions and,
thanks to the digitalisation initiatives
undertaken, considerable assistance
has been provided to bid and business
development teams; particularly in the
latter half of the year, as clients have
restarted some projects that had been
temporarily delayed by the pandemic.
In 2022 we will begin our Covid-19 re-
emerge strategy. The initial focus will
be an audit programme of those higher
security risk projects that Group Security
have not been able to travel to during the
pandemic. Further to this, there will be
time spent ensuring that the workplace
violence and prevention and the site and
ofice security standards, both developed
in 2021 in response to internally identiied
needs linked to pandemic-related
workplace violence and petty crime trends,
are fully implemented across the business.
The team will also be conducting a review
of communication tools with a view to
potentially implementing a more effective,
digitised means of responding to and
managing emergencies and crises.
Geo-political risk monitoring
Operational security, bids and
planning
Travel
Crisis and emergency
management
Business continuity
Resilience
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Annual Report and Accounts 2021
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46
Governance Financial statements
Our key areas of focus in 2021 consisted of:
1.
ABAC programme
2.
Trade compliance
3.
Data protection programme
4.
Improving training and communications
Anti-Bribery and Anti-
Corruption programme
In June/July 2021, Wood announced
settlements with the Serious Fraud
Ofice (SFO) in the UK, the Department
of Justice (DOJ) and Securities and
Exchange Commission (SEC) in the US,
and the Ministério Público Federal (MPF),
the Comptroller General’s Ofice (CGU)
and the Solicitor General (AGU) in Brazil,
to resolve their respective bribery and
corruption investigations into the past
use of third parties in the legacy Amec
Foster Wheeler business.
Under the terms of the agreements, Wood
will pay compensation, disgorgement
and prejudgment interest, ines and
penalties totalling approximately $177m.
This will be phased over three years with
approximately $62m paid in 2021, and the
balance to be paid in installments in 2022,
2023 and 2024.
In the UK, Wood entered a three-
year deferred prosecution agreement
(DPA) relating to the use of third-party
agents for bribery and corruption in
ive jurisdictions; Nigeria, Saudi Arabia,
Malaysia, India and Brazil, over the
period 1996 to 2014, before Amec plc
acquired Foster Wheeler and prior to the
combined irm’s acquisition by Wood in
October 2017. Wood has also entered into
a three-year DPA with the DOJ, a Cease
& Desist order with the SEC, and leniency
agreements with a term of 18 months with
the CGU, AGU and MPF, all in relation to
the historical use of third-party agents for
bribery and corruption in connection with
winning a project in Brazil.
Earlier in the year, in March, Wood also
reached a civil settlement of approximately
$9m with Scotland’s Civil Recovery Unit in
relation to the historical engagement of a
third party agent, Unaoil, by a legacy joint
venture and potential unlawful conduct.
This resolves an investigation by the Crown
Ofice & Procurator Fiscal Service (COPFS)
and the Civil Recovery Unit that was
initiated following Wood’s self-reporting of
the issue.
Wood cooperated fully with all
authorities in their investigations, which
is relected in the cooperation credit
that Wood received from the authorities
in their respective resolutions. Our
improvements in relation to ABAC were
recognised in the resolution processes, most
notably in that there was no requirement
for the appointment of a monitor.
Our Code of Conduct is available at:
woodplc.com/ethics
Our commitment to
sustaining a visible,
continually improving ethical
culture remained strong
throughout 2021.
Leaders across the organisation play
a key role in delivering Wood’s Ethics
& Compliance (E&C) programme by
emphasising ethical behaviour to
our workforce and supporting those
speaking up.
Our Code of Conduct (the "Code")
continues to be the foundation of the
E&C programme, promulgating the
importance of doing the right thing,
setting clear expectations for ethical
business practices and providing
guidance to employees on how to
respond if faced with ethical decisions.
It also sets out our “Speak Up” resources
and requires employees to report
anything they feel does not relect
our values, our policies or the law. We
actively create an environment where
our employees feel empowered to speak
up and Wood does not allow acts of
retaliation against any person who,
acting in good faith, reports suspected
misconduct or participates in an
investigation.
The Code is supported by a suite of
global E&C policies and procedures,
available in multiple languages, covering
the following:
•
Anti-Bribery and Anti-Corruption
(ABAC)
• Commercial Intermediaries
• Competition Law
• Conlicts of Interest (COI)
• Data Protection, including Breach
Response
• Ethics Investigations
• Ethics Reporting and Anti-Retaliation
• Gifts and Hospitality
• Sanctions, Export Controls and
Anti-Boycotts
Compliance with the Code and supporting
policies and procedures is mandatory
for all directors, oficers and employees
as well as contractors, consultants,
representatives, intermediaries and
agents retained by Wood. Any reports
of non-compliance are investigated and
appropriate action taken, up to and
including termination of employment and/
or business relationships.
E&C has continued to build its team in
2021 to help strengthen governance and
carry out key priorities. This included
stafing two new roles (Trade Compliance
Counsel and Senior Manager, ABAC
Improvement Programme), as well as
restructuring the roles of Compliance
Counsel East and West, and Compliance
Advisors – East and West.
However, as is standard under resolutions
of this nature, Wood has committed
to further ABAC improvements and
enhancements under the terms of the DOJ
and SFO DPAs and the Brazilian leniency
agreements. Recognising our responsibilities
in this area, work on the planning and
development of our ABAC programme
continued through the irst half of 2021 and
the ABAC programme was implemented on
completion of the settlements.
Building on previous improvement work,
we continue to review and enhance
policies and processes. The gifts and
hospitality (G&H) policy was updated
to emphasise government and public
oficials as a critical focus area. We also
revised our conlicts of interest (COI) policy
to improve transparency in assessing and
mitigating potential or actual conlicts.
Upgrades to the G&H and COI review
processes will occur in 2022 to augment
management information reporting
capabilities. A structured management
information programme helps track
compliance with policy requirements and
identiies key trends on which to focus
training and communications.
Third parties
Consistent with efforts over the past
couple of years, we maintained our focus
on management of third parties.
As regards commercial intermediaries
(CIs), Wood continues to prohibit, as a
matter of policy, the engagement of any
new sales agents or national sponsors
other than those required by law, and
the business no longer has any active
sales agents in use. The CI policy and
procedure has been updated to reine
our existing approach by introducing a
new risk methodology and a commercial
intermediary lead role, as well as clearer
onboarding and ongoing monitoring
requirements. Implementation is
expected to continue throughout 2022.
Management of other third-party risk,
and in particular joint venture risk, is
a key focus of the ABAC programme.
Substantial progress has been made
in this area in 2021; a comprehensive
due diligence review of our existing
incorporated joint venture partners
is well progressed; a systematic, risk-
based due diligence process was devised
and implemented across the majority
of our supply chain; and a new client/
opportunity due diligence process is
under development after substantial
stakeholder engagement and planning.
These due diligence initiatives will
continue throughout 2022.
Ethical culture
Leadership must be visibly committed
to the highest standards for business
conduct, demonstrating compliance
with the Code and our values through
their words and actions. The E&C team
partners with leaders to further embed
ethics throughout the organisation.
The Chief Ethics & Compliance Oficer
reports to the General Counsel (having
previously reported to the Executive
President HSSE&S) and meets
regularly with the CEO and the Safety,
Sustainability and Business Ethics
Committee (SSABE) to provide updates
on the status of the programme.
Wood has designated key leaders as
Ethics Responsible Oficers (ROs) to
promote the Code and related ethics and
compliance policies and procedures, as well
as to support E&C initiatives. Throughout
2021, E&C engaged regularly with ROs
through one-on-one sessions, as well as
through formal meetings of the Business
Ethics Forum (BEF). The BEF provides a
mechanism for the E&C team to engage
with operational and functional leadership
throughout the organisation. During the
meetings, E&C provided updates on the
status of ongoing ethics and compliance
projects; discussed the effectiveness of
Wood’s ethics and compliance programme;
identiied matters of potential or actual
ethics and compliance misconduct along
with mitigation efforts with respect
to unfavourable trends or ethics and
compliance risks faced by Wood
.
Ethics & Compliance training
and communications
Our training and communication efforts
are a fundamental component of the
E&C programme and help reinforce a
strong ethical culture at Wood. In 2021,
we implemented an integrated training
and communication plan comprised of
a three-tiered engagement strategy,
consisting of inluencing, bespoke training
and immersion, with initial emphasis
on inluencing, through foundational
communications, and bespoke training. In
2022 we will move into the immersion tier
of the strategy by promoting awareness of
key E&C issues to site-based employees.
During the year, E&C developed a new
library of Ethics Moments, which enable
leaders to easily prompt discussions with
their teams about ethics and compliance
issues. Fifty Ethics Moments were
published in 2021 with the expectation
of doubling this content in 2022. Another
new facet of the programme is the micro-
learning library, where employees can
access 1-3 minute training videos covering
various ethics and compliance related
topics, such as competition and anti-trust,
gifts and entertainment, and reporting
and non-retaliation.
In 2021, mandatory ethics and compliance
training was deployed to nearly 4,600
mid-level managers and principals, and
100% completion was attained. The
training was designed to drive everyday
ethical decision making and position
learners as local champions of core E&C
messages, enabling them to initiate
conversations about conducting business
with integrity and promoting a “Speak
Up” culture. In addition, all participants in
the Annual Bonus Plan, the outcomes of
which are linked to company performance,
were required to complete a Code of
Conduct certiication.
All other employees were requested to
complete the certiication on a voluntary
basis. By completing this certiication,
employees acknowledge that they have
read, understood, and agree to comply
with the Code.
Moreover, throughout the year, risk-
based online training and webinars were
provided to smaller targeted audiences
on topics including anti-bribery and anti-
corruption, conidential information and
conlicts of interest.
E&C partners with a third-party to
anonymously survey employees in speciic
geographic regions for feedback on ethical
culture. In 2021, this annual survey was
distributed to over 3,500 employees in
the Asia Paciic region. The survey results
will help set training and communication
priorities in 2022.
Managing cases
We encourage employees to use their line
manager as a irst point of contact to
report concerns, with additional “Speak
Up” resources available, including another
manager, People & Organisation, or Legal.
As such, many matters are managed
without E&C intervention. However,
employees may also contact E&C directly
or use the Ethics Helpline, which is
operated by an independent third party
and allows anyone to raise a concern
or report a suspected violation of our
policies, procedures or the law. Reporters
can make reports by telephone or online
and may elect to remain anonymous. On
a quarterly basis, the SSABE Committee
is provided a summary of the use of E&C
Speak Up resources, including initiatives to
further promote the “Speak Up” culture.
During 2021, E&C received a total of 139
concerns through the Ethics Helpline
and internal channels. All concerns are
reviewed and necessary disciplinary
action and/or remedial action is taken
as appropriate. Of the 49 allegations
which were substantiated this year after
review or investigation, eight resulted in
termination of employment for serious
violations of company policy.
Trade compliance
The business has embraced the
expertise made available by the newly
created Trade Compliance Counsel
role, which covers sanctions, export
controls and anti-boycotting, and the
appointment of a leading law irm in
support. We have also implemented a
proprietary restricted party screening
and monitoring tool to support the due
diligence and continuous assurance
of our clients. Our sanctions risk
assessment is underway and will be
completed in 2022.
Data privacy and protection
The data privacy team continued to
drive improvements in how we manage
personal data through our data privacy
and protection programme. Through
the programme we implemented the
new South African privacy law and
progressed implementation of new and
amended privacy regulations in Brazil,
Singapore and Thailand. Two Data
Information Oficers, the equivalent of
Data Protection Oficers (“DPOs”), were
appointed for South Africa along with a
DPO for Brazil, bringing the total number
to six and strengthening local support for
privacy compliance.
Communications and training continue
to be an important element in the
privacy programme. A communications
campaign was run over ive days
in January 2021 targeted at Wood
employees. A library of 25 case studies
and privacy moments was used to reach
a wider group of workers along with
Yammer posts on Wood networks and
communications to the Data Protection
Ambassador network. There were more
than 900 attendees at virtual training
sessions designed for speciic roles such
as the Delhi Financial Shared Services
team and 2,200 individuals completed
online privacy training.
Under the programme we conducted
a review of the use of the OneTrust
system for privacy assessments and
reined procedures and documentation
to make it easier to use and trials
are being conducted allowing certain
individuals to self-serve in relation to
issuing assessments and accessing
vendor assessments. It is envisaged that
assessments on the OneTrust system
will be increasingly used to document
governance and use of personal data
throughout Wood and become Wood’s
source of information on personal data
use, notwithstanding they are not always
mandated by local laws.
The privacy team has continued to provide
support on the use of personal data for
key company initiatives including:
• The processing of sensitive data
to support inclusion and diversity
activities, in particular, the collection
of data in the employee engagement
survey hosted by Peakon
• Covid-19 matters including advice
on collection and use of Covid data,
implementation of a new system to
store Covid data and the roll-out of the
Global Mandatory Covid Vaccination
policy. Privacy assessments are being
used on an ongoing basis to document
the approach to collection and use of
Covid data
•
The transfer of personal data to Oracle
through the Oracle Light and other
programmes
Data privacy incidents continue to
be low-level impact and mainly occur
within our internal environment such as
including excessive personal information
in reports and sending emails to the
wrong Wood employee. Incident
learnings are used to drive improvements
throughout our businesses. The volume
of individual subject access requests has
reduced from previous years and remains
consistently low and they have been
handled in compliance with legislation.
Ethics & Compliance
Our Supply Chain Code of Conduct
is available at:
woodplc.com/scm
Building a sustainable business
continued
Strategic report
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Annual Report and Accounts 2021
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Governance Financial statements
Environmental performance
Key environmental data is captured
centrally, including incidents, audits, and
regulatory interactions. All signiicant
pollution incidents and near miss
events are investigated and subject to
an incident review panel. We record
environmental observations through our
corporate observation reporting system,
Harm Elimination and Recognition
Tracker (HEART), and encourage the
Wood Shield approach to environmental
management: preparing properly;
engaging our workforce in environmental
management and having the courage
to intervene to prevent environmental
harm. Environmental data assists the
business to target time and resources to
maintain good performance.
Environmental incident data is reported
globally into our in-house incident
management and analysis tool,
Corporate Analysis Incident Reporting
System (CAIRS). Monthly and quarterly
reports are provided to senior leadership
and the Board on environmental
performance, inclusive of data, trends
and incidents. This provides visibility of
environmental performance and ensures
environmental management is addressed
at the highest level in the organisation.
Protecting the environment is more important than ever. Society has woken up to the realisation
that we cannot continue to exploit the world’s resources, pollute its ecosystems and eradicate
biodiversity without a dramatic impact to our quality of life. As a business, we recognise our
responsibility to the environment and our stakeholders to take action to reduce the environmental
impact of our operations, be it climate change, waste plastics or ecosystem damage.
We do not take this responsibility lightly and believe we have a signiicant part to play in
challenging ourselves and others to play their part in addressing this global issue. Climate
change is shaping our business in terms of the business we do and the way we deliver it.
Our approach to
environmental management
Our commitment to the environment
is set out in our HSSE Policy, supported
by our global HSSES management
system. Our approach is aligned to
ISO14001:2015, which provides the
framework for how we manage our
global environmental responsibilities
and ensures our processes are effective
in delivering continuous improvement
in our environmental performance.
Whilst our 14001:2015 certiication
covers over 11,000 employees globally,
externally veriied by Lloyds Register, our
management system extends beyond
certiication. Those areas not covered by
our certiication must comply with Wood’s
minimum environmental standards,
which although not certiied, have been
developed to meet the requirements of
the ISO 14001:2015 standard.
Our standards have been developed
following a comprehensive review of
Wood’s environmental commitments
and performance, considering
environmental best practice, regulatory
performance and environmental incident
investigations and learning.
Compliance with the standards is
mandatory wherever we have operational
control, thus creating a consistent
approach to environmental management.
The standards are split into two sections:
• Managing environmental risks
• Reducing our environmental impact
Each section is further sub-divided into
key elements covering key environmental
aspects. A web-based gap analysis tool
is used to assess compliance with the
standards and aid improvement against
a maturity scale.
Managing environmental risks
Environment in
project design
Site set up
Protected and
sensitive environments
Environmental
due diligence
Emergency
preparedness
Permissions
and licences
Environmental
aspects and impacts
Polluting
material storage
Site vehicles
and equipment
Reducing our environmental impact
Carbon management
Waste management
Water preservation
and protection
Air pollution
Spill response
Further information on our environmental
performance and ongoing strategy is
contained in our annual Sustainability
Report which is available at:
woodplc.com/company/sustainability
Environment
Building a sustainable business
continued
2018
171
123
2019
71
98
2020 2021
2018
0.20
0.14
2019
0.10
2020
0.14
2021
Having fallen signiicantly in both 2019
and 2020, environmental incidents
increased this year by 38%. Incidents
are sensitive to type, location and phase
of projects. In the year a number of
projects were in the groundwork phase,
when the potential for environmental
incidents is inherently higher, and have
operated throughout seasons. Some of
our projects and operations have also
been impacted by the Covid-19 pandemic
restrictions that continued into 2021;
temporary ofice and project closures,
reduced workforces and restricted
activities have all impacted on the
number of incidents that have occurred.
With Covid-19 restrictions varying
throughout the period and by geography,
our approach to operations has needed
to be reactive to the constantly evolving
situation. This means that the incident
levels for 2020 and 2021 are not
comparable with each other and even
more so with 2019, pre-pandemic.
Number of environmental incidents
Environmental incident frequency rate
per 200,000 work hours
All reported incidents were minor events
with localised or no environmental harm
resulting from the incident e.g. oil leakage
within bunds or hard standing and silt
discharges into drainage systems. There
has been no regulatory action in any
jurisdiction throughout the year and Wood
is not subject to any pending proceedings
in 2021.
The most common reported cause
of incidents were failure of plant and
equipment (47%) with hydraulic oil
being the most common cause of
contamination. We will continue to
increase the information we gather on
such incidents to enable pro-active steps
to be taken with our suppliers to prevent
re-occurrence.
As well as an increase in the total
number of incidents reported, we have
also observed a rise of 40% in our
environmental frequency rate compared
to 2020.
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Annual Report and Accounts 2021
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Governance Financial statements
Building a sustainable business
continued
Plastic elimination
We have committed to eliminating
single use plastics (SUP) from all of our
ofices by 2025. Covid-19 has created
obstacles on this journey as many of our
employees temporarily moved from being
ofice based to home based and project
sites have had to implement Covid safe
practices involving the use of disposable
plastic items. Whilst this caused some
interruption to our intended primary
focus for 2021 of creating a location-
based SUP baseline to measure our
reduction efforts against, we found new,
innovative ways to deliver our aim.
Carbon reduction
The importance of reducing greenhouse
emissions has heightened even further
in 2021 with the publication of the
Intergovernmental Panel on Climate
Change’s (IPPC) latest report. The
report gave a stark warning that the rate
at which we are reducing greenhouse
gas emissions must increase if we are to
achieve the goal of limiting climate change
to 1.5
º
C as per the Paris agreement.
We recognise this urgency and have
challenged ourselves around what else
we can do. Our Board and ELT regularly
review our carbon reduction target to
ensure that it remains appropriate for
Wood. The methodologies established
by the Science Based Target Initiative
(SBTi) remain the most widely recognised
process for the establishment of reduction
targets aligned to the goals of the Paris
Agreement. In light of the publication
of the IPCC report and the move by
many corporates to commit to net-zero,
there have been changes to the SBTi’s
approach with the publication of their
Net-Zero Standard which we are currently
evaluating to ensure our targets remain
relevant and credible. Our carbon reduction
strategy is a live process, our aim is to
ensure our approach evolves to relect the
needs of our many stakeholders.
We report our emissions in line with
both location and market-based
methodologies. However, we have
adopted a market-based approach as
our principal reporting method. This
methodology was used to establish our
2019 baseline of 173,585 tonnes COe
and will be utilised going forward when
assessing progress against our target to
reduce scope 1 and 2 emissions by 40%
by 2030. We have chosen to report in
this way to relect a key element of our
carbon reduction strategy which is to
transition to procuring electricity solely
from renewable sources. Using a market-
based methodology allows for a true
relection of the impact on our emissions
to be reported.
To gain additional assurance on our
approach, we engaged an independent
third-party climate change consultant to
review our baseline data and our target
modelling. This will provide assurance
that the underlying data is accurate and
demonstrate independent veriication to
our stakeholders.
A Climate Change Focus Group, made
up of key stakeholders from our functions
and operations, has been established to
deliver our carbon reduction strategy. A
move to purchase renewable electricity
is a key focus of the team’s near-term
actions to deliver our scope 1 and 2
reduction target. Signiicant progress has
been made this year with targeted action
on the biggest consumers of energy
within our global portfolio, including the
establishment of a master agreement for
procurement of renewable electricity for
our Houston ofices.
The chart above shows our progress
since 2019. We have made signiicant
progress in 2021 with around 45% of
the electricity we use now from certiied
renewable energy sources. We will strive
to increase the purchase of renewables
further throughout 2022.
Scope 3 emissions are often overlooked
but are vital to understand the true
impact of the organisation. In order
to meet our net-zero goal, we must
understand all of the emissions
associated with our activities in order
to take targeted action. Therefore, for
the irst time we are able to disclose our
full emissions footprint, including scope
3, in this report. We have increased the
transparency in our scope 3 disclosures in
2021 by enhancing the accounting of our
emissions from fuel and energy related
activities by now including the well to
tank emissions of the fuel we consume.
We will continue to work to enhance the
quality of this data, reducing the level of
estimation currently required.
There is potential for many of the
elements of the carbon reduction
strategy to result in incremental costs to
the business, such as the move to procure
renewables, however these are not seen
to be signiicant. The actions undertaken
so far have been relatively low cost, and
in many cases are cost neutral.
For example, with many of our
ofices closed we were unable to
undertake waste audits as planned
so we changed our approach and our
Consulting waste team undertook
a review of our global procurement
data to identify items of SUP being
purchased with the aim of producing
a preliminary 2019 baseline. Whilst
there were some limitations in the
procurement data, the key spend
categories and overall spend for SUP
was identiied. To supplement the
insights gained from the procurement
data and in order to inalise the
baseline measure, a plan to undertake
waste audits throughout ofices in
early 2022 has been developed.
2019
0
100
%
2020 2021
Grid vs renewable electricity usage
Reducing our impact
Environmental responsibility at the heart of our operations
We understand how important it is to take responsibility for the environmental impact of
the work that we do, and how we do it. Reducing our environmental impact needs to be at
the heart of our day to day decision making process, not an add on. By considering more
environmentally friendly techniques, materials and tools, we will challenge the norm and
create new, better possibilities for our own operations and for our clients.
Responding to and mitigating environmental impacts requires an ability to create
innovative solutions by working together with all our stakeholders. This is where employee
core competency and awareness are essential, combined with intervention skills to
imagine and innovate new solutions to often complex matters.
Case Study – South West
Scotland Stone Re-use
Our work on the Southwest Scotland
interconnector project involved the
installation of 232 electricity transmission
towers and associated cabling to bring
renewable energy from newly constructed
wind turbines to the electrical grid. Given
the rural nature of the construction
approximately 1 million tonnes of stone
were needed to establish access tracks
and provide foundations.
With the power lines commissioned and
energy lowing from wind turbines to
the grid, the project’s focus turned to the
restoration of the areas impacted by the
construction. The stone used to construct
the access tracks would technically have
been considered to have reached the end
of its life and as such would traditionally
be treated as waste. Wood with its client,
Scottish Power Energy Networks, has
been working with a local regulator, the
Scottish Environmental Protection Agency
(SEPA), the local planning authorities, local
landholders, local charities, and wind farm
developers to minimise the amount of
stone that would be treated as waste.
A beneicial re-use has been identiied for
all of the stone extracted for instance,
through the construction of permitted
forestry roads, restoration of borrow
pits, and a donation of stone to the
Carsphairn Community Trust. The
areas from where the stone has been
removed have been landscaped, allowing
for natural revegetation in the coming
growing seasons.
6 5
45
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Governance Financial statements
Our new carbon management
software, provided by Sphera, has
given us a much improved ability
to monitor and verify data and the
veriication of emissions factors used
in our software provider’s system
is undertaken as part of both our
internal and external veriications.
In addition, we have also enhanced
our internal data assurance processes
as well as taking steps to increase
accountability across our operations.
Each business unit now has a
sustainability lead who is responsible
for carbon reporting in their area of
the business and who must sign off
at the end of each reporting period
that the emissions stated are an
accurate relection of those within
their business.
In January 2022, the business
announced its intention to undertake
a sale process for the built
environment business. The impact
of any agreed sale will be assessed
to ascertain if a re-baseline of GHG
emissions has been triggered in line
with GHG protocol.
Making sustainable operations
a possibility
It is fundamental that we embed
sustainable practices into our operations
if we are going to realise our carbon
reduction targets. To do this we are
focusing on challenging traditional
methods and thinking of new, innovative
ways of delivering for our clients. That
is exactly what our commercial team
supporting our duty holder operations at
the Scottish Area Gas Excavation (SAGE)
terminal have done. Located at St Fergus,
north of Aberdeen, UK, the SAGE system
is an integrated gas transportation
and processing system with a nominal
capacity of 1,150 cubic feet of gas per
day. Gas processed at SAGE feeds into
the UK’s National Transmission System,
providing a signiicant proportion of the
UK’s total gas supply.
Wood manages the day-to-day operation
of SAGE which means we purchase the
electricity to power the site. One of the
initial steps to reduce the carbon intensity
of SAGE was to review the electricity
procurement strategy. As of the second
quarter of 2021, the electricity used to
power SAGE is now generated entirely
by wind and hydro, which means we have
radically reduced the carbon emissions
associated with powering the site.
Historically, SAGE has been Wood’s
biggest emitter of scope 2 emissions
globally and so changing the procurement
strategy has a signiicant impact. To
put this into context, the switch will
reduce the scope 2 emissions of our
Operations business by a huge 43%, whilst
reducing Wood’s global scope 1 and 2
emissions by 7%. In total we will save
around 12,600 tonnes of carbon dioxide
emissions annually.
Carbon performance
Total global greenhouse gas (GHG) emissions for Wood for the period
01 October 2020 to 30 September 2021:
75,629
tonnes of COe
A total split of emissions is shown in the table below.
Global GHG emissions and energy use data for period 1 October 2020 to 30 September 2021
2020-21 2019-20
2018-19
Emissions from:
Wood UK
Emissions
Wood Global
Emissions
Wood UK
Emissions
Wood Global
Emissions*
Wood UK
Emissions
Wood Global
Emissions
Activities for which the Company own
or control including combustion of fuel &
operation of facilities (Scope 1) / tCOe
3,745 46,667
3,789 57,619 10,174 78,084
Purchase of electricity, heat, steam and
cooling purchased for own use (Scope 2,
location-based) / tCO
e
16,904 45,266
18,124 53,839 28,106 101,503
Purchase of electricity, heat, steam and
cooling purchased for own use (Scope 2,
market-based) / tCO
e
3,927 28,962
16,480 51,424 22,105 95,501
Total gross Scope 1 & Scope 2 emissions
(location-based) / tCO
e
20,649 91,933
21,913 111,458 38,280 179,587
Total gross Scope 1 & Scope 2 emissions
(market-based) / tCO
e
7,672 75,629
20,269 109,043 32,279 173,585
Energy consumption used to calculate
above emissions (MWh)
91,315 345,537
95,356 408,158 109,862 582,771
Company’s chosen intensity ratio: tCOe
(gross Scope 1 & 2, location-based) /
$100,000 revenue
2.70
1.42
2.37
1.48
3.31 1.82
Company’s chosen intensity ratio: tCOe
(gross Scope 1 & 2, market- based) /
$100,000 revenue
1.00 1.17
2.20 1.44
2.79 1.76
Total Scope 3 emissions / tCOe - - -
n/a
1,524,919
-*Restated
GHG Emissions Methodology
Reporting period – our reporting period covers 1 October - 30 September. This approach reduces reliance on estimation to increase the accuracy of reporting.
Reporting boundaries – our emissions are reported within an operational control boundary.
Scope 3 categories material to Wood – Purchased Goods and Services; Capital Goods; Fuel and Energy Related Activities; Upstream Transportation and
Distribution; Waste Generated in Operations; Business Travel; Employee Commuting (including emissions relating to our employees working from home);
Downstream Leased Assets.
Scope 3 emissions cannot currently be broken down to the UK level because a signiicant proportion of these emissions are estimated from spend information
which cannot be broken down by geography.
A market-based methodology is utilised to report progress against targets.
We have used accepted methods of calculation based on the WRI Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised
edition). National conversion factor guidelines (e.g. Environmental Protection Agency, Environment Canada, DEFRA) have been utilised where appropriate.
2020 conversion factors have been utilised throughout the 2021 reporting period.
Building a sustainable business
continued
Our 2021 emissions have fallen by
31%. This is partly due to the actions
undertaken in line with our carbon
reduction strategy but also the impact
of the Covid-19 pandemic. Six months
of our 2020 data was affected by the
restrictions put in place as a result of
the pandemic. For 2021 the full year’s
dataset has been impacted.
This has resulted in a 56% reduction from
our 2019 baseline towards our goal of a
40% reduction in scope 1 and 2 emissions
by 2030. The reduction was achieved
without the use of carbon offsets.
Our 2021 scope 1, 2 and 3 emissions
have been externally veriied by Carbon
Intelligence in line with the requirements
of ISO 14064-3.
Wood’s carbon emissions inventory is
based on actual data (with the exception
of certain scope 3 categories where
actual data is currently not available), this
generates signiicant amounts of data
points covering our global operations.
Following issues with our previous
provider we re-platformed our data
to a new carbon reporting system in
early 2021, giving better granularity and
functionality supporting a more in-depth
veriication and validation processes.
Our carbon data was also mapped over
to the new organisational structure
as part of the re-platforming process.
During the internal validation of the
carbon data and organisation, several
anomalies were encountered. Following
exhaustive investigations, we identiied
our previous provider had transcribed
emissions factors into the system
incorrectly generating a systematic error
in two data sets. We have now corrected
this in the system and subjected all
data to a 3rd party veriication process.
This led to the identiication of an
overstatement in the carbon emissions
reported for 2020. The 2020 data has now
been veriied and validated leading to the
need to restate emissions for 2020 only.
Strategic report
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Annual Report and Accounts 2021
55
John Wood Group PLC
Annual Report and Accounts 2021
54
Governance Financial statements
Case Study – Wood and ReNew
ELP partner on landmark
hydrothermal plastic recycling
facility
Wood has entered into a partnership with
ReNew ELP to develop the world’s irst
commercial-scale plastic recycling plant
using an innovative advanced recycling
process in the north east of England.
The plant will use HydroPRS™
(Hydrothermal Plastic Recycling Solution)
to recycle end-of-life plastic waste into
hydrocarbon feedstocks, for use in the
manufacture of new plastic products and
other materials; diverting plastic away
from the natural environment, decoupling
plastic manufacture from fossil resource,
and reducing CO
emissions. Wood will lead on the delivery of
engineering, procurement, and
construction (EPC) solutions for the
new facility. Upon commissioning of the
irst phase, the plant will be capable of
processing up to 20,000 tonnes of waste
plastic each year, rising to 80,000 tonnes
on site completion with an estimated
annual saving of 120,000 tonnes of
CO
emissions, when compared with
incineration.
Richard Daley, Managing Director, ReNew
ELP said: “We are delighted to announce
our partnership with Wood which marks
one of the most signiicant stages in this
vitally important project. The plant will
be the irst of its kind in the world and
marks a landmark event for the recycling
industry and for the environment.”
Building a sustainable business
continued
Energy eficiency
In 2021 our Real Estates Services team
was restructured and a new role, Director
Global Workplace and Sustainability, was
created. A core objective of this role is
a drive towards embedding sustainable
practices throughout our global real
estate portfolio which includes a primary
focus on energy eficiency and GHG
emissions reduction. In addition, the role
has created a singular focal point for
addressing energy and emission related
actions and is now a key member of our
Climate Change Focus Group, the team
responsible for the delivery of our carbon
reduction strategy.
An immediate priority was to ensure that
our global property portfolio database
is aligned with our carbon reporting
software and to ensure that the
energy usage being reported currently
is an accurate relection of our global
operations.
The Real Estates Service Team continue
to rationalise the Wood property
portfolio, consolidating wherever possible
to suit business requirements and provide
eficiencies. For our remaining portfolio,
energy audits are to be carried out to
ensure our active ofice portfolio is as
energy eficient as possible. Throughout
2021 energy audits were undertaken as
a pilot study, on properties within the UK
and presented to senior management
with plans now underway to extend this
globally.
Work has also been undertaken to
improve governance with the creation
of a new Global Workplace Design and
Sustainability Standard and a separate
document concentrating solely on Energy
Management Standards. Inclusion of
these documents on the Wood Business
Management System will ensure that the
business is fully advised on best practice
and procedure regarding sustainability
throughout the entire property lifecycle,
from initial design to the occupied
workplace. These documents will go live
in early 2022.
The Climate Change Focus Group
continue to work closely with their
colleagues in Supply Chain on our
shift to procure renewable electricity
and additionally ensure that any new
property acquisition is supplied with
renewable electricity as standard with
dedicated metering, where appropriate.
Climate change risks and
opportunities
To demonstrate our commitment
to global efforts to tackle climate
change, Wood participates voluntarily
in the annual Carbon Disclosure
Project (CDP) questionnaire. The
CDP is an independent, not-for-
proit organisation and the largest
published registry of corporate
GHG emissions in the world. Our
involvement in the scheme allows us
to demonstrate Wood’s resilience to
climate-related risk, the opportunities
we see arising from climate change
issues and the structure in place to
ensure governance in this area. CDP's
disclosure platform provides the
mechanism for reporting in line with
the TCFD recommendations, Wood
submits annually to CDP Climate
Change and seeks to continually
improve disclosure, particularly in our
approach to climate scenario analysis
and our emissions reduction efforts.
In 2021, we submitted our fourth
submission to CDP Climate Change
as Wood, building upon a long history
of participation in the scheme,
receiving a disclosure score of ‘B’ for
the second consecutive year.
Wood’s process for identifying,
assessing and responding to climate-
related risks and opportunities is
governed by our risk management
process and framework, that
feeds into our principal risks and
uncertainties reviewed by the Board
and our Executive Leadership Team.
The Board has responsibility for
identifying the nature and extent
of the emerging and principal risks
faced by the business, for performing
a robust assessment of those risks,
monitoring and reviewing the risk
management and internal control
systems and providing oversight of the
processes that management follows.
See page 68 ‘Managing our Risks’ for
more detail.
As a result of the Board’s oversight and
assessment of the risks, climate change
is currently relected in two of Wood’s
principal risks:
•
Strategic agility - relating to the scale
of growth in energy transition, industrial
decarbonisation and built environment
and the ability of Wood’s strategic plan
to keep pace and deliver growth from
these market trends
•
ESG strategy and performance -
relates to our ESG strategy and
performance, including in relation
to climate change impacting our
attractiveness as an investment
proposition for our employees,
investors, lenders, communities, and
other stakeholders
On an ongoing basis, emerging climate
change risks are identiied through regular
business risk register reviews. Where
there is noteworthy change these are
communicated to leadership through
monthly leadership reporting and
discussed with SSABE as appropriate.
For further details on how we categorise,
deine and mitigate risks refer to page 68,
‘Managing our Risks’.
In 2021 Wood appointed a President of
Sustainability, this new role acknowledges
the ever-growing importance of Wood’s
response to ESG and climate change. The
President brings improved co-ordination
and transparency of Wood’s climate
change and ESG risks and in 2021 was
responsible for the establishment of an
ESG risk management framework which
includes a climate change risk register,
developed with input from multiple
stakeholder groups’ risk management
frameworks.
We recognise the risks associated with
climate change to our business, however
we also see signiicant opportunities from
our strategy that is aligned to delivering
solutions for a net-zero future.
In 2019, as part of our strategic planning
process, we undertook qualitative scenario
planning exploring the pace and depth of
the low-carbon energy transition required
to meeting Paris Agreement targets.
During 2021 we continued to assess the
risks associated with climate change to
our business and review our actions to
mitigate them. Moreover, we continued
to see signiicant opportunities from
our strategy, and we used external and
internal climate change and path to net-
zero scenarios (ranging from 1.5 to 4
º
C) to
support a quantitative assessment of our
medium-term outlook.
As results of these assessments, we have
identiied a comprehensive list of risks
and opportunities in our climate change
risk register and the top ive risks and
opportunities related to climate change
are shown in the table below. In addition,
they are informing our actions as we
continue to execute our business plans and
reine our strategy. Speciically, these are:
•
Ensuring our business is inancially
resilient across a range of market
scenarios with respect to the pace,
scope and scale of energy transition
changes
•
Enabling our business model resources
to be optimised in response to speciic
short to near-term market and
geographical opportunities
•
Supporting our clients with
differentiated service offerings,
engineering solutions and delivery
capabilities to help them meet their
individual climate-related net-zero
targets and low-carbon product needs
Leadership (A/A-):
Implementing current best practices
Management (B/B-):
Taking coordinated action on climate issues
Awareness (C/C-):
Knowledge of impacts on, and of, climate issues
Disclosure (D/D-):
Transparent about climate issues
A-
B
B-
C
C-
D
D-
A
Wood principal risks
ESG risk management framework
Consulting risk register
Projects risk register
Operations risk register
HSSES risk register
E&C risk register
Climate change risk register
Human rights risk register
Environmental risk register
Risks Opportunities
•
Undertaking high carbon projects that are inconsistent with
Wood’s positioning of pivoting to support clients in their
pursuit of net-zero and decarbonisation, giving rise to a
risk of a loss of investor conidence and exposing Wood to
disinvestment in the fossil fuel industry
•
Energy transition and industrial decarbonisation markets do
not generate suficient revenues required to meet targets
and/or Wood’s ability to attract or retain the appropriately
skilled workforce results in an inability to compete for energy
transition and industrial decarbonisation work effectively
•
Failure to meet carbon targets through lack of engagement,
investment and/or accountability, resulting in Wood being
unable to effect behavioural change and giving rise to risks
of environmental harm and loss of stakeholder conidence
•
Increased client scope for decarbonisation services. The
current global aim of attaining a maximum of 1.5
º
C of
warming requires investment in energy transition and
eficiency and this provides Wood with opportunities
to deliver growth in these areas and diversify our client
portfolio. Recognising the scale of opportunities for Wood
from positive trends and its leading positions in energy
transition and industrial decarbonisation, the strategic
review of the built environment business in November 2021
also focused on assessing how best to allocate capital and
resources to take advantage of these opportunities
•
Access to competitive lending rates. The increasing adoption
of the Principles of Responsible Investment and incorporation
of climate change considerations into capital allocation
decisions provides an opportunity for Wood to continue to
access the most competitive lending rates as a result of its
strategy aligned to delivering solutions for a net-zero future
and appropriate management of our own ESG risks. Our
recently agreed $600m term loan backed by UK Export
Finance and $1.2bn revolving credit facility are clear examples
of this. In addition to inancial covenants, both facilities
have KPIs linked to growing energy transition revenues and
reductions in carbon emissions
An index of our disclosures against
the TCFD recommendations is
available on our website:
woodplc.com/tcfd
Strategic report
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Annual Report and Accounts 2021
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John Wood Group PLC
Annual Report and Accounts 2021
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Governance Financial statements
Develop
Developing our people to be able to do
their job today and in the future is critical
to our success. In response to the ongoing
challenges of the pandemic, we have fast-
tracked our journey of virtual training for
employees, by signiicantly increasing the
content available on eLearning platforms,
accessible in multiple languages. We
have been able to demonstrate our
commitment to enhancing skills, and
responding to feedback from our teams
in the employee engagement survey, in
numerous ways during the year, including:
• Over 8,000 colleagues participated
in personal development webinars,
with the most popular topics being
individual resilience for effective
performance and leading through
uncertainty and change
• We have three tiers of leadership
development:
•
In 2021 we successfully launched
our ‘Stepping into Leadership
Programme’, which focuses on
leadership skills and is aimed at those
employees who have recently moved
or are about to move into their irst
leadership role. To date approximately
200 colleagues have participated,
with another 700 plus scheduled to do
so in 2022 and beyond
• ‘Leadership Excellence Programme’
supports those at the next tier in our
leadership structure, identiied as
high potential, and includes strategic
thinking, change agility, digital
leadership, and how to become an
inspirational leader. To date 150
colleagues have completed or are
attending the programme, with
another 100 registered to attend in
2022 and beyond
• ‘Leading Beyond’ launched in Q4 to
15 senior leaders, and supports them
to inspire others, be inclusive and
engaging, unlock growth enablers,
transform culture, and accelerate
operational excellence in everything
we do. A further 180 leaders are
planned to attend in 2022
• One of our key enterprise objectives in
2021 was to demonstrate leadership
in inspiring 100% of our colleagues
to be inclusive every day, leading to
sustainable, cultural change. During
the year we carried out conscious
inclusion awareness training for over
36,000 people across Wood, using a
variety of mediums, translated into
several languages. This has been
positively received and has provided
the catalyst for our colleagues to
engage in rewarding conversations
that further our understanding of
different lived experiences. This
enhances workforce dynamics making
Wood a better place to work, and in
turn enables people to give of their
best in terms of diversity of thought
for developing engineering, project,
and business solutions
• Project Management Academy (PMA)
has been launched and globally
deployed to all project managers (PM)
and project controllers (PC). One or
more courses have been offered each
month via live or eLearning platforms
with an average of more than 400
colleagues participating in each course.
Courses covering PM fundamentals,
delivery excellence, start-up practices,
risk management, governance &
assurance, quality management, and
leadership in technical safety are just
a few of the topics delivered this year.
As part of the Academy, we have also
rolled out competence frameworks and
assessment tools to all participants
• Mentoring app – to support our
learning and growth culture, and build
greater collaboration, our people
development and digital & technology
teams collaborated to develop a
global “MentorConnect” app. The
app enables widespread access to
mentoring for our employees and
works by providing mentees with a list
of suggested mentors based on their
proiles. Mentees can then review the
proiles of the suggested mentors and
send a request for mentoring directly
through the app. We now have 435
mentors and 438 mentees who have
created a proile and completed the
training, and 155 mentoring matches
registered in the app. Ongoing
engagement campaigns continue to
increase usage. We aim to offer this
to our trade and craft population, who
work in the ield, via the use of our new
ConnectedWorker app. In a year when
most of us have continued to work
remotely, this additional source of
connection has been invaluable
•
Launch of early careers hub - as early
career professionals take the irst
steps on their career journey with
Wood, there is so much to learn and
absorb. The hub brings together all the
information this community needs to
navigate the business and the irst steps
of their career with Wood, with links
to the Company induction, mentoring
programmes, learning tools, our
developing professionals network, career
support and a wealth of stories from
colleagues at all levels of the business
The environment we operate in is dynamic and so much
around us is evolving including the energy landscape, societal
expectations, and the speed of digitalisation.
We are a people business, and our people will always be our differentiator, they are
at the heart of all we do and all we aspire to achieve. Our strategic priorities will only
be realised if Wood has the right people, in the right place, at the right time and at
the right cost. We need people with the appropriate skills and behaviours aligned to
our culture; people who are adaptable, have learning agility and are engaged with a
customer and community focus. It is our people who are the key to Wood’s success and
our people strategy is centred around four key themes:
As an inclusive and equal opportunities
employer, Wood promotes an
environment that is free from all forms
of unlawful or unfair discrimination.
We value diversity of thought and as
such value the wealth of diversity of
all people across the globe. We seek to
treat all people fairly and with dignity
and respect and consider applications for
employment from all levels of ability and
all areas of society.
Ensuring fair, competitive, and
transparent reward is key to supporting
attraction and retention, aligning our
employees’ needs with our business
objectives. Reward frameworks align to
business strategy, ensure our values are
maintained, and a balance is achieved
between the short and long-term;
activities include:
• Global job and grading framework
underpinned by a formal job evaluation
methodology, ensuring fair application
of reward for jobs of equal value
•
Competitive base salaries, with salary
structures mapped to local market
data and our job frameworks
•
Leadership incentive plans designed
to deliver exceptional results short
and long-term, balancing out annual
objectives with the requirement to align
to and deliver the longer-term Wood
strategy, with the right behaviours
• Employee spot bonus plans to
recognise achievements over and
above core responsibilities
• Global employee share plan already
offered in 17 countries, with Brunei
and Kuwait being added in 2022. In
addition, in 2021 we launched the
Share Incentive Plan in the UK. 10% of
our global eligible population enrolled
in the plan during the year, up from
8% in 2020. For more information see
woodplc.com/employeeshareplan
•
Insured beneits and retirement plans
continuously reviewed to ensure they
are fair, inclusive, relevant, sustainable,
and offer great value and protection for
our people
People
Building a sustainable business
continued
Attract
Wood is a leader in an ever changing
business environment, focused on the
attraction of future skills required to
lead in energy transition for years to
come. Using digital innovation, market
intelligence, and data driven analytics
to discover and attract inclusive and
diverse talent communities, Wood can
fulil our clients’ requirements for today
and the future. We are committed to
providing an engaging candidate and
employee experience which promotes an
internal culture of enhanced employee
performance and retention, leadership
development, and long-term partnership
with our clients. Our focus on internal
redeployment provides consistency
and skills predictability for our projects
and our people; and our focus on
hiring locally wherever possible ensures
we promote nationalisation in the
communities we serve.
Attract
Engage
Develop
Retain and sustain
Strategic report
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Annual Report and Accounts 2021
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John Wood Group PLC
Annual Report and Accounts 2021
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Governance Financial statements
Engage
In response to feedback from the 2020
employee engagement survey, we
launched our engagement framework,
designed to ensure our employees
have a consistent experience in their
connections with Wood leaders. This
minimum engagement standard ensures
we are continuously connecting with
our people and listening to the heart of
our business. Business units are able to
adjust the framework to suit speciic
requirements and we have also created a
reward engagement framework, which is
detailed on page 116.
In our global employee engagement
survey in October 2021, we asked our
people to speak up and share what
works well and where we can improve
the employee experience. Over 50% of
our people from across our sites and
ofices took the opportunity to make
their voices heard – nearly 18,000
employees, representing 37 countries (up
from 13,000 employees in June 2020).
A summary of results was shared
with the Board in November, with
more detailed information to follow in
2022, to enable them to continue to
measure and monitor the effectiveness
of our culture; challenge management
on where improvements need to be
made; and to formulate topics for
discussion and deeper feedback with
the wider workforce via our Listening
Group Networks (LGN). Our employee
net promoter score has improved
signiicantly since our irst engagement
survey in Q3 2018, with the top scoring
areas being:
• My manager provides me with the
support I need to complete my
work and communicates openly and
honestly with me
• People of all backgrounds have the
same opportunities at Wood
• Wellbeing support from line managers
– for work and personal matters
We added questions relating to diversity,
equity, and inclusion for the irst time in
2021 and were pleased to see positive
feedback relating to our commitment
to improving diversity and creating a
place where everyone feels like they
belong. It was also gratifying to see
positive improvement on wellbeing and
associated management support, as
we have made great improvement in
our approach to wellbeing, particularly
in the resources and support we provide
to our teams. Our people appreciate the
“open-door” policy that their managers
offer, and the implementation of our
lexible hybrid working policy, as a result
of previous employee feedback, which
supports greater work life balance –
this has been of particular beneit as
the impact of Covid-19 continued to be
experienced around the world.
We seek continuous opportunities
to connect and collaborate with one
another, face-to-face, where safe to
do so, and via online toolkits. When
Covid-19 restrictions allow, we look
forward to welcoming all our employees
back into the workplace on a hybrid
working arrangement (part home, part
ofice) and gaining the full beneits to be
derived from such multi-location working.
We shared the global employee survey
results across the business in December
2021, with initial focus groups taking
place across Wood; business unit,
business grouping and functional
focus groups are scheduled for 2022.
These focus groups provide us with the
opportunity to hear more detail from
our people on the emerging themes and
enable the formation of detailed action
plans to build on our successes and focus
on those areas requiring improvement.
The Remuneration Committee members
will participate in speciic reward focus
groups and provide summary updates
back to the Board.
Our employee networks continue
to strengthen and grow, providing
a platform for our employees to
connect, learn, share views, tell us
what we’re doing well and recommend
improvements to make Wood an even
better place to work. Each network is
open and inclusive to everyone. They have
clear terms of reference, are sponsored
by a senior leader, and have an action
plan for the year, which is aligned to
our culture and inclusion ambitions. We
added a neurodiversity group during
the year to raise awareness and provide
support mechanisms for colleagues who
are neurodivergent or are supporting
family members who are.
Key accomplishments across our
networks in 2021 included:
• The relaunch of our gender equality
network, with a new name, “Equal
Footing”, and Mike Collins, Executive
President - Projects, joining Nina
Schoield, Executive President -
HSSES as sponsor. The network
expanded its geographical footprint
across Australia, India, Singapore,
Norway, Canada, Brazil, and Trinidad
& Tobago, whilst continuing to grow
in the US and UK. The community
created support groups in the areas
of perimenopause and menopause;
transgender and non-binary inclusion;
and working parents
• Wood’s Race and Ethnicity Network
(WREN) has been the fastest
growing network and is now proud
to have more than 650 colleagues
participating, sponsored by Joe
Sczurko Executive President -
Environment and Infrastructure
Consulting, supported by several other
senior leaders. WREN seeks to build
awareness of the lived experience of
Black, Indigenous, and people of colour
(BIPOC), speak up against racism and
discrimination, and create a safe space
to connect, learn, and advance ethnic
diversity and inclusion. During the year
WREN established a reverse mentoring
programme, with mentors being
more junior team members, providing
mentoring to senior colleagues. This
provides the opportunity for colleagues
to share their inclusivity and diversity
experiences and identify ways we
can continue to enhance the sense
of belonging for everyone in Wood.
The pilot programme matched 28
pairs and will be expanded in 2022.
Feedback from participants has
been overwhelmingly positive with
personal growth and understanding
of different cultures highlighted
as a key beneit. The network also
developed a “Let’s Talk about Race”
campaign which gained the attention
of external organisations such as
Scottish Enterprise, contributing to
WREN being selected as a inalist for
ALLY Energy’s “Trailblazing Energy
Superhero” award
• The We Care Network, supports
employees who are either currently
working and balancing caring
responsibilities, have done so in the
past, or want to be prepared should
they need to do so in the future.
During the year they hosted workshops
focused on the impact of Covid-19
on carers, the support they need to
effectively navigate the pandemic,
and key resources for fostering a carer
friendly workplace
Our Listening Group Network (LGN)
continues to enable our people to request
leadership updates on topics of their
choice and have their voices heard by
members of the Board and Executive
Leadership Team (ELT), with subsequent
actions identiied and implemented as
a result of the feedback. We held six
meetings during the course of 2021,
details of which are summarised in
the table below; these are a fantastic
opportunity for members of the Board
to gain greater insight into the prevailing
culture across Wood and consider any
improvement actions.
Listening Group Network agenda 2021
Building a sustainable business
continued
Month
Host(s)
Discussion topics
Example of outcomesJanuary
Robin Watson – Chief
Executive
Strategic focus for 2021,
including the Future Fit
programme, and engagement
results from an employee
survey in December 2020
• Pay equity project to review salaries for engineering disciplines
against salary bands
• Enhancement of the Learning & Development function
March
Dave Stewart – Chief
Operating Oficer
Operational Excellence and
culture progress
• Roll out of Wood’s conscious inclusion training to all employees.
By the end of the year this training was provided to more than
36,000 employees
• Launch of our new model for Operational Excellence
May
Nigel Mills and Birgitte
Brinch Madsen,
non-executive
directors; Andrew
Stewart, Executive
President - Strategy &
Development; and Nina
Schoield, Executive
President - HSSES
Future Fit programme
and sustainability
• Wood’s fourth annual sustainability week celebrations in September
• Launch of our third annual Global Cause Challenge asking our
employees to tell us what education means in their community and
providing them with the opportunity to gain seed funding for an
educational activity in their location
• Development of a training module in our sustainability
training academy
July
Lesley Birse, Executive
President - P&O;
and John Habgood,
Vice President -
Investigations &
Compliance
Ethics & Compliance team
assurance; importance of our
shared commitment to our
Code of Conduct; and focus on
future skills
• Enhancement of our Early Careers Hub which provides information
and links to mentoring programmes, learning tools, Developing
Professionals Network, career support and a wealth of stories from
colleagues at all levels of the business
• Existing skills analysis carried out and Future Skills matrices created
in digital, technical, leadership & cultural
• Development and launch of new leadership programme
September
Mike Collins, Executive
President - Projects
Growth plans, including end
markets and the solutions we
have enabled for our clients
through collaboration
• Key wins in Pulp & Paper; US Government; Hydrogen and CCUS;
Renewables EPC
November
Jacqui Ferguson and
Brenda Reichelderfer,
non-executive directors;
Stephanie Cox,
Executive President
- Operations; and Claire
Yule, President - Reward
& Mobility
Update on the Future Fit
programme, including key
successes; and an update on
reward practices, including
those for the Executive
Leadership Team
• Future Fit Survey and workshops with more than 200 employees
• Shared Service centres live in F&A, HSSE&S, P&O and Proposals
• 80% plus roles mapped to job framework with salary bands live
in over 16 countries; leaders undergoing pay equity training and
engagement; reward engagement via networks and Yammer
Other engagement activities carried out
during the year included:
• Regular communications and vlogs
from the Chief Executive and other
members of the Executive Leadership
Team to all employees
• Surveying employees on insured
beneits, leading to the introduction
of more sustainable products such as
electric vehicle purchase plans
•
Retirement plan engagement, leading to
enhanced communication toolkits and
access to alternative draw-down options
•
Quarterly leadership updates in inance,
HSSES, strategy, P&O, and operations
excellence to the top 280 leaders in the
business, providing insights into and
the opportunity to ask questions on the
company performance
Strategic report
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Annual Report and Accounts 2021
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Annual Report and Accounts 2021
60
Governance Financial statements
Retain and sustain
Caring for our people continues to be our
number one priority. During 2021, in light
of the ongoing impacts of Covid-19, we
have seen a continuation of working from
home for the majority of our ofice-based
colleagues, with a gradual return to the
ofice for some where it has been safe
to do so, in line with local guidelines. The
implementation of our Flexible Working
Policy has further enhanced our ability
to offer our people the opportunity to
adopt a hybrid-working pattern, enabling
a better work life balance. This has been
widely welcomed and strengthens our
ability to attract and retain a highly skilled
team. For our on-site staff we have
implemented enhanced safety measures,
supported by greater use of technology to
reduce physical contact wherever possible.
These “new ways of working” are evolving,
and we continue to strengthen our ways
to connect with one another to maintain
the sense of belonging and team Wood.
Being part of the Wood family means
our people are part of a team that cares
about their wellbeing, cares that they
have someone who listens, cares that
they have all the support they need to
succeed and cares about them and those
closest to them. Our Employee Assistance
Programme (EAP), continues to play a
signiicant role in our commitment to the
wellbeing of our people. The services are
provided through two vendors, one for
the UK and one for the rest of the world.
The EAP underpins many of our wellbeing
activities and provides our employees,
and their families with 24/7 support, 365
days of the year, and access to practical
information and counselling on a variety
of topics including improving relationships,
managing stress, career success,
parenting, managing workplace pressure,
improving esteem and conidence, and
maintaining physical health.
Our wellbeing sharepoint site, Living Well
at Wood, continues to grow in popularity,
supported by our wellbeing community
of practice and over 370 wellbeing
champions distributed across all locations
in Wood. In response to feedback from
our employee engagement surveys, at
the beginning of December we launched
our Mental Wellness strategy, a six-point
approach to mental health management,
promoting our role as individuals, leaders,
and managers, supporting sustained
and resilient mental wellness for us all.
It is aligned with six strategic themes:
leadership, positive culture, prevention,
early intervention, support, and mental
health crisis management, and will be
implemented over the next three years.
We remain committed to applying the
best available mental health approaches
to beneit our Wood community, and
we now have the framework needed
to provide a business-wide, effective,
eficient, and sustainable approach.
Wood is committed to transparent,
internally fair, and externally competitive
reward. Our reward roadmap launched in
2020 and referred to in last year’s annual
report, sets out the steps towards greater
transparency and includes global pay
equity reporting which was implemented
in 2021. Pay equity reports are directly
available to line managers, incorporated
in our annual salary review process, and
will continue to be rolled out as part of
our people system implementation on
a country-by-country basis. The reports
enable line managers to review the pay of
their people against salary bands which
are speciic to the function and country
of work; ensure no bias in the application
of our pay practices; and to be able to
engage in open, honest dialogue with their
people about why they are paid what they
are. Other initiatives implemented this
year include:
• Our accreditation as a Real Living
Wage employer in November 2021,
supporting Aberdeen, UK, as an
ambassador in its ambition to become
a Real Living Wage city. A part of the
accreditation process is to ensure
all contracted workers (third party
employees of service providers e.g.
security oficers, canteen staff, and
cleaners), are also paid the Real Living
Wage. To do this we have ensured
that new suppliers will comply through
amendments to our supply chain code
of conduct which states, “Wood is a
Real Living Wage employer accredited
by the Living Wage Foundation. Supply
chain partners in the United Kingdom
must not pay less than the Real Living
Wage to all their employees and
contractors when working for Wood”
•
The completion of a pay equity
review, as part of our Future Fit
programme. The review analysed
salaries of over 3,500 employees
in engineering, engineering design,
and project management, in our
Projects and Operations business
units across six countries. This
involved mapping individuals to our
deined technical job frameworks
and analysing individual salaries
to our benchmarked salary bands
in each country. The outcome and
recommendations were approved by
the Future Fit Steering Committee
in June, with regular updates and
engagement provided to employees
via the Wood news channel, Yammer
and email. Our analysis found that
the global average compa ratio
(salary to median of the salary range)
was 101%, with no gender bias,
aligned to our reward strategy – this
outcome clearly demonstrates strong
alignment with our pay philosophy to
pay at median levels
Key beneits derived from this
workstream included:
• Improved education and awareness
of our reward practices, and
enhanced embedding of structure,
governance, and assurance, ensuring
fair pay for all our people
•
Enhanced collaboration and
conversations with line managers on
pay equity and fair, unbiased practices
• Assurance that our reward
philosophy and practices are working
and will be enhanced by further
rollout of Oracle People
•
Engaging with our employee networks
on reward equity, providing transparency
around the internal and external factors
affecting pay and enabling live feedback
via interactive polls
• The 2021 UK gender pay gap, covering
5 entities and 5,587 employees
shows that the overall Wood pay gap
reduced to 26.1% from 27.7%, whilst
the bonus gap increased from 4.6% to
38.2%. During the same time female
representation has decreased across
our UK business from 25% to 23%.
Although female representation is in
line with 2019 percentages, we believe
the reduction in female representation
from 2020 is due to the impact of
the pandemic and several TUPE
transfers in for offshore contracts with
all-male teams. The pay and bonus
gap numbers excluded furloughed
employees in line with the reporting
rules. Had furloughed employees (more
of whom were lower paid males) been
included, the pay gap would have
been 25.2%. The increase in the bonus
gap is driven by the fact that there
was no bonus paid to managerial and
leadership levels in 2021, for the 2020
performance year, of which females
make up a higher percentage. Bonus
payments made were predominantly
to offshore and site employees, who
were all male, and are driven by our
clients and collective agreements. For
the limited number of our onshore,
ofice-based employee population
paid a bonus, 7.5% were female and
7.5% were male, demonstrating no
bias. We continue to focus on pay
equity – fairness of pay for those
carrying out the same job, in the same
location, with the same skills and
experience, regardless of diversity. We
have made signiicant progress during
2021 on our commitment to fair pay
for all our people, (as highlighted in
the remuneration section on page
116). Full details can be found on the
Government website, categorised by
industry sector, as determined by the
Ofice of National Statistics (ONS), or
on the Company website
We continue to celebrate success. We are
particularly proud of our Inspire awards
which recognise outstanding employee
contribution across our business. For
our third awards in 2021, over 990
nominations were received from 32
countries. Judging panels, comprised of a
diverse group of 30 judges from 5 regions
selected winners from Australia, Canada,
Papua New Guinea, UK, and USA in
categories of: Championing Sustainability;
Driving Inclusion & Diversity; Exceptional
Customer Service; Excellent Financial
Performance; Impactful Innovation;
Inspiring Teamwork; Marvelous Mentor;
Outstanding Ethical Conduct; and Safety
Shield. Commendation certiicates were
sent to over 4,600 individual nominees
and team members.
Our overall People’s Choice Winners,
voted for by our global employees, were
Angus Armstrong and Brian Tiu, two
graduates from our vibration dynamics
and noise team in Brisbane and our
Safety Shield category winners. On a site
visit they found a hydrocarbon gas leak.
Although the initial reading showed a
level of gas that could not be ignited, it
suggested that there would be a much
higher gas fraction closer to the source of
the leak. At this point, Angus and Brian
demonstrated care by stopping work and
reporting the leak to the client operator,
asking them to investigate further. The
source of the leak was identiied, and a
second separate gas leak location found.
The operator then shut down the unit
and immediately rectiied the leaks. By
following safe process and challenging
the client to carry out a full investigation,
due to the level of risk, Angus and Brian
raised The Shield. The judges of the
award commented “this intervention by
two junior members of the Wood family
was outstanding and is exactly the type
of behaviours we want to see across the
organisation. The actions of Angus and
Brian reinforce the Wood values and
set a great example for other members
of their team and the wider global
organisation. The clear application of two
key elements of The Shield (engage and
intervene) by Angus and Brian potentially
prevented a signiicant safety incident
and underscored the importance of living
the Wood values every day.”
Our Safety Shield awards recognise those
who go above and beyond for HSSES,
with quarterly winners in 3 categories;
Prepare, Engage, and Intervene. The
purpose of the awards is to:
• Showcase exemplary behaviours and
encourage the right behaviours
• Increase visibility of best practice,
enabling others to review and
implement
• Reward personnel at a global level,
demonstrating the use of ‘Intervene’
positively
• Highlight the positive HSSES culture
and create a sense of community
• Promote The Shield to encourage
global use across the business
Our ambition is to create the best
working environment and establish
a culture where employees are highly
engaged and feel supported by the
Company and their line manager. Our
focus on inclusion & diversity (I&D), is
fundamental to our efforts in creating a
great working environment and culture.
Our approach is further supported by
driving personal ownership and a focus
on educating ourselves and each other,
empathising with our colleagues and
engaging in activities and conversations
relating to I&D. Whilst embracing
diversity and creating an inclusive working
environment is implicit in our values and
behaviours, we recognise that we are still
on a journey to truly achieving this. This is
a shared responsibility of all of us which
will take positive intention and conscious
action to achieve and sustain.
The Board continues to maintain
a quarterly focus on I&D matters,
particularly with regards to the impact
I&D has on Wood’s culture, and to
ensure diverse talent is identiied for
succession and appointed into positions
of leadership. As outlined above a key
success in 2021 was the training provided
to over 36,000 employees, including
Board members, on conscious inclusion, in
support of one of our nine sustainability
goals – to educate and inspire 100% of
our colleagues to be inclusive everyday by
the end of 2021. The training encouraged
people to listen to one another and share
experiences to help build understanding
from all perspectives.
We provide platforms that are inclusive
of all and celebrate the diversity we
bring together, our networks are a place
for our employees to connect, learn,
share views, tell us what we’re doing
well and recommend improvements
to make Wood an even better place to
work. In 2021, we launched Myriad, (My
role in inclusion and diversity) – this is
about constantly educating ourselves
and each other to empathise and be
truly engaged in the conversations and
with our actions, including:
• Driving our I&D activities with
leadership champions and having allies
at all levels of Wood championing
those in underrepresented groups
•
Fostering a work environment and
culture where inclusion is delivered
structurally and behaviourally,
through policies, training, and
communication plans
•
Attracting and retaining key talent
from the full spectrum of the global
talent pool, unlocking diverse talent and
matching people to best opportunities
for their growth within Wood, aligned
to representation targets
• Empowering our employee network
structure which facilitates employee
voice and feedback loop, and
continuously evolve our approach
based on internal and external inputs
•
Monitoring and measuring progress
using effective and reliable methods,
including key demographic data, setting
targets to improve representation in key
areas and engagement outcomes
We continue to monitor the gender
balance of our leadership and
management teams quarterly and, as
detailed last year, have a desire to be
able to provide aggregated ethnicity
reporting; this has proven complicated
from a legal point of view, but we hope to
be able to ask our people to submit their
data on a voluntary basis from Q2 2022 in
several countries. As previously disclosed,
as part of our sustainability targets, we
are committed to continuing to improve
gender balance with a target of 40%
female representation in senior leadership
roles by 2030; at 31 December 2021, we
had 33% female leaders, up from 31% in
2020. The FTSE Women Leaders Review
report, measuring female leadership
representation in the FTSE 350 for Board,
ELT, and direct reports, published in
February 2022, showed that Wood has
improved to 100th position from 118th
position, with 40% of our Board and 24%
of our combined executive committee and
direct reports represented by women.
Our Sustainability Report highlights the
protection and enhancement of human
rights as fundamental to a sustainable
business. We are committed to stamping
out all forms of modern slavery and
human traficking in our business and
across our supply chain and upholding the
Universal Declaration of Human Rights
(UDHR); see more information:
woodplc.com/modernslavery
Wood remains committed to working
fairly, transparently, and ethically through
the trusted partnership of “Building
Responsibly”, demonstrated in our
business wide sustainability targets to
ensure 100% of our labour suppliers
sign up to and comply with our Building
Responsibly Principles by 2025; and
100% of our suppliers embed Building
Responsibly Principles in their supply
chains by 2030.
Building a sustainable business
continued
Gender split at 31 December 2021
Leadership Team**
Overall
Male Female
Key:
Board
ELT*
80%
20%
60%
40%
67%
33%
67%
33%
*inclusive of the executive directors
**inclusive of three levels of leadership below ELT
Strategic report
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Annual Report and Accounts 2021
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Annual Report and Accounts 2021
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Governance Financial statements
We recognise the importance
of building strong and
lasting relationships with
our stakeholders and this
is achieved through social
interaction; so the way Wood
shows up in communities
where we live and work
matters, after all, we are all
part of a community.
Working with our communities we can
create sustainable value supporting
the people and places in our shared
communities. By developing mutually
beneicial relationships we have the power
to improve lives and reduce our impact
on the planet all of which contribute to
global sustainable development.
We strive to be a trusted community
partner in all that we do and recognise
our responsibility to contribute to the
local economy and social fabric of the
communities that we live and work
in. Our commitment to understand,
engage and evolve as a community
partner truly demonstrates our values
and culture at Wood.
Our approach
Through supporting and encouraging
actions of our employees, we aim to
ensure Wood’s contribution goes far
beyond inancial support and we seek to
lift up the communities around us, using
our energy, expertise and passion to
improve lives.
Based on a ‘Think Global, Act Local’
methodology, Wood’s community
investment strategy sets out to inspire
and engage as many of our employees
as possible, encouraging them towards
measurable actions to support local
communities. The strategic pillars of
our community investment programme
consist of matching our employees’
fundraising efforts, strategically uniting
our people around a single Global Cause,
and placing a focus on the actions we
take through volunteering our time, skills
and expertise.
The strategy is governed by our
Community Investment Committee
which oversees each element of the
programme through monthly committee
approval sessions, chaired by the
Group Sustainability Manager and
with representation from each of our
business units.
In 2021, as part of Wood’s evolving
sustainability strategy we announced
a long-term target for community
investment to drive engagement across
the business in support of our Global
Cause. We have committed to giving
our time, resources and funding to
contribute $10 million to our Global
Cause in the period from January 2020
to December 2030.
$10 million
to our Global Cause by 2030
We believe that establishing a target
focused on our Global Cause; currently
SDG 4 and quality education, unites
Wood to demonstrate our collective
impact. It also provides the opportunity
to collaborate with a wide range of
stakeholders such as community groups,
suppliers and partners, to deliver value
beyond our monetary target.
In addition to launching our community
investment target, we undertook a
number of actions during 2021 in support
of the wider sustainability strategy with a
focus on developing procedures and tools
needed to reach our goal and improve
reporting. These actions included:
•
The launch of a revised group wide
sustainability action tracker which
is speciically designed to capture
donations of time, resources and money
•
The creation of business unit strategic
plans to support the delivery of our goal
and complement the group strategy
• Updating our community investment
governance to better guide our
employees and business in contributing
to our goal, including community
budget management and funding
request processes
As a community partner we commit to:
Understand >
• Our community
impact and
opportunities
• Our key stakeholders
• Local heritage and
context around human
rights
Engage >
• With key stakeholders
and develop, where
possible, local
procurement plans
• With clear
communication
including methods of
reporting
• On local development
and investment plans
Evolve >
• The effectiveness of
plans and community
perception
•
How we review
and respond to
community incidents
•
How we benchmark
our performance,
monitor and evaluate
Our contribution in 2021
Across the three pillars of our community
investment strategy, in 2021 our
employee and business charitable
contributions totalled $1,380,137,
including a of $738,992 towards our
Global Cause goal.
Aligned to our approach in reaching our
Global Cause goal of $10 million by 2030,
our improved data collection process
now includes direct monetary donations,
the value of resources donated and the
monetised value of volunteering time.
Employee
matched funding
We are proud of the efforts and
lengths our people go to in support of
their local communities and charitable
organisations close to their hearts.
We believe these actions should be
recognised and celebrated and our
employee matched funding programme
enables us to do this.
Our matched funding programme is
the core inancial support given to our
global employee base, with 100% of
the amounts raised by employees being
matched by Wood, up to a speciied
limit. In recognition of the importance of
supporting individual employee efforts,
our annual community budget primarily
supports the employee matched funding
programme to ensure we reach as many
of our employees as possible.
We continued to see a reduced number
of matched funding applications during
2021 due to social distancing measures
and event delays caused by the Covid-19
pandemic. In response, our community
investment committee increased
matching limits to directly match a
greater proportion of applications and
incentivise engagement.
84
matched funding applications
$302,771
raised through the funding programme,
including
$136,262
contributed by Wood and $10,270
towards our Global Cause
85
charitable organisations supported
9,761
hours volunteered by our employees
$179,850
additional community support donations
Kiltwalk challenge
Truly leading by example, our Chief
Executive Robin Watson took
advantage of Wood’s employee
matched funding to step forward for
a walk to raise funds to support a
charity which develops opportunities
for socially disadvantaged people
across Scotland.
Robin and his teenage son took part
in the Kiltwalk, an annual event
where participants can choose from
one of three walking distances to
raise funds for their chosen Scottish
charity. Robin and his son chose
Street Soccer Scotland, a charity
providing football inspired training
and personal development as a
medium to empower people who are
affected by social exclusion.
Their efforts raised over £2,000
including funds matched by Wood.
In addition, Kiltwalk’s partners,
the Hunter Foundation, donated a
further 50% of the total raised.
Building strong communities
in Australia
Going from strength to strength,
Wood’s Annual Cycle Challenge took
place in Melbourne, Perth and Brisbane,
Australia in late March to help raise
funds for the charitable organisation
Red Dust. Now in its 9th year, the Wood
Cycle Challenge has grown bigger and
better, with more routes, more riders
and more fun. In 2021, for the irst time
the team introduced virtual ride options
for those not in a capital city. In 2021,
the team raised A$6,600 including
funds matched by Wood.
Red Dust delivers innovative health
promotion programmes in partnership
with remote communities that
encourage Indigenous youth to learn
more about health and inspire them to
live a healthy lifestyle. The organisation
provides annual one-week volunteer
placement opportunities for Wood
employees in Indigenous communities in
the Northern Territory. Wood’s work with
Red Dust supports our global efforts
to work in partnership with Indigenous
Peoples to enable a more inclusive and
equal society.
We also support Red Dust’s Strong
Young Women’s Programme which
delivers gender-speciic health messages
to young women in Alice Springs
and remote Australian communities.
Members of Wood’s gender equality
network, Equal Footing, and Wood’s
Race and Ethnicity Network (WREN)
joined forces to raise a total of A$4,228
including funds matched by Wood.
Read more about our community
investment programme on pages 64-67
of our Sustainability Report 2020:
woodplc.com/company/sustainability
Volunteering our
time, knowledge and
expertise to show up
in our communities
and demonstrate
commitment.
Wood’s central
charitable fund aimed
at matching employee
fundraising efforts
for personal choice
charities.
Chosen by our employees
and aligned to UN SDG
4 and Quality Education,
our Global Cause unites
our people around a
single cause.
Employee
matched
funding
Our
Global
Cause
Volunteering
Building a sustainable business
continued
Community
Strategic report
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Annual Report and Accounts 2021
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Governance Financial statements
Global Cause
Wood’s Global Cause unites our business
behind a single cause in support of the
UN Sustainable Development Goals and
enables us to demonstrate the power
of collective action. At the same time,
supporting a cause as opposed to a
singular charity provides the lexibility to
deliver local action in the context of the
people and places we impact.
In 2018, our people chose SDG 4 and
quality education as our Global Cause
and this has remained consistent up to
and throughout 2021. Wood’s focus on
education as our Global Cause will be
subject to periodic review and validation
by our employees over time. Aligning
our target of $10 million by 2030 to our
Global Cause rather than a speciic SDG
allows the lexibility for our area of focus
to change over time to relect the cause
most relevant to our employees and our
sustainability strategy.
2021 Global Cause Challenge
To drive funding of activities in support
of our Global Cause we run an annual
‘Global Cause Challenge’ through which
our local teams can apply for assistance
from our community fund for projects
related to our Global Cause. We expect
to contribute a minimum of $1 million
towards our collective goal through our
Global Cause Challenge. In 2021, the
challenge resulted in the approval of
26 applications across 9 countries and
donations totalling $293,613.
26
applications supported through
our 2020 annual challenge
$293,613
seed funding awarded
9
countries
Progress towards our 2030 goal
Since the start of the target period,
donations of time, money and resource
from Wood and our employee efforts,
including donations from our community
fund have contributed $1,033,736
towards our Global Cause and 10% of
our 2030 goal, with $738,992 of that
total donated in 2021.
$293,613
applications supported through our 2021
annual Global Cause Challenge
$10,270
education funding provided by Wood’s
employee matched funding programme
$183,503
direct funding reported by employees through
our group wide sustainability action tracker
$251,606
volunteer time reported by employees
through our group wide sustainability action
tracker and a Wood hourly rate applied*
The introduction of a revised group wide
action tracker has allowed our employees
to begin reporting volunteering
donations, resource and time during
2021. Volunteer time is assigned a
monetary value using a Wood employee
volunteer rate aligned to the total
employee remuneration published in our
Annual Report. In 2022, we will continue
to embed improvements to our reporting
process, including a focus on more
granular reporting across our business
structure. Furthermore, in 2022 we plan
to create tailored business unit strategies
with the aim of embedding sustainable
action and accountability across the
business. As a result of these actions we
expect to generate further momentum
towards our target going forward.
Partnering on indigenous
peoples education in
Canada
Education supports meaningful,
long-term, multi-generational
change and is integral to Canada’s
reconciliation journey with
Indigenous Peoples. Indigenous
Peoples face many barriers to
post-secondary education such
as having to relocate, lack of
guidance and culturally appropriate
curricula, inadequate funding,
as well as the ongoing impact of
intergenerational trauma. As a
result, the higher education gap
between Indigenous Peoples and
non-Indigenous Peoples in Canada
remains signiicant.
Advancing Wood’s Canadian
Indigenous Inclusion Framework,
our continued support for the
charitable organisation Indspire
seeks to address the education
gap and invest in education
for Indigenous Peoples. As an
Indigenous national charity,
Indspire invests in the education
of First Nations, Inuit and Métis
people for the long-term beneit
of these individuals, their families
and communities, and Canada. In
2020-2021, Indspire provided over
$20 million to 6,245 to Indigenous
students across Canada.
Wood has supported Indspire
for three years and we aim to
further this support in the future
through the creation of the three-
year bursary programme which
will be accessible to Indigenous
Peoples pursuing post-secondary
education.
Through the #powerofpartnership
we invest in and connect with
Indigenous People so they can
achieve their highest potential.
Supporting education and
mental health in Iraq
Mental health in the Arab world is
largely considered a taboo topic,
although, the decades of violence,
war, instability and poverty that
Iraqis have endured breeds the ideal
foundation for a mental health crisis.
Wood’s ongoing support for the
Basra Empowerment Project and
the non-proit organisation The
Canadian Aid and Development
Association (CADA) seeks
to empower orphans and
underprivileged children impacted
by war, the opportunity to attend
school and gain valuable mental
health support.
CADA’s mission is to support and
empower Iraqi orphans whose lives
have been disrupted by the ongoing
conlicts within the region. In 2021
for the second year, Wood’s Global
Cause Challenge provided inancial
support to 50 Iraqi orphans and/
or underprivileged children in Basra
so that they can continue with their
education, as well as the delivery
of a mental health workshop in
November.
In addition, the Global Cause
Challenge supported an application
from the Wood team in country
to assist the Malala Fund in
2022 as part of their ongoing
#keepinggirlsinschool initiative.
The initiative aims to provide
remote support to young girls in
Afghanistan, where it’s estimated
60% of children not in education
are girls, the non-proit Malala
Fund advocates for girls’ education
and development.
Volunteering in the Atlantic
Forest Trail
The Atlantic Forest Trail (AFT) is a trail in
the southern and south-eastern regions
of Brazil, following the Serra do Mar and
extending to the Serra Geral mountain
ranges.
For the last two years, one of our
engineering coordinators, based in
Macaé, Brazil, has worked as a volunteer
and coordinator marking trails in the
220km extreme north part of the Atlantic
Forest Trail in the north of the State
of Rio de Janeiro. The AFT’s mission is
to promote society’s engagement in
conservation and recovery of the Atlantic
Forest through outdoor activities, whilst
promoting inclusive socioeconomic
development and adding value to the
natural and cultural heritage.
Demonstrating the passion of our
employees to support causes in their
communities, our employee said “Hiking
in the trails, and working with the other
volunteers, over the last year has helped
to ease the isolation the pandemic has
brought. The work we are carrying out
will be a legacy for current and future
generations and I am very proud to be
one of over 3,000 volunteers.”
Team Wood gives
generously to Louisiana
hurricane recovery
Louisiana has been ravaged over
recent years by numerous hurricanes.
In 2020, Louisiana was directly hit by
Hurricane Laura and many residents,
including Wood employees, were still
recovering from that storm’s impact
when Hurricane Ida landed on 29
August, 2021.
Team Wood stepped up once again
with generous hearts to provide
supplies to employees and the
people of Louisiana most impacted
by Hurricane Ida. Travelling from
neighbouring states, with trailers
loaded with much needed supplies,
Wood employees met in Louisiana
to deliver donations to their fellow
community members. The Wood team
in Lafayette, Louisiana also partnered
with the United Way and Second
Harvest Food Bank to collect supplies
and help distribute them to areas
most impacted by Hurricane Ida.
Director of Operations in our
Operations Americas US East
business based in Lafayette said, “I
am so proud of the generosity and
willingness of the Wood team in
Lafayette to help others. The team
lives out Wood’s values to fellow
employees and our community.”
Building a sustainable business
continued
*Average volunteer rate is based on the
total remuneration to all employees as
stated in Wood’s Annual Report 2020,
divided by total employees, average
working days in the year and 8-hour day.
Volunteering
Through volunteering our time and energy
to the issues important to our shared
communities, we continue to demonstrate
care and commitment towards the people
and the environment we impact.
In 2021, our people continued to go above
and beyond to show up in our communities
and demonstrate our values in action and
volunteered time worth $420,400 at the
Wood hourly rate, including $251,606 of time
dedicated to our Global Cause. Overall, we
have seen less volunteering activity during
2021 due to restrictions caused by the
Covid-19 pandemic. As restrictions continue
to relax, we expect to see an increase in our
volunteering activity where safe to do so and
where restrictions allow. This will be further
supported by the improvements we have
made to the data capture and reporting of
volunteering time. On this basis, we remain
conident that we will see an improvement
in 2022 and that the results will better relect
the efforts of our employees donating their
time and energy to their local communities.
Strategic report
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Governance Financial statements
Managing our risks
Risk management
The Board is responsible for:
• Identifying the nature and extent of
the emerging and principal risks faced
• Determining the extent of those risks
it is willing to take in achieving its
strategic objectives (its “risk appetite”)
• Performing a robust assessment of
those risks
• Monitoring and reviewing the risk
management and internal control
systems, and providing oversight of the
process that management follows
The Board is assisted in this assessment
by the Audit Committee and the
Safety, Sustainability, Assurance and
Business Ethics Committee (SSABE),
who are delegated responsibility for
various aspects of risk, internal control
and assurance.
Risk management process
The Wood Risk Management Framework
is designed to deliver compliance with
the UK Corporate Governance Code and
alignment with the ISO 31000 principles.
A bottom up and top down approach
to identifying risks operates within the
organisation as laid out in the group
risk management framework. Risk
registers are developed at an individual
contract or project level, escalated to
the business grouping (BG) risk registers,
and rolled up into business unit (BU)
risk registers, which are reviewed by the
by the BG and BU Leadership Teams
every quarter. The BU risk registers are
subsequently reviewed as part of the
quarterly BU Project and Risk Review
meetings. These meetings are chaired
by the Chief Operating Oficer (COO)
with attendance by the BU Executive
Presidents and CFO.
Group level functional risk registers are
also maintained with the functional
leadership teams reviewing these risk
registers twice a year.
The aggregation of the individual risk
registers into a Group risk register
was reviewed twice during the year
by the Group Risk Committee (GRC),
which is attended by the CEO, CFO,
COO, Executive Leadership Team (ELT)
and General Counsel, to ensure that
the material risks for the Group are
appropriately measured and managed.
The overall focus of the GRC meetings
is to ensure that the principal risks for
Wood were identiied, agreed, measured
and effectively controlled.
After the GRC reviews, the summary of
principal risks is formally reviewed and
challenged by the Board twice a year.
The principal risks identiied that face the Group are set out below.
During the year the Board has carried out a robust assessment of
these principal risks as well as emerging risks, and monitored the
Group’s risk management and internal control systems.
For more information on the
effectiveness of internal control
systems see page 76
The principal risks considered by the
Board in 2021 are set out in the table
on pages 72 to 74
Robust assessment of
principal and emerging risks
The Board has carried out a robust
assessment of the principal risks
facing the business. To support this,
the Board and its committees received
regular reports from key functions
such as safety, sustainability, ethics
& compliance, commercial, inance,
tax & treasury, legal, IT, internal audit,
operations assurance and P&O, along
with operational reports from the BUs,
which include key risks, information on
compliance with controls and reports on
assurance activities where applicable.
Operating Committee
Wood’s Operating Committee (OpCom)
is chaired by the COO and attended by
the Business Unit Executive Presidents,
the BU Operations Excellence Presidents,
President Commercial, President
Operations Assurance, President
Supply Chain and President Digital &
Technology. The purpose of OpCom is to
provide governance and oversight across
Wood’s global operations by reviewing,
monitoring, driving and assuring the
delivery of the global operational
strategy into the business.
Wood’s global operational strategy
is focused on ensuring the right
environment, tools, processes,
procedures, standards, governance and
oversight to enable the BUs to deliver
with consistency, precision and employing
best practice execution methodologies
and assurance.
The measure of delivery and maturity
of Operational Excellence initiatives and
deliverables are tested by the Operations
Assurance team who provide assurance
over various aspects of operations,
including the project execution and
contracting principal risks.
Enduring impact of Covid-19
In early 2020 the GRC and Board risk
sessions identiied Covid-19 as an
emerging risk. In May 2020, the Board
approved a new principal risk titled
“Enduring impact of Covid-19” that
considers the HSSE, inancial and
business disruption impacts of Covid-19,
including the impact on our people,
clients, suppliers and business partners.
The global pandemic continued to
create uncertainty during 2021; however,
our awareness and understanding of
how to maintain business continuity
matured as we continued to adapt and
evolve to the pandemic and improve our
business resilience.
During 2021 Wood has further developed
and applied controls including the roll
out of a Global Vaccine Policy, a revised
Flexible Working Policy, enhancements
made to our wellbeing guidance and
increased promotion of our Employee
Assistance Programme.
The Covid-19 principal risk is governed
by a bespoke risk management plan
and framework due to its unique proile.
The framework ensures complete
risk coverage from all the business
and is governed by both the BU Crisis
Management Teams and the Group
Incident Management Team with regular
Board reporting.
The process is coordinated and maintained
by the President Security, Group Risk VP
and the President Operations Assurance.
Climate change
During the GRC and Board risk sessions
in 2021, the various aspects of climate
change risk for Wood were reviewed as
an integral part of our risk management
framework. From our analysis, climate
change risk was not considered to be a
standalone principal risk given its diverse
nature, but to be a contributing factor
to other principal risks. The major impact
of climate change for Wood was seen
to be on our strategy to address energy
transition, and therefore feeds into the
Strategic agility principal risk. This has
been a strategic priority in 2021 and has
been a major focus for the Board. These
aspects also impact ESG strategy and
performance as outlined below.
At a more detailed level, climate change
risk will include localised events such as
abnormal temperatures and weather, and
will be relected in project risk registers,
which map back to the Project Execution
principal risk at a BG and BU level,
depending on the materiality.
Regular oversight of these risks at the
GRC, SSABE and Board Risk Committee
ensures the content of the related
principal risks remains focused on our
perception of climate change risk on the
business. The Wood risk management
framework provides a process for all
associated risks to be governed by
these oversight committees where the
associated risks, plans and KPIs are
reported and reviewed.
ESG and sustainability
ESG and sustainability are transversal
risks that can be found across our
business, and over the last year,
our newly appointed President -
Sustainability has continued to develop
and mature the direction of Wood’s
response to sustainable development,
climate change obligations and ESG
matters by aligning to the Company’s
overarching strategy and developing an
ESG risk management framework.
Wood’s risk management framework
is developed to ensure that all ESG
risks map back to our principal risk of
“ESG strategy and performance” to
ensure we have adequate oversight and
governance in identifying, managing,
and reporting such risks, mitigations
and control effectiveness.
Brexit
Wood has regularly monitored and
assessed the legal, inancial, commercial
and operational effects of Brexit
throughout 2021, to identify any
localised areas that would potentially be
impacted by Brexit. These areas included
critical spare levels being increased
on a small number of UK projects and
external advice being obtained to assist
in supporting the small number of
employees that have been impacted.
Emerging risks
Wood’s Risk Management Framework
includes a focus on identifying and
assessing potential emerging risks.
Emerging risks are identiied throughout
the year via the Business Grouping,
Business Unit and functional risk
processes and escalated and discussed
during the GRC and further escalated to
the Board as required.
This process follows the group risk
management framework, which
applies to all risks. A cross-check is also
undertaken against the principal and
emerging risks identiied by Wood’s peer
group which helps to inform the mid-year
Board discussion on risk. At the year-end,
a series of one-to-one interviews were
carried out by the President - Internal
Audit and the Group Risk VP with
each of the non-executive directors to
understand their perception of emerging
risks. The outputs of these one-to-one
interviews were then fed into the year-
end GRC and Board risk session.
During the GRC, additional time was
set aside to allow for discussion in the
form of a risk ampliication exercise to
understand the impact of the strategic
review of the built environment business
on the principal risks. From this analysis
of the strategic review, it was not
considered to be a standalone principal
risk given its short time-frame and was
considered to be an active risk which will
have its own governance and oversight.
As an emergent risk, the Russia and
Ukraine geopolitical risk was identiied
and escalated in early March 2022
to the Board risk committee (prior
to Russia’s invasion of Ukraine). In
concurrence, a working group within
Wood was established to understand the
materiality of the risk exposure to the
company. Following the invasion, ongoing
analysis of the business exposure to the
situation and developing sanctions had
been undertaken, and in late March 2022
the Company announced its decision
to begin the process to withdraw from
operations in the country. Despite the
withdrawal from operations and business
impact from sanctions, there are no
concerns of material impact on Wood.
Principal risks and uncertainties
Contract/
project
Monthly project
governance risk
review
Proposals & Tenders
Individual projects
Programmes
Contracts
Functional
risk review
Business
groupings
Quarterly risk
review
Business units
Quarterly
risk review
Group business
review
Quarterly BU
project & risk
review
Group Risk Management Standard
Risk Escalation
Group Risk
Committee
Bi-annual Group
risk & principal
risk review
Board
Bi-annual
principal risk
review
Group risk framework
Chair:
Business
grouping president
Attendees:
• Business grouping
leadership team
Chair:
BU Executive
President
Attendees:
• BU leadership
team
Chair:
COO
Attendees:
•
BU leadership team
•
COO
•
Internal Audit
• President
Operations
Excellence
Assurance
• President
Commercial
•
Group Risk Vice
President
Chair:
CEO
Attendees:
•
COO
•
CFO
•
ELT
• General Counsel
•
President Internal
Audit
•
Group Risk Vice
President
Chair:
CFO,
Functional Executive
President
Attendees:
• Functional
leadership team
Sub-Board
Committees:
• Audit Committee
•
Safety,
Sustainability,
Assurance &
Business Ethics
Committee
Strategic report
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68
Governance Financial statements
Monitoring the risk
management and internal
control systems and processes
The Board receives bi-annual updates
on the key controls in place in relation
to each of the principal risks, the level
of assurance activity carried out, and
management’s assessment of the
adequacy of the assurance provided
and the effectiveness of the controls. As
part of this monitoring, the Board could
ensure that corrective action was taken
where necessary.
To ensure that responsibilities for risk
and assurance were clear within the
committee structure, each principal risk
and area of risk is assigned to either the
Board or one of the Board committees.
This is revisited on a bi-annual basis at a
meeting with relevant members of the
ELT and the Board.
Accountability for managing risk is
embedded into our business. Each
business unit and function undertakes
a quarterly risk assessment, monitors
risk and requires senior management to
attest the control effectiveness of their
risks on a prescribed basis as part of
their ongoing accountabilities.
The Board’s assessment of the Group’s
internal inancial and IT control
environment, as informed by internal
audit, is effective, with some areas where
improvement is needed. Particular areas
of focus are smaller businesses which
have not yet been integrated to the
Group’s common ERP system and shared
services model. Having been impacted by
Covid-19 in 2020, the project to establish
a common ERP and shared service
platform resumed in the second half of
2021 and has been combined with the
initiation of the planning and design of
an Oracle Cloud instance. An improving
and maturing control environment for
entities hosted in the common ERP
environment and serviced by the shared
service centres was noted in 2021.
Details of the status of inancial and IT
internal controls are included in the Audit
Committee report on pages 106 to 109.
Risk appetite
The Group’s risk appetite is deined
by six broad risk appetite statements
to ensure the current list of principal
risks are adequately covered by the risk
appetite statements.
The Group’s risk appetite is taken into
account when setting the nature, extent
and effectiveness of the key control
mechanisms in place and the level of
assurance activity required for each risk.
A framework around the application of
the Group’s risk appetite to contracting
models sets out the risk appetite
for certain ixed price or lump sum
(and other high risk) contracts and
outlines ten criteria to assess contract
opportunities. Clear criteria exist for
approval of these type of contracts
by the Tender Review Committee. The
process for ongoing monitoring of ixed
price and high-risk contracts includes
quarterly BU Project and Risk Review
meetings attended by the COO, CFO
and BU Leadership Teams including the
BU Executive Presidents.
Group risk management
standard
The risk management standard is the
formal overarching risk management
process within Wood that complements
current policies and processes across the
Group. The purpose of the standard is to:
• Ensure there is a formal, structured
and consistent risk management
process across Wood
• Identify, mitigate, and manage risks
that occur
• Provide visibility over business risks to
inform leadership
During 2021 a new enterprise risk
management system and risk
dashboard were rolled out to the
business to complement the bottom
up, top down, approach to enterprise
risk management. The system and
dashboard were designed to enhance
oversight and governance of the control
environment as part of the Company’s
enterprise risk management framework.
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 inancial statements (the going
concern period), as well as preparing
inancial forecasts up to the end of 2023
to relect reasonably possible downsides.
The directors did not declare an interim
or inal dividend for 2021 in order to
protect cashlows and preserve long
term value. No dividends are included
in the going concern assessment.
Any decision to resume payment of a
dividend will consider the Group’s future
proitability and cash requirements.
In assessing the basis of preparation of
the inancial statements for the year
ended 31 December 2021, the directors
have considered the principles of the
Financial Reporting Council’s ‘Guidance
on Risk Management, Internal Control
and Related Financial and Business
Reporting, 2014’; namely assessing the
applicability of the going concern basis,
the review period and disclosures.
In order to satisfy themselves that
they have adequate resources for the
future, the directors have reviewed
the Group’s existing debt levels, the
forecast compliance with debt covenants
including any impact on committed
funding and liquidity positions and the
Group’s ability to generate cash from
trading activities. As of 31 December
2021, the Group’s principal debt facilities
comprise a $1,200.0m revolving credit
facility maturing in October 2026;
a $600.0m term loan maturing in
July 2026 and $803.3m of US private
placement debt repayable in various
tranches between July 2022 and July
2031, with over 95% due in 2024 or later.
At 31 December 2021, the Group had
headroom of $935.1m under its main
facilities and a further $148.9m of other
undrawn borrowing facilities. The Group’s
key inancial covenants are set at a ratio
of 3.5x for both net debt/maximum
rolling 12-month EBITDA and minimum
interest cover. These covenants are
measured on a semi-annual basis and
excludes the impact of IFRS 16. There
are no indications from the scenarios
modelled that any of these covenants will
be breached in the period assessed.
At 31 December 2021, the Group had
net current liabilities of $363.3m (2020:
$457.3m) and the reduction mainly
relates to the extension of the maturity
of the Group's principal borrowing
facilities during 2021. The cash low
forecasts show that the Group will have
suficient funds to meet its liabilities as
they fall due.
For more information on the internal
control environment see pages 83 and 84
The directors have considered a range
of scenarios on the Group’s future
inancial performance and cash
lows. These scenarios relect our
outlook for the broad range of end
markets that the Group operates in,
whilst also considering the growth in
the order book during 2021 and an
improved outlook for activity across
Projects, Operations and Consulting.
Approximately 62% of the Group’s
revenues are driven by renewables and
other energy; process and chemicals
and the built environment. The Group
anticipates growth opportunities due
to the post covid recovery in industrial
activity. Additionally, there are growth
opportunities in the built environment
due to iscal stimulus measures adopted
by governments across the world in
response to the pandemic and longer-
term demand supported by changing
attitudes to infrastructure spending to
provide climate and economic resilience.
The conventional energy business, which
makes up around 38% of revenue is
supported by the global recovery in
energy demand and improved commodity
prices. This backdrop of strong order
book growth and improved activity levels
in 2021 gives the directors improved
conidence around the 2022 forecast and
the growth assumptions for 2023.
The base case going concern scenario
assumes the retention of the built
environment business. Additionally, the
directors have modelled the disposal of
the built environment business following
the outcome of the strategic review
being announced in January 2022.
The proceeds from the disposal would
lead to a strengthening of the balance
sheet through a pay down of debt and
other liabilities currently included on the
balance sheet. Both scenarios indicated
that covenants will be passed at the
covenant remeasurement dates.
The directors have considered severe, but
plausible downside scenarios. The most
severe of these relect further material
reductions in revenue and EBITDA from
the base scenario, which is the Board
approved forecast, the basis of which
is described above. This could result
from a worsening economic climate or
a signiicantly reduced oil price. In each
of the scenarios modelled, the inancial
covenants were met, with signiicant
facility headroom remaining available.
Consequently, the directors are conident
that the company will have suficient
funds to continue to meet its liabilities as
they fall due for at least 12 months from
the date of approval of the inancial
statements and therefore have prepared
the inancial statements on a going
concern basis.
Viability statement
In accordance with provision 31 of the
Governance Code the directors have
assessed the Group’s viability over a
three-year period to 31 December 2024
and modelled the impacts of the risks
over a ive-year period to 31 December
2026.
The process of establishing the period
over which the Group’s viability has been
assessed is subjective and considers
a range of factors, all of which are
indicative of slightly different time frames.
In making their assessment the directors
have considered these factors both
individually and in aggregate and have
decided that, on balance, three years was
the most appropriate period.
As at December 2021, the Group’s principal
debt facilities comprise a $1,200.0m
revolving credit facility maturing in October
2026, a $600.0m term loan maturing
in July 2026 and $803.3m of US private
placement debt repayable in various
tranches between July 2022 and July 2031,
with over 71% due in 2025 or later. These
are set out in note 17 to the Group inancial
statements.
The committed long-term inancing
together with factors such as the
Group’s asset light and lexible business
model, the Group’s strategic and
planning cycle and the visibility of
operational backlog led the directors to
select a period of three years to assess
the Group’s viability.
In order to make this assessment, the
Board considered the current trading
position and reviewed a number of future
scenarios which stress-tested the viability
of the business in severe but plausible
scenarios. These scenarios considered
the potential inancial and operational
impacts of the Group’s principal risks
and uncertainties arising and the degree
of effectiveness of mitigating actions.
As indicated in the table on pages 72
to 74 these included, individually and
in combination, multi-year reductions
in demand, project execution and
contracting risk, revenue growth risk, the
impact of a catastrophic safety or cyber
security incident, the ines and damage
sustained by an ethical, regulatory or
data breach or a substantial litigation.
Based on the modelling performed,
the Board’s assessment was that the
strength of our balance sheet, the
lexibility of our business model and the
mitigating actions available meant that
in all plausible scenarios considered the
business would continue to be viable for
at least three years. Mitigating actions
would include reduction of discretionary
spend on bonuses, capex reduction or
further disposals.
Principal risks and uncertainties
continued
The plan to dispose of the built
environment business has not been
included in the base scenarios as it has
not been completed at the date of this
report, however the impact of the sale
on debt and ongoing proitability were
considered as a speciic scenario and
found to be supportive of the Group’s
ongoing viability.
Based on this assessment, the directors
have a reasonable expectation that
the Group will be able to continue in
operation and meet all its liabilities as
they fall due up to 31 December 2024.
Strategic report
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Annual Report and Accounts 2021
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Governance Financial statements
Strategic
Strategic agility
oversight covering compliance with the
key components of ESG
• ESG risk management framework
developed, including linkage to the Task
Force on Climate-related Financial
Disclosures (TCFD)
• Appointment of a dedicated President
- Sustainability and sustainability team
reporting to the Executive President -
HSSES
• SSABE Committee includes oversight
of sustainability aspects with
additional review by the full Board on
an annual basis
transition, industrial decarbonisation
and built environment growth
opportunities
•
Scanning of the external environment
and competitor landscape to reine
strategic focus areas
•
Continued to assess the strategy and
business portfolio for opportunities to
generate signiicant enterprise value
uplift and unlock capital for growth,
including initiating a strategic review of
the built environment business
Risk proile
Absolute level of leverage is above our
0.5-1.5 times net debt: adjusted EBITDA
target. Achieving this will require cash
generation to repay debt and a recovery
in proitability. The risk increased in 2021
due to the ongoing impact of Covid-19
leading to continued pressure on
cash generation. Payments were also
made in 2021 regarding the resolution
of legacy investigations by the SFO,
DOJ, SEC, and the Brazilian regulatory
authorities.
Following a strategic review in 2021,
the Group has commenced a sales
process in January 2022 for the built
environment business, expected to
conclude Q2 2022.
Risk proile
Our ESG strategy and performance
does not effectively address our
environmental, social and governance
responsibilities, including in relation
to climate change, and leads to our
business becoming an unattractive
investment proposition for our
employees, investors, lenders,
communities, and other stakeholders.
Mitigation, monitoring and assurance
• Existing policies, procedures,
management structures and Board
Risk proile
Strategic plan does not keep pace
with energy transition and industrial
decarbonisation megatrends, market
disruption, client demands and/or
competitive threats. Strategy fails to
deliver a sustainable business model
with differentiated service offerings
generating superior returns.
Mitigation, monitoring and assurance
•
Assessed impact of Covid-19 and
legacy issues on free cash low
availability to invest in energy
Analysis of principal risks
•
Ongoing delivery of a programme
(Future Fit) to accelerate strategic
objectives through initiatives to
unlock stronger medium-term
growth, deliver eficiency savings and
create value through investment in
digital solutions and future skills
•
BU growth plans developed and
deployed to deliver order book
improvement
•
Increased cadence of Sales and
Growth BU reviews, attended by the
Chief Executive, CFO and COO, from
quarterly to six-weekly
• Sustainability targets sanctioned by
the Board
• Monitoring of compliance and
reporting in line with the UK
Corporate Governance Code,
covering governance responsibilities,
with oversight provided by the Audit
Committee and the Board
• Safety performance is a long-
standing component of bonus
schemes and sustainability targets
established in 2020 are also now
embedded in bonus and long-term
incentive plans
Mitigation, monitoring and assurance
• During the year the Group completed a
planned reinancing exercise, including:
• A new $600m loan facility with
existing lenders backed by UK Export
Finance (UKEF); and
• A new $1.2bn sustainability linked
Revolving Credit Facility (RCF),
replacing the Group’s existing
$1.75bn facility
• Target business cash performance and
ongoing monitoring via a Group-wide
cash campaign
•
Short-term cash low forecasting tool
was fully rolled out across the business
• Monthly BU and ELT reviews of debt
and cash performance and Board
reviews
• Designated process for governance
of capital expenditure
• Established processes for monitoring
of working capital
• Target improvement in day
sales outstanding
• Credit policy in place with monthly
reporting process
• Monthly monitoring and reporting
of aged debt including any
unbilled amounts
ESG strategy and performance
Leverage position
Mitigation, monitoring and assurance
• Contracting policy and associated
approvals process
• Tender governance process including
Tender Review Committee
• Focus on overall lump sum proile
• Increased focus on lump sum contracts
via quarterly project reviews
•
Lump sum (and other high risk)
contracts policy providing additional
control over the pursuit of lump
sum contracts
• Commercial intervention team in
place to strengthen in-house claims
capability and provide input on
effective project commercial set up
Mitigation, monitoring and assurance
• End-to-end recruitment platform,
across Wood to optimise internal
and external recruitment activities,
and ensure right person, right
place, right time
• Critical Position Resourcing reviews
used at BU level to highlight key
vacancies and establish pipelines
for future demand
• Succession planning in place for
management and leadership
positions with development plans
in place for high performing
employees
• Employee engagement survey
carried out during 2021 to assess
progress against the employee
engagement framework with
follow-up focus groups and
action plans developed to address
key themes
Board assessment of change in risk from 2020:
No change in risk since 2020
Risk has decreased since 2020
Risk has increased since 2020
Considered as part of viability assessment
New
Risk proile
Weaknesses in the contract bidding and
award process, inappropriate pricing,
misalignment of contract terms,
challenging client behaviour, or failure
to comply with contractual conditions
could lead to reputational damage,
and/or poor inancial performance.
Risk proile
Problems in attracting, engaging and
retaining critical staff could lead to
insuficient capability and leadership to
meet our strategic objectives, and not
being seen as an employer of choice.
Commercial and Operations
Risk proile
Failure to successfully execute projects
safely and to expected quality, on time
and within budget.
Mitigation, monitoring and assurance
• Start up, project management,
technical and resourcing execution
plans for key projects supported by
monitoring and reporting
•
Group strategic projects team assist
in start-up phase of key projects and
embed learnings from previous projects
• Tender governance processes including
Tender Review Committee at Group
level and BU levels in line with
established Delegation of Authority
• Financial Management Framework in
place to ensure disciplined contract
compliance, including variation orders
and contractual requirements, at all
phases of the project
• Project governance standard with
cascading project reviews including
quarterly BU Project and Risk
Review meetings chaired by the
COO and attended by the Group
CFO and BU Executive Presidents
• Operational Excellence programme
supporting consistent project
delivery through on common
operating model, standardised
delivery applications and project
management academy
Contracting
Project execution
Failure to attract, engage and retain critical staff
Risk proile
Signiicant HSSE event (including a
pandemic) leading to a major incident
resulting in multiple loss of life,
signiicant harm (including inancial),
damage to the environment and
damage to our reputation.
Mitigation, monitoring and assurance
•
HSSES Framework Standard
setting out clear standards for
HSSES management across Wood
aligned to ISO standards
• Consolidation and simpliication
of HSSES management system
elements through the deployment
of The Shield
Health, Safety, Security & Environment (HSSE)
• Development of a Professional Shared
Services Hub to implement consistent
delivery of safety management
• Clear and enforced Life Saving Rules
covering critical risks underpinning
safe working processes and clear safe
working behaviours in the Wood
Safety Essentials
• Live incident monitoring/reporting/
alerting/management through our
Corporate Analysis and Incident
Reporting System (CAIRS)
• Group Incident Review Panels for
breaches of Life Saving Rules, high
potential and high severity incidents
•
Group Operations Assurance
team focused on Technical, Quality
and HSSES areas and assurance
against standards
• Regular review of safety
performance by ELT, SSABE and
the Board
• Revised Business Continuity and
Emergency Response Plans
• Wellbeing resources supporting
our employees
Major incident
Risk proile
Continuing impact of Covid-19
including the associated HSSE risks,
inancial and business disruption
(including impact on order book)
whilst maintaining operability.
Mitigation, monitoring and assurance
• Sustained Crisis Management Team
(CMT) including full ELT and BU
Incident Management Teams (IMTs)
Enduring impact of Covid-19
meeting with regular cadence for
governance and oversight
• Covid-19 risk management framework
implemented across business and
mapped into principal risk
•
Mitigation, monitoring and assurance in
place for each of the key Covid-19 risks
• Roll out of Global Vaccine Policy and
revised Flexible Working Policy, along
with enhancements to wellbeing
guidance and increased promotion of
the Employee Assistance Programme
• Covid-19 Response Committee
remains in place to oversee response
to the pandemic
•
SSABE Committee receives updates
on HSSE aspects of Covid-19 response
• Monthly Board updates on
Covid-19 response
Strategic report
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Governance Financial statements
Principal risks and uncertainties
continued
Risk proile
Regulatory investigation or
proceedings resulting from non-
compliance with applicable legislation,
which could lead to consequences
including inancial exposure, penalties
and reputational damage.
Mitigation, monitoring and assurance
•
Suite of Wood policies that
mandate compliance with
applicable laws and policies
Risk proile
Legal action can result from a
major incident, a major regulatory
investigation, contracting issues, or
project execution. Failure to manage
litigation can lead to increased claims,
damages, ines and penalties.
• Dedicated Ethics Responsible Oficers
across the business with increased
engagement and training provided
from the Group Legal, Ethics and
Compliance team
•
Assurance framework across technical
and non-technical business processes
•
Anti-Bribery and Anti-Corruption
(ABAC) programme reinforced
with dedicated project manager,
Executive Sponsor, and regular
reporting to SSABE
• Robust compliance programme
including our Code of Conduct and
speciic requirements around the
appointment and management of
commercial intermediaries
• Targeted programme of ethics &
compliance training
• Group Legal, Ethics and
Compliance team provides support
and guidance to the business
Mitigation, monitoring and assurance
• Controls over major incident, major
regulatory investigation, contracting,
and project execution risks
• Policies for management of litigation
• Group Legal, Ethics and Compliance
team with experience in litigation
supported by external specialist
lawyers where necessary
• Group Litigation report provided
to the ELT on a monthly basis and
to the Board on a quarterly basis
• Enhanced governance on major
cases with senior executive and
business unit leadership.
• Identiication of lessons learned
arising from litigation and
training in key areas
Compliance and Litigation
Major investigations
Major litigation
Risk proile
Impact on the conidentiality, integrity
and/or availability of Wood or client data
and/or disruption to Wood business
operations through cyber-attack.
Mitigation, monitoring and assurance
• Dedicated security, governance, risk
and compliance team led by Chief
Information Security Oficer (CISO)
• Mature Information Security
Management Framework that
combines technical and process
controls with a group-wide
Technology
Cyber security
programme of colleague awareness
• Comprehensive IT security policy/
standards and procedures
• Extensive threat hunt and intelligence
gathering capability
• Utilisation of next generation
perimeter security and best-in-class
end point detection and protection
capability
• Mature cyber security incident and
event management
• Security Operations Centre
enabling 24/7 detect and respond
capability
• Mandatory cyber awareness
training and Group wide
continuous cyber education
programme
•
Monthly reporting to the ELT;
quarterly reporting to the Audit
Committee and the Board with
an annual review by the Audit
Committee
Letter from the Chair of the Board
Dear Shareholder
2021 has been a year inluenced by
the ongoing impacts of Covid-19 and
an accelerated focus on the impacts
of climate change. The pandemic has
continued to generate challenging
conditions in some of Wood’s core
consulting and engineering markets in
2021 and required us to consider the
medium to longer-term impacts on our
business. However, 2021 has also been
a year of increased focus on climate
change, with COP26 acting as a catalyst
for global commitments to address the
effects of climate change.
Throughout 2021, the Board had
oversight of the delivery of Wood’s
strategic objectives, aligned to the
delivery of innovative solutions for a net-
zero future. The Board’s focus has been
on ensuring Wood’s strategy generates
value for all of Wood’s stakeholders
through balancing the sometimes
competing, interests of those stakeholder
groups and ensuring the maintenance
of an effective culture. With the Board’s
support, Robin and his Executive
Leadership Team have responded swiftly
and effectively to the dynamic challenges
of the pandemic as they have evolved
during the year whilst also making
good progress in positioning Wood for
a leading role in energy transition and
industrial decarbonisation.
As a result of these actions, Robin and
his Executive Leadership Team have
delivered a inancial performance that
relects improving trading momentum
against the backdrop of challenging
market conditions.
“In 2021, the Board oversaw the delivery of
Wood’s strategy, which has sustainability at its
core, with a focus on balancing the interests
of, and generating sustainable value for all of
our stakeholder groups. In addition, the Board
focused on the maintenance of an effective
culture that promotes inclusion and diversity
whilst also overseeing the response to the
longer-term effects of Covid-19 to ensure
business continuity and employee well-being.”
Roy A Franklin
Chair
In April 2022, Robin Watson advised the
Board of his intention to retire as Chief
Executive. On behalf of the Board, I
thank Robin for his years of service to
the company. Under his leadership, Wood
has transformed into a global consulting
and engineering business that operates
across a wide range of sectors across
energy and industry markets worldwide.
Robin has built a strong leadership
team around him and a solid portfolio
that provides us great opportunities
as we look ahead. A search process
is now underway, with both internal
and external candidates, and we are
conident a smooth transition will follow
later in 2022.
Balancing stakeholder interests
As a Board, we have regard to the
interests of our stakeholders and seek
to balance their interests in our decision-
making processes.
As required by s414CZA of the Companies
Act 2006, we have included a s172(1)
statement on page 85 and further details
of engagement with key stakeholders can
be found on page 81.
Sustainability is at the heart of
Wood’s strategy and in 2021 the Board
endorsed a set of targets aligned to
the UN Sustainable Development
Goals. Having considered the views
of a range of stakeholders including
shareholders, employees and wider
societal expectations, the Board approved
goals in the key areas of delivering our
purpose aligned to solutions for a net-zero
future; inclusion and diversity; fair working
practices; and our impact on communities
and the environment. In addition,
performance against ESG targets were
embedded in the 2021 annual bonus and
long-term incentive plans for Wood’s
executive directors, relecting the
importance the Board places on delivering
a sustainable business and value for all of
Wood’s stakeholders.
COP26 took place in 2021 and reinforced
the view that the delivery of net-zero
commitments are fundamental to
addressing the signiicant impacts of
climate change. Through its oversight
of Wood’s strategy aligned to delivering
solutions for a net-zero future, the Board
has been focused on assessing how
best to take advantage of the positive
trends and investment opportunities for
Wood in energy transition and industrial
decarbonisation.
This included ensuring that the
signiicant value in Wood’s exposure to
sustainable infrastructure markets was
appropriately recognised in the equity
market. As a result, the Board initiated a
strategic review of the built environment
business in November 2021. The review
was completed in early 2022 with the
Board concluding that a sale of the built
environment business is the best option
to deliver value for our shareholders
and to strengthen the group as we look
to capitalise on the signiicant growth
opportunities, including in energy
transition and industrial decarbonisation.
The Board recognises that the
maintenance of an effective culture is
fundamental to the successful delivery of
Wood’s strategic objectives.
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Governance
Financial statementsJohn Wood Group PLC
Annual Report and Accounts 2021
74
Principal risks and uncertainties
continued
The Board continued to undertake
employee engagement during 2021
through its participation in the Listening
Group Network, which provided it with
insights into the prevailing culture
and enabled consideration of any
improvement actions. By reviewing
the results of our global employee
engagement survey, the Board obtained
an understanding of the effectiveness
of Wood’s approach to diversity, equity
and inclusion. In addition, the survey
gave insights into the success of actions
overseen by the Board to manage
the longer-term effects of Covid-19
on employee wellbeing, such as the
implementation of our lexible hybrid
working model to support employees as
they return to the workplace.
Health, safety and sustainability
In 2021, the Board’s oversight of the
ongoing response to Covid-19 extended
beyond the safety and wellbeing strategy
emergency response and business
continuity arrangements to include a
focus on ongoing risk management;
operational readiness and planning for
a safe return to work. This approach
ensured the safety of our people and
minimised business disruption. The
Safety, Sustainability, Assurance and
Business Ethics Committee received
regular updates throughout the year
enabling it to continually monitor
any changes in the pandemic risk
assessment, travel or operational
restrictions, vaccine policy and control
measures. The Committee also provided
oversight to the incident investigation
into the fatality that regrettably
occurred during the year. The purpose
of this oversight was to ensure the
investigation was independent, of high
quality and fully identiied the root causes
and organisational learnings from this
tragic event.
With responsibility for oversight of
sustainability matters, the Committee
endorsed the set of sustainability targets
that underpin Wood’s sustainability
strategy. In response to the pace of
change with regard to ESG risks and
reporting requirements, the Board has
increased its oversight for sustainability
matters with detailed reviews by the Board
now taking place on a bi-annual basis.
On 21st February, the Company
announced a delay was necessary to
inalise the Company’s reported results
and to conclude the year-end process
with the Company’s auditor, KPMG
LLP. The delay was required to allow
an external investigation and review to
be undertaken, principally in relation to
the historical carrying value of the Aegis
Poland project contract and the process
by which this was determined. This review
was concluded, and Wood’s 2021 full year
results will be announced on 20 April 2022.
The Audit Committee will take account of
the indings of the review in its continuing
work on the effectiveness of the
Company’s internal control environment
and the Chair of the Audit Committee
and I will jointly review the Board
oversight governance framework and
make any recommendations for further
reinement to the Board in due course.
For further details see page 109.
Directors' remuneration
The Remuneration Committee has
continued to closely monitor the
external executive remuneration
environment, alignment to the wider
workforce, and the views of our
shareholders whilst continuing to make
remuneration decisions that relect
the needs of the business and in line
with our remuneration principles. The
Committee’s priority is to balance fairly
rewarding management performance
with aligning to shareholder and
wider stakeholder expectations. The
Committee recognises the continued
strength, resilience, courage and care
demonstrated by the executive directors
and the wider leadership team in leading
the business throughout the year. The
Committee continued its engagement
activities with leadership and the wider
workforce to ensure fair reward for all
employees and alignment of executive
director remuneration to that of the
wider workforce.
Board evaluation
The Board participated in a Board
evaluation process externally facilitated
by Lintstock. The evaluation process
enables the Board to ensure that
the principles of the UK Corporate
Governance Code on the role and
effectiveness of the Board are satisied.
A number of actions were recommended
including ensuring that the Board and
senior management proile relects the
future direction of the organisation;
devoting more time to discussion and
greater focus on operational execution
informed by appropriate metrics.
The Board has undertaken activities
throughout the year to address these
areas including: reviewing senior
management development and
succession plans to ensure appointments
relected the appropriate expertise for
the future direction of the Company;
including additional time to the Board
meeting timetable to allow for more
in-depth discussion and refreshing the
approach to business unit reporting to
facilitate a deeper understanding of each
business unit’s operational performance
and risk management.
Investigations
Through the Investigations Oversight
Committee, the Board provided
independent oversight of the risk
analysis, mitigation and response
of the business in connection with
the investigations by the relevant
authorities into the historical use of
agents and other matters. The Board
is pleased that these investigations
were concluded during 2021. Going
forward the SSABE Committee
will continue to review and provide
oversight for the organisational
arrangements and requirements put
in place to ensure compliance with the
agency commitments as part of these
settlements.
Your Board recognises the resilient
and agile leadership demonstrated
by Robin, David and the Executive
Leadership Team, in a dynamic and
challenging environment, to deliver
improving momentum in Wood’s
inancial performance including
margin improvement and strong
order book growth and in taking steps
to strategically position Wood for a
leading role in energy transition and
industrial decarbonisation.
Through the strategic actions
underway in 2022, I am conident that
Wood will unlock shareholder value and
will be well positioned to capitalise on
the signiicant opportunities ahead,
including in energy transition and
industrial decarbonisation. I believe
that the Board has the appropriate
skills to support these actions and the
ongoing delivery of Wood’s purpose
and strategy and for effective decision
making to promote Wood’s long-term
success and sustainability.
Roy A Franklin
Chair
Diversity and Board composition
The Nomination Committee had focused
on the continued implementation of
Wood’s inclusion and diversity strategy
and succession planning. The Board
recognises the importance of developing
and maintaining an inclusive culture
that promotes diversity of thought and
perspective. During 2021, the Committee
had oversight of Wood’s commitment
to improving gender balance with good
progress being made towards our goal
of female representation in at least
40% of senior leadership roles being
made. At 31 December Wood had 33%
female leaders compared to 31% in
2020. The Committee also oversaw
a number of wider actions focused
on creating an inclusive organisation
including the roll-out of conscious
inclusion training to all Wood employees,
enhanced employee networks and the
development of inclusion & diversity
leadership champions. The Committee is
mindful of the recommendations of the
Hampton-Alexander and Parker reviews
during Board succession planning and the
recruitment process for new directors.
Whilst the Committee continues to work
towards stated goals of these reviews it
is supporting initiatives to improve the
reporting of industry progress, including
those led by the FTSE Women Leaders
Forum and the Parker Review Team at
the Department for Business, Energy &
Industrial Strategy.
In March 2021, Brenda Reichelderfer
and Susan Steele were appointed non-
executive directors. The appointments
support the Board’s commitment to
gender diversity and their extensive
global experience signiicantly
strengthens the Board. Mary Shafer-
Malicki resigned as non-executive director
on 13 May 2021 as she had served on
the board for nine years. Thomas Botts
will have served on the Board for nine
years in 2022 and, in accordance with
the principles of the 2018 UK Corporate
Governance Code, he will step down
from the Board at the 2022 AGM.
Internal controls and external audit
During the year, the Audit Committee
focused on areas of judgement and
estimation, maintaining a strong control
environment, continuing to standardise
and digitise inance systems and
processes, and the increasing importance
of ESG matters.
The primary areas of judgement
and estimation considered by the
Committee included impairment
reviews, signiicant ixed price or lump
sum contracts, provisions and tax
balances. With the pandemic continuing
throughout 2021, the Committee
considered the enduring impact of
Covid-19 when reviewing and challenging
the assumptions for impairment
reviews, together with the impacts of
energy transition on core markets.
The Committee also had oversight of
the processes and controls put in place
to maintain a strong internal control
environment. The Board assessed
the internal inancial and IT control
environment as effective, with some areas
where improvement is needed. Good
progress has been made to standardise
inancial systems with an improving and
maturing control environment noted for
entities already included in the common
ERP system and shared service model.
In addition, the project to integrate
remaining smaller businesses into the
ERP system and shared services model
resumed in the second half of 2021 and
this has been combined with the planning
and design of an Oracle Cloud instance
as we focus on digitising inancial
systems. Recognising the importance
of the governance of ESG matters, the
Committee had oversight of a number of
internal audits focused on sustainability
aspects and this focus will be extended
further in 2022. The Committee assessed
the effectiveness of the external audit
by KPMG and concluded that the audit
process was operating effectively.
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Strategic report
Governance
Financial statementsLetter from the Chair of the Board
continued
The directors submit their report together
with the audited inancial statements of the
Group for the year ended 31 December 2021.
Information relevant to and forming part of the directors’ report
is to be found in the following sections of the Annual Report:
The Group consolidated income statement for the year is set out on page 150.
Governance and the Board
Corporate governance statement 79
Application of Governance Code Principles 79-84
Corporate governance arrangements 90
Directors' responsibilities under s172 of the Companies Act 2006 85
Statement of directors’ responsibilities
87
Other Statutory Disclosures 85-86
The names of the directors who were appointed during the year 88-89
Board of directors and biographies 88-89
Business review
Principal activities and business review
04-41
Future development of the business of the Company and its Subsidiaries 06-07
Financial Information
Fair, balanced and understandable 82
Going concern
70-71
Viability statement
71
Post balance sheet events 86
Financial instruments
185-188
Risk
Risk management and internal control 83, 99
Principal risks and uncertainties 68-74
Monitoring climate change related risk
69
Health, safety, security and ethics
42-49
Environment
Managing and minimising environmental impact 50-57
Greenhouse gas emissions and energy and carbon information 54-55
Employees
Employment policies 58-67
Policies on recruitment, training and career development of disabled persons
105
Investing in and rewarding the workforce 62-63
Diversity statement 105
Shares
Share capital structure 86
Substantial shareholders
97
Directors’ interests in ordinary shares
127
Directors’ interests in options over ordinary shares 128
Subsidiaries
Acquisitions and divestments
202
Subsidiaries, branches and joint ventures 211-224
Directors' report
Going Concern
In applying the going concern basis for
preparing the inancial statements, the
directors have considered the Group’s
objectives and strategy, the risks and
uncertainties in achieving those objectives
and reviewed business performance.
Accordingly, the directors continue
to adopt the going concern basis in
preparing the inancial statements.
Dividend
Due to uncertainty around the impact
of Covid-19 and volatility in oil prices,
the Board decided not to declare a inal
dividend for 2020.
Whilst the Board were encouraged
by improving momentum in activity
and early signs of markets recovering,
performance in the irst half of
2021 relected the ongoing impacts
of Covid-19 and as such, the Board
considered it prudent not to pay an
interim dividend for 2021.
No dividends were therefore paid to
shareholders during 2021.
In addition, given the high level of net
debt held by the Group, the Board has
decided not to recommend dividends in
relation to the 2021 inancial year.
The Board remains committed to
ensuring balance sheet strength and
considered these decisions to be prudent
and appropriate in order to protect cash
lows and preserve long-term value.
The Board recognises the importance
of dividends to shareholders and is
committed to reviewing the policy in the
future following the proposed sale of our
built environment business.
Board leadership and Company purpose
Effective Board – Principle A
Our Board is composed of highly skilled individuals who bring a range of skills and corporate experience to the boardroom (see
pages 88 to 89).
The role of the Board is to lead and direct the Group, to promote its long-term sustainable success, generate value for
shareholders and contribute to wider society.
The Board has a structured calendar for the year ensuring all relevant matters are considered and utilises its four principal
committees to ensure suficient time is allowed for discussion. At each Board meeting suficient time is set aside for the
committee chairs to report on the contents of their discussions, put forward any recommendations to the Board which require
approval and the actions taken. Further information on the activities of the principal committees can be found on pages 90 to
91 and 103 to 114.
The Board continually assesses the lexibility and sustainability of our business model, monitoring and reviewing our strategy
(including our purpose and strategic objectives), assessing and identifying changing or emerging risks that could impact on
the Group in the short, medium and long-term. Further information on sustainability of the business model and principal and
emerging risks can be found on pages 95 and 69 to 74.
Purposes, values and culture – Principle B
Our purpose, values and culture are set out in the Strategic Report on pages 6 and 7 which describes the basis upon which the
Company generates and preserves value over the long-term.
The Board oversees the development of the Group’s purpose, deining our values and strategy and monitoring and assessing
culture, for the beneit of all stakeholders.
Our purpose informs the Group’s strategic direction and how we deliver value for our stakeholders. Due to its importance, the
Board periodically reassesses our purpose to ensure it continues to relect the Board’s strategy, values, and desired culture.
Our values relect the qualities we embody and our underlying approach to doing business. Our values are embedded in our
operational practices and the direct oversight and involvement of the executive directors.
Our culture has developed from our values and is considered a key strength of our business. The Board reinforces our culture
and values through its decisions, strategy and conduct.
During the year, the Board assessed the effectiveness of Wood’s culture, with particular emphasis on the effectiveness of
Wood's approach to diversity, equity and inclusion and actions taken to manage the longer-term effects of Covid-19 on
employee wellbeing. These activities, including discussions with management and employee surveys, are described in more
detail on pages 58 to 63. The Board is satisied that the culture is operating effectively.
Governance framework and Board resources – Principle C
The Board believes good corporate governance is essential to ensuring our business is run in the right way, creating value for all
our stakeholders and is key to overall performance and integrity and is consistent with our shared values.
Corporate governance extends beyond regulatory compliance and the directors consistently monitor developments in best
practice, including guidance published by investor groups.
The directors use an electronic Board paper system which provides secure access to papers. The information provided to Board
members is of suficient depth to facilitate debate and to fully understand the content whilst remaining clear and concise.
If any director has concerns about the running of the Group or any proposed course of action, they are encouraged to express
those concerns which will then be minuted. No such concerns were raised during 2021.
All directors are entitled to take independent professional advice at the Group’s expense and have access to the advice and
services of the Company Secretary, who is responsible for ensuring that Board procedures are complied with.
The Board is fully committed to maintaining high standards of corporate governance and,
as a company with a premium listing on the London Stock Exchange, complies with the 2018
UK Corporate Governance Code issued by the Financial Reporting Council (the Governance
Code). A copy of the Governance Code is available at www.frc.org.uk.
The Board reviews its governance procedures to maintain proper control and accountability and monitors its compliance with the
Governance Code via a self-assessment veriication process. Proper control, accountability and compliance with the Governance
Code lows through the Group as a whole and the directors consider that the Group has fully complied with the provisions of the
Governance Code throughout 2021.
The Board has applied the Governance Code Principles (A to R) as follows:
Corporate governance statement
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Strategic report
Governance
Financial statements
Stakeholder engagement – Principle D
We recognise the importance of clear communication and proactive engagement with all of our stakeholders. The
Governance section of the Annual Report explains how the Group has applied the principles of the Governance Code with its
shareholders on page 95. Further information on engagement with stakeholders and the Board’s application of s172 of the
Companies Act 2006 can be found on pages 14 to 21 and page 85.
Employee engagement
We have an experienced, diverse and dedicated workforce which is recognised as a key asset of our business.
The Board recognises the importance of strong employee engagement and considers that meaningful, regular dialogue
with employees provides it with greater insights into the culture, activities, and experiences of the people in our business.
Rather than adopting one of the three methods of employee engagement set out in the Governance Code, the Board uses
a combination of methods, including a bi-annual global employee survey, additional global employee pulse surveys to gather
the views of employees, and the Listening Group Network (LGN), which involves employees from all our global locations,
enabling the employee voice to be heard by the Board and Executive Leadership Team. The LGN has grown in membership
by over 20% during 2021. The Board believes this is a more effective method of employee engagement and representative
of Wood’s global, diverse workforce. In 2021, our global employee engagement survey received c18,000 responses (a
participation rate of around 50%) from 37 countries.
Established mentoring relationships have continued during 2021. However other examples of workforce engagement
activities usually carried out by Board members, including hosting talent lunches and dinners and town halls and visiting
regional and overseas sites were not possible due to continuing Covid-19 restrictions. It is intended these activities will
recommence once it is safe to do so.
We discuss our workforce engagement activities on page 14 and pages 58 to 63. Details of the impact of employee
engagement on principal decisions are set out on pages 19 to 21.
Shareholder engagement
Shareholders play a valuable role in safeguarding the Group’s governance through, for example, the annual re-election of
directors, monitoring and rewarding their performance and engagement and constructive dialogue with the Board.
To engage with our shareholders, the Board utilises the following engagement methods: shareholder consultation; investor
meetings and presentations; annual general meeting; annual report and our corporate website. Further details of our
engagement with shareholders are on pages 15 and 95.
Business relationships with suppliers and clients
Relationships with suppliers and clients are developed at all levels through daily business activities allowing us to gain an
understanding of their views and priorities.
Executive and business unit leaders hold regular meetings with suppliers to discuss matters including performance issues,
innovations and upcoming projects.
Wood is a founding member of the Building Responsibly initiative, a global, business-led coalition committed to promoting
the rights and welfare of workers, speciically for those in the engineering and construction industry. The Building Responsibly
Principles provide a framework for Wood’s ongoing development of good practice and will assist in establishing a common,
global baseline for the treatment of workers. Our Building Responsibly strategy has been developed in collaboration with
Supply Chain and, through engagement with our suppliers, we aim to ensure 100% of Wood’s labour suppliers sign up and
comply with the Building Responsibly Principles by 2025 and ensure 100% of our suppliers have Building Responsibly Principles
embedded into their supply chains by 2030.
Client engagement is managed through our structured Client Management Framework enabling active executive and
business unit leadership participation in strategic level and key client meetings. The insight from these meetings helps to
inform operational, business development and long-term strategic direction. In 2021, the continuing Covid-19 pandemic
resulted in most meetings taking place virtually. Details of the Group’s engagement activities with clients and suppliers
during the year are provided on page 16.
Board leadership and Company purpose
Board roles – Principle F
There is clear division between executive and non-executive responsibilities which ensures accountability and oversight.
The roles of Chair and Chief Executive are separately held and their responsibilities are well deined, set out in writing and
regularly reviewed by the Board.
Further details on the roles of the Chair, Chief Executive, Senior Independent Director, non-executive directors and the
Company Secretary is on page 92.
Independence – Principle G
The Board has reconirmed that, at 31 December 2021, our non-executive directors remain independent from executive management
and free from any business or other relationship which could materially interfere with the exercise of their judgement.
External commitments and conlicts of interest – Principle H
The Board takes into account other commitments when considering anyone for appointment to the Board to satisfy itself
that the individual can devote suficient time to the Company and also to assess any potential conlicts of interest.
Key activities of the Board – Principle I
The Board typically schedules four face to face meetings and three calls on an annual basis. During 2021 a total of eight
board meetings took place: four “full” board meetings (one in-person meeting held in Glasgow and three via video conference)
and four board calls (all held via video conference). The meeting in Glasgow was held to coincide with COP26 and local
management and other employees were provided the opportunity to participate in our activities at the conference.
Committee meetings during the year were predominately held remotely by telephone or by video conference.
The Board and its committees routinely invite members of the management team to attend meetings to present on the
matters being discussed, enabling their input into discussions.
The following are covered as standing agenda items at the majority of meetings:
• Review of Governance and reports from the Safety, Sustainability, Assurance & Business Ethics; Audit; and Remuneration
Committees, and the Chief Executive report
• Operations updates and functional updates from HSSES, P&O, Strategy & Development and Finance & Administration
(including Investor Relations, IT, Legal, Tax & Treasury and Commercial)
Further details on Board activity during the year is on pages 97 to 100.
Division of responsibilities
Division of responsibilities
Workforce policies and practices – Principle E
The Board and/or Executive Leadership Team review and approve all key policies and practices which could impact on our workforce
and drive their behaviours. All policies support the Group’s purpose and relect our values and are published on the Group intranet.
As a business, we seek to conduct ourselves with honesty and integrity and believe that it is our duty to take appropriate measures to
identify and remedy any malpractice within or affecting the Company. Our employees embrace our high standards of conduct and
are encouraged to “speak up” if they witness any behaviour which falls short of those standards.
Mandatory training programmes are used to reinforce key ethics and compliance messages in areas such as anti-bribery and
corruption and conlicts of interest. All Board members and employees are required to notify the Company as soon as they become
aware of a situation that could give rise to a conlict or potential conlict of interest. Further details are provided on pages 48 to 49
and page 92.
In 2021, the Board approved the Modern Slavery and Human Traficking 2021 statement.
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Risk management and internal control – Principle O
The Board has overall responsibility for the Group’s systems of internal control and risk management which is fundamental to
the achievement of the Group’s strategic objectives.
Risk management
The Board has a well-established process for identifying, evaluating, and managing the principal and emerging risks faced by
the Group and this process has been in place for the year under review and up to the date of approval of this Annual Report.
The process is regularly reviewed by the Board and is in accordance with the Governance Code. The Group, for the purposes of
applying the Governance Code, comprises John Wood Group PLC and its subsidiaries.
A Group risk management standard codiies existing risk management practice and drives consistency across the Group.
For further details on the principal risks and uncertainties faced by the Group along with associated mitigations, monitoring,
assurance and the approach to emerging risks, please refer to pages 68 to 74.
Any system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives and
can only provide reasonable and not absolute assurance against material misstatement or loss.
The key elements of the ongoing procedures, which the directors established to review the effectiveness of the system of
internal control on an annual basis, are listed below.
As a result of these ongoing procedures, the Board’s assessment was that the overall internal control environment was
operating effectively, with some areas for improvement noted, please refer to pages 70 and 76.
• Internal control structure
The Group has a clear organisational structure for the control and monitoring of its businesses, including deined lines of
responsibility through the organisation up to Board level and delegations of authority in place. The Group has issued policies
which deine the standards of business conduct and include Accounting; Contract Risk Management and Review; Health,
Safety, Security and Environment; and Business Ethics. A Group Business Ethics helpline, operated by an independent third
party, is in place to enable staff and third parties to raise concerns in conidence about possible non-compliance with the
Group’s Code of Conduct.
For more information on Business Ethics see pages 101 and 102.
• Ongoing monitoring of internal control systems
The Board has agreed certain reporting procedures to monitor key risk areas on an ongoing basis, including safety, legal
and inancial matters. Our internal controls and risk management systems in relation to the preparation of the inancial
statements focus on: correct application of relevant accounting standards, company law and our accounting policies; review of
the primary areas of judgement and estimation for 2021; review of the Internal Financial Controls Assessment; consideration
on whether indicators of impairment existed and results of any impairment reviews; judgements underpinning the calculations
for current and deferred tax including uncertain tax positions; review of signiicant contracts; review of provisions; and review
of the signiicant underlying assumptions for the accounting of deined beneit pension obligations. The Audit Committee has
been delegated the responsibility to review the effectiveness of the inancial and IT internal control systems implemented by
management.
The Safety, Sustainability, Assurance and Business Ethics Committee has been delegated responsibility for the effectiveness of
the Group’s management of HSSE, sustainability, operations assurance and business ethics and compliance programme.
The Board and its committees are assisted by the various Group functions including Internal Audit, HSSES and, where
appropriate, the external auditors and other external advisors. Where the internal or external auditors identify any signiicant
deiciencies in the inancial or IT internal control systems, a plan of action is agreed to remedy these and progress against them
is tracked and reported with updates provided to the Audit Committee as necessary.
The Audit Committee receives regular updates concerning ongoing audits. Details of audit updates received by the Committee
in 2021 are set out on pages 106 to 109. The Chairs of the Audit Committee and the Safety, Sustainability, Assurance and
Business Ethics Committee report regularly to the Board on their discussions.
• Information and communication
The Group has a comprehensive system for reporting performance to the Board. This includes monthly and quarterly reports.
The quarterly reports include a detailed inancial review against budgets and latest forecasts. The Executive Leadership Team
receives detailed monthly inancial reports and meets monthly to discuss inancial performance and other operational matters.
The Operating Committee receives reports from each business units quarterly review meetings and quarterly project & risk
review meetings, both of which involve the Chief Executive and the Chief Financial Oficer.
Appointments to the Board – Principle J
We ensure that appointments to our Board are made solely on merit with the overriding objective of ensuring the Board
maintains the correct balance of skills, length of service and knowledge to successfully determine the Group’s strategy.
Appointments are made based on the recommendation of the Nomination Committee with due consideration given to
the beneits of diversity in its widest sense, including gender, and social and ethnic backgrounds.
The Nomination Committee report on pages 103 to 105 provides further information on Board appointments,
succession planning and diversity.
Board skills, experience and knowledge – Principle K
An effective Board requires the right mix of skills and experience. Our Board is a diverse and effective team focused on promoting
the long-term success of the Group. An overview of the skills and experience of each of the directors is on pages 88 and 89.
Annual Board evaluation – Principle L
On an annual basis, an evaluation process is undertaken which considers the effectiveness of the Board, individual directors
and of the Chair. This review identiies areas for improvement, informs training plans for the directors and identiies areas
of knowledge, expertise or diversity which should be considered in our succession plans.
Further details on Board evaluation during the year is on pages 92 to 94.
Composition, succession and evaluation Audit, risk and internal control
Audit, risk and internal control
Financial reporting – Principle M
One of the Audit Committee’s principal responsibilities is to review and report to the Board on the clarity and accuracy
of the Group’s inancial statements, including the Annual Report and interim statement. When conducting its reviews,
the Audit Committee considers the overall requirement that the inancial statements present a ‘true and fair view’.
The main responsibilities of the Audit Committee include:
• Compliance with inancial reporting standards and relevant inancial reporting requirements
• Consideration of the inancial and IT internal control environment
• Consideration of the internal audit programme and results
• Review of the external audit relationship and provision of non-audit services
External auditor and internal audit – Principle M
The Audit Committee has primary responsibility for managing the relationship with the external auditor, including assessing
their performance, effectiveness, and independence annually and recommending to the Board their reappointment or removal.
During the year, the Committee received conirmation from the external auditors regarding their independence.
In accordance with UK regulations and to help ensure independence, the auditors adhere to a rotation policy based on Auditing
Practices Board standards that require the Group audit partner to rotate every ive years. During 2021 the lead audit partner
was changed by the Company’s external auditors, KPMG, following consultation with and agreement from the Company. The
previous lead audit partner had served for three years prior to this change. Further details can be found on page 109.
Further detail on the work of the Audit Committee is on pages 106 to 109.
Fair, balanced and understandable – Principle N
The Board considers that the annual report and accounts, taken as a whole, is fair, balanced, and understandable and provides
the information necessary for shareholders and other stakeholders to assess the Group’s position, performance, business model
and strategy.
In reaching this assessment, the Board carried out an in-depth review of the inancial statements and disclosures therein and
noted the discussions between the Audit Committee and the auditors on the adequacy and clarity of the disclosures. The Board
was also assisted by the Chair, Senior Independent Director and the Chair of the Audit Committee who engaged directly with
company management during the planning, drafting and review stages of this annual report and were provided with draft
materials for review and comment as the document progressed. This facilitated a good level of understanding of the process
of compilation and assurance over the information contained within the Annual Report. The Board subsequently considered the
Annual Report and Accounts as a whole and discussed the Report’s tone, balance, and language at the April 2022 Board meeting.
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continued
Linking remuneration with purpose and strategy – Principle P
Our Remuneration Policy is designed to be simple, balanced and transparent, aligning with strategy, culture and delivery of
shareholder value. The Remuneration Policy and principles support the needs of our business over the next few years, our
strategy and the creation of long-term value for our shareholders. We link pay to performance by ensuring there is a strong
alignment with the organisation’s short and long-term objectives, and the prevailing company culture.
Changes to policy and summary of process – Principle Q
The Remuneration Committee has an established, formal and transparent procedure for developing policy on executive
remuneration and determining director and senior management remuneration. No director is involved in deciding their
own remuneration outcome. In setting the Remuneration Policy, the Remuneration Committee considers the relevant
provisions of the Governance Code, relevant regulations enacted under the Companies Act 2006 and shareholder views
through consultation.
The current Remuneration Policy received shareholder approval at the 2020 AGM.
Strategic targets and performance outcomes – Principle R
The Remuneration Committee exercises independent judgement and discretion when recommending remuneration
outcomes to the Board, taking account of company and individual performance and wider circumstances.
Further detail on the work of the Remuneration Committee is on pages 110 to 134.
Statement by the directors in performance
of their statutory duties in accordance
with s172(1) Companies Act 2006.
It is the intention of the Board to behave
responsibly toward our shareholders,
and other stakeholders, as a whole
and treat them fairly and equally so
they may beneit from the successful
delivery of our strategy; and to ensure
that management operate the business
in a responsible manner, operating
within the high standards of business
conduct and good governance expected
for a business such as ours. The Board
considers that by having regard to the
interests of each of our stakeholders
the Company’s strong reputation will be
maintained and enhanced.
The directors believe that they have
acted in a way they consider, in good
faith, would be most likely to promote
the success of the Company for the
beneit of its members as a whole, and
in doing so have had regard to (among
other matters) the matters set out in
section 172(a) – (f) of the Companies
Act 2006. The information on pages 18
to 21 describes how the Board’s principal
decisions taken during the year ended 31
December 2021 have had regard to those
matters and forms part of the directors’
statement required under section 414
CZA of that Act.
In particular, by reference to our strategy
and aligning to our purpose to unlock
solutions to the world’s most critical
challenges, the Board has:
• Overseen the ongoing delivery of a
strategy aligned to the emerging
trends in our core markets, particularly
energy transition and industrial
decarbonisation, the increasing
demand for sustainable infrastructure
with technology driven solutions
and regard to climate change. As
part of this, in Q4 2021 the Board
had oversight for the initiation of a
strategic review to unlock value from
the part of the Consulting business
unit that faces built environment
markets. The Board considers that
the strategy, including the outcome
of the strategic review of the built
environment business that concluded
that a full sales process is the best
option, will have a long-term beneicial
impact on the Company, its employees
and shareholders; is aligned to the
needs of our clients and will have
beneits for the environment and
communities;
• Recognised that our employees know
our business and have a wide range of
views and experience. Our employees,
and their motivation and retention,
are fundamental to the delivery of
our strategy. The health, safety and
wellbeing of our employees is one of
our primary considerations in the way
we do business (see page 14). Ensuring
strong employee engagement has
been a key Board activity throughout
the year;
• Extensively engaged with clients,
enabling us to gain an understanding
of their views and priorities. We also
aim to act responsibly and fairly in
how we engage with our suppliers (see
page 16); and our credit investors (see
page 15); all of whom are integral to
the successful delivery of our strategy;
• Taken into account the impact of
the Company’s operations on the
environment, including climate change,
and the communities we operate in
(see pages 17 and 18 and pages 65 to
67);
• Considered the medium and longer-
term impact of Covid-19 on our
strategy and stakeholders.
Proit forecast
In our trading update on 13 January
2022, we made the following statement
which is regarded as a proit forecast for
the purposes of the Financial Conduct
Authoritys Listing Rule 9.2.18: "Adjusted
EBITDA of around $550 million to $560
million and adjusted EBITDA margin of
around 8.7%, Operating proit (before
exceptionals) of around $195 million to
$205 million". Full year adjusted EBITDA
was $554m, adjusted EBITDA margin
was 8.6% and operating proit before
exceptionals was $192m.
Disclosures under Listing Rule 9.8.4R
Disclosures in relation to listing rule LR
9.8.4R where applicable are included in
note 22 to the inancial statements in
relation to long-term incentive plans.
Energy usage and carbon emissions
We recognise the impact of energy use
and carbon emissions on climate change
and are committed to minimising our
environmental footprint.
The Company’s approach to governance,
mitigation, monitoring and assurance of
climate change related risk is set out on
pages 68 to 71 and details of the actions
the Company is taking to manage and
minimise our impact are set out on pages
50 to 57.
Detailed information on our energy
usage in line with the Streamlined Energy
& Carbon Reporting framework (SECR),
is set out on page 54.
Political donations
During the year ended 31 December 2021,
no political donations were made and
no political expenditure was incurred,
as deined in Part 14 of the Companies
Act 2006. No donation, contribution or
expenditure was made to any non-UK
political party during the year.
Charitable donations
The employee matched funding
initiative supports employee
fundraising efforts for employee
personal choice charities, with Wood
matching up to 100% of the amounts
raised by employees, up to a speciied
limit. This initiative is the foundation of
our charitable donation programme.
See pages 64 to 67 for further details.
The employee matched funding
initiative is employee led. During 2021
none of the directors recommended or
approved any charitable donations or
other forms of giving.
During 2021 we introduced a strategy to
support Wood’s community investment
sustainability target in order to relect
growing stakeholder expectation that
companies move away from ad hoc
philanthropic activities, to strategic
community investment plans that
emphasise the ‘shared value’ of aligning
business goals with local stakeholder
needs. Wood’s focus on education as our
Global Cause is subject to periodic review
and validation by our employees, allowing
scope to revisit our focus and put this to
a global employee vote periodically over
a 10-year period. Wood is committed to
contributing $10 million to our Global
Cause by 2030.
See page 64 for further details.
Articles of Association
The Company’s Articles of Association
may only be amended by special
resolution at a General Meeting of
shareholders and are iled with the
Registrar of Companies.
Statutory disclosures
Remuneration
Our Articles of Association are available at:
woodplc.com/articlesofassociation
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Financial statementsDirectors' report
continued
The following statement, which
should be read in conjunction with the
directors’ report and statement of
Auditor’s responsibilities set out on page
149 describes the responsibilities of the
directors with respect to the inancial
statements.
The directors are responsible for preparing
the Annual Report, the Annual Report on
Directors’ Remuneration and the inancial
statements of the Group and the
Company in accordance with applicable
law and regulations.
Company law requires the directors to
prepare Group and parent Company
inancial statements for each inancial
year. Under that law they are required
to prepare the Group inancial
statements in accordance with UK-
adopted international accounting
standards and applicable law and have
elected to prepare the parent Company
inancial statements on the same
basis. In addition the Group inancial
statements are required under the UK
Disclosure and Transparency Rules to be
prepared in accordance with UK-adopted
international accounting standards.
The Company inancial statements are
prepared in accordance with FRS 101
“Reduced Disclosure Framework”.
Under company law the directors must
not approve the inancial statements
unless they are satisied that they give a
true and fair view of the state of affairs
of the Group and Company and of their
proit or loss for that period. In preparing
each of the Group and Company inancial
statements, the directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• Make judgements and estimates that
are reasonable, relevant and reliable;
•
State whether they have been
prepared in accordance with UK-
adopted international accounting
standards;
• Assess the Group and Company’s
ability to continue as a going concern,
disclosing, as applicable, matters
related to going concern; and
• Use the going concern basis of
accounting unless it is intended to
liquidate the Group or the Company
or to cease operations, or have no
realistic alternative but to do so.
The directors are also responsible for:
•
Keeping adequate accounting records
that are suficient to show and explain
the Company’s transactions and
disclose with reasonable accuracy at
any time the inancial position of the
Company and the Group and to enable
them to ensure that the inancial
statements and the annual report on
directors’ remuneration comply with the
Companies Act 2006 and, as regards
the Group inancial statements, Article
4 of the IAS Regulation;
• Such internal controls as they
determine is necessary to enable the
preparation of inancial statements
that are free from material
misstatement, whether due to fraud
or error;
•
Taking reasonable steps to safeguard
the assets of the Group and to prevent
and detect fraud and other irregularities;
•
Preparing a strategic report, directors’
report, annual report on directors’
remuneration and Corporate
Governance statement that complies
with applicable law and regulations; and
•
The maintenance and integrity
of the corporate and inancial
information contained on the
Company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
inancial statements may differ from
legislation in other jurisdictions.
Directors’ responsibility statement
The directors conirm that, to the best of
their knowledge:
• The inancial statements, prepared
in accordance with the applicable set
of accounting standards, give a true
and fair view of the assets, liabilities,
inancial position and proit or loss of
the Company and the undertakings
included in the consolidation taken as
a whole;
• The strategic report and directors’
report include a fair review of the
development and performance of
the business and the position of
the Company and the undertakings
included in the consolidation taken as
a whole, together with a description of
the signiicant risks and uncertainties
that they face; and
•
The directors consider the annual
report and inancial statements,
taken as a whole, are fair, balanced
and understandable and provide the
information necessary for shareholders
to assess the Group’s position and
performance, business model and
strategy.
So far as the directors are aware, there
is no relevant audit information of which
the Company’s auditors are unaware.
Each director has taken all reasonable
steps that they ought to have taken as
a director in order to make themselves
aware of any relevant audit information
and to establish that the Company’s
auditors are aware of that information.
Relevant information is deined as
‘information needed by the Company’s
auditors in connection with preparing
their report.
This responsibility statement was
approved by the Board of Directors on
19 April 2022 and is signed on its behalf
by:
Robin Watson
Chief Executive
David Kemp
Chief Financial Oficer
Share capital and rights
As at the date of this report, the
Company’s issued share capital, quoted
on the London Stock Exchange, consisted
of 691,839,369 ordinary shares, each
carrying one vote. The total voting rights
at the date of this report are accordingly
691,839,369. No person has any special
rights of control over the Company’s share
capital and there are no shares carrying
special rights or restrictions on voting
rights. All issued shares are fully paid.
There are no restrictions on the transfer
of ordinary shares in the capital of the
Company other than certain restrictions
which may, from time to time, be
imposed by law, for example, insider
trading regulations. The Company is
not aware of any agreements between
shareholders that may result in
restrictions on the transfer of securities
and/or voting rights.
Details of signiicant direct or indirect
holders of securities in the Company can
be found on page 97 of this report.
The John Wood Group PLC Employee
Share Trust holds shares to meet
its obligations under the Company’s
employee share plans and rights in
respect of those shares are not directly
exercisable by employees. The Trust
refrains from exercising its voting rights.
Acquisitions and purchases
of own shares
Subject to applicable law and the
Company’s Articles of Association, the
directors may exercise all powers of the
Company to authorise the issue and/or
market purchase of the Company’s shares,
subject to an appropriate authority being
given to the directors by shareholders in
a General Meeting and any conditions
attaching to such authority.
At the 2021 annual general meeting
shareholders passed a resolution
authorising the Company to purchase its
own shares up to a maximum number
of 68,833,937 ordinary shares. During
the year ended 31 December 2021 the
Company made no acquisitions of its
own shares and the authority granted by
this resolution has not been used.
Post balance sheet events
Important post balance sheet events
are detailed in the notes to the
inancial statements.
Research and development activity
We have substantial industry know-how
that is shared across the business and
we work with clients to create innovative
solutions. We have active research and
development projects in areas such as
software development, process design,
power plant design, clean energy and we
utilise the outcomes to improve current
process and practice as appropriate.
Appointment, retirement
and removal of directors
The rules governing appointment,
retirement and removal of directors are
detailed in the Articles of Association.
A director may be appointed by an
ordinary resolution of shareholders in a
General Meeting following nomination
by the Board or a member (or members)
entitled to vote at such a meeting. The
directors may appoint a director during
any year provided that the individual
stands for election by shareholders at
the next annual general meeting.
Powers of directors
Subject to applicable law and the
Company’s Articles of Association, the
directors may exercise all powers of
the Company.
Indemnity of oficers
Under Article 137 of the Articles, the
Company may indemnify any director
or former director against any liability,
subject to the provisions of the
Companies Acts. Under the authority
conferred by Article 137, the Company
has granted indemnities to the directors
of the Company. The indemnities do not
apply to any claim which arises out of
fraud, default, negligence or breach of
iduciary duty or trust by the indemniied
person. In addition, the Company may
purchase and maintain for any director
or other oficer, insurance against
any liability. The Company maintains
appropriate insurance cover against legal
action brought against its directors and
oficers and the directors and oficers of
its subsidiaries.
Approval of the directors’ report
The strategic report set out on pages 01
to 74 and the directors’ report set out
on pages 78 to 87 were approved by the
Board on 19 April 2022 and have been
signed by the Company Secretary on
behalf of the Board.
Martin J McIntyre
Company Secretary
Footnotes
1. Subsidiaries are those entities which are under
Group management and control as detailed in
note 37 to the Financial Statements.
Directors’ responsibilities
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continued
David Kemp
Chief Financial Oficer
Appointed:
2015
Contribution to the Company
David is an experienced Chief Financial
Oficer (CFO) with a signiicant track
record of building inancial discipline,
driving growth and margin improvement
and delivering excellence. His extensive
knowledge of the debt and equity markets
and the wider inancial and service sectors
is vital to the Company’s objectives of
resilience and a strong balance sheet.
Experience
David was appointed as CFO of Wood
Group’s PSN division in 2013 and as Group
CFO in 2015. David is a non-executive
director of Craneware plc and was a
director of Albyn School Limited until the
end of January 2022. Prior to joining Wood
Group, he served in executive roles at Trap
Oil Group, Technip, Simmons & Company
International and Hess Corporation, working
across Finance, M&A and Operations. He
is a member of the Institute of Chartered
Accountants of Scotland.
Roy A Franklin
OBE
Chair
Appointed:
2017
Chair since September 2019
Contribution to the Company
Roy brings to the Board more than 48
years’ experience as a senior executive in
the oil and gas industry including strong
strategic and operational expertise and
extensive experience in chairing boards
of listed companies. Such combined
knowledge enables him to steer the
Board’s focus, promoting open and
productive debate and contributes to the
Board’s practical understanding of good
governance. He has an outstanding track
record and has demonstrated consistent
and valuable leadership.
Experience
Roy is currently a director of Kosmos
Energy Ltd and an independent non-
executive director of Energean plc. Roy
initially spent 18 years at bp, latterly as
head of M&A, bp Exploration, after which
he was group MD of Clyde Petroleum and
then CEO of Paladin Resources until its
acquisition by Talisman Energy in 2005.
Since then Roy has served on a number
of international energy boards in non-
executive roles, including Amec Foster
Wheeler plc. He is a former chairman of
the Keller Group PLC and former deputy
chairman of Equinor A/S. Until 25 February
2021, Roy was chairman of privately held
Energean Israel Ltd and until 31 March
2021 was chairman of Premier Oil plc.
N
Robin Watson
CBE
Chief Executive
Appointed:
2013
Group Chief Executive since January 2016
Contribution to the Company
Robin has a comprehensive understanding
of the Company and a clear strategic
mindset. He has extensive leadership
and management experience, with a well
established track record of implementing
strategic change and operational delivery.
His contribution and vision is invaluable
as we re-position the business across
the energy transition and deliver long-
term growth, in a continually changing
environment.
Experience
Robin was responsible for the creation
of Wood when he led the acquisition of
Amec Foster Wheeler in 2017. Robin joined
the Company in 2010, becoming CEO
of Wood Group’s PSN division in 2012
and was appointed as Chief Operating
Oficer and an executive member of the
Wood Group Board in 2013. Prior to joining
Wood Group, he worked for Petrofac and
Mobil Oil in the UK and internationally
and has more than 35 years’ engineering
and industry experience. Robin is a board
member of the Institute of Directors
through his membership of the Energy
Leaders Coalition (ELC) and his personal
commitment to the Scottish Leaders
Mentoring Scheme is contributing to
improving gender diversity in the energy
sector and the wider Scottish business
sector. He has also been a past Board
member of Oil & Gas UK and, between 2011
and 2015, on the Scottish Business Board,
a cross-industry advisory group to the UK
government. Robin has received a variety of
prestigious business awards recognising his
leadership, innovation and entrepreneurism
and was appointed a Commander of the
Order of the British Empire (CBE) in 2020,
in recognition of his services to international
trade and is a Chartered Mechanical
Engineer, a Fellow of both the Institution
of Mechanical Engineers and the Energy
Institute. He holds a Masters of Business
Administration and an Honours Degree in
Offshore & Mechanical Engineering and was
recently bestowed an Honorary Doctorate
in Engineering from Heriot Watt University.
Robin is also a Visiting Professor at the
Robert Gordon University.
Nigel Mills
Non-executive and
Senior Independent Director
Appointed:
2020
Contribution to the Company
Nigel has extensive inancial, commercial and
investor relations skills, having advised some
of the UK’s largest companies across a broad
range of end markets. His strong strategic
inancial experience ensures he is well
equipped to provide sound advice together
with independent challenge to the Board.
His contribution strengthens the Board’s
discussions and is invaluable as we strive for
long-term growth.
Experience
Nigel is senior independent director of
Persimmon Plc, where he also served as
acting chairman for six months in 2018. His
executive career was in investment banking,
as chair of Corporate Broking at Citi and
chief executive at Hoare Govett.
NA R
Former director who served for
part of the inancial year
Mary Shafer-Malicki
Appointed:
2012
Non-executive Director.
Member of the Audit, Nomination and
Remuneration Committees.
Resigned May 2021.
Jacqui Ferguson
Non-executive Director
Appointed:
2016
Contribution to the Company
Jacqui contributes to both strategic and
operational matters with wide ranging
managerial and equality, diversity and inclusion
experience. Her diverse outlook and broad
industry related technology expertise from
multiple sectors including telecommunications,
inancial services, manufacturing, travel &
transportation, energy and government is
an important element enabling the Board to
deliver its strategy and long-term growth.
Experience
Jacqui is a senior independent director of
Tesco Bank and a non-executive director
of Croda International plc. She is deputy
chair of Engineering UK and a Fellow of the
Institute of Engineering and Technology.
Jacqui was previously a founding member of
the Scottish First Minister’s Advisory Board
for Women and Girls, her 3 year term having
ended during 2021, and Senior Vice President
and General Manager of Hewlett Packard
Enterprise Services in the UK and Ireland,
Middle East, Mediterranean, Africa and Israel.
A N R
Brenda Reichelderfer
Non-executive Director
Appointed:
2021
Contribution to the Company
Brenda is an engineer with broad
business leadership experience. She
brings considerable global engineering
and operational capability from multiple
industries to the Board, together with
valuable independent advice.
Experience
Brenda is currently a director of Moog, Inc.,
and of Federal Signal Corporation. She
was previously Senior Vice President and
Managing Director of global consulting irm
TriVista, Inc. and non-executive director of
Meggitt plc. Prior to that Brenda was Senior
Vice President, Chief Technology Oficer and
Director of Engineering of ITT Corporation.
She also held the position of President in two
of ITT’s four Operating Divisions during her
28-year tenure.
Susan Steele
Non-executive Director
Appointed:
2021
Contribution to the Company
Susan has wide-ranging engineering
and construction industry, programme
management and supply chain performance
experience. Her global expertise across
a range of end markets signiicantly
strengthens the Board.
Experience
Susan is the Chief Executive Oficer of
Steele & Partners. She is also an independent
director of Hill International, Inc., and
was until May 2021 a director of Harvard
Bioscience, Inc. She was Senior Vice President
of Global Supply Chain Management at
Jacobs Engineering and held a number
of roles including Vice President, Business
Development for Manufacturing and
Life Sciences at CHM2 Hill. In October
2021 Susan was inducted into the
National Academy of Construction, which
recognises and honours individuals for their
distinguished contribution to the industry and
to share their expertise.
Birgitte Brinch Madsen
Non-executive Director
Appointed:
2020
Contribution to the Company
Birgitte has extensive, global experience of
engineering and consulting projects in the
energy and built environment sector. Her
knowledge and understanding of green
energy technologies adds value as we
continue to strengthen our expertise within
renewable energy. Birgitte adds to the
balance of skills and diversity of views on
the Board.
Experience
Birgitte is a non-executive director of the
Danish based road contractor, Arkil Holding
A/S and is a non-executive director at the
Danish fund companies Danske Invest and
Danske Invest Select. She was previously
Chief Technical Oficer with Maersk FPSO’s,
a business unit of international logistics
company A.P. Moller – Maersk A/S, and prior
to that was BU Director of the Energy and
Industry business of the Danish international
engineering consultancy COWI A/S.
R
N
S
NASN
*Image © Søren Svendsen, M&L
Thomas Botts
Non-executive Director
Appointed:
2013
Contribution to the Company
Thomas has almost four decades of
international business and senior management
experience. He has strong leadership skills and
wide-ranging experience within the industry.
His proven track record and performance
brings extensive practical and business
knowledge to the Board’s discussions and
makes him a valuable member of the Board.
Experience
Thomas is a non-executive director of EnPro
Industries, is co-chair of the Governor’s Task
Force at the University of Wyoming, chairman
of the University of Wyoming Foundation and
is a long-standing member of the Society of
Petroleum Engineers. Thomas was formerly
with Shell for 35 years, latterly as global head
of Shell’s manufacturing business.
N S
Adrian Marsh
Non-executive Director
Appointed:
2019
Contribution to the Company
Adrian has a wealth of inancial expertise
in large multi-national companies. He has
a proven track record in inancial, strategic
and commercial roles and brings substantial
audit, risk and audit committee expertise to
the Board.
Experience
Adrian has been Group Finance Director
of DS Smith plc since September 2013. He
was previously Head of Tax, Treasury and
Corporate Finance at Tesco plc and has
also held divisional CFO positions at both
AstraZeneca PLC and Pilkington plc.
A S
N
Key to Committee membership
S
Safety, Assurance & Business Ethics
N
Nomination
R
Remuneration
A
Audit
Chair
Governance
Board of Directors
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Strategic report
Governance
Financial statements
Executive Leadership Team
The ELT operates under the authority of the Chief Executive Oficer and comprises the Chief Executive Oficer, Chief Financial
Oficer, Chief Operating Oficer, the Executive Presidents of our business units, the Executive Presidents of our Health, Safety,
Security, Environment & Sustainability, People & Organisation and Strategy & Development functions and the Group General
Counsel & Company Secretary. The Executive Presidents of our business units all report directly to the Chief Operating Oficer.
The other members of the ELT report directly to the Chief Executive Oficer.
The ELT supports the Chief Executive with the development and implementation of Group strategy and with the management
of the business operations of the Group.
Executive Leadership Team and
business unit update
At the end of December 2021, Dave
Stewart, formerly Chief Operating Oficer
(COO) and Sue MacDonald, Executive
President – People & Organisation, retired
and stepped down from their respective
roles and from the ELT.
Dave Stewart had been with the
Company in various roles for 25 years
and his deep cross-industry experience
has been a driving force, propelling
our performance and navigating us
through many changes. Most recently
as our COO, he led the creation of our
Operational Excellence model, our mark
of excellence and a hallmark for the
Wood way of working.
In September 2021, Wood welcomed
Ken Gilmartin to the ELT and, after
a hand-over period, he assumed the
position of COO on 1 October 2021.
Ken has signiicant experience in
operational and project leadership roles
across geographies and sectors which
is valuable to his role as COO, with
responsibility for execution excellence,
operational assurance and optimising
and digitalising the way Wood delivers
work to its global client base. He
also leads the Operating Committee
with a focus on building on the strong
momentum in the deinition and
execution of a global operational strategy.
Sue MacDonald joined the Company in
2010 and has been pivotal in navigating
the Company through the strategic
acquisitions and integrations that
have brought our organisation, culture
and people together to become the
community we are today.
Lesley Birse succeeds Sue as Executive
President – People & Organisation,
having previously held the role of
President, P&O for our Operations
business unit. Lesley has over 20 years of
global human resources (HR) experience,
including shaping HR strategies for
growth, championing diversity and
inclusion initiatives and leading cultural
change programmes. Her focus on
optimising our organisation and talent
will be at the heart of her new role.
During 2021 we progressed our “Future
Fit” initiative ensuring our business
is it for accelerating the pace of the
energy transition, through optimising
our operating model and further
digitalising the way we work to unlock
stronger medium-term growth. This
included transforming how we operate
and, effective from 1 January 2021, we
moved to three global business units;
Consulting, Projects and Operations.
These business units were led by Joe
Sczurko as Executive President –
Consulting, Stephanie Cox as Executive
President – Operations and Mike Collins
as Executive President – Projects.
Role of the Board and Committees
Board
The Board is collectively responsible for the governance of the Company on behalf of shareholders and is accountable to them
for the long-term success of the Group. The Board focuses its time and energy on strategy, succession planning, signiicant
acquisitions and divestments, deleveraging, the annual budget and performance against it, monitoring and assessment of
culture, monitoring the performance of the management team, and risk management, speciically focusing on principal risks
and the overall system of internal control.
The Board has delegated some of its responsibilities to its four main Board Committees – the Safety, Sustainability, Assurance &
Business Ethics Committee, the Nomination Committee, the Audit Committee and the Remuneration Committee. The work of
these Committees is supported by members of the Executive Leadership Team (ELT) and other senior management.
The Company Secretary provides advice and support to the Board.
Safety, Sustainability,
Assurance &
Business Ethics
Committee
Oversees the Group’s
management of HSSE,
Sustainability, Operations
Assurance and the
Business Ethics and
Compliance programme,
consistent with the
Group’s values.
Read more on page 101
Nomination
Committee
Leads the process for
Board appointments,
ensuring formal, rigorous
and transparent
procedures and making
recommendations to the
Board to ensure plans
are in place for an orderly
succession to both
the Board and senior
management positions
and oversees the
development of a diverse
pipeline for succession.
Audit Committee
Responsible for reviewing
the effectiveness of the
Group’s internal inancial
controls, monitoring the
integrity of the Group’s
inancial statements and
internal and external
audit functions. The
Audit Committee
aims to promote high
standards of corporate
governance by ensuring
robust and effective
inancial controls,
reporting and audit.
Remuneration
Committee
Oversees and is
responsible for various
aspects of remuneration
and beneits of the
Chair, executive directors,
members of the ELT and
the Company Secretary.
Dave Stewart
Chief Operating
Oficer
(retired 31 Dec 21)
Ken Gilmartin
Chief Operating
Oficer
(appointed 1 Oct 21)
Joe Sczurko
Executive
President -
Environment &
Infrastructure
Consulting*
Martin McIntyre
Group General
Counsel &
Company
Secretary
(appointed 1 Jan 22)
Mike Collins
Executive
President -
Projects
Stephanie Cox
Executive
President -
Operations
Sue MacDonald
Executive President -
People &
Organisation
(retired 31 Dec 21)
Lesley Birse
Executive President -
People &
Organisation
(appointed 1 Nov 21)
Jennifer Richmond
Executive President
- Strategy &
Development
(appointed 18 Apr 22)
Andy Hemmingway
Executive President -
Consulting
(appointed 9 Mar 22)
Nina Schoield
Executive
President -
HSSES
Andrew Stewart
Executive President
- Strategy &
Development
(resigned 31 Jan 22)
*In Q1 2022, as part of the preparations for the proposed sale of the built environment
business, Joe Sczurko’s role transitioned from Executive President – Consulting, to
Executive President - Environment & Infrastructure Consulting.
Find out more about the ELT at:
woodplc.com/leaders
Read more on page 103 Read more on page 106 Read more on page 110
Operating Committee
The OpCom operates under the
authority of the Chief Executive
and is led by Ken Gilmartin as COO.
The OpCom is responsible for
overseeing the deinition and
execution of a global operational
strategy that supports the
priorities of the business.
The OpCom drives operations
excellence in the form of enhanced
operating discipline to ensure
greater consistency in operational
outcomes. The OpCom comprises
the COO, the Executive Presidents
of our three business units, the
Presidents – Operations Excellence
of our three business units and the
leaders of our Digital & Technology,
Supply Chain and Operations
Assurance functions.
Investigations Oversight
Committee
The Board established the
Investigations Oversight
Committee following the
acquisition of Amec Foster Wheeler
to oversee and report to the Board
on the investigations by various
authorities referred to in notes 20
and 33 to the inancial statements.
The Company agreed settlements
of the various investigations during
2021.
Details of the respective settlements
can be found on page 48.
The implementation of the
respective settlements is being
managed by the Ethics &
Compliance team, overseen by the
Safety, Sustainability, Assurance &
Business Ethics Committee.
The Investigations Oversight
Committee continues to meet to
provide support and additional
oversight to those functions
managing the settlements. It is
intended that the Committee will
stand down upon conclusion of the
respective settlements.
The members of the Committee are
Thomas Botts (Chair), Roy Franklin
and Adrian Marsh along with the
Executive President
–
HSSES and the General Counsel. The Chief
Executive and CFO also attended
meetings of the Committee.
Group Risk Committee
The Group Risk Committee ensures
the material and emerging risks
for Wood are appropriately
measured and managed and that
all principal risks are identiied and
appropriately mitigated. The Board
formally reviews the work of the
Committee, including the summary
of principal risks, twice a year.
The Committee comprises the
members of the ELT and the
General Counsel. The President
– Internal Audit and the Vice
President – Risk also attend
meetings of the Committee.
Covid-19 Response Committee
A Covid-19 Response Committee
was created in 2020 in order to
assist the Board in its oversight
responsibilities by reviewing,
monitoring and supporting the
Company’s response to the
Covid-19 pandemic and related
market conditions.
The Committee is intended to
be established for the duration
of the pandemic. As the effects
of the pandemic and associated
government guidance, and the
Company’s response, became
clearer, the Safety, Sustainability,
Assurance & Business Ethics
Committee assumed oversight of
the Committee in August 2020.
Corporate governance
Governance
As part of preparing for the proposed
sale of the built environment business,
in Q1 2022 we began preparing for the
future separation of that business by
taking steps to create two distinct
divisions within our Consulting business
unit. These divisions are Consulting;
consisting of our energy focused
consulting activities, and Environment
& Infrastructure Consulting; which
is the subject of the proposed sale.
Andy Hemingway joined the ELT in
March to assume leadership for the
Consulting division and Joe Sczurko’s
role transitioned so that he now leads
the Environment & Infrastructure
Consulting division.
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Governance
Financial statements
Corporate governance
arrangements
Details of how the Company has
complied with each Principle of the 2018
UK Corporate Governance Code (the
Governance Code) are set out on pages
79 to 84.
Board composition
The Board comprised ten directors for
most of the year. Mary Shafer-Malicki
resigned as a non-executive director
with effect from 13 May 2021. Brenda
Reichelderfer and Susan Steele were
appointed as additional non-executive
directors with effect from 31 March 2021.
The Board considers any recommendations
made by the Nomination Committee with
regard to board composition and proposed
appointments.
Non-executive directors comprised
a majority of the Board (excluding
the Chair) as recommended by the
Governance Code.
Board roles
As agreed by the Board and in
compliance with the Governance Code
there is a clear separation of the roles of
the Chair and the Chief Executive.
The Chair is a non-executive director and
is responsible for leadership of the Board,
creating the conditions for overall Board
and individual director effectiveness. The
Chair’s responsibilities include providing
coherent leadership consistent with
the Group’s vision and values, running
the Board and setting its agenda,
taking full account of all concerns of
Board members, and ensuring there is
a clear structure for, and the effective
running of, Board Committees with
appropriate terms of reference. The
Chair ensures effective communication
with shareholders and other stakeholders
and ensures that the members of the
Board are made aware of the views of
major investors.
The Chief Executive is an executive
director and is responsible for running
the business of the Group in close
collaboration with and with the support
of the Executive Leadership Team. The
Chief Executive’s responsibilities include
developing group objectives and strategy
for approval by the Board, effectively
leading the Executive Leadership Team
and senior leadership in the day-to-day
running of the Group’s business and
setting out the Group’s culture, values
and behaviours.
The Senior Independent Director
provides support to the Chair and to the
Board in the delivery of its objectives.
The Senior Independent Director is
available to shareholders who have
concerns that have not been resolved
through discussion with the Chair or
Chief Executive. The Senior Independent
Director is responsible for leading the
evaluation of the Chair on behalf of the
other directors.
Non-executive directors have a
responsibility to bring constructive,
independent challenge and judgement
to Board discussion. The Chair and the
non-executive directors meet periodically
without the executive directors present.
Non-executive directors are required
to be free from any relationships or
circumstances which are likely to affect
the independence of their judgement.
The Nomination Committee regularly
reviews the independence of non-
executive directors.
The Company Secretary is responsible
for advising the Board on all governance
matters. The responsibilities of the
Company Secretary include ensuring
information lows within the Board and
its Committees and between senior
management and the non-executive
directors, facilitating the induction of new
directors and assisting with the ongoing
training and development needs of Board
members as required, and facilitating an
annual board, committee and individual
director effectiveness review.
Board independence
After careful consideration, the Board
considers that, at 31 December 2021,
all of its non-executive directors were
independent in character and judgement,
and that there were no relationships
or circumstances which are likely to
affect, or could appear to affect their
judgement. Mary Shafer-Malicki resigned
as a non-executive director with effect
from 13 May 2021. Mary had been
a non-executive director of Wood
since June 2012 and her resignation
was in line with the principles of the
Governance Code regarding the tenure
of independent directors.
Thomas Botts will have served on the
Board for nine years in 2022 and, in
accordance with the principles of the
2018 UK Corporate Governance Code,
he will step down from the Board at the
2022 AGM.
Conlicts of interest
The Board requires directors to declare
any appointments or other situations
which would amount to a possible
conlict of interest, including those
resulting from signiicant shareholdings,
and to ensure that the inluence of third
parties does not compromise or override
independent judgement. The Board has
procedures in place to deal with and, if
necessary, approve any such conlicts.
At the start of any Board or Committee
meeting, directors are required to declare
any conlicts arising from agenda items
scheduled for that particular meeting
and not to take part in any discussion of
that particular item.
Board re-election
All Board directors are required to
offer themselves for re-election at
the annual general meeting (AGM) of
the Company. Any director appointed
after the AGM must stand for election
by shareholders at the next AGM. As
required by the Governance Code the
papers accompanying the resolutions
proposing their election or re-election
set out speciic reasons why their
contribution is, and continues to be,
important to the Company’s long-term
sustainable success.
Evaluation of performance
In order to evaluate its own
effectiveness, the Board undertakes
annual effectiveness reviews using a
combination of externally facilitated and
internally run evaluations.
During 2020, Lintstock, a corporate
advisory irm, undertook independent
evaluations of the Board and of its
committees and during 2021 undertook
evaluations the Board, its Committees
and of the Chair.
Lintstock has conducted previous
evaluations of the board and its
committees but has no other connection
with the Company or any of the directors.
The 2020 evaluations were conducted by
means of survey questionnaires issued to
and completed by each Board member.
The 2021 evaluations were conducted
utilising survey questionnaires and via
one-to-one interviews with each Board
member and with senior management.
Lintstock also engaged with members of
the Executive Leadership Team to gain a
wider perspective and understanding of
board performance.
During December 2020 and January 2021
Nigel Mills, Senior Independent Director,
spoke to each director (executive and
non-executive) and also discussed the
Chair in his absence. He also discussed the
Lintstock 2021 evaluation with the Board
as a group without the Chair present.
The results of the evaluation conducted
during late 2020 were reviewed by
the Board and committees during the
November 2020 Board meeting and the
results of the evaluation conducted during
2021 were reviewed during the November
2021 Board meeting.
With regard to the evaluation conducted
during 2020, the overall conclusion was
that the performance of the Board
of Directors is rated very highly and
therefore the recommendations were
characterised as points of potential
further improvement rather than
material changes of approach.
2020 evaluation
Particular areas of Board governance
which were commended in the report
included:
•
rated very highly - the Board’s
effectiveness in adjusting its focus
and priorities in response to the
Covid-19 pandemic
• rated highly - Board composition;
senior management succession
planning; monitoring of culture and
behaviours; non-executive directors’
engagement with management;
management of Board meetings;
effectiveness of remote Board
meetings; communications during the
Covid-19 pandemic
• rated positively – the Board’s
understanding of investors, clients,
employees and partners
• rated as adequate - oversight of
the Group’s processes for improving
diversity and inclusion
The recommendations and the actions
taken subsequently in response to the
2020 Board evaluation were:
Board and senior management succession:
Recommendation:
The importance of ensuring that the Board
and senior management proile relects
the future direction of the organisation, as
well as ensuring the expertise of departing
Board members is replaced.
For brief biographies of the directors
see pages 88 and 89
More information on the roles and
responsibilities of the Chair, Chief
Executive and Senior Independent
Director is available at:
woodplc.com/investors/
roles-and-responsibilities
Further details on director appointments
and the role of the Nomination
Committee are set out on page 103
Corporate governance
continued
Action undertaken:
The Board monitors the tenure of
independent directors in line with the
principles of the Governance Code.
During 2021 Mary Shafer-Malicki
resigned having served as a non-
executive director for nine years. Upon
the recommendation of its Nomination
Committee, the Board approved the
appointment of two additional non-
executive directors, Brenda Reichelderfer
and Susan Steele, further details of
which are on pages 103 to 105. The
appointment of Brenda and Susan
supports the Board’s commitment to
gender diversity and their international
consulting experience signiicantly
strengthens the Board.
The Board reviewed senior management
development plans and succession
planning to ensure any proposed
promotions or appointments relected
the expertise required to facilitate the
future direction of the Company.
Devoting time to discussion:
Recommendation:
The Board should focus on deeper
exploration of individual issues, allocating
more time for discussion in general.
Action undertaken:
Additional time was added to the Board
meeting timetable to allow for in-depth
discussion where required.
In particular, business unit reporting to
the Board was re-formatted. Instead of
the Executive Presidents of each business
unit taking the Board through their
respective reports in detail, they each
gave a brief verbal summary of the key
points followed by a Q&A session to allow
deeper discussion.
Additional time was also set aside to
allow discussion of strategic options
which may be available to the Company
including discussions which ultimately
led to the strategic review of the built
environment business. Further details
of this strategic review are set out on
page 21.
The agendas of subsequent meetings
were reviewed in order to allow time for
deeper discussion as necessary.
Focusing on performance, including
through metrics:
Recommendation:
Greater focus on operational execution,
informed by appropriate metrics and
having better leading KPIs for business
performance, enabling non-executive
directors to gain an understanding of
how the business is performing and to
lag areas of potential concern.
Action undertaken:
The refreshed approach to business unit
reporting gave the non-executive directors
a better understanding of how each
business was performing and allowed the
Board to focus on the management of
potential risks such as retention of skilled
staff and to ensure consistency in gross
margins and tender governance.
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Financial statements
Corporate governance
continued
Engagement with shareholders
Our investor relations (IR) activities are
led by the Chief Executive and CFO,
supported by the IR team and other
members of senior management as
appropriate. We provide the opportunity
for signiicant shareholders to meet with
the Chief Executive and CFO at least
twice a year around the interim and full
year results announcements. and with
the Chair around the Annual General
Meeting. The Chair also has regular
calls with the Company's brokers to
understand the views of shareholders
and equity markets more broadly.
During 2021, in addition to periodical
market updates and our interim and full
year results, more than 100 shareholder
engagements took place between
investors and the IR team and/or the
Chief Executive and CFO and these were
carried out by call and video conference.
Continuing Covid-19 restrictions
meant that we were unable to invite
shareholders to attend our AGM, held on
13 May 2021, in person. In order to allow
shareholders to participate as much
as possible, we facilitated submission
of questions in advance of the AGM
through our website and we provided
a simultaneous audio broadcast of
the AGM so shareholders could follow
proceedings and could also submit
questions during the meeting. Questions
submitted, and the responses, were
published on our website at
woodplc.
com/investors/annual-general-meeting
Engagement between signiicant
shareholders and the Chair proceeded
as normal albeit via video conference
and telephone rather than face-to-face
meetings. The engagement focused
on Wood’s medium-term strategic
objectives and capital allocation, and
later in the year engagement focused
on the strategic review initiated in
November in respect of the built
environment business.
Sustainability of the
Group’s business model
As part of the continuing assessment of
the lexibility and sustainability of our
business model, the Board monitors and
reviews strategy (including purpose and
strategic objectives). Through its review
the Board is able to assess and identify
changing or emerging risks that could
impact on the Group in the short and
medium-term.
During the year, the Group Risk
Committee continued to monitor, and
report to the Board on risk management,
internal control, and assurance. In
addition, a new enterprise risk
management system and risk dashboard
that is aligned to the business principal
risks was implemented in 2021, providing
a clear escalation of emerging risks and
focus on control effectiveness.
The impacts of climate change on the
resilience of our business model are
relected in two of our principal risks:
ESG strategy and performance and
Strategic agility. During the year, the
Group Risk Committee and the Board
have continued to monitor climate
change impacts through their oversight
of the principal risks.
The Board believes that Wood plays
a vital role in addressing climate
change through its strategy aligned
to solutions for a net-zero, combined
with the technical solutions it provides
to clients, as well as minimising its
own environmental footprint. In order
to assess the risks, opportunities
and impact of climate change on the
sustainability of the business model,
the Board considers the key market
drivers and uncertainties for market
development, key customers and
competitors across each of Wood’s
focus geographies, Wood’s historical
track record of performance, major risks
to delivery and how will they be mitigated.
The Board increases its understanding by
developing strategic partnerships as well
as supporting global initiatives on climate
advocacy such as COP26 and the UN
Global Goals for Sustainable Development.
Additionally, the Group Risk Committee
continued to assess the longer term
impacts of Covid-19, including a review
of the principal risk “Enduring Impact of
Covid-19” and determined that Covid-19
remained a principal risk.
Board development
The training and continuing professional
development needs of directors are
periodically discussed at Board meetings
and during the year brieings and/or
training were provided on issues relating to:
• Market backdrop and share price
performance, valuation analysis on
consensus and management forecasts
and potential third-party approaches
and shareholder activism
• Unconscious bias
• Market Abuse Regulations and
Insider Trading
• UK regulatory considerations; key
features of the UK Takeover Code and
the Board’s responsibilities, including
their iduciary duties
Arrangements are in place for newly
appointed directors to undertake an
induction process designed to develop
their knowledge and understanding
of the Group’s business. This includes
meetings with senior management,
visits to operating sites and discussion
of relevant business issues. Due to
continuing Covid-19 restrictions it was
not possible for Birgitte Brinch Madsen
and Nigel Mills, both appointed during
2020, and for Brenda Reichelderfer and
Susan Steele, both appointed during
2021, to visit any operating sites and
the majority of meetings with senior
management took place virtually. It is
intended that this part of the induction
process will recommence once it is safe
to do so.
Upon their appointment, directors are
advised of their legal and other duties
and their obligations as directors of a
listed company and under the Companies
Act 2006.
2021 evaluation
With regard to the evaluation conducted
during 2021, it was noted that the Board
composition has evolved purposefully
and includes a wide range of relevant
expertise and good gender diversity and
the addition of another non-executive is
not a matter of urgency. The standard
of director and senior management
induction was commended, particularly
in the context of limited face-to-face
engagement. Board meetings were
generally well managed, however more
concise management presentations
to maximise the time available for
discussion and more frequent one-to-
one engagement between non-executive
directors and members of the ELT would
be beneicial.
The response of risk management
arrangements to Covid-19 and the
Board's oversight of recently concluded
investigations, were rated extremely highly.
The Board’s oversight of risk was
rated highly.
When compared against the Lintstock
Governance Index, which draws upon
over 200 board reviews and helps put
performance into context, monitoring
of culture was rated considerably more
positively than is typically the case.
The following were all rated positively
overall: understanding of key stakeholder
groups, current mechanisms for
workforce engagement, organisational
structure of the Group, oversight of
project execution and understanding
of various markets and geographies in
which the Group operates.
The top priorities for the Board were
identiied as:
Discussing and agreeing strategy
As an enhancement to the longer-
term strategic plan, the Board is
encouraged to extend workstreams and
inancial targets used for the medium-
term strategy over a longer-term
horizon. This will enable longer-term
strategic targets to be discussed and
agreed with the management team
responsible for delivering them, allow
the Board to monitor the delivery and
hold management to account and
enable the longer-term strategy to be
clearly communicated both internally
and externally.
The top strategic issues were identiied as:
•
the energy transition
• transitions in leadership
• attracting and retaining talent
•
returning to growth
• maintaining inancial/balance sheet
strength
• portfolio optimisation
• operational execution
Monitoring business performance
and execution
Monitoring the impact of the new
organisational structure to drive more
consistent execution and business and
inancial performance represents a key
area of focus. Maintaining close oversight
of the Future Fit initiative is a priority.
Returning to face-to-face meetings
and engagement
Strong working relationships are the
foundation of an effective Board and
although the Board had maintained
strong relationships through a period
of remote working, a return to face-to-
face engagement would be critical for
building rapport between the Board,
senior management and with the wider
workforce.
More frequent one-to-one engagement
between non-executive directors
and members of the ELT would be
beneicial whilst non-executives should
revert to an in-person format for their
programme of regular engagement
with non-Board management and high
performing employees.
Focusing on people and succession
More time should be devoted to the
people agenda, including plans in place to
deliver on stated ambitions in areas such
as diversity and inclusion.
Greater emphasis should be placed on
succession planning for senior positions,
including non-board roles, as well as the
longer-term talent pipeline with greater
clarity on the strengths and weaknesses
of succession candidates.
Evaluation of the Chair
The performance of the Chair was rated
very highly.
He is responsive and pragmatic and
maintains highly positive relationships
with both the executive and non-
executive directors and with the ELT,
however even greater engagement with
the ELT was recommended.
He is highly effective at setting clear
agendas, managing director input and
demonstrates a fair and balanced
approach to include all voices, offering
constructive feedback whilst balancing
challenge and support.
The availability of the Chair outside of
board meetings was highly rated and
his readiness to engage with employees
throughout the business was commended.
Oversight of committees
Board oversight of its committees was
rated very highly with committee reports
and actions driving the Board agenda
forward. The annual committee meeting
cycle was well managed, balancing
structured cadence and focus.
Committee evaluation
The reports on each of the Board
Committees prepared as part of the
externally-facilitated Board effectiveness
review were circulated to the members
of each of the respective committees
and subsequently discussed by those
committees.
Further details of the committee
evaluations are set out on pages 102,
105, 109 and 112.
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Strategic report
Governance
Financial statements
Update on investigations
The Investigations Oversight Committee
(IOC), chaired by Thomas Botts, continued
to provide independent oversight,
monitoring and reporting to the Board
of our response to the investigations by
relevant authorities into the historic use
of agents and other matters.
In March 2021, WGPSN (Holdings) Ltd,
a subsidiary of the Company, reached
a civil settlement with Scotland’s
Civil Recovery Unit in relation to the
historical engagement of Unaoil by
a legacy joint venture in Kazakhstan
during the period between 2008 and
2010. The settlement concludes the
issue which started after the Group
self-reported, having conducted a
thorough internal investigation, before
cooperating fully with the Crown Ofice
& Procurator Fiscal Service (COPFS)
and the Civil Recovery Unit throughout
their investigation. Under the terms of
the settlement, Wood agreed to pay
approximately $9m to the COPFS, of
which around $3m was paid in 2021, with
the balance to be paid in instalments in
2022 and 2023.
In June and July 2021, Wood entered
into agreements with authorities in
the UK, the US, and Brazil to resolve
their respective bribery and corruption
investigations into the past use of
third party agents in the legacy Amec
Foster Wheeler business. Under the
terms of the agreements, Wood will
pay compensation, disgorgement and
prejudgment interest, ines and penalties
of approximately $177m, of which around
$62m was paid in 2021, with the balance
to be paid in instalments in 2022, 2023
and 2024.
In total, payments related to the
settlement of investigations in 2021 were
approximately $75m consisting of the
amounts referred to above, together with
associated legal fees. These amounts
were fully covered by the provisions
relected in the 2020 inancial statements
as described in note 20 Provisions.
In the UK, the Company’s subsidiary,
Amec Foster Wheeler Energy Limited
(AFWEL) entered into a three-year
deferred prosecution agreement with
the Serious Fraud Ofice relating to the
historical use of third-party agents for
bribery and corruption in Nigeria, Saudi
Arabia, Malaysia, India and Brazil over
the period 1996 to 2014, before Amec plc
acquired Foster Wheeler AG in November
2014 and prior to the combined irm’s
acquisition by Wood in October 2017.
In the US, AFWEL entered into a three-
year deferred prosecution agreement with
the Department of Justice and another
subsidiary of the Company, Amec Foster
Wheeler Limited (AFWL) entered into a
Cease & Desist order with the Securities
and Exchange Commission.
In Brazil, AFWEL and Amec Foster
Wheeler Americana Limitada entered
into 18-month leniency agreements
with the Ministério Público Federal, the
Comptroller General’s Ofice and the
Solicitor General.
The agreements in the US and Brazil all
related to the historical use of third-
party agents for bribery and corruption
in connection with the award of a project
in Brazil.
Wood cooperated fully with all
authorities in their investigations, which
is relected in the cooperation credit that
Wood received from the authorities in
their respective resolutions.
Wood continually reviews and enhances
its compliance programme to mitigate
the risk of recurrence of similar conduct
and prohibits the use of sales agents or
similar unless required by law.
Video conference
Face to face
Attendance at Board and Committee meetings is noted as the number of meetings
attended/the maximum number of meetings possible for that director to attend, so
accounting for appointments and resignations part way through the year.
During 2021, all directors attended all meetings they were entitled to attend.
* Brenda Reichelderfer was appointed 31 March 2021
** Susan Steele was appointed on 31 March 2021
*** Mary Shafer-Malicki resigned 13 May 2021
Major shareholdings
The Company has been notiied,
in accordance with DTR 5, of the
major shareholdings in the Company
as of 31 December 2021, as shown in
the table below:
Shareholders
No of
shares
% of
shares
Liontrust
Investment
Partners LLP
41,452,814 5.99%
Schroders plc 37,098,551 5.36%
FIL Limited 35,594,123 5.14%
abrdn plc 34,373,800
4.99%
Pzena Investment
Management, Inc.
34,273,605 4.95%
Franklin Templeton
Institutional, LLC
33,950,724 4.90%
Ameriprise Financial 33,776,060 4.88%
Artisan Partners
Limited Partnership
33,601,505 4.85%
Norges Bank
Investment
Management
27,404,062 3.96%
APG Asset
Management N.V
27,345,991 3.95%
Kiltearn Partners
LLP
23,028,390 3.32%
The following changes in the interests
disclosed to the Company have been
notiied between 31 December 2021 and
19 April 2022:
•
On 13 January 2022 APG Asset
Management N.V disclosed that their
percentage interest in the ordinary
share capital of the Company was
4.23% (29,297,191 ordinary shares)
• On 22 and 25 February 2022 Norges
Bank Investment Management
disclosed that their percentage
interest in the ordinary share capital of
the Company was 3.08% (21,347,284
ordinary shares)
• On 8 March 2022 Norges Bank
Investment Management disclosed
that their percentage interest in the
ordinary share capital of the Company
was 2.93% (20,252,656 ordinary shares)
Board
Safety,
Sustainability,
Assurance
& Ethics
Committee
Nomination
Committee
Audit
Committee
Remuneration
Committee
Roy Franklin 8/8 - 5/5 - -
Robin Watson
8/8 - - - -
David Kemp 8/8 - - - -
Thomas Botts 8/8 - -
4/4
5/5Jacqui Ferguson 8/8 - 5/5 5/5 5/5
Birgitte Brinch Madsen 8/8 - -
4/4
5/5Adrian Marsh 8/8 5/5 -
4/4
5/5Mary Shafer-Malicki*** 3/3 3/3 3/3
4/4
-Nigel Mills 8/8 - 5/5 5/5 5/5
Brenda Reichelderfer* 3/3 - 3/3
6/6
-Susan Steele** 3/3 3/3 -
6/6
3/3Read the Charters of the Board’s Committees at:
woodplc.com/charters
Board and Committee attendance 2021
Attendance by directors at the meetings of the Board and its Committees
is summarised in the table below. The dates of future Board meetings have
been agreed until the end of 2024.
Corporate governance
continued
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Strategic report
Governance
Financial statementsJan Apr May Jun Jul Oct
Feb
MarAug
Sep Nov
Dec
Activity
•
Wood's strategy was reviewed and regularly discussed
at Board meetings. Interim updates were provided to the
Board during the year. A full day was set aside as part of
the November board meeting to discuss strategy
• Individual strategy updates were received from each
business unit
• The lexibility and sustainability of our business
model, and Wood’s role in addressing climate change
including minimising its own environmental footprint,
was reviewed and the Board discussed the risks,
opportunities and impact of climate change on the
sustainability of the business model
• The Board discussed the Company’s approach to the
type of projects it would undertake, and the approach
to governance, having regard to its commitments on
sustainability and the energy transition
• The Board considered how best to participate at
the UN Climate Change (COP26) Conference held in
Glasgow in November 2021
Outcome/progress:
• Regular updates were received from each business
unit with additional overview presentations from the
Executive President - Strategy & Development
• The Board Strategy Day held at the November
2021 meeting discussed strategic fundamentals:
vision, values, purpose, strategic objectives and ESG
commitments, especially with regard to the energy
transition and industrial decarbonisation
•
Risks to the sustainability of the business model could be
mitigated by: responsible business assessment ensuring
potential material ESG issues are identiied and managed
at an early stage, retraining and reskilling sections of the
existing workforce and hiring external experts, accessing
green hydrogen technology via partnership and/or
research and development investments
•
Proposed projects should be assessed from a sustainability
perspective as well as from a commercial perspective
• Our Glasgow ofice was itted out and became ‘Wood
House’ for the duration of COP26 and hosted guests
from across multiple energy transition and resilient city
thought leadership events. This included partnering
with AIG and the University of Strathclyde to explore
how the city can integrate plans to effectively mitigate
climate risk as part of its energy transition and
resilience strategies
• Development of a ive-year earnings plan linked to the
Company’s strategy
• The Board approved a strategic review of the built
environment business to identify a range of options
to best unlock value from that part of the business,
to ensure this value is being recognised in its market
capitalisation and assess how best to take advantage
of the positive trends and investment opportunities in
the energy transition and industrial decarbonisation
spaces where the Company is already a global leader.
In January 2022 the Board concluded that a full sale
of the built environment business is the best option to
deliver shareholder value and strengthen the Group
Activity
• Updates were received at each meeting from the CFO,
including reports of progress against forecast
• Updates from the Chief Executive on the impact of
Covid-19 on trading
• Review of monthly management accounts, preliminary
results statement, annual report and interim report
• Review of debt and cash performance, including
progress against target leverage policy
• Updates were received at each meeting on the activities
of the Audit Committee
Outcome/progress:
• Reports reviewed, challenged and approved for release
• Debt and cash performance reviewed and challenged
• The Audit Committee reported on matters
including: internal audit activity; inancial results and
independence of the external auditor
Activity
• Updates were received at each meeting on the
activities of the Safety, Sustainability, Assurance &
Business Ethics Committee and from the Executive
President – HSSES
•
Reports were received directly from the Chief
Executive and senior management on speciic
compliance related matters
• Continued oversight of the investigations referred to
in notes 20 and 33 to the inancial statements through
receipt of reports from the dedicated Investigations
Oversight Committee and the
General Counsel
• Regular review of Covid-19 risks and response including
review of the Group vaccination policy
• Discussion on sustainability targets, including carbon
reduction and single use plastics
Outcome/progress:
• Updates were received at each meeting on the
activities of the Investigations Oversight Committee
and a detailed presentation describing the various
settlements was presented to and approved by the
Board at the May meeting
• Updates were received on the ongoing response to
the Covid-19 pandemic, including communications
with and feedback received from the workforce
and clients together with a review of return to
the workplace measures to ensure alignment with
prevailing government advice. The position with regard
to mandatory vaccination was regularly discussed
and a recommendation to encourage all our people to
participate (unless exempt) in national programmes
offering Covid-19 vaccines that have been approved by
relevant government regulators was endorsed at the
November board meeting
• The Modern Slavery and Human Traficking 2021
statement was approved
• Considered the views of a range of stakeholders
in reviewing and approving Wood’s Sustainability
Framework and Sustainability Report. This included
approving eight further sustainability targets, in
addition to the scope 1 and 2 emissions reduction target
implemented in 2020, in the key areas of inclusion and
diversity; human rights and fair working practices;
community investment and environmental impact
Activity
•
Reviewed and discussed the current and future
dividend policy
•
Reviewed the payment of dividends for the year
Outcome/progress:
• The Board received reports from the CFO in March and
August concerning dividend policy and reviewed whether
payment of dividends was appropriate given prevailing
market conditions
• The Board recognises the importance of dividends to
shareholders and is committed to reviewing the policy
in the future following the proposed sale of our built
environment business
Activity
•
Review of Group’s risk management and internal
control systems, including the Group’s register of
principal and emerging risks and associated controls
and assurance provision
•
Challenge of management’s conclusions on the
effectiveness of internal controls
•
The approach to identifying and assessing emerging risks
was reviewed against the guidance in the Governance Code
•
Review of risks associated with climate change and
review of other emerging risks
Outcome/progress:
• Updated principal risks included in annual and interim
reports
• Implementation of an enterprise risk management
system and risk dashboard aligned to the business
principal risks and providing a clear escalation of
emerging risks and focus on control effectiveness
Activity
• Reviewed the Matters Reserved to the Board policy
•
Reviewed the respective charters for the Audit,
Remuneration, Nomination and the Safety,
Sustainability, Assurance and Business Ethics
committees and the Roles and Responsibilities
of the Directors
• Reviewed the directors’ external appointments and
conlicts of interest register
Outcome/progress:
• Updated Matters Reserved to the Board policy
was approved
• The respective Audit, Remuneration, Nomination and
Safety, Sustainability, Assurance and Business Ethics
committee charters and the Roles and Responsibilities
of the Directors were all approved and published on the
Company website
• The directors’ external appointments and conlicts of
interest register was updated
Board programme & agenda
The Board typically schedules four face-to-face meetings and
three calls on an annual basis. During 2021 a total of eight
board meetings took place: four “full” board meetings (one in
person meeting held in Glasgow and three via video conference)
and four board “calls” (all held via video conference).
The following are covered as standing agenda items:
• Review of Governance and reports from the Safety,
Sustainability, Assurance & Business Ethics, Audit, and
Remuneration Committees, and the Chief Executive report
• Operations updates and functional updates from HSSES,
P&O, Strategy & Development and Finance & Administration
(including Investor Relations, IT, Legal, Tax & Treasury and
Commercial)
The Board also receives presentations from management and
discusses other matters arising which are set out in the table on
pages 98 to 100.
Strategy
Review of inancial results
Safety, Sustainability, Assurance and Business Ethics
Review of Dividend Policy
Risk management and internal control Governance
Corporate governance
continued
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Strategic report
Governance
Financial statements
People and
succession planning
Activity
• Reviewed succession plans in place for the Board, ELT
and other senior management positions in the Group
• Reviewed the Company’s various initiatives on
inclusion and diversity
• Further employee engagement via an
all-employee survey and review of an
Organisational Health Index survey
• Review of future skills requirements
• Reviewed the Gender Pay Gap report
Outcome/progress:
• The Board noted the succession plans for senior
executives and senior management. The Board also
challenged the diversity of the succession pipeline
•
Board participation in Listening Group Network calls
on topics including Wood’s strategic focus for 2021,
mentoring initiatives, and the results of employee surveys
• Introduction of future skills initiatives to enhance skills,
both in new sectors and in our more traditional oil &
gas sector
Board engagement with shareholders
and other stakeholders
Activity
• The Board seeks to understand the views of
shareholders and other stakeholders and take these
into account where appropriate
• Regular reports received from the CFO on Investor
Relations activities, supplemented by analysis provided
by our brokers
• The Chair, Senior Independent Director and the Chair
of the Remuneration Committee make themselves
available to meet with key shareholders
• The Board reviewed its obligations under the
Governance Code for meaningful engagement with its
stakeholders, including the workforce
• The Board engaged with its lenders with regards to its
revolving credit facilities and UK Export Development
Guarantee Facility
Outcome/progress:
•
Signiicant shareholders have the opportunity to meet
with the Chief Executive and CFO at least twice a year
around the interim and inal results announcements
and with the Chair around the Annual General Meeting.
During 2021, government restrictions on travel and
on public gatherings in response to the Covid-19
pandemic meant that engagement was carried out
by calls and video conference. The AGM was held on 13
May, however shareholders were unable to attend in
person as restrictions on public gatherings were still in
place. Shareholders were invited to submit questions
in advance of the AGM through our website and we
provided a simultaneous audio broadcast of the AGM
so shareholders could follow proceedings and could also
submit questions on the day
•
Engagement with investor proxy agencies took place
upon request
•
Our established employee networks continued to meet,
in line with our commitment to listen to our workforce,
with a non-executive director actively participating in
each session. Feedback was delivered to the Board
•
Engagement with our lenders resulted in a new
revolving credit facility and a successful application
for term-loan backed by the UK Transition Export
Development Guarantee Facilities
The Safety, Sustainability, Assurance
and Business Ethics Committee
is responsible for overseeing the
Group’s management of Health,
Safety, Security, Environmental
(HSSE), Sustainability and regulatory
compliance & Business Ethics matters,
in line with the Group’s policies and
values commitment. The Committee
changed its title during the year to
include Sustainability, recognising
the increasing importance and
proile of Environmental, Social and
Governance (ESG) risk and relecting
the expansion of the Committee’s terms
of reference in 2020 which formalised
its responsibilities for overseeing the
Group’s approach to sustainability.
The primary focus of the Committee
is to ensure that risks associated with
issues relating to HSSE, Sustainability
and Business Ethics are understood
and managed and oversight is provided
to systems and assurance activities
in place to minimise the occurrence of
major events.
Sustainability
Sustainability was a key focus for the
Committee in 2021 as it exercised
its responsibilities for overseeing the
Group’s effectiveness in its approach
to sustainability management,
responding to sustainability risks and
positioning the Company with external
stakeholders through engagement and
Global Compact driven disclosure in
our Sustainability Report. The pace of
change with regards to ESG risks and
reporting requirements led to more
detailed discussion in this area and it
was agreed going forward to carry out a
detailed review of sustainability with the
full Board, on a bi-annual basis.
Thomas Botts
Chair, Safety, Sustainability, Assurance & Business Ethics Committee
Safety, Sustainability, Assurance
& Business Ethics Committee
“In 2021, sustainability was a key focus with the Committee
endorsing targets aligned to the UN Sustainable Development
Goals and the sustainability aspects that are material to
Wood and its stakeholders. The Committee was also actively
engaged in overseeing the response to the longer-term
impacts of Covid-19 to ensure the safety and well-being of our
people and the ongoing resilience of the organisation.”
Membership
In 2021 the Committee attendees
comprised Thomas Botts, Chair,
Adrian Marsh, Birgitte Brinch Madsen
and Susan Steele who joined the
Committee in May 2021 following
her appointment as non-executive
director in March 2021. The Chair,
Chief Executive, Executive President
– HSSES and the Chief Ethics and
Compliance Oficer were also in
attendance. The Committee meets
four times a year and has a written
charter setting out its responsibilities.
Main responsibilities:
The Committee’s main responsibilities
include reviewing and making
recommendations on:
• HSSE, Assurance and Business
Ethics strategy and performance
•
Effectiveness of the organisation’s
policies and systems and evidence of
a prevalent safety and ethical culture
• Effectiveness of the Group’s
sustainability management
approach and its response to
sustainability risks
• HSSE and Business Ethics leadership
development throughout the Group,
particularly in frontline operations
• Quality and integrity of the
organisation’s internal and external
reporting of HSSE and Business
Ethics performance and issues
•
Preparedness for response to a
major HSSE incident or ethics
non-compliance
• The process for and outcomes of
investigations into major HSSE
and Business Ethics incidents
and the effectiveness with which
recommendations are assimilated
throughout the Group
• The expertise and appropriateness
of the structure of the HSSES and
Compliance function throughout the
organisation
• The adequacy and effectiveness
of the Assurance programmes for;
HSSE; Business Ethics, Operations,
Sustainability and Data Privacy
• Oversight of any ongoing regulatory
investigations and the associated
case management
Read the Safety, Assurance & Business
Ethics Committee Charter at:
woodplc.com/ssabecommittee
Corporate governance
continued
V V V F
Jan Apr May Jun Jul Oct
Feb
MarAug
Sep Nov
DecCommittee meetings in 2021
Video conference
Face to face
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Strategic report
Governance
Financial statements
In 2021, the Committee reviewed and
endorsed Wood’s Sustainability Targets.
The targets are in line with the Wood
Sustainability Strategy that has been
developed in response to the UN Global
Compact principles and supporting
actions identiied by the UN Sustainable
Development Goals (SGDs). The
targets relate to Wood’s key material
sustainability development aspects
signiicant to our success and relevant
to our key stakeholders, linking Wood’s
journey into those of the SGD objectives.
The key strategic targets include delivering:
• Top quartile ESG investment ratings
• Doubling of client support
in energy transition and
sustainable infrastructure
• An inclusive and diverse workforce
through improving the senior
leadership gender balance and rolling
out conscious inclusion training to all
Wood employees
• Managing our environmental impact
through a reduction in carbon
emissions and removing single use
plastics from Wood ofices
•
Embedding fair working practices
throughout the supply chain
• Positively impacting our
communities by continued support
to our Global Cause
The Committee endorsed both Wood’s
Annual Sustainability Report and the
revised Modern Slavery & Human
Traficking Statement in pursuance
of Wood’s legal obligations under the
Modern Slavery Act 2015.
Managing the ongoing impacts of
Covid-19 and safety
Wood’s management of the Covid 19
pandemic continued to be a primary
focus for the Committee in 2021.
This involved reviewing and providing
oversight of the response strategy, and
ongoing resilience of the organisation
including operability status and safety
and wellbeing; emergency response
and business continuity arrangements;
ongoing risk management; operational
readiness and planning for a safe return
to work. The ongoing Wood response
to the pandemic was seen as both
appropriate and effective in minimising
business disruptions. The Committee
received weekly brieings providing an
overview of the current Wood and global
pandemic status along with any changes
in the pandemic risk assessment, travel
or operational restrictions, vaccine policy
and control measures.
The Committee also provided oversight to
the incident investigation into the fatality
that regrettably occurred during the year.
The purpose of this oversight was to
ensure the investigation was independent,
of high quality and fully identiied the root
causes and organisational learnings from
this tragic event.
Regulatory compliance
and Business Ethics
With regards to matters of Ethics
and Compliance, the Committee
continued to provide oversight to the
Ethics and Compliance Strategy and
the effectiveness of the programme.
In addition, the Investigation Oversight
Committee (IOC), which was established
in 2017, continued in place throughout
2021. The IOC was established to
provide further independent oversight
and governance with regard to any
major regulatory investigations or
signiicant breaches of a compliance
nature that had the potential to incur
serious criminal sanctions or cause
signiicant and lasting reputational
harm to Wood. The Committee, chaired
by Thomas Botts, continued to provide
independent oversight of the risk
analysis, mitigation and response of the
business in connection with the ongoing
investigations by the relevant authorities
into the historical use of agents and
other matters.
These investigations were concluded
in 2021 and Wood entered into several
settlement agreements. In the UK,
a three-year deferred prosecution
agreement (DPA) relating to the use
of third party agents for bribery and
corruption in ive jurisdictions by Foster
Wheeler, before Amec plc acquired
Foster Wheeler and prior to the
combined irm’s acquisition by Wood,
has been agreed with the SFO. In the
US, Wood has entered into a three-year
DPA with the Department of Justice
(DOJ) and a Cease & Desist order with
the Securities and Exchange Commission
(SEC), and in Brazil has entered leniency
agreements with a term of 18 months
with the Comptroller General’s Ofice
(CGU), Solicitor General (AGU) and
Ministério Público Federal (MPF).
Earlier in March, Wood also reached
a civil settlement with Scotland Civil
Recovery unit in relation to the historical
engagement of a third party agency
by a legacy joint venture. This resolves
an investigation by the Crown Ofice
& Procurator Fiscal Service (COPFS)
and the Civil Recovery Unit that was
initiated following Wood’s self-reporting
of the issue.
Roy A Franklin
Chair, Nomination Committee
Read the Nomination
Committee Charter at:
woodplc.com/nomcommittee
Work of the Nomination Committee
The purpose of the Committee is to lead
the process for Board appointments,
ensuring formal, rigorous and transparent
procedures and making recommendations
to the Board to ensure plans are in place
for an orderly succession to both the
Board and senior management positions.
The Committee oversees the development
of a diverse pipeline for succession.
The Committee also regularly reviews the
composition of the Board sub-committees,
the independence of the non-executive
directors and external appointments.
The Committee held ive formal
meetings during 2021 and focused on
Board appointments, succession planning
and inclusion and diversity.
Board appointments
In 2021 the Committee recommended the
appointment of Brenda Reichelderfer and
Susan Steele as non-executive directors.
Brenda and Susan were appointed on
31 March 2021 following a process which
had commenced in 2020 utilising Russell
Reynolds, a global recruitment consultant
irm that assists Wood on recruitment for
Board and senior level positions. Russell
Reynolds provides no other services to
Wood and is considered independent of
the Company and the Board.
Selection criteria were agreed with a
preference for US-based and female
candidates with international consulting
experience. The search process was
completed and the Committee reviewed
a list of potential candidates and met
with a number of them. The Committee
noted the appropriate blend of skills
and extensive global experience across
a range of end markets of Brenda and
Susan, both US nationals, and believe
their experience would contribute to and
signiicantly strengthen the Board. The
Committee unanimously recommended
to the Board their respective
appointment as non-executive directors
with effect from 31 March 2021.
V V V V F
Read our Sustainability Report:
woodplc.com/company/sustainability
Read the Modern Slavery & Human
Traficking Statement:
woodplc.com/modernslavery
“In 2021, the Committee focused on Board and senior
management succession planning, independence of
non-executive directors and the effectiveness of the
Board and its leadership. The Committee was also
active in progressing Wood’s inclusion and diversity
strategy. Two new independent non-executive
directors were appointed in 2021.”
Nomination Committee
Membership
The Nomination Committee
comprises the Chair and the
independent non-executive directors.
Brenda Reichelderfer and Susan
Steele were appointed to the
Committee in March 2021. Mary
Shafer-Malicki stepped down
from the Committee in May 2021
following her resignation as a non-
executive director.
The Committee meets at least once
a year. It operates within a written
charter setting out its roles and
responsibilities.
Main responsibilities:
• Reviewing Board structure, size
and composition and making
recommendations to the Board with
regard to any adjustments
•
Nominating candidates for the
approval of the Board
• Ensuring succession plans are in
place for the Board and senior
executive positions
• Monitoring non-executive
director independence and
external appointments
Jan Apr May Jun Jul Oct
Feb
MarAug
Sep Nov
DecCommittee meetings in 2021
Governance
Safety, Sustainability, Assurance & Business Ethics Committee continued
The SSABE Committee will continue
to review and provide oversight for
the organisational arrangements and
requirements that have been put in
place, to ensure compliance with the
settlement commitments.
Assurance
The Committee continued to monitor
the activities of the audit component of
the Operation Assurance (OA) function
which has responsibility for reviewing
project execution compliance with
HSSE, Technical and Quality policies
and standards. During the year the
Committee had oversight of the audits
and resultant improvement plans and
was satisied they were operating
effectively to address the key areas
identiied for improvement in 2020.
Copies of all Operations Assurance
audit reports are shared with the
Committee for ongoing discussion
around key indings and emerging trends,
organisational learning and timely close
out of actions. Key priority areas for
2022 will include more targeted use of
predictive analytics through the Digital
Control Tower, to target audit plans to
areas of optimum impact, and more
emphasis on the application of key
standards in all areas of the business in
order to assess cultural maturity.
Committee evaluation
In November, the Committee
participated in an evaluation process
as part of the annual Board evaluation
externally facilitated by Lintstock. The
review focused on the effectiveness of
the Committee’s meetings and processes
and the performance of the SSABE
Committee was rated highly overall.
The key area for improvement going
forward was the ongoing maturing
and development of the oversight of
sustainability matters in light of the pace
of change in this area.
Video conference
Face to face
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John Wood Group PLC
Annual Report and Accounts 2021
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Strategic report
Governance
Financial statements
Independence
The Nomination Committee also
regularly reviews non-executive
director independence. After careful
consideration, the Board conirmed
that, at 31 December 2021, it regarded
each non-executive director as
independent for the purposes of the
2018 UK Corporate Governance Code
(“the Governance Code”). All non-
executive directors are considered to be
independent in character and judgement;
with no relationships or circumstances
which are likely to affect, or could appear
to affect, their judgement.
The Committee noted that Thomas
Botts, a non-executive director, will
have served on the Board for nine
years in 2022. The Committee noted
the Governance Code requirements
regarding non-executive director
tenure, including potential impairment
of independence, and accordingly
considered his position as a non-
executive director. Accordingly, it was
agreed that he will step down from the
Board at the 2022 AGM.
External appointments
The Board requires all directors to
declare any external appointments and
has procedures in place to monitor and
approve such appointments to ensure the
director continues to devote suficient
time and commitment to the Company.
In March 2021, Roy Franklin was
appointed to the board of Kosmos
Energy, which is listed on the New York
and London stock exchanges and, in
October 2021, was appointed to the
board of Energean plc, which is listed
on the London stock exchange. Prior to
these appointments, Roy had resigned
from the boards of Premier Oil PLC and
Energean Israel Ltd respectively. In light
of the previous reductions to his external
commitments, these appointments
were considered and approved by the
Board. Roy continues to devote time and
commitment to his role as Chair of Wood
and of this Committee.
In August 2021, Robin Watson was
appointed to the board of the Institute
of Directors, such appointment having
been considered and approved by
the Board. Robin continues to devote
time and commitment to his role as
Chief Executive of the Company and is
considered a full-time employee.
During the year, two non-executive
directors reduced their external
commitments. Jacqui Ferguson
concluded her three-year term as a
founding member of the Scottish First
Minister’s Advisory Board for Women and
Girls and Susan Steele stepped down
as an independent director of Harvard
Bioscience, Inc.
Succession planning
The Board has a duty to ensure the long-
term success of the Company, which
includes ensuring that we have a steady
supply of talent for executive positions
and established succession plans for
Board changes.
The Executive Leadership Team considers
the adequacy of the Group’s succession
plans below the Board and executive level
and provides updates to the Committee.
The Committee considers the Group’s
succession planning on a regular
basis, including consideration of the
length of service of the Board as a
whole, to ensure that changes to the
Board are proactively planned and co-
ordinated. The Committee monitors the
development of the executive leadership
and management teams to ensure
that there is a diverse supply of senior
executives and potential future board
members with appropriate skills and
experience. As a part of this, the Board
meets with members of the leadership
team and high performing employees to
gain an overview of the internal talent
pipeline and the Committee monitors
ongoing development plans in relation to
potential internal candidates.
Where no internal candidates
with suitable skills and experience
are identiied to ill vacancies, the
Committee will consider external
candidates and during 2021, Korn Ferry,
a global leadership and talent consulting
irm that assists Wood on recruitment
for Board and senior level positions,
assisted the Committee to identify
potential external candidates for senior
positions. Korn Ferry provide no other
services to Wood and we consider it
independent of the Company and
the Board.
In September 2021, we welcomed Ken
Gilmartin to Wood and to the Executive
Leadership Team and, after a hand-over
period, he assumed the position of Chief
Operating Oficer on 1 October 2021.
In November 2021, Lesley Birse joined the
Executive Leadership Team as Executive
President – People & Organisation,
progressing from her previous position as
President – People & Organisation for our
Operations business unit.
At the end of December 2021, Dave
Stewart, formerly Chief Operating
Oficer and Sue MacDonald, formerly
Executive President – People &
Organisation, stepped down from their
respective roles and from the Executive
Leadership Team and retired.
The Committee recognises that the
Board currently has no ethnic minority
representation and does not yet meet
the recommendations of the Hampton-
Alexander and Parker reviews to have at
least one director from an ethnic minority
background on the Board by 2024. The
Committee is mindful of, and gives
consideration to the recommendations of
the Parker Review during reviews of the
Board succession plans, and during the
recruitment process for new directors, to
ensure the Board is regularly refreshed
and appointments are objective whilst
promoting diversity of gender, social and
ethnic backgrounds and is cognitive of
personal strengths.
The Company has engaged with
the FTSE Women Leaders forum to
report the percentage of women’s
representation at board and senior
executive level and with the Parker
Review Team at the Department for
Business, Energy & Industrial Strategy
to report the position with regard to
board diversity. The Board considers
that Wood’s active contribution to
such initiatives is important to drive
improvements in reporting of industry
progress towards more balanced and
diverse representation.
Inclusion and diversity
Wood is committed to its Inclusion
and Diversity policy which encourages
an inclusive environment where
employees are involved, respected,
connected, encouraged, cared for
and welcomed. Differences such
as life experiences, gender, sexual
orientation, marital or civil partner
status, gender reassignment, race,
religion or belief, colour, nationality,
ethnic or national origin, disability,
age, and upbringing underpin and
create our diverse workforce, creating
an inclusive organisation.
The Committee proactively seeks
regular updates on and continues
to monitor the implementation of
the inclusion and diversity strategy
framework, including:
• roll-out of conscious inclusion
training to all Wood employees
• improved gender and ethnic diversity
representation in senior leadership
roles and across the organisation
• development of employee
initiated and led networks to
provide platforms for our employees
to connect, learn and to share views,
and also to provide feedback on
what Wood is doing well and to
recommend improvements. Our
employee networks are open to
everyone in the Company’s
global community
• the development of leadership
champions at all levels who
help drive Wood’s I&D activities,
championing those in under-
represented groups. Our I&D
champions put forward ideas and
implement them in a way that
shows care and commitment and
promotes the conversations we need
to have
Read our Diversity & Inclusion policy at:
woodplc.com/diversitypolicy
External Board evaluation
During late 2020, an independent
evaluation of the Board was undertaken
by Lintstock, the results of which
were reviewed at the November 2020
Board meeting. A number of areas for
improvement were recommended which,
together with their outcomes, can be
found on page 93.
A further evaluation, which was also
facilitated by Lintstock, was conducted
during 2021 and reviewed by the Board at
its November meeting.
The indings of the review were regarded
as positive, characterising the Board
as one that has successfully navigated
a very challenging period during the
Covid-19 pandemic.
The top priorities for the Board were
identiied as:
• discussing and agreeing strategy
• monitoring business performance
and execution
•
returning to face-to-face meetings and
engagement between board members
and also between non-executive directors
and the Executive Leadership Team
• focusing on people and succession
The Board’s oversight of its committees
was rated very highly with committee
reports and actions driving the Board
agenda forward. The annual committee
meeting cycle was well managed,
balancing structured cadence and focus.
A separate evaluation of Roy Franklin’s
performance as Chair was also
undertaken by Lintstock. Further
details of this, and of the wider Board
evaluation, are on page 94.
Committee evaluation
Lintstock also facilitated evaluations
of each of the principal committees,
including the Nomination Committee. The
performance of the Committee was rated
highly overall and would be improved
further over the coming year by focusing
on ethnic and geographical diversity.
The results of the evaluation of the
Safety, Sustainability, Assurance &
Business Ethics Committee, the Audit
Committee and the Remuneration
Committee are included on pages 102,
105, 109 and 112.
The Committee remains cognisant of
the Governance Code’s requirement
to pay due regard to the beneits
of diversity, including gender, and
is mindful of the requirements
of the Hampton-Alexander and
Parker reviews when considering
appointments to the Board and to
senior management positions.
Our people are our most valuable
resource and creating an inclusive
working environment where our
people enjoy coming to work is
fundamental to achieving our
strategy. More information on Wood’s
approach to diversity and inclusion
and enhancements we have made for
the ongoing operation of our policy
can be found on page 63.
During 2021 the number of female
Board members was at least one-third
and at 31 December 2021 was 40%.
For details of the gender balance of
the Board, ELT and leadership teams
see page 63.
Wood is committed to remaining an
equal opportunities employer.
As an inclusive and equal
opportunities employer, Wood gives
full consideration to applications
for employment from all levels of
ability where the requirements of
the job can be adequately fulilled
by a person with impairment. Where
existing employees become disabled,
it is the Company policy wherever
practicable to provide continuing
employment under normal terms and
conditions and to provide training,
career development and promotion
to disabled employees wherever
appropriate, as we would for any
other employee.
Governance
Nomination Committee continued
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Governance
Financial statements
Membership
Adrian Marsh chaired the Audit
Committee throughout 2021. Adrian has
recent and relevant inancial expertise
and is currently Group Finance Director
of DS Smith PLC.
Jacqui Ferguson and Nigel Mills served
on the Audit Committee throughout the
year. In May 2021, Mary Shafer-Malicki
stepped down from the Committee
prior to her resignation as non-executive
director in May 2021. Susan Steele was
appointed to the Committee in May
2021 following her appointment as non-
executive director.
As Group Chair, Roy Franklin is not
a member of the Audit Committee
but attended all meetings in 2021 by
invitation, and all other non-executive
directors are welcome to attend any
meeting. The Chair of the Committee
reports to each Board meeting on the
activity of the Committee.
The Committee has a written charter
which is reviewed on an annual basis,
setting out its roles and responsibilities.
Main responsibilities:
•
Compliance with inancial
reporting standards and relevant
inancial reporting requirements
•
Consideration of the inancial and
IT internal control environment
• Consideration of the internal
audit programme and results
• Review of the external audit
relationship and provision of non-
audit services
Read the Audit Committee Charter at:
woodplc.com/auditcommittee
Video conference
Face to face
The Committee met ive times in
2021. The social distancing and travel
restrictions in place due to Covid-19
meant that most meetings were held
by video conference. In addition to the
members of the Committee, the CFO,
the Group Financial Controller, the
Interim President – Internal Audit and
the external auditors, KPMG, attended
all Audit Committee meetings. The
Group Chair is also invited to attend all
meetings and did so during the period.
During the year other relevant people
from the business presented to the
Committee on the topics as noted below.
The Chair of the Committee also held
monthly update calls with the Group
CFO and Interim President – Internal
Audit.
The President – Internal Audit and the
external auditors have the right of direct
access to the Chair of the Committee at
all times and to meet the Committee
without management present.
KPMG continued as auditors of the
Group, having been in place since 2018
and the Committee spent time with the
auditors during the year understanding
their audit approach, the challenges of
performing their work throughout the
Covid-19 pandemic and the outcomes of
their work.
During the year the following areas
were discussed at the Committee
meetings:
February
• Review of the material issues and
key areas of accounting and tax
judgement impacting the 2020
Group inancial statements including
the classiication of exceptional
items, goodwill impairment reviews,
dispensations from Group accounting
policies, material provisions, uncertain
tax positions and the accounting for
signiicant contracts
• Update on KPMG’s audit
status, independence and
preliminary conclusions
• Review of KPMG’s Audit
Quality processes
• Approval of KPMG’s non-audit fees
• Review of internal audit reports
and status
• Final review of AFW Synergies, in the
context of the long-term incentive plan
(LTIP) cycle ending 2021
March
• Review and recommendation to
the Board for approval of the 2020
Group inancial statements and
related disclosures
• Review and recommendation to
the Board for approval of the going
concern and viability statements
•
Review of KPMG’s 2020 external audit
work and audit opinion, including
discussion of their key indings and
judgmental areas
• Review and approval of the 2020
Audit Committee Corporate
Governance Report
• Review of the internal audit annual
summary for 2020 and the overall
Internal Financial Controls Assessment
• Assessment of external
audit effectiveness
• IT security update
May
• Review with the Projects Business Unit
President F&A on the outcome and
lessons learned on a material project
• Review of the Group’s initial response
to the UK Government’s consultation
by the Department for Business,
Energy & Industrial Strategy (BEIS)
on Corporate Governance reform
and an update on the roll out of an
expanded Internal Financial Controls
Questionnaire
• Review of internal audit reports and
status against the 2021 plan
• Review of KPMG’s control observations
from their 2020 audit
• Review of KPMG’s preliminary
audit plan for 2021, along with
approval of their engagement
letter for the 2021 audit
• IT security update
August
•
Review and recommendation to the
Board of the 30 June 2021 Group
interim inancial statements including
key accounting and tax judgements,
going concern, goodwill impairment
reviews, and classiication of
exceptional items
• Update on KPMG’s 2021 interim
inancial statements external
review indings, review opinion and
discussion of their key indings
• Review of Internal Audit’s 2020
Themes and Insights report
• Review of internal audit reports and
status of 2021 plan
•
Reviewed and approved KPMG's 2021
audit plan
• Effectiveness review of internal and
external audit
• IT security update
November
•
Review of material upcoming year end
accounting judgements and issues
• Update on IT security status and
continuous improvement plans from
the Chief Information Oficer (CIO)
and Chief Information Security
Oficer (CISO)
• Update on the Group’s compliance
with UK Tax Corporate Criminal
Offence (COO) legislation
• Approval of inal changes to
KPMG’s 2021 external audit plan
and audit fees
• Status update on KPMG’s pre year
end audit work and year end planning
• Review of internal audit reports
issued and status against the
2021 plan
• Review and approval of the 2022
Internal Audit Plan
• Audit Committee evaluation
During the year the Committee
focused on the following areas:
Financial reporting and
signiicant accounting issues
The Committee focused on the
application of our accounting policies
and on the areas of judgement and
estimation in relation to signiicant
accounting and tax matters.
The primary areas of judgement
and estimation considered by the
Committee in relation to the 2021
inancial statements and how they were
addressed are outlined below.
Review of signiicant contracts
The Group executes a number of
contracts on a ixed price or lump sum
basis. Such contracts inherently involve
a greater degree of estimation and
judgement than is typically the case in
reimbursable contracts.
The external auditors assessed this as
an area of focus and the Committee
received updates on related work
undertaken by KPMG.
The Committee reviewed and was
satisied with the accounting for
signiicant lump sum projects in progress
at the year end and the material
judgements taken by management in
recognising proit or the quantiication
of known losses where these are
probable. The Committee also noted
the continuous improvements made
to improve both the controls over such
contracts and the reporting to the
Committee of judgements made and
potential outcomes.
Impairment reviews
At both half year and the year end,
the Committee considered whether
indicators of impairment existed and
the results of any related impairment
reviews. No indicators of impairment of
goodwill were identiied at 30 June 2021,
therefore detailed impairment reviews
were not performed at that time.
However, the annual impairment reviews
as required by Accounting Standards
were carried out in relation to goodwill
at the year end. The Committee’s role
is primarily to challenge the signiicant
assumptions and estimates made by
management to ensure that they are
appropriate and to review the work done
in these areas by KPMG, who identiied
this as a key audit matter.
The Committee challenged and was
satisied with the assumptions used and
the results of the reviews, and with the
sensitivities disclosed. The signiicant
assumptions were around short and
longer-term growth rates, including the
enduring impact of Covid-19, the impacts
of energy transition on Wood’s core
markets and discount rates. Sensitivities
related to these were performed, further
details of which can be found in note 9 of
the Group inancial statements.
Audit Committee
Governance
“Despite the challenges created by the continued
impact of Covid-19 and the extension of working from
home arrangements into 2021, the Committee was
satisied that a strong internal control environment
was maintained throughout the year.”
Committee meetings in 2021
Adrian Marsh
Chair, Audit Committee
Jan Apr May Jun Jul Oct
Feb
MarAug
Sep Nov
DecJohn Wood Group PLC
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Governance
Financial statementsGovernance
Review of provisions
The Committee considers the
appropriateness, adequacy, and
consistency of approach to provisioning
at the 30 June and 31 December balance
sheet dates. All material provisions,
including those made against uninsured
legal claims, asbestos litigation and
expected credit losses, are discussed and
challenged.
The Committee, taking into account
the reports of the external auditors,
concluded that the positions taken by
management were appropriate.
Going concern
At both the half year and the year
end, the Committee considered the
appropriateness of the going concern
basis of preparation and reviewed
forecasts prepared by management
covering a period of more than 12
months from the date of signing
of the Group inancial statements.
These forecasts included the impact
of Covid-19 on the short-term outlook
for the Group. The Committee was
comfortable that the going concern
basis remains appropriate.
Reporting measures
The Committee reviewed the interim and
year end annual reporting, including the
use of alternative performance measures
(APMs), such as EBITDA, on behalf of the
Board. The Committee was comfortable
that APMs add to stakeholders’
understanding of our inancial
performance and do not detract from
the fair, balanced and understandable
presentation of our results. The
Committee reviewed and challenged
the inclusion of items as exceptional at
both the year end and half year, with
reference to the Group’s policy in this
area and taking into account KPMG’s
view of normal custom and practice.
The Committee was satisied that the
items noted were suficiently material
by nature or by size or a combination of
both to require separate disclosure, and
that all such items had been identiied.
Review of pensions
The Committee reviews the accounting
for the Group’s deined beneit
obligations under IAS 19 Pensions
at the half year and year end. The
Committee reviews the results of the
actuarial review performed on behalf
of management by a leading actuarial
irm, with a focus on the key underlying
assumptions as set out in note 32 to the
inancial statements. The Committee
also considered the appropriateness of
recognition of the pension asset under
IAS 19. To help with this assessment the
Committee also received reports from
KPMG who use specialist actuaries to
review and challenge the assumptions
made. The Committee was satisied
with all the assumptions, the disclosures
made and the results of the reviews.
Investigations
Governance around the investigations by
authorities in connection with historical
use of agents and other matters referred
to in notes 20 and 33 is provided by the
Investigations Oversight Committee
and is not within the scope of the Audit
Committee, however throughout the
year the Committee considered the
accounting and disclosure requirements
associated with these investigations.
During 2021, the Group entered into
settlement agreements which brought
resolution to the investigations by
the Serious Fraud Ofice (SFO), US
Department of Justice (DoJ), US
Securities and Exchange Commission
(SEC), the Brazilian authorities and the
Crown Ofice & Procurator Fiscal Service
(COPFS) in Scotland.
These matters were covered in full by
the provisions relected in the 2020
inancial statements as described in note
20 Provisions. The Committee reviewed
and approved the accounting for this
settlement, and related disclosures in the
30 June 2021 interim inancial statements.
Current and deferred tax balances
The Group operates in a number of
different tax regimes and a range of
judgements underpin the calculations for
both current and deferred tax, including
uncertain tax positions.
In the Income Statement, these can have
an impact on both the tax charge and
the operating proit. The Committee
receives a detailed written report on
taxation matters at each meeting.
Where necessary, the Committee
considers advice received from
professional advisory irms and
concluded that the positions taken
were appropriate. The Committee also
received updates on work undertaken by
KPMG in this area.
FRC review of energy and carbon
reporting
During 2021 the Financial Reporting
Council (FRC) included our Annual
Report and Accounts to 31 December
2020 in the sample for their thematic
review of streamlined energy and carbon
reporting (SECR) disclosures. Based on
their review, there were no questions
or queries that they wished to raise
with the Company regarding our SECR
disclosures. The FRC have requested
that we note that this was a limited
scope review in accordance with Part
2 of the FRC’s Corporate Reporting
Review Operating Procedures. The
review is based on the annual report
and accounts and does not beneit from
detailed knowledge of the business or
an understanding of the underlying
transactions entered into. It is, however,
conducted by staff of the FRC who have
an understanding of the relevant legal
and accounting framework.
Internal inancial control
The Board is ultimately responsible for
the Group’s system of internal control
and for reviewing its effectiveness. The
Audit Committee has been given the
responsibility to review the effectiveness
of the inancial and IT internal control
systems implemented by management.
This work was informed by regular
updates from the Interim President –
Internal Audit and the results of various
self-assessment processes undertaken
across the Group. The external auditor
also provides feedback on areas of
inancial or IT control which they wish to
bring to the Committee’s attention.
The Board’s assessment of the Group’s
internal inancial and IT control
environment, as informed by internal
audit, is effective, with some areas
where improvement is needed. Particular
areas of focus are a continued focus on
improving the controls in place around
bidding, estimation and forecasting in
certain capital projects in the Projects
Business Unit and smaller businesses
which have not yet been integrated to the
Group’s common ERP system and shared
services model. Having been impacted by
Covid-19 in 2020, the project to establish
a common ERP and shared service
platform resumed in the second half of
2021 and has been combined with the
initiation of the planning and design of an
Oracle Cloud instance. An improving and
maturing control environment for entities
hosted in the common ERP environment
and serviced by the shared service centres
was noted in 2021.
The Audit Committee considered the
enduring impact of employees working
from home in response to Covid-19
and noted no material impact on the
overall effectiveness of internal inancial
controls, as evidenced by the assurance
activities undertaken by Internal Audit.
The Audit Committee was acutely aware
of the pressure and stress which the
business has been under over the recent
period and the inherent risk this places
on governance. Whilst the business has
responded to this with the creation of
new governance roles deployed within the
divisions it was agreed in November that a
deputy CFO would be appointed to further
strengthen the Group team and to relieve
some of the pressure on the Group CFO. It
was felt that this, in combination with the
governance roles, would further enhance
the overall control environment.
IT security review
The responsibility for reviewing IT security
is delegated to the Audit Committee.
At the November Committee meeting,
the Committee received a presentation
from the CIO and CISO who provided a
cyber security update which relected an
improving and maturing cyber readiness
posture. The presentation also included
the results of the annual cyber security
assessment audit, independently carried
out by Ernst & Young.
The audit provided the results of the
assessment that was carried out during
2021 and noted that the maturity level
had increased against a landscape of
increasing cyber risk.
Internal audit
Monitoring the activity of the Group
Internal Audit function is an agenda
item at each Committee meeting.
The Interim President – Internal Audit
attended all meetings.
Each year, the Committee agrees the
plan to be carried out and receives
regular updates on progress against
this plan, including a summary of the
key indings from each of the internal
audits, and an update on the status
of actions agreed with management.
A separate annual report on key
themes and insights from the internal
audit work was also considered by the
Committee, including comparing the key
themes to the prior year.
In 2021, recognising the importance of
ESG matters, an increasing number of
audits focused on sustainability items
such as modern slavery and human
rights and variable people compensation
elements. For 2022, the focus of Internal
Audit continues to be extended to include
further ESG related audit topics. The
approach to a number of audits has also
been updated for the 2022 plan in order to
ensure more eficient delivery in response
to the increased use of shared services
throughout the group and the associated
impact on the design and operation of the
internal control environment.
During 2021, EY have continued to be the
provider of strategic IT internal audits,
under the supervision of the Interim
President – Internal Audit. Any other
internal audits that require specialist
knowledge or language skills outside of
the internal audit team’s abilities, are
outsourced as appropriate.
The Chair of the Committee and other
Committee members hold private
discussions with the President – Internal
Audit as necessary during the year
outside the formal Committee process.
The Chair of the Committee also
periodically meets with the Chief Ethics
and Compliance Oficer and Group
General Counsel and the Committee
takes comfort from the internal
processes that allow employees to
raise concerns and to the extent that
they relate to inancial matters will
also receive the output of any internal
investigations and can, if considered
appropriate, require an external
investigation to be conducted.
External audit
KPMG are the Group’s auditor and were
appointed in 2018 after a tender process.
During 2021 the Committee assessed the
effectiveness of audit process through
consideration of the reporting received
from KPMG at the half year and the
year end, the robustness of the external
auditors’ handling of key judgmental areas
and the quality of the external auditors’
interaction with, and reporting to, the
Committee. As a result of the assessment
the Committee concluded that the audit
process was operating effectively.
The Committee also reviews the
standing, experience and tenure
of the external audit lead partner,
the arrangements for ensuring the
independence and objectivity of the
external auditors and the nature and
level of non-audit services provided.
During 2021, following consultation with
and with agreement from the Company,
KPMG changed the lead partner for the
audit from Catherine Burnet to Paul
Glendenning. Paul was not previously
involved in the Wood audit. In addition,
an annual exercise to seek feedback from
around the Group on the effectiveness of
the external audit process was performed
and debrief meetings were held to ensure
opportunities to improve the process were
captured and incorporated into the 2021
external audit plan.
Appointment and independence
The Committee has overall responsibility
for ensuring that the external auditors’
independence and objectivity is not
compromised.
The Committee considers the appointment
of the external auditor each year and
assesses their independence on an ongoing
basis. During the year the Committee
received conirmation from the external
auditors regarding their independence.
In accordance with UK regulations and to
help ensure independence, the auditors
adhere to a rotation policy based on
Auditing Practices Board standards that
require the Group audit partner to rotate
every ive years. As noted above the lead
partner was changed by KPMG during
the year. Catherine Burnet was lead audit
partner for three years prior to this change.
The Board approved the Committee’s
recommendation that KPMG be
reappointed for the 2022 audit.
Accordingly, a resolution proposing
the appointment of KPMG as the
Group’s external auditor will be put to
shareholders at the 2022 AGM. There are
no contractual obligations that restrict
the Group’s choice of external auditors.
The Company conirms that it complied
with the provisions of the CMA Order for
the inancial year under review.
Non-audit services
One of the key risks to external auditor
independence is the provision of non-
audit services by the external auditor.
The Group’s policy in this area, which is
set out in the Audit Committee’s terms
of reference, is clear.
The Committee Chair considers and
approves fees in respect of non-audit
services provided by the external auditors
in accordance with policy and the cost
of non-audit services provided in 2021
is reported in note 4 to the inancial
statements.
In the opinion of the Committee, the
provision of these non-audit services did
not impair KPMG’s independence.
Committee evaluation
The Committee’s activities formed part
of the review of Board and Committee
effectiveness performed in the year.
Overall the Committee was considered
to be operating effectively.
Delay of year-end results
On 21 February 2022 the Company
announced a delay was necessary to
inalise the Company’s reported results
and to conclude the year-end audit
process with the Company’s auditor,
KPMG LLP. The delay was required to
allow an external investigation and
review to be undertaken, principally in
relation to the historical carrying value
of the Aegis Poland project contract
and the process by which this was
determined, which supplemented
an internal review initiated following
concerns raised internally.
This review was concluded, and Wood’s
2021 full year results will be announced
on 20 April 2022. The Committee
reviewed the results of the external
investigation, the auditor’s comments on
the investigation and audit work carried
out during the period of the investigation,
and the accounting treatment of the
Aegis Poland project. The Committee
concluded that no changes to the
historical carrying value of the project
were required and the $99m exceptional
charge was appropriately recorded in
2021. Whilst no immediate actions were
required following the investigation,
the Committee will take account of the
indings of the review in its continuing
work on the effectiveness of the
Company’s internal control environment.
It was also agreed that the Chair of
the Board and the Audit Chair would
jointly review the Board oversight
governance framework and make any
recommendations for further reinement
to the Board in due course.
Audit Committee continued
John Wood Group PLC
Annual Report and Accounts 2021
109
John Wood Group PLC
Annual Report and Accounts 2021
108
Strategic report
Governance
Financial statements
Remuneration Committee
Remuneration
Face to face
Matters considered May
Feb
MarAug
Nov
Policy application for year ahead: annual salary review &
retention – executive directors and Chair of Board, ensuring
alignment with wider workforce
ABP: future year performance measures for all participant
plans, team & personal objectives for executive directors and
executive leadership team
Review projected outcomes for previous performance
periods for ABP and LTIP
LTIP: future year arrangements, risks, impact of windfall
gains and performance measures for all participant plans &
executive directors
Variable reward: ongoing review of performance against
targets for executive directors and all participants
ABP & LTIP: Deferred and/or discretionary awards review
and approval
Wider workforce focus - overview on a range of matters
including reporting (pay equity and UK gender pay gap
reporting), UK real living wage, wellbeing focus, share plans,
beneits, pensions, spot bonus, annual salary review, employee
engagement and reward engagement framework
Incentive plans summary
Annual general meeting preparation
Preparation of annual remuneration report and sign off;
determine stakeholder engagement
Review ELT and Company Secretary remuneration including
new appointments, discretionary awards, and annual review
External market update from advisors including update
on investor guidelines; emerging legislation, best practices,
current thinking
Review proposals for Long Term Incentives including
introduction of restricted stock for the wider workforce
Committee performance, review effectiveness, charter, and
objectives – review of current year and determination of
following year
Share dilution and management: discussion and approval
Decision made
Inform, discuss and planning
Read the Remuneration
Committee Charter at:
woodplc.com/remcommittee
Video conference
Jacqui Ferguson
Chair, Remuneration Committee
Membership
During 2021, the Remuneration
Committee comprised of the following
independent non-executive directors;
Jacqui Ferguson (Chair), Mary
Shafer-Malicki, Nigel Mills and Brenda
Reichelderfer. Mary retired from the
Committee and Board as a non-executive
after nine years of service on 13 May
2021, replaced by Brenda Reichelderfer
who joined the Committee on 31 March
2021. All members of the Committee
are considered independent and short
biographies can be found on pages 88
to 89.
Main responsibilities:
The Remuneration Committee advises
the Board on executive remuneration
and sets the remuneration packages of
each of the executive directors within
the approved Directors’ Remuneration
Policy. The Committee has a written
charter, which is reviewed annually and
is publicly available on the Company
website. The Committee monitors the
ongoing appropriateness and relevance
of the Policy and its application, ensuring
alignment of incentives and rewards with
the wider workforce, global remuneration
trends, and culture at Wood.
The aim of the Committee is to establish
an overall remuneration structure which:
• Promotes the long-term success of the
Company and delivers the strategy
•
Relects a balance of ixed and variable
pay, with the intent of creating a
competitive total remuneration
package that supports the attraction
and retention of executive directors
• Ensures appropriate alignment
between incentivised performance and
the interests of shareholders
In setting the Remuneration Policy
and its application, the Committee
considers the relevant provisions of
the UK Corporate Governance Code,
relevant regulations enacted under the
Companies Act 2006 and shareholder
views through consultation.
Our principles
Alignment with strategy, culture,
and delivery of shareholder value
Ensuring the Remuneration Policy
and principles support the needs
of our business over the next few
years, our strategy and creating long
term value for our shareholders. We
link pay to performance by ensuring
there is a strong alignment with the
organisation’s short and long-term
objectives, and the prevailing company
culture. Our shareholding requirements
ensure executives remain aligned with
the shareholder experience, including
post-departure.
Committee meetings in 2021
“We continue to ensure that reward relects the
wider stakeholder experience whilst balancing
the need for motivation and retention.”
Jan Apr May Jun Jul Oct
Feb
MarAug
Sep Nov
DecRemuneration contents
Remuneration Committee 110-112
Chair's letter 113-115
Workforce reward 116-118
Remuneration Policy 119
Executive directors' remuneration 120-133
Single igure of remuneration and outcomes 2021* 120
Share based interests awarded during the year* 126
Payments to past directors* 126
Payments for loss of ofice* 126
Statement of directors' shareholding and share interests*
127
TSR performance summary & Chief Executive remuneration 128
Illustration of future application of Remuneration Policy 131
Statement of implementation of Remuneration Policy 132
Chair of the Board and non-executive directors* 134
*Audited
Unless otherwise noted, the remaining sections of the
Annual Remuneration Report are not subject to audit.
Stakeholder engagement
The Committee is mindful of shareholder
and other stakeholder expectations in
respect of executive pay and actively
takes this into account when developing
remuneration arrangements.
Simplicity and balance
Our remuneration should effectively
support attraction and retention, as
well as being easily understood by all
stakeholders. We aim to provide an
appropriate balance between ixed and
variable pay, with the following main
components: base pay; beneits and
pension; annual bonus plan; long term
incentive plan; and employee share
plans. Our arrangements should be clear,
transparent, and aligned to those of the
wider workforce.
Internally fair, externally competitive
Ensuring executive directors’
remuneration relect wider workforce
arrangements, including base salary
increases. We use external data
to inform our thinking and ensure
remuneration decisions support
attraction, retention, incentivisation and
reward of our executive directors and
broader leadership team.
Discretion in decision making
The Committee exercises discretion when
determining the outcomes of short and
long-term variable reward, in addition to
the formulaic outcomes, considering any
year-on-year changes, market conditions
and relevant environmental, social
and governance (ESG) matters. Such
factors may include (but are not limited
to); workplace fatalities and injuries,
signiicant environmental incidents,
large or serial ines or sanctions from
regulatory bodies and/or signiicant legal
judgements or settlements.
To enhance the rigour in which
performance is reviewed the Committee
utilises the discretionary matrix when
assessing bonus and long-term incentive
plan outcomes. As with all Committee
decisions (in line with section 172 of the
Companies Act 2006), we relect on the
experience of all stakeholders through
the course of plan performance periods.
A copy of the framework can be found
at:
woodplc.com/discretionarymatrix
Committee meetings in 2021
During 2021, the Committee met ive times to discuss remuneration issues and
the operation of the Directors’ Remuneration Policy. Additional meetings were
held in January & February to determine variable reward outcomes for 2020
which were approved at the 2020 AGM. There was full Committee attendance at
each meeting. The Committee has a regular schedule of agenda items in addition
to other matters. The following matters were considered during the year:
John Wood Group PLC
Annual Report and Accounts 2021
111
John Wood Group PLC
Annual Report and Accounts 2021
110
Strategic report
Governance
Financial statements
Chair’s Letter
Remuneration
Remuneration Committee continued
Dear Shareholder
I am pleased to present, on behalf
of the Board, the annual report on
remuneration for the year ending
31 December 2021. This year we
were delighted to welcome Brenda
Reichelderfer to the Committee at the
end of March 2021 and say thank you to
Mary Shafer-Malicki who retired from the
Board on 13 May 2021 after nine years
of service. The purpose of this report
is to set out the remuneration of the
executive directors, demonstrating how
their pay aligns with the remuneration
arrangements for the wider workforce,
company culture, and shareholder
value creation, through the delivery
of the short and long-term strategic
objectives of the Company. We continue
to ensure that reward relects the wider
stakeholder experience whilst balancing
the need for motivation and retention.
In 2021 we introduced an Environmental,
Social and Governance (ESG) framework
on performance measures for our short
and long-term variable incentive plans as
we believe they challenge our business,
our people, and our clients to do better
and to create a better tomorrow and
support our ambitions and delivery of our
sustainability report. The Committee is
not proposing any material changes to
the operation of the Policy in 2022, and
we thank you for the support you showed
us in 2021, with a vote of 97.74% for the
annual report on remuneration at the
Annual General Meeting.
The delay in publishing the end of
year accounts resulted in additional
communications being provided to
participants in the annual bonus and
long-term incentive plans, informing
them of the delay and potential changes
to vesting dates. The Committee
determined not to make any inal
decisions on outcomes for plans ending
31 December 2021, and not to release any
deferred awards from the annual bonus
in 2019, until the inal results were known,
in line with governance best practice.
Considering our stakeholders
2021 remained a challenging year
with the ongoing impact of Covid-19
affecting, many of our people, who
continued to work from home where
possible. Although the business made
some limited use of the UK Government’s
furlough scheme until 31 July 2021,
all monies received in the year have
been paid back. Our people’s wellbeing
remained a priority, with the Committee
regularly updated on progress of
initiatives such as global wellbeing
champions, the Employee Assistance
Program, and the internal wellbeing
SharePoint site.
During the year we increased the
Committee’s involvement in engagement
activities with the wider workforce,
supported by the internal reward team,
as detailed in the people section of
this report. We remain committed to
increasing transparency, ensuring fair
reward for all employees, listening to
feedback, and ensuring alignment of
executive directors’ remuneration to
that of the wider workforce – see page
116 for more details. We were delighted
that Wood achieved Real Living Wage
employer accreditation in the United
Kingdom in November 2021, for both
direct employees and all contracted
workers, and that we are supporting
Aberdeen City as an ambassador, in its
ambition to become a Real Living Wage
city. Pay equity remains a focus, and we
were pleased to receive positive feedback
from the workforce on progress being
made, although we recognise there is still
more to do.
In 2021, demonstrating our continued
focus on creating an inclusive and diverse
workforce, female representation in
senior leadership roles increased to
33% from 31%. Wood also progressed
to 100th position in the FTSE Women
Leaders review, from 118th position.
Further information on our continued
progress and actions taken can be found
in our People section on page 64.
We took the dificult decision not to
pay a dividend in 2021 and have seen
a reduction in our share price from
£3.102 (closing mid-market price on
31 December 2020), to £1.911 (closing
mid-market price on 31 December 2021).
The Committee has been mindful of
the share price performance when
determining remuneration outcomes
as well as the employee and other
stakeholder experiences.
Remuneration and performance
outcomes for 2021
The application of the Remuneration
Policy in 2021 continued to focus
management on achieving long term
value for the business. Assurance of
these achievements against targets
set out below have been carried out by
internal audit, validated independently
by the SSABE Committee, with a
further external audit carried out by
KPMG, following the end of the inancial
year. The Committee did not make any
adjustments to performance targets for
ABP or LTIP plans during the year.
Annual Bonus Plan
2021 market conditions were challenging,
compounded by the pandemic and
management have continued to work
hard to improve the business. The
Committee was therefore mindful with
how to fairly recognise achievements,
whilst balancing the experience of
wider stakeholders. Having carefully
considered outcomes and stakeholder
experiences, using the discretionary
matrix, introduced in 2021, the
Committee has decided to reduce the
formulaic bonus outcomes for the bonus
2021 by 58.21% to 15% of maximum.
Whilst management has made progress
against personal and team objectives
(see page 122), and positioned Wood
for future growth, we believe this is
an appropriate response, from the
perspective of all stakeholders, given
Wood’s inancial performance, continued
suspension of the dividend, employee
experience and the overall business
context.
Long Term Incentive Plan (LTIP)
Performance measures for 2019-2021
LTIP were relative Total Shareholder
Return (TSR), against a select group of
peer companies, at a 50% weighting;
gross margin improvement, at a 25%
weighting; and overhead percentage
improvement, also at a 25% weighting.
These targets were disclosed to
shareholders at the time of grant.
Despite continued challenging conditions
due the Covid-19 pandemic and fall in
activity, management achieved the
overhead percentage improvement by
reducing our overheads to 11.2% at the
end of 2021, from 12.7% in 2018. This
results in full award for this measure.
Targets for TSR and gross margin
improvement were not achieved and
therefore there is no award for these
measures. The outcome results in 25%
overall achievement, with vesting in
March 2024 for the executive directors,
following the end of the additional two-
year holding period. In considering this
outcome, the Committee reviewed the
wider stakeholder experience, including
the value of any vested shares from the
time of grant to realisation of the award
which has reduced in line with shareholder
experience. We believe the performance
from the executive directors and the
management team in achieving overhead
percentage improvements during this
challenging period of time warrants
achievement of this measure at 25%.
Workforce engagement & remuneration
The Committee continues to increase its focus on workforce
engagement and is committed to ensuring employees’ views
are considered in any decision-making process. The aim of
workforce engagement is to ensure that the workforce is
listened to and considered as part of the remuneration process
ensuring that remuneration decisions are aligned with their
experience and underpinned by feedback and supported by data
on the composition, remuneration, engagement, retention, and
diversity of the workforce.
In 2021, the Committee attended a Listening Group Network
call with employees to gather feedback on how they feel about
their own reward, shared how executive remuneration is aligned
to wider workforce remuneration, and provided an update on
wider workforce practices and improvements. In February 2022,
the Committee are attending reward focus groups following
feedback from the results of the annual employee engagement
survey to directly hear from employees on their experiences of
working at Wood. The Committee continued to receive regular
updates from the President of Reward & Mobility and Executive
President of People & Organisation (P&O) throughout the
year on wider workforce remuneration matters, ensuring that
broader reward practices are understood and aligned when
setting executive remuneration. More information on wider
workforce remuneration considered by the Committee can be
found from page 116.
Advice provided (including internal teams)
During the year, the Committee took advice from Deloitte
LLP, who was retained as external advisor to the Committee.
Deloitte received £72,310 for the provision of services to the
Committee during the year. These fees consisted of core
services (where the cost was agreed in advance) and additional
services (which were charged on a time and materials basis).
The Committee has reviewed the remuneration advice
provided by Deloitte during the year and is comfortable that
it has been objective and independent. Deloitte is a member
of the Remuneration Consultant Group and adheres to the
Group’s Code of Conduct. The Committee has reviewed the
potential for conlicts of interest and judged that there were
appropriate safeguards against such conlicts. As well as
advising the Committee, Deloitte provided other services in
2021, predominately related to tax compliance and advisory,
and immigration advice. Where appropriate, the Committee
also receives input from the Chair of the Board, Chief Executive,
Chief Financial Oficer, Executive President of People &
Organisation, and the President of Reward & Mobility, who
also acts as Secretary to the Committee. These individuals
may attend the Committee but do not take part in discussions
regarding their own compensation.
Committee evaluation
As detailed on page 77, Lintstock undertook a review of
the Committee during the year. The performance of the
Committee continues to be positively rated overall. Going
forward the committee will further focus on inding the right
balance between UK investors remuneration requirements
and the dynamics of the global talent market and the wider
stakeholder experience. In addition, the Committee will focus
on strengthening engagement with executive directors on
remuneration matters and continuing to maintain effective
target setting and ensuring effective planning ahead of the
2023 Policy renewal. The review concluded that the Committee
is appropriately chaired and supported in fulilling its role.
Shareholder consultation
As a minimum, the Committee engages annually with
signiicant shareholders and voting agencies via written
correspondence and offers the opportunity to meet with the
Chair of the Committee. The Committee views these meetings
as an opportunity to ensure the Directors’ Remuneration Policy,
and application, continues to be aligned with shareholder
views, with feedback used to inform the Committee’s decision-
making process. The Committee ensures that appropriate and
meaningful shareholder consultation takes place in advance
of any material change being proposed to the Directors’
Remuneration Policy.
A summary of any such consultation and the Committee’s
response to substantive points raised will be included in the
relevant section of the remuneration report. In addition, the
Committee receives input on broader market insights and
shareholder expectations through Committee advisors.
We have continued to proactively engage with and listen to
our shareholders during 2021 where appropriate and were
appreciative of the level of support for our voting resolutions in
2021. The Committee, as always, is thankful for the time and
considerations conveyed by our stakeholders and trusts that
the proposed application of the Policy detailed in this report
demonstrates we continue to listen and act on any feedback.
Statement of shareholder voting
The Committee encourages shareholder engagement. Where
there are a substantial number of votes against any resolution
on directors’ remuneration, the Committee seeks to understand
the reasons for any such vote and will detail here any actions
in response to it. In line with the Corporate Governance Code,
where there are 20% or more votes against remuneration
resolutions, the Committee will support the Board in engaging
with shareholders to understand their views regarding
remuneration.
The following table sets out the 2021 AGM voting in respect of
our remuneration matters and our voting outcome in respect of
the 2020 Directors’ Remuneration Policy.
Item AGM
date
Vote For
(including
Discretionary)
Vote
Against
Votes
Withheld*
Advisory vote
on the 2020
Remuneration
report
13
May
2021
544,291,523
(97.74%)
12,591,917
(2.26%)
2,530,912
Binding vote
on the 2020
Directors’
Remuneration
Policy
29
June
2020
485,497,628
(90.14%)
53,097,415
(9.86%)
1,494,302
Notes to the statement of shareholding voting
* A vote withheld is not a vote in law and is not counted in the calculation of
the percentage of votes 'For' or 'Against' a resolution.
John Wood Group PLC
Annual Report and Accounts 2021
113
John Wood Group PLC
Annual Report and Accounts 2021
112
Strategic report
Governance
Financial statements
Remuneration
Annual Bonus Plan
To incentivise executive directors to
deliver in the year ahead, maximum
bonus opportunity for the Chief
Executive will remain at 175% of base
salary, and 150% of base salary for the
CFO, less than the Policy maximum of
200% of base salary. Full details of the
corporate and personal objectives, which
account for 30% of the annual bonus
opportunity, are provided on page 133.
In line with last year, other performance
measures will be a measure of proit at
30%; cash generation at 30%; and an
ESG framework at 10%.
Proposed policy
application for 2022
Full details of our proposed
implementation of the Directors’
Remuneration Policy for 2022 can be
found on pages 132 to 133. The Committee
will consider the announcement of
Robin Watson’s decision to retire as
Chief Executive and the impact on
his remuneration arrangements. The
Committee will ensure that decisions
taken in relation to his exit arrangements
are in line with the current Policy. Details
of the exit arrangements will be disclosed
at the appropriate time.
The Committee has continued to review
remuneration with alignment to strategy,
culture, and delivery of shareholder value.
The table below shows how our proposed
application aligns with our strategic
value outputs for investors, our people,
clients, and communities.
Salary and beneits
In January 2022 we increased the base
salary for both executive directors by
2.5%, in line with the wider workforce in
the UK. This increases Robin Watson’s
base salary to £806,880, from £787,200,
and David Kemp’s to £511,024 from
£498,560. As a reminder, neither
executive director received an increase to
base salary in 2021, and both elected to
take a voluntary 10% reduction in base
salary for nine months in 2020. There is
no change to beneits provided since our
last report. As disclosed in our previous
annual report and Policy, executive
directors’ pension contributions aligned
to those of the wider workforce from 1
January 2022, ahead of the Investment
Associations’ target date of 31 December
2022; in the United Kingdom this is 9%.
Chair's Letter continued
Remuneration link to
strategic value outputs
Annual
bonus plan
Long term
incentive plan
Underpins Other
EBITDA
Cash generation
Serious injury and fatality (SIF)
Safety leadership engagement
Employee engagement
improvement
Corporate and personal
objectives
TSR
EBITDA margin %
improvement
Revenue growth
Carbon emission reductions
Improvement in leadership
gender diversity
Discretionary matrix
Holding periods
Shareholding
For investors
Total shareholder return
Growth and cash
generation
For our
people
Rewarding careers and
employee retention
A workplace where different
backgrounds, experience
and expertise are welcomed
and celebrated
For clients
Best-in-class delivery,
consistently
Global reach with balanced
portfolio of long-term
partner relationships with
clients
Leading technical services
and smarter, more
sustainable solutions
Track record on
industry-leading projects
For
communities
Signiicant contribution
to local employment and
communities
Long Term Incentive Plan
The performance measures are proposed
to remain the same as 2021 and be
relative TSR, EBITDA margin percentage
improvement, revenue growth, and
an ESG framework, weighted 50%,
30%, 10% and 10% respectively. These
measures remain key strategic priorities
aligned with value generation for our
shareholders, incentivise business
growth through higher margin services,
and support our sustainability plan.
Although the Board has approved the
commencement of a sales process for
our built environment business, for the
purposes of target setting we have
assumed that this business remains part
of the Company for the duration of the
performance period, and we will adjust
targets at a future date assuming the
sale takes place. Full details, along with
the threshold and maximum targets, can
be found on page 132.
We determined to anchor participation
levels on 200% of salary for the Chief
Executive and 175% for the CFO.
However. having carefully considered
the material reduction in share price
during 2021, and feedback received, the
Committee believed it appropriate to
reduce participation levels for 2022 by
20%. This results in a participation level
of 160% of salary for the Chief Executive
and 140% for the CFO. As in previous
years, and detailed in the Policy, no
portion of these awards is released until
ive years from grant, further aligning
shareholder and executive interests. We
will monitor share price performance
during 2022 and anticipate reverting
to the normal participation levels of
200% and 175% of salary respectively
in 2023. However, as a result of the
announcement of the Chief Executive’s
decision to retire, the Committee has
determined not to award him LTIP 2022-
2024 as the usual 18-months service
required in the Plan will not be realised.
In recognition of concerns in attracting,
motivating, and retaining key talent
due to our history of low outcomes for
achievements in LTIP, in 2022 we are
introducing a restricted stock plan for
those eligible leaders below the Executive
Leadership Team. We believe this model
better aligns to the cyclical nature of
our business, incentivises our people to
deliver our strategic ambitions, and is
globally market competitive
Policy renewal in 2023
In 2022 we will undertake the review of
our Directors’ Remuneration Policy, due
for renewal in 2023, and will proactively
engage with key investors to ensure long
term alignment with shareholders.
I trust that in the report for 2021 we
have clearly explained our application
and intentions regarding future
implementation of the Directors’
Remuneration Policy, and I look forward to
your support on the relevant resolution.
Signed on behalf of the Board and as
Chair of the Remuneration Committee
Jacqui Ferguson
Chair, Remuneration Committee
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Strategic report
Governance
Financial statements
Remuneration
Pay equity
Wood is committed to transparent,
internally fair, and externally competitive
reward. Our reward roadmap launched in
2020 set out the steps towards greater
transparency and includes global pay
equity reporting which was implemented
in 2021. All line managers have access to
pay equity reporting tools to facilitate
individual pay assessments, carry out
pay equity analysis by country, job family,
department, grade, and gender, against
our established reward frameworks. We
continue to monitor the external market
and continue to step ahead of emerging
legislation and trends, whilst ensuring
compliance with current legislation.
Pay ratio of the Chief Executive
The pay ratio of the Chief Executive
continues to relect the Company’s
internally fair approach to pay through
aligned and consistent frameworks.
Total pay across the wider workforce is
consistent with externally competitive
remuneration required for the professional
workforce which Wood employs, assisting
with an above average UK pay ratio.
Real Living Wage Accreditation UK
In 2021, Wood was proud to become
an accredited Living Wage employer,
ensuring that our UK workforce and
regular supply chain workers will earn at
least the Real Living Wage, representing
our commitment to ensuring everyone
is paid a fair wage that meets the costs
and pressures they face in their everyday
lives while working for Wood. A living
wage directly advances several of the
Sustainable Development Goals (SDGs):
Employee engagement
As part of our reward roadmap, we continue to focus on increasing engagement, ensuring decisions are people led and that
our people are kept informed. In November the Committee again participated in our Listening Group Network call with a focus
on reward. Additional engagement was carried out by the reward team through our existing employee networks and Yammer
to educate, engage and inspire our people on reward matters. We also continued to enhance our focus on reward engagement
through our employee survey and continued to monitor results from local reward surveys and committee led engagement activity.
Throughout the year, we listened to our people and identiied three themes as key areas of focus:
•
Completed a pay equity project which reviewed in detail over 3,000 positions in engineering, engineering design, &
project management across 6 countries taking steps where required to ensure fair and equitable pay
• We launched real time, live pay equity reporting in our people systems available to line managers and linked
with our Inclusion & Diversity agenda
Is my
contribution
rewarded
fairly compared
to others?
• We continued to complete job mapping for around 30, 000 employees, aligning to our established global job
framework and grading structure
• We built our salary bands into our systems for over 10 countries, allowing managers direct access to the
information required to make effective reward decisions
• We rolled out better visibility of our annual salary review process and learning hub content to our people, using
our systems to enhance process, conidence and knowledge to aid effective decision making
Is the process
for deciding my
pay fair?
How am I
treated in the
decision making
process?
• We provided our key business leaders with pay equity training to enhance knowledge and accountability,
enabling them to have quality conversations with their people
•
We focused our employee engagement survey reward questions on how our people are treated, to identify key
focus areas for 2022 and will establish reward focus groups to build on this. Through these forums we will listen to
our workforce to understand what fair reward means to them, and how we can become meaningfully transparent
with reward
• We launched our reward engagement framework, setting out the tools available for employees to get involved
in reward decision making.
With 40,000 inquisitive minds, united by our common purpose to unlock
solutions to the world’s most critical challenges, our people enable us to achieve
our purpose, and are our most important asset. We are committed to providing
fair reward for our people in return for the work they do, whilst ensuring that
we are responsible with our spend on reward. Our priority is to ensure our
people feel secure, are rewarded competitively, and treated fairly and inclusively.
More information on these activities
can be found on pages 58-63
Workforce reward
Read more at:
woodplc.com/livingwage
Sharing success
We are committed to ensuring that
our people beneit from the collective
success of Wood and are rewarded
for their commitment to delivering
our vision, values, and purpose. In
2021, we continued to offer our
Employee Share Plan (ESP) and as
mentioned in last year’s report, we
introduced a new Share Incentive
Plan (SIP) for our UK workforce. Both
plans offer employees the chance to
own a stake in the future of Wood,
along with the ability to beneit from
matching shares and dividends.
In 2022 we are extending the ESP
offering to eligible employees in
Brunei and Kuwait and we will also be
moving to an “evergreen” SIP in the UK
allowing our employees the lexibility
to join the plan at any time throughout
the year, subject to eligibility.
In 2021 we introduced a global spot
bonus policy allowing individuals or
teams to be rewarded inancially for
outstanding contributions to Wood,
sharing in collective success. We
celebrate wider achievements across
the Company in many ways, with
more details in our people section on
pages 58 to 63.
We continue to engage with our
workforce around the best ways to share
success and included this topic in our
global employee engagement survey.
As we continue to analyse the results
from the survey, we will also be setting
up employee focus groups in Q1 2022 to
continue the conversation with our people.
Summary of 2021 enrolment:
27,629
eligible employees
17
countries
9
languages of inclusive communications
and materials
2,793
enrolled (10.1% of total eligible)
23%
SIP enrolment (15% in 2020)
Read our full gender pay gap report at:
woodplc.com/genderpay
Employees at snapshot date
5,587
23%
female
77%
male
Gender balance
Mean gap/median gap pay
34.6%
median
26.1%
mean
Mean gap/median gap bonus
67.4%
median
38.2%
mean
Fair and equitable reward
Gender pay
Our 2021 gender pay gap report included
results across ive UK entities (5,587
employees). Consistent with previous
years, we are conident that our gender
pay gap does not relect an equal pay
issue but continues to be because of
gender distribution across occupations
and job levels, consistent with industry
peers. In 2021, the pay gap reduced to
26.1% from 27.7%, whilst the bonus gap
increased from 4.6% to 38.2%. During
the same time, female representation
decreased across our UK business
from 25% to 23%, consistent with
pre pandemic levels reported in 2019.
Proportionally 7.5% of females and 7.5%
of males received a bonus, however the
shift in the bonus gap is driven by the
fact that there was no bonus paid to
managerial and leadership levels in 2021,
for the 2020 performance year. Non
managerial bonus payments made were
to several offshore and site employees,
who are all male, with these bonus values
and eligibility often driven by our clients
and collective agreements.
We continue to focus our efforts on
pay equity – fairness of pay for those
carrying out the same job, in the same
location, with the same skills and
experience, regardless of diversity.
Full details can be found on the
Government website, categorised by
industry sector, as determined by the
Ofice of National Statistics (ONS), or
on the Company website.
We are committed to continuing
to improve gender balance with a
target of 40% female representation
in senior leadership roles by 2030;
on 31 December 2021, we had 33%
female leaders, up from 31% in 2020.
The FTSE Women Leaders Review
report, measuring female leadership
representation in the FTSE 350
for Board, ELT, and direct reports,
published in February 2022, showed
that Wood has improved to 100th
position from 118th position, with
40% of our Board and 24.2% of our
combined executive committee and
direct reports represented by women.
More information can be found in our
People section of the report.
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Governance
Financial statements
Remuneration
The Remuneration Policy was reviewed and approved by shareholders at the 2020 AGM and took effect from that date. Extensive
shareholder consultation was undertaken by the Committee to ensure views were understood and listened to. The output of these
meetings inluenced the Committee’s decisions, leading to a Policy which was overwhelmingly supported at the AGM. The objective
of the Remuneration Policy is to set the paraments for all components of executive remuneration, including maximum award
levels, and performance measurement, which provide a compensation package promoting the long-term success of the Company
and supports the strategy. It does this through a balance of ixed and variable pay, with the intent of creating a competitive
total remuneration package which attracts and retains executives while creating an appropriate alignment between incentivising
executive performance and the interests of shareholders. In line with the usual cycle the Committee will put a revised Policy to
shareholders again no later than the AGM in 2023.
In reviewing the application of the Remuneration Policy, the Committee ensures the following areas, as outlined in Section 40 of the
UK Corporate Governance Code, have been fully considered and addressed as described below:
Clarity
We fully disclose our remuneration decision making, targets and outcomes in our annual report on directors’
remuneration. We carry out regular shareholder engagement throughout the year, as necessary. Our wider
workforce remuneration arrangements focus on ensuring we are internally fair, whilst remaining externally
competitive. We are improving transparency of our remuneration and seek to gain feedback from our global
workforce via our employee engagement surveys and Listening Group Network.
Simplicity
Our performance measures for our long and short-term incentives are simple and aligned to our
stakeholders. The operation, targets and outcomes are fully disclosed in the annual report each year.
Where possible we communicate future performance measures and targets, such as in our long-term
incentive plan, but in certain areas, such as annual bonus, are unable to do so due to commercial sensitivity.
Participants are provided with engaging supporting documentation to ensure understanding, with regular
updates provided during each performance period, to drive positive behaviours and business performance.
Proportionality
As deined in our Remuneration Policy, total remuneration is more heavily weighted towards variable pay
linked to Company-wide performance and stakeholder experience. Individual performance is aligned with
delivering the long-term strategy. The Committee reserves the right to apply discretion to ensure that poor
performance is not rewarded; outcomes may be adjusted to relect stakeholders’ experience.
Predictability
The Committee discloses and explains all relevant limits and discretions allowed under the terms of the
Remuneration Policy. This is further demonstrated in the remuneration report each year.
Alignment to
culture
Incentive plans are linked to business strategy, overall performance, and growth through a mix of inancial
and noninancial targets. They reward those who exemplify behaviours which align to our purpose, culture
and values, aiding delivery our strategy.
Risk
Governance of our remuneration arrangements ensures that rewards are not excessive compared to
Company results and stakeholder experience. We review our performance measures and targets used
in our incentive plans to ensure they do not lead to excessive risks and poor behaviours. The Committee
monitors the overall performance of executive directors and assesses the overall outcome of performance
in the relevant inancial year. Our enhanced malus and clawback provisions safeguard the Company against
future risk in relation to our long and short-term incentive plans which applies to awards from 2020. Under
this Policy if the Board decides to operate Malus in respect of a Policy Award, the Policy Award will lapse,
be reduced, be cancelled and/or be forfeited to the extent determined by the Board. If the Board decides
to apply Clawback in relation to a Policy Award, to recover amounts to which Clawback will apply, the
Company has the right to (or to procure that another person will):
• lapse, reduce, cancel, or forfeit cash or shares which may be or otherwise become due to the Participant
under any Award; and/or
• reduce the amount of any future Award to be granted to the Participant; and/or
• forfeit in whole in or part cash or shares being held on behalf of the Participant in any retention
arrangement in connection with any Plan; and/or
• make a deduction from any payment otherwise due to the Participant, to the extent permitted by law;
and/or
• claim repayment of an amount directly from the Participant (in cash or shares) which the Participant
must repay on receipt of a written request.
The Directors' Remuneration Policy with updated scenario charts to
relect our proposed application of the Policy for 2022 can be found at:
woodplc.com/rempolicy
Alignment to the workforce
The Directors’ Remuneration Policy was approved by shareholders at the 2020 AGM in June and took effect from that date. The
objective of the Policy is to set all components of remuneration, maximum awards, and performance measurement, which provide
a compensation package promoting the long-term success of the business and delivery of the strategy. The Policy with updated
scenario charts can be found at
woodplc.com/rempolicy
This table provides a summary of executive directors’ remuneration outlined in our Policy and alignment to the wider workforce.
Element & purpose executive director
remuneration
Alignment with workforce
Salary
To provide an appropriate level of ixed salary
to attract and retain executives with the
qualities, skills and experience required to
deliver our strategic objectives.
The process of setting and annually reviewing salaries against market
information, mindful of individual contribution, is the same for all employees
including executive directors. Salaries are paid either cumulatively by hours
worked or on a ixed installment basis.
Beneits
To provide fair and market competitive
beneits which support the health and
wellbeing of our executives to perform at their
best.
All employees are provided with beneits typical of the markets in which they are
employed. In the UK, this includes private medical insurance, income protection
insurance (where applicable), transportation allowance (based on job level) and
life assurance. Where applicable, employees are offered the ability to choose
additional beneits to suit their lifestyle and circumstances.
Retirement related beneits
To support the long-term inancial wellbeing
and future stability of our executives in
return for their commitment to delivering our
strategic objectives.
Employees receive retirement plan contributions typical of the markets in which
they are employed. In the UK, this is currently a maximum of 9% employer
contribution. As previously reported, executive directors were also aligned to
receive 9% employer pension contributions from 1 January 2022; their previous
contribution was 15%.
Annual Bonus Plan (ABP)
To incentivise executives to deliver strategic
business priorities for the inancial year with
compulsory deferred payment designed
to provide additional alignment with
stakeholders and reinforce retention.
Provides a reward for senior employees critical to future success and who are in
a position that can materially inluence the success of Wood. Participation levels
are based on the job which an individual carries out linked to a global framework.
ABP is based on the same structure and performance targets throughout the
organisation, except for further team and personal targets where appropriate.
Executive directors and the ELT receive 75% of any award earned in cash, with
the remainder deferred into stock for a further two years. Other participants,
with a small number of senior leadership exceptions, are paid fully in cash.
ABP participation typically applies to circa 3.6% of the global employee population.
Long Term Plan (LTP)
To reward and retain executives while aligning
their interests with those of stakeholders by
incentivising performance over the longer
term. Performance measures are linked to
longer-term creation of shareholder value.
Designed to incentivise senior leaders in delivering business performance over the
longer-term. The plan provides an opportunity to earn an award, in the form of
conditional shares, subject to remaining in employment on the same basis as our
executive directors. Measures are consistent and linked to long-term creation of
shareholder value for all participants. Participation levels are based on the job
which an individual carries out, linked to a global framework.
In 2022 we will move to a time-vested restricted stock model for eligible
participants beyond the Executive Leadership Team to support retention and
build momentum for future growth whilst ensuring alignment of variable pay in
the form of shares and moving to be more consistent with global markets. The
executive directors and the ELT will remain on the existing LTIP performance-
based plan.
LTP participation typically applies to circa 0.83% of the global employee
population.
Employee Share Plans
To give our people the opportunity to beneit
from the success to which their performance
and commitment contributes.
Open to all eligible employees across the organisation. Employees may choose to
contribute up to 10% of gross salary subject to plan rules, or such lower amount
as the Committee may determine, which is deducted in regular pay periods from
the salary. Depending on country eligibility, employees may join the Employee
Share Plan (ESP) and/or Share Incentive Plan (SIP).
Shareholding requirements
To ensure that executive directors’ interests
and individual wealth are aligned with those
of shareholders over a long-term performance
period.
Shareholding requirement policy applies to executive directors only, including
requirement to hold shares post-employment. Post-employment shareholding
does not apply to any other employee.
Other senior employees hold share awards as part of deferral and retention
requirements of variable remuneration plans.
Remuneration Policy
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Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration
Single igure of remuneration and outcomes 2021*
The following table sets out the single igure of remuneration received or receivable (£000’s) in the year for each of the executive
directors. No remuneration for either executive director was waived during the year.
Year Salary
(a)
Beneits
(b)
Bonus
Long term
incentive
(c)
Pension related
beneits
(d)
Total
Total ixed
remuneration
Total variable
remuneration
Robin Watson
2021
£787 £14 £207 £134 £118 £1,260 £919
£341
Robin Watson
2020 £728 £14 £0 £354 £118 £1,214 £860 £354
David Kemp
2021
£499
£14 £112 £773 £587 £186
£74
£75David Kemp 2020 £0 £202 £75 £752 £550 £202
£461
£14Notes to the single igure of remuneration
a. Salary received during the year.
b. Taxable beneits received during the year. These include transportation allowance and private medical cover.
c. The share price used to calculate the LTIP value is £1.91, the closing mid-market share price on 31 December 2021 and vesting date of the award. The share price
at grant was £5.69, the value shown is not as a result of share price growth.
d. Pension igure relects cash value of deined contribution pension contribution or cash alternative, as detailed in the next section.
Bonus and long-term incentive outcomes are described in the following sections.
The aggregate amount of executive directors’ remuneration (salary, beneits including cash pension allowances; and bonus and long-term incentives) is
£2,032,988.
The aggregate amount of Company contributions to executive directors’ pension schemes was £40,000.
Pension beneits
In line with the Directors’ Remuneration Policy, executive directors can choose to participate in the relevant local deined
contribution pension arrangement or receive a cash allowance in lieu of pension, or a combination thereof. In line with our current
Remuneration Policy and existing arrangements, payment may be up to 15% of base salary, this compares with 9% for onshore,
ofice-based employees in the UK. Robin Watson split his pension beneits with 66% as cash allowance and the remainder as
deined pensions contributions; David Kemp chose to receive his full pension entitlement as a cash allowance. As detailed in the last
two annual reports, pension entitlements for the existing directors have aligned to that of the wider workforce of 9% in the UK from
January 2022.
Normal retirement age speciied in the pension plan rules is 65 years. There are no additional beneits that become receivable in the
event of early retirement.
Bonus
For 2021, the maximum bonus opportunity was 175% of base salary for Robin Watson and 150% for David Kemp. Bonus measures
were split between inancial, ESG and corporate or individual performance objectives with a balance of 60%, 10% and 30%
respectively. Financial measures were further split into two measures – a measure of proit and a measure of cash generation -
equally weighted at 30% as illustrated in the chart below:
Relative weighting
(% of bonus maximum opportunity)
To assure achievement outcomes against targets within variable incentives, performance is considered and approved by the Safety,
Sustainability, Assurance and Business Ethics Committee (SSABE), with a further external independent audit carried out following
the end of the inancial year as appropriate.
ESG measures and outcomes
ESG measures were included in the bonus plan from 2021
to support Wood’s transition away from our oilield services
heritage to a more enduring market position in energy
transition and sustainable infrastructure, and to aid delivery
of our longer-term sustainability goals. ESG measures
accounted for a total 10% of the maximum bonus opportunity
and comprised of three Key Performance Indicators, equally
weighted. To provide assurance of achievement outcomes
against targets, performance is considered and approved
by the Safety, Sustainability, Assurance and Business Ethics
Committee (SSABE).
Measure Target & payment Achieved
Total Recordable
Incident Rate
(TRIR - the total of lost
work cases, restricted
work case and medical
treatment cases per
200,000 work hours).
Improve by 10%
Performance between 0% and
10% results in a proportionate
payment.
Not met - 0%
payout
Due to the tragic
fatality during the
year management
proposed that this
element of the
bonus be waived
regardless of
outcome.
Successful
delivery of Safety
Intervention
Programme
Success criteria: Cultural
maturity assessment conducted
to establish benchmark;
Intervention to be conducted
in selected low performing
areas; 90-day improvement
plans to be completed; and
cultural maturity re-assessment
to be conducted in Q4 2021,
demonstrating improvement
against benchmark.
If this KPI is achieved, 3.33% will
be paid; if it is not fully achieved,
no payment will be made.
Fully achieved -
100% payout
Active,
demonstrated
leadership in
educating and
inspiring 100% of
our colleagues to be
inclusive every day,
resulting in positive,
sustainable change.
Conscious inclusion training to
be completed for employees.
Payment for this KPI is based on
number of employees who have
completed training between
threshold and maximum
(34,580 employees).
Fully achieved –
100% payout
Additional inclusion
and diversity
activities can be
found in the people
report on pages 58
to 63.
Financial measures and outcomes
Financial measures for the bonus year which ended 31
December 2021 consisted of:
• Proit target – we used EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortisation) as our metric of
success
• A cash generation target – this was based on pre-tax cash
from operations before exceptional items
In response to the high degree of uncertainty around the shape
and timing of the recovery in our markets post Covid-19 and oil
price volatility, threshold performance for 2021 was 85% of the
target set, with maximum bonus achieved when results exceed
115% of target. Threshold performance must be met before
any of that element of the award is paid; if target performance
is met, 50% of the potential bonus opportunity is paid; 100%
is payable for reaching maximum performance. Performance
between threshold and target and between target and
maximum will result in a proportionate award calculated on a
straight-line basis as illustrated in the following graph:
A summary of the inancial targets and achievements are set
out below:
Bonus achievement
0%
10%
20%
30%
40%
70%
60%
50%
80%
90%
100%
85%
100%
115%
Performance
% pay out
ESG
10%
Proit
30%
Cash generation 30%
Corporate/personal objectives
30%
inancial measures
60%
non-inancial measures 30%
ESG framework
10%
63% 10% 16% 11% 64% 11% 15% 10%
Salary Beneits & Pension Bonus
Long term incentives
David Kemp
Robin Watson
0% 100% 0% 100%
Note:
Illustrations not to scale
Proit (EBITDA)
Achieved
$554m
Cash generation
% pay out on measure
19.35%
Achieved
-
$74m
Threshold
$251m
Target
$295m
Maximum
$339m
% pay out on measure
0%
Threshold
$519m
Target
$610m
Maximum
$702m
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Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration continued
Corporate / personal objectives and outcomes
Stretching objectives relating to corporate and personal objectives focused on the delivery of strategic plans are weighted as
30% bonus opportunity. The achievement of objectives is considered by the Chair of the Board and the Committee as part of the
annual review process. Measurement against each of the objectives is based on tangible performance outcomes and demonstrable
evidence of achievement during the year. Achievements against each objective are described in the table below.
Individual performance objectives
Executive
Director
Objective Achievement
Robin
Watson
Sustainable delivery against the
strategic plan:
Reposition Wood within energy transition
and infrastructure markets, establishing a
strong, differentiated competitive position;
enduring, value added client relationships;
and a healthy sales pipeline in these growth
markets of the future.
Lack of market momentum in 2021 led to challenges, but momentum in the
year saw our order book up 19% YoY at December 2021.
Proactive management to de-risk our projects portfolio to help improve the
quality of our business.
Strategic options considered and worked on included the proposed divestment
of the Consulting built environment business, and the subsequent future
positioning of Wood. The strategic review of the built environment business
was endorsed by the Board in November.
Existing and future client relationships enhanced via our thought leadership
activities at CoP 26, consolidating our position as global leaders in energy
transition and industrial decarbonisation.
Project execution:
Design and deliver a programme of execution
excellence to ensure robust project delivery
systems and commercial governance, to
deliver a project execution model which
delivers predictable and sustainable project
outcomes.
The re-organisation of the company was completed in late 2020, with a
planned 18-month transition, including delivery of execution excellence in
projects.
During 2021 we de-risked our Projects portfolio with a focus on Improving the
quality of our business in the future.
2021 was however, another year of disappointing inancial performance overall
from some principal lump-sum turnkey projects within this portfolio, with the
knock-on effect on cash generation, through working capital outlow.
Operating model and OpCom delivery:
Develop and deliver the reined operating
model and execution delivery through the new
OpCom and assurance structure, to ensure
predictable, consistent best-in-class delivery;
unlock and deliver operational eficiencies; and
improve margin.
OpCom established with Operations Excellence framework and reporting
developed and implemented. High Value Engineering Centres (HVEC) usage
steadily risen through year, resulting in increased margin opportunities and
eficiencies.
Project Management Academy fully established and operating effectively with
over 5,000 participants completing training throughout the year.
ESG and sustainability
programme leadership:
Deliver against the agreed climate, ESG
& sustainability programme, including
appraising the Board and create a compelling
investment case as a sustainable investment
proposition via effective communication and
engagement around our ESG credentials.
ESG and sustainability plans have progressed very well in 2021 and ESG
dashboard both well received and delivered against. Sustainability embedded
within the standing Board governance as a formal charter addition to SSABE.
Good progress made against gender leadership targets, with 33% female
leaders (to ELT 3) at year end, versus 31% at end 2020. Wood also increased to
100th position, from 118th, in FTSE Leaders Review. In carbon emission targets,
in 2021 we recorded more than a 50% fall against our baseline year, inluenced
by an unprecedented and unique set of circumstances as Covid-19 restrictions
and headcount reductions. This is not a sustainable emissions reduction and in
years 2022/23 we will inevitably see year-on-year increases in emission as we
head out of the pandemic. We are conident however that we will reach our
2030 targets, as outlined in our sustainability report.
Top quartile agency rating continues; ESG further embedded through 2021 in
our IR positioning.
Active risk management and
business ethics leadership:
• Actively mitigate Company principal risks
aligned to the Group Risk Management
programme
• Continue to manage Crisis Management
Team and Covid-19 related risks through
2021
• Close out the case management portfolio
through the Investigations Oversight
Committee, and conclusion of cases with
Regulatory authorities
• Deliver against Ethics & Compliance
improvement programme (related to case
management close-out) through 2021
The primary risk process, risk committee and Board assessment and
discussions around key risks and risk management continue to be very good
and a well-established part of the executive and Board governance cadence.
Crisis Management Team delivery has been very effective through 2021 with
active management reducing risks such as those created by the ongoing
pandemic challenges.
E&C improvement around anti-bribery and anti-corruption (ABAC) has been
captured with the establishment of the ABAC Programme, which is aligned
to our SFO and DOJ Deferred Prosecution Agreement Obligations. The ABAC
Programme has made excellent progress in 2021 and is delivering against
objectives. The ABAC Programme will continue for the 3-years of our Deferred
Prosecution Agreements and has started to improve our active E&C risk
management process.
Individual performance objectives
Executive
Director
Objective Achievement
David
Kemp
Drive success of related Future Fit
programme including F&A functional
deliverables:
• Deliver F&A functional plan
• Promote and support delivery of overall
plan
• Reshape Oracle plan
• Redesign reporting structures
• Recut budget and targets
• Reconsider internal investment in line with
constraints
F&A functional plan fully delivered. Key items included migration of Houston
and Alpharetta shared service centres to Delhi with annualised beneits c$7m.
Oracle programme reshaped with move to Oracle Cloud. Programme
approved & underway with design.
Budgets recut to support new organisation.
Capital structure and inancing:
• Maintain inancing strategy adapting to
changing conditions
• Execute agreed inancing strategy
ensuring business maintains suficient
liquidity, suficient covenant headroom and
meets audit requirements
• Propose and agree 2021 dividend strategy
with Board
Financing strategy developed, agreed with Board, and executed extending the
maturity of the Group’s debt facilities by securing a $600m UKEF backed term
loan, and a $1.2bm sustainable RCF; both maturing in 2026 and linked to our
energy transition related strategy
As part of underlying leverage challenge developed strategic options
considered and worked actively included the proposed divestment of the
Consulting built environment business, and the subsequent future positioning
of Wood. The strategic review of the built environment business was endorsed
by the Board in November.
Investor engagement:
• Enhance opportunity for increased market
capitalisation via improved share price
performance
• Build and communicate a clear and
compelling, sustainable investment
case via effective repositioning and
differentiation of the Wood brand from
traditional peer group
Challenging IR progress during most of year against a backdrop of
disappointing business performance and cashlow / debt concerns. However,
signiicant engagement with major shareholders and analysts undertaken
in respect of the strategic review of the Consulting built environment
business, announced in November 2021. Sentiment to the strategic review
and subsequent announcement of the proposed sale of the built environment
business was largely positive.
Due to internal succession, new President IR appointed and onboarded.
Regulatory investigations and litigation
management:
• Through governance structure, provide
leadership to SFO, DOJ, SEC and COPFS
investigations
• Active management of current and
emergent litigation risks; eficient and
effective litigation management, active
balance of cost vs return
Government investigations by the SFO, DOJ, SEC, Crown Ofice and
Procurator Fiscal of Scotland and CGU and MPF in Brazil progressed and
concluded.
Major Review Boards developed for signiicant litigation and Ethics and
Compliance investigations and driven through the organisation, enhancing
governance over such litigation and investigations.
Corporate performance objective Achievements
Develop and deliver against the Future Fit
programme:
• Clear work-stream project plan and overall
programme plan to deliver against objectives
• Ensure governance of programme via executive
sponsorship and accountability for delivery across
the future it workstreams
• Deliver inancial targets of the plan, including
requisite improvement to the bottom-line
Project plan delivery against agreed objectives and updates provided to the
Board at regular intervals. Future Fit programme successfully completed with
associated savings. Key highlights included:
• Establishment of new organisational model with new chief operating oficer
position and operating committee
• Operations assurance programme embedded
• Improvement in digital & technology through creation of D&T partnerships,
connected worker and digital twinning
Leadership effectiveness:
• Assess and continuously improve ELT ‘team health’
in a measured manner (independent assessment of
the ELT development programme)
Continued investment in the ELT development framework, with three sessions
completed in 2021 remotely.
The sustained period of inancial challenge, lack of personal interface,
pandemic turbulence, and general pressure on delivery was challenging for the
ELT.
ELT succession plans implemented due to Dave Stewart and Sue MacDonald’s
planned retirement. Ken Gilmartin, an external hire, joined as COO, and Lesley
Birse, internally promoted, joined as executive president, P&O; both were
comprehensively on-boarded.
John Wood Group PLC
Annual Report and Accounts 2021
123
John Wood Group PLC
Annual Report and Accounts 2021
122
Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration continued
Bonus award achievement summary
The table below provides a summary of the formulaic overall bonus achievement for each of the executive directors:
% achieved
Total bonus
% achievedName
Financial targets ESG targets
Corporate and
personal objectives
Robin Watson
5.81% 6.67% 23.4% 35.88%
David Kemp 5.81% 6.67% 23.4% 35.88%
2021 remained a challenging year. Using the discretionary decision matrix for guidance, the Committee consider the experience of
all stakeholders during the performance period, including customers, investors, suppliers, and the wider workforce, supported by
reports from audit and SSABE:
• Customer feedback remains positive with our order book up 19%; our overall win and sold gross margin improved
• The Board took the dificult decision not to pay a dividend and our share price reduced by 38% year on year, using the closing mid-
market price on 31 December 2021.
• We continued to develop closer relationships with suppliers, including category agreements with key suppliers. We gained support
and buy in with 2021 revisions to the Supplier Code of Conduct, the Modern Slavery and Human Traficking Statement, and the
implementation of the real living wage in the UK. We also supported our suppliers by implementing a method to help them gain
access to payment earlier.
• In the wider workforce we increased gender split in our leadership levels to 33%, up from 31%, and increased our ranking to 100th,
from 118th in the FTSE Leaders Review; we have also demonstrated that we have no gender bias in our pay equity reporting. We
have continued growth in all inclusion and diversity activities, including training nearly 37,000 employees in conscious inclusion
to demonstrate leadership in educating and inspiring 100% of our colleagues to be inclusive every day. The six listening group
network meetings, hosted by members of the Board and executive leadership team, and detailed on page 61, ensured we listened
to and acted on the feedback from our people.
•
Due to the tragic fatality during the year, the Total Recordable Incident Rate measure was not achieved, but there was good
delivery across the business in our safety intervention programme.
• Assurance of achievements against measures was carried out by internal audit, validated by the SSABE and Assurance
Committees, with further external independent audit carried out by KPMG, following the end of the inancial year.
A full copy of the discretionary decision matrix can be found at
woodplc.com/discretionarymatrix
The Committee believes that management has taken positive steps to position Wood for future growth despite dificult trading
conditions. Although good performance was achieved in some areas, having considered all factors, the decision has been taken to
reduce the formulaic bonus outcome by 58.21%, resulting in 15% of maximum bonus being realised.
75% of any award will be paid in cash in March following the end of the performance year, with the remaining 25% deferred into
a conditional award of nil-cost shares for a further two years with continued employment a requirement to receive the deferred
payment, other than for those classiied as good leavers as detailed in our Remuneration Policy. Our malus and clawback provisions
safeguard the Company against future risk in relation to this award.
Long term incentives – Long Term Incentive Plan (LTIP)
The igures set out in the single igure of remuneration table are related to awards under LTIP 2019-2021, the performance period
for which ended on 31 December 2021. The participation level for Robin Watson was 200% and for David Kemp was 175%.
To provide assurance of achievement outcomes against targets within variable incentives, performance is considered and approved
by the Safety, Sustainability, Assurance and Business Ethics Committee (SSABE), with a further external independent audit carried
out following the end of the inancial year as appropriate.
For each performance measure, upon reaching the threshold, 25% of the relevant measure becomes payable; and on reaching the
maximum, 100% of the relevant measure becomes payable. For achievement between threshold and maximum, the allocation
is on a straight-line basis. No award is made for less than threshold performance. The targets for LTIP 2019-2021, including the
weightings of the performance measures and the extent to which they were achieved, are set out in the table below
Financial measures Weighting Threshold Maximum Achieved Award %
TSR
a
50%
50
th
percentile 75
th
percentile Below 25
th
percentile 0%
Gross margin improvement
(growth from 2018 to 2021)
25%
9% 19% -30% 0%
Overhead percentage
improvement (reduction)
25%
2021 performance
of 12.3%
2021 performance
of 11.9%
11.6% 100%
Notes
a. Total Shareholder Return (TSR) is a measure of the growth in John Wood Group PLC (JWG) share price plus dividends and other shareholder returns over
the period; performance is measured relative to a peer group of comparative companies. Each company is ranked and JWG’s position in this group used to
measure success.
TSR Peer Group Companies for LTIP 2019-2021
The TSR peer group for the performance period comprised of the following companies - Aecom, Aker Solutions, Fluor, Hunting, Jacobs
Engineering, KBR, McDermott, Petrofac, Saipem, SBM Offshore, SNC Lavalin, Stantec, Technip FMC, Tetratech, Weir Group, Worley
Parsons and WSP.
The Committee applies the following approach when the TSR peer group is impacted by acquisition or other corporate activities during
the performance period - if a company has been in the peer group for more than half the performance period then this company will
be retained in the peer group, adjusting to the end of the period for the movement in the acquiror’s share price. If a company has not
been in for half of the performance period, then it will be removed and not replaced.
LTIP award achievement summary
Wood did not achieve the threshold for TSR or gross margin improvement, so zero award is due on these measures. The third
measure, to reduce overhead as a percentage of revenue, achieved maximum performance. The team made a huge effort
to achieve this target, which was disclosed externally, in dificult circumstances. The achievement against this measure was
independently assured for appropriate governance.
The Committee considered this performance against the experience of stakeholders over the performance period, using the
discretionary matrix for guidance, as detailed on page 111. The absolute value delivered to executive directors as a result of this
performance is reduced to relect that more than 66% of value has been lost since the date of the grant (with the opening
share price being £5.69, and the closing mid-market share price on 31 December 2021, £1.91), demonstrating clear alignment
to shareholder experience. This level of vesting applies to 329 employees who participated in the 2019-2021 LTIP, relecting the
contribution of the wider leadership team towards the achievement of the overhead improvement target. Retention remains a
signiicant concern for our critical talent; recent low LTIP vesting levels, zero bonus for 2020, and share price reduction means that
many of our key people have limited shares, at reduced value, that they would forfeit if they left employment with Wood. Taking all
these factors into account, supported by the process using the discretionary decision matrix and considering provisions in the malus
and clawback policy, the Committee determined that the LTIP award of 25% of maximum is appropriate and no additional use of
discretion is required. Our malus and clawback provisions safeguard the Company against future risk in relation to this award.
A full copy of the discretionary decision matrix can be found at
woodplc.com/discretionarymatrix
David Kemp
Final bonus payment:
£112,113
Final award as % of salary: 22%
(Original pre-discretion amount
£268,271 - 54% of salary)
Final award as a % of
max bonus opportunity
Robin Watson
Final bonus payment:
£206,523
Final award as % of salary: 26%
(Original pre-discretion amount
£494,184 - 63% of salary)
Final award as a % of
max bonus opportunity
15% 15%
John Wood Group PLC
Annual Report and Accounts 2021
125
John Wood Group PLC
Annual Report and Accounts 2021
124
Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration continued
Share based interests awarded during the year*
The following table sets out the awards made to each of the executive directors under the Company’s share based long term
incentive arrangements during 2021. These related to 2021 LTIP awards which will be for the performance period 2021 – 2023 as
detailed in our previous report. As disclosed in last year’s report and in line with our Policy, performance measures are based on
relative TSR (50% weighting), EBITDA margin percentage improvement (30% weighting), revenue growth (10% weighting) and an
ESG framework (10% weighting). For TSR and ESG measures, 25% becomes payable on reaching threshold; for EBITDA, margin
percentage improvement and revenue growth measures, 10% becomes payable on reaching threshold; and for all measures 100%
becomes payable on reaching maximum.
These awards will continue to be monitored for windfall gains and the Committee can apply discretion as appropriate at the end of
the performance cycle, informed by the discretionary decision matrix.
Executive
director
Type
of award
Participation
level
Salary relevant
to performance
cycle
Face
value of
award
(a)
Performance
period
Holding period
for 100% of
award Dividends
Robin
Watson
Conditional
award of
shares
awarded
under the
LTP
200% £787,200 £1,574,400 1 Jan 2021 – 31
Dec 2023
Two years from
vesting
Dividend equivalents are paid on
the vesting date based on the
number of vested shares at the
end of the performance period.
David
Kemp
175% £498,560 £872,480
Notes
a. The awards above were granted as conditional share awards based on base salary x participation level, calculated using the 20 days trading average of £3.17
as at 1 January 2021.
Performance is measured over a period of three inancial years, 100% of any award is deferred for a period of two years following
the end of the performance period. This timeline is demonstrated below:
LTIP timeline
Payments to past directors*
There were no payments made to past directors which require disclosure during the year.
Payments for loss of ofice*
There were no payments made for loss of ofice to any director during the year.
Statement of directors’ shareholding and share interests*
Share interests
The table below sets out the total number of shares held by each executive director as at 31 December 2021, with and without
performance conditions; the declaration includes shares held by connected persons as deined for the purposes of section 96B (2) of
the Financial Services and Markets Act 2000. Where applicable the igures include interest in retained long term plan awards.
Changes in the shareholding of directors between 31 December 2021 and 19 April 2022 are related to permitted purchases under
the Wood employee share plans. Robin Watson and David Kemp acquired an additional 9,568 and 6,099 shares respectively
during this period.
None of the executive directors had a material interest in any contract, other than a service contract, with the Company or any of its
subsidiary undertakings.
Beneicial interest
Shares owned
outright as at
1 January 2021
Shares owned
outright as at
31 December 2021
Unvested share awards
Vested unexercised
Share interests without
performance conditions
Share interests with
performance conditions
Robin Watson
371,126 464,819 169,902 1,127,271 -
David Kemp 93,178 132,184 95,403 625,038 -
Shareholding requirements
The revised Remuneration Policy approved at our 2020 AGM requires the Chief Executive to hold shares valued at 250% of base
salary and the other executive directors to hold shares valued at 200% of base salary. There is no time period in which they must
achieve the requirement. The extent to which each director met the shareholding guidelines as at 31 December 2021 is shown in the
chart and tables below shown as two separate calculations (neither include shares held by connected persons as per shareholding
requirements detailed in our Policy):
• Calculation 1: Shareholding and shares not subject to any further performance conditions but may be subject to other conditions
such as continued employment
• Calculation 2: Shareholding not subject to any further performance or other conditions
Notes to shareholding guidelines achievement
Shareholding is calculated using the closing mid-market share price on 31 December 2021 of £1.911 and base salary levels at the same date.
For the purposes of calculation 2, a 50% reduction has been applied (on the assumption of a “sell to cover” at point of exercise) to account for any tax liabilities on
awards.
Although neither executive director has reached their required shareholding, this relects that the LTIP performance has resulted in
minimal outcomes over the last ive years, compounded by the fall in share price.
To assist in achieving the shareholding requirement both executive directors continued to purchase shares over and above any
awards earned during their employment via the Employee Share Plan (ESP) and the Share Incentive Plan (SIP), with both
continuing to contribute 10% of their salary on an ongoing basis and deducted monthly. Cumulatively, as of 31 December 2021,
Robin Watson had invested £289,931, and David Kemp £176,433. Robin has also paid over £613,000 from his own cash resources to
meet the tax liability on vesting shares, although the policy does allow him to sell shares to meet such liability.
Post-cessation shareholding
As outlined in our Remuneration Policy, approved by shareholders at the 2020 AGM, executive directors are required to hold shares
in John Wood Group PLC post-cessation of employment to the value of 100% of shareholding guidelines for the irst year, reducing
to 50% in the second year. Post-cessation shareholding provisions will apply to shares received from share awards granted from 1
January 2020 onwards. The sale of shares is restricted by way of approvals for current executive directors and the Committee will
ensure appropriate enforcements and control is in place post-cessation. Post-cessation controls will be managed through the online
system provided by our third-party stock administrator.
Robin Watson
Shareholding
requirement
0% 50% 100% 150% 200% 250%
David Kemp
Shareholding
requirement
0% 50% 100% 150% 200% 250%300%
112%
132%
51%
69%
Calculation 1 Calculation 2
Year 1 Year 2 Year 3 Year 4 Year 5
Award
granted
Performance outcomes
award vest
Shares
available
Three year performance period Two year deferral period
John Wood Group PLC
Annual Report and Accounts 2021
127
John Wood Group PLC
Annual Report and Accounts 2021
126
Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration continued
Share interests
Details of executive directors’ interests in long term incentive and bonus plans as at 31 December 2021; all interests are awarded as
share options or conditional share awards:
Date of
award/
performance
period
Performance
conditions
Earliest
exercise
date
Exercise
price per
share
Market
value at
date of
exercise
per share
Number
as at 1
Jan 2021
Granted
in 2021
Exercised
in 2021
Lapsed
in 2021
Dividends
awarded as
additional
share
options
Number
as at 31
December
2021
Robin Watson
LTP
2018 - 2020 N March 2023 0 – 206,865 – – 103,433 10,632 114,064
LTP
2019 - 2021 Y – 263,611 – – – – 263,611
March 2024
0LTP
2020 - 2022 Y
March 2025
0 – 367,310 – – – – 367,310
LTP
2021 - 2023 Y
March 2026
0 – 0 496,350 – – – 496,350
ABP 2018 01 March 2019 N March 2021 0 – 3,054 0
£2.48
46,92249,976
–ABP 2019 01 March 2020 N March 2022 0 – 55,838 – – – – 55,838
Total
940,546 496,350 13,686 1,297,173
49,976
103,433David Kemp
LTP
2018 - 2020 N March 2023 0 – 118,048 – – 59,024 6,067 65,091
LTP
2019 - 2021 Y – 146,084 – – – – 146,084
March 2024
0LTP
2020 - 2022 Y
March 2025
0 – 203,893 – – – – 203,893
LTP
2021 - 2023 Y
March 2026
0 – 0 275,061 – – – 275,061
ABP 2018 01 March 2019 N March 2021 0 £1.83 26,230 –
27,937
– 1,707 0
ABP 2019 01 March 2020 N March 2022 0 – 30,312 – – – – 30,312
Total
524,567 275,061 27,937
59,024
720,4417,774
Total for all executive directors 1,465,113 771,411 21,460 2,017,614
77,913
162,457Notes to incentive plan interests table
For LTP 2018-2020, ABP 2018 and 2019, awards vest and are available to exercise after a two-year deferral period.
For all awards, dividends accrue on 100% of the inal award.
There has been no change to the exercise price or date of vesting of shares as outlined in this table.
TSR performance summary & Chief Executive remuneration
In accordance with the reporting regulations, the TSR performance summary is maintained at a 10-year disclosure period. As the
Company is included in the UK FTSE 250 index but has been included in the FTSE 100 index for part of the period under review,
both the UK FTSE 250 and UK FTSE 100 indices are shown, by way of providing a reasonable TSR comparison. The graph below
compares the TSR on a holding of shares in John Wood Group PLC with the TSR on a holding of shares in the companies in the UK
FTSE 250 and 100 indices for the last ten inancial years.
The total remuneration for the Chief Executive over the same period as the TSR performance graph detailed is listed in the
following table. This table includes details of the annual bonus received in each year as a percentage of the maximum opportunity
that was available, as well as the long-term incentives which vested in each year as a percentage of the maximum number of shares
that could have been received.
Chief Executive remuneration (£000)
Year 2012 2012 2013 2014 2015 2016 2017 2018 2019 2020
2021
Chief Executive Allister
Langlands
Bob
Keiller
Bob
Keiller
Bob
Keiller
Bob
Keiller
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
CEO single igure of total
remuneration (£’000)
£2,276 £199 £1,624 £1,330 £1,146 £1,179 £1,417 £1,875 £1,690 £1,214 £1,260
Annual bonus award as a % of
maximum opportunity
76%
75% 60% 48% 62% 0% 15%
37%
43%59%
88%Long term incentive vesting rates
as a % of maximum opportunity
100% 25% 79% 51% 16% 25% 11% 0% 0% 50% 25%
Notes to Chief Executive remuneration table
Allister Langlands was appointed Chair on 1 November 2012. His remuneration for 2012 related to his time as Group CEO only.
Bob Keiller was appointed Group CEO on 1 November 2012. His remuneration for 2012 relected his remuneration from appointment as Group CEO only. Long
term incentives vesting during the year were awarded during his time as Wood Group PSN CEO and vested based on performance targets linked to performance
of that division.
Robin Watson was appointed as Chief Executive on 1 January 2016. Long term incentives vesting during the year were awarded during his time as Wood Group
PSN CEO and vested based on performance targets linked to performance of that division.
Percentage change remuneration of all directors and all employees
In line with The Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, the below table
illustrates the percentage change in remuneration for the Chief Executive, Chief Financial Oficer, and non-executive directors as per
the single igures reported each year and all other employees within the group. This table will accumulate over a ive-year rolling period.
Change in executive directors and employee remuneration relects the reinstatement of the voluntary 10% pay reduction on 1
January 2021. There was no inlationary increase to pay applied across the workforce between 2020 and 2021. Change in employee
beneits is impacted mainly by the operational nature of our self-funded medical plans in the US, which have returned to pre-
pandemic claim levels and the increase in the global cost of healthcare provision; the dip in claim levels during the peak of the
pandemic was due to our employees voluntarily putting some medical treatment and claims on hold. In addition, we continue to
experience modest changes in premiums for our non-US employees, but there has been limited change to Company funded beneit
provision in line with executive directors. No bonus was awarded for 2020, therefore a 100% change has been reported relecting
the reintroduction of bonus awards for executive directors and the wider workforce in 2021.
There was no change to fees for non-executive directors between 2020 and 2021 however the percentage increase in fees reported
relects the reinstatement of the voluntary 10% reduction with effect from 1 January 2021 and changes to the Board participants
during 2020, as previously disclosed in our 2020 report. Jacqueline Ferguson’s remuneration change relects the reinstatement
of full year fees and Remuneration Committee Chair fees in 2021 from the reduction in 2020, Chair fees were only received from
appointment in July 2020 in the previous year. Birgitte joined the Board in March 2020, the percentage change reported relects the
change to full year. Fees for Nigel Mills increased to full year fees as non-executive director and Senior Independent Director (SID),
having been appointed as SID from July 2020 and to the Board in May 2020. Brenda Reichelderfer and Susan Steele did not receive
any remuneration in 2020 therefore no change has been reported.
For further commentary of year-on-year changes, refer to previous annual remuneration report disclosures.
2019 - 2020 2020 - 2021
Salary/fees Beneits Bonus Salary/fees Beneits Bonus
All Employees
-1%
7% -100% 3% 16% 100%
Executive directors
Robin Watson
-3%
0% -100% 8% 0% 100%
David Kemp -100% 8% 0% 100%
-3%
0%Non-executive directors
Roy Franklin
47%
7%Adrian Marsh 36% 8%
Thomas Botts -8% 8%
Jacqui Ferguson 0% 15%
Birgitte Brinch Madsen 24%
Nigel Mills 42%
Brenda Reichelderfer
Susan Steele
Notes to the percentage change in Chief Executive remuneration
Salary and beneits percentage change for all employees is calculated on a per capita basis using total annual spend (excl. executive directors and bonus values) /
average number of employees in the year as disclosed in Note 31 of the inancial statements.
Bonus is calculated as the average award paid to all participants of the Annual Bonus Plan.
In line with regulations, pensions and long-term incentives are not required to be included in this table.
Non-executive directors do not receive beneits or bonuses.
The percentage increase in executive director salary and non-executive director fees reported between 2020-2021 relects the reinstatement of the voluntary 10%
reduction with effect from 1 January 2021.
0
50
100
150
200
250
300
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Dec-21
Wood FTSE 100 FTSE 250
301%
194%
38%
John Wood Group PLC
Annual Report and Accounts 2021
129
John Wood Group PLC
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Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration continued
Illustrations of future application of Remuneration Policy
As detailed in the Remuneration Policy, a signiicant proportion of remuneration for executive directors is linked to variable pay
opportunity, particularly at maximum performance levels, through the short-term Annual Bonus Plan (ABP) and the Long-Term
Incentive Plan (LTIP), with the intention to ensure a greater link between Company performance and individual reward.
Pay mix chart
The below charts illustrate the percentage mix of ixed and variable pay elements for executive directors based on maximum
variable reward outcomes. The total value displayed for each executive director is an illustration of the maximum proposed future
policy application as further detailed below.
The charts below provide an indication of the level of remuneration, as a value, which could be received by each executive director
under the Remuneration Policy as a ixed value, target and maximum performance, as well as an illustration of maximum plus 50%
share price growth. These charts are for illustrative purposes only and actual outcomes may differ from those shown.
Notes to the illustrations of future application of Remuneration Policy
In all scenarios, ixed remuneration comprises base salary, beneits, and pension. The igures used in preparing the charts are as follows:
• Salary is the salary as at 1 January 2022
• Beneits is the last known igure as set out in the single igure of remuneration table for 2021
• Pension related beneits are based on 9% of the base salary, covering deined contribution pension or cash allowance in lieu of pension
• Bonus includes short term incentives and is based on the proposed application of the Policy for 2022 and the base salary. The illustrations above relect
maximum potential opportunity as a percentage of base salary; 175% for the Chief Executive and 150% for the CFO
• Long term plan includes long-term incentives and is based on the proposed application of the Policy for 2022 and the base salary. The illustrations above relect
maximum potential opportunity as a percentage of base salary of 140% for the CFO and no 2022 LTIP grant for the Chief Executive due to the announcement
of his retirement. For reasons of clarity, any dividend accrual has been excluded from the charts above.
Fixed
- It has been assumed that each executive director receives base salary, beneits and pension related beneits only; there are no elements of variable reward
included.
Target
- It has been assumed that annual bonus awards have been made at target levels, which results in payout at 50% and that LTIP performance is such that
awards have vested at 50%.
Maximum performance
- It has been assumed that annual bonus awards have been made at maximum levels and that LTIP performance is such that awards
have vested at maximum level.
Maximum performance plus 50% share price growth
- the same assumptions as the ‘maximum performance’ scenario have been used. The additional impact of
share price growth of 50% has been applied to maximum LTP awards.
Pay Ratio of Chief Executive
The Chief Executive pay ratio is calculated at the 25th, 50th and 75th percentiles for total pay and beneits for all UK employees for
the relevant inancial year on the same basis as the single igure table as stipulated by The Companies (Miscellaneous Reporting)
Regulations 2018. Option B (utilising gender pay gap data as at 5th April 2021) is used to identify best equivalents for the calculation
for simplicity, consistency and alignment across our external disclosures, and includes all UK employees. We believe that the best
equivalents are representative P25, P50 and P75 employees and their remuneration is consistent with that of the wider workforce.
Figures are adjusted accordingly (such as pension contributions) to ensure best representation of full time equivalent (FTE) employees
for the purposes of calculation. Salary and total pay values are included for maximum clarity.
The Committee believes that the pay ratio results relect the Company’s internally fair approach to pay through aligned and consistent
frameworks. The total pay across the wider workforce is consistent with externally competitive remuneration required for the
professional workforce which Wood employs, assisting with an above average pay ratio. We continue to monitor year-on-year changes
to the pay ratio as they continue to luctuate with the evolution of our workforce through integration, divestment, and acquisitive
growth. The value of salary and total pay reported between 2020 and 2021 has increased, relecting reinstatement of voluntary pay
reductions, and impacted by the exclusion of furlough employees, who typically had lower hourly earnings, and were not included in our
gender pay gap data in line with guidance from the Government Equalities Ofice. We are conident the pay ratio remains relatively
static relective of aligned remuneration application between executive directors and our wider workforce.
Year Method
Ratio of Chief Executive pay to employee pay
25
th
percentile Median 75
th
percentile
Ratio Value (000s) Ratio Value (000s) Ratio Value (000s)
2021 Option B Salary 19:1 £62 11:1
£41
13:1£70
Total pay 28:1 £45 18:1 £68 15:1 £86
2020 Option B Salary 19:1 £38 14:1 £54 11:1 £68
Total pay 29:1 £42 18:1 £66 15:1 £80
2019 Option C Salary 24:1 £32 18:1 £42 13:1
£59
Total pay 48:1 £35 36:1 £46 25:1 £68
2018 Option C Salary 20:1 £34 14:1 £64
£49
11:1 Total pay 50:1 £38 35:1 £53 26:1 £71
Notes
We reported our Chief Executive pay ratio for the irst time in our 2018 annual report using pay data for employees in our integrated systems which represented
64% of all UK employees. In 2019 our calculations included all full pay relevant UK employees in line with Gender Pay Gap calculations. From 2020, our calculations
are based on only our Gender Pay Gap report data using the Option B calculation method.
Relative importance of spend on pay
The table below is provided to assist shareholders in assessing the relative importance of the Company’s spend on pay. It contains
details of the remuneration paid to or received by all employees of the Company as well as the value of distributions to shareholders
by way of dividends and share buyback over the previous two years. The igures displayed in this table are impacted by movements
in the number of employees each year.
Item
2021
2020 Difference %
($m) ($m) ($m) change
Remuneration paid to or received by all employees 3,169.6 3,399.9 (230.30) (6.77%)
Distributions to shareholders by way of dividend and share buyback 0 0 0 0
Fixed pay Beneits & Pension Annual bonus
Long Term Plan
Robin Watson
Chief Executive
(£000's)
Fixed Target Maximum
Maximum +
50% share
growth
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
David Kemp
CFO
(£000's)
Fixed Target Maximum
Maximum +
50% share
growth
0
500
1000
1500
2000
2500
3000
Fixed pay Beneits & Pension Annual bonus
Long Term Plan
% mix
of pay
% mix
of pay
David Kemp
CFO
Robin Watson
Chief Executive
35% 4% 3% 37% 35%
61%
25%Maximum value £2.31m Maximum value £2.05m
John Wood Group PLC
Annual Report and Accounts 2021
131
John Wood Group PLC
Annual Report and Accounts 2021
130
Strategic report
Governance
Financial statements
Remuneration
Executive directors’ remuneration continued
A full copy of the Remuneration Policy can be found at:
woodplc.com/rempolicy
Statement of implementation
of Remuneration Policy
This section provides an overview of how the Committee will
implement the Remuneration Policy in 2022. In determining the
policy application, the Committee has complied with Section
40 disclosures within the UK Corporate Governance Code as
outlined earlier in the report.
Personal objectives
Robin Watson
Continued delivery against the Group strategic cycle:
Provide
mechanisms for delivering against the Group strategy and
demonstrate continued tactical progress, including:
• Delivery of the sale of built environment
• Restructuring of the business following the sale of built
environment
• Embedding new consultancy and S&D leadership teams
• Key customer KPIs for engagement, satisfaction, and growth
• Further develop digitisation strategy
Projects business unit:
Continue to mature our projects
business through growth and appropriate risk management
ESG and sustainability:
• Continue to deliver the sustainability programme
• Embed our sustainability credentials with the market
through the organisational changes due to sale of built
environment and restructuring of business
• Continue to deliver against our ESG dashboard and
commitments
Active risk management and business ethics leadership:
• Actively mitigate company primary risks aligned to the Group
Risk Management programme
• Continue to manage Crisis Management Team through
business ‘normalisation’ / hybrid working in 2022
• Handover of ethics & compliance function to Group legal
function
David Kemp
Deliver strategic review of built environment business:
• Implement Board’s decision
• Implement sale of business
• Gain shareholder approval
Contribute to the Group strategy post sale of built
environment
taking responsibility for key inancial areas
including dividend policy
Reshape Group’s cost base post sale of built environment
• Central and shared cost review and implementation
• Implement F&A actions
Capital structure and inancing:
• Develop Financing strategy post sale of built environment
• Execute agreed inancing strategy ensuring business
maintains suficient liquidity, suficient covenant headroom
and meets audit requirements
Investor engagement:
• Proactive engagement with investor community to ensure
support and approval of sale of built environment business
• Preparation for capital markets day to outline the new
investment case for Wood post the sale of built environment
Corporate objectives
Strategic plan
• Develop initial refreshed strategy for Wood post the sale of
our built environment business, including options for the use of
proceeds
Develop Voice of the Customer program
• Develop Voice of the Customer Program with comprehensive
metrics to enable strong customer focus.
Leadership effectiveness
•
Planning and transition for ELT succession and organisational
development
•
Further develop groupwide culture of strong customer and
innovation focus
Annual Bonus Plan (ABP)
Bonuses will continue with maximum opportunity at 175% for
Robin Watson and 150% for David Kemp. In line with policy, 25%
of any payment will be deferred into nil cost share-based awards
for a further two years.
In line with our policy bonus measures will be split between
inancial, an environmental, social and governance (ESG)
framework measures and non-inancial, in the form of corporate/
personal milestones with a balance of 60% Financial, 10% ESG
and 30% corporate and personal objectives as illustrated in the
chart below.
The ESG framework will comprise of three Key Performance
Indicators, equally weighted: serious injury and fatality (SIF);
delivery against leadership safety engagement; and improvement
in employee engagement score through active demonstrated
leadership in improving employee engagement, resulting in
positive, sustainable cultural change. Measures and targets
for the ESG have been approved and will be overseen by the
SSABE Committee. Performance for SIF and leadership safety
engagement will be also tracked via the HSSE global dashboard.
Financial measures will remain EBITDA and cash generation for
2022, with threshold performance being 85% of the target set,
and maximum bonus is achieved when results exceed 115% of
target. Threshold performance must be met before any of that
element of the award is paid; if target performance is met, 50%
of the potential bonus opportunity is paid; 100% is payable for
reaching maximum performance. Performance between threshold
and target and between target and maximum will result in a
proportionate award calculated on a straight-line basis.
As in prior years, assurance of achievements against measures
will be carried out by internal audit and validated by the SSABE
Committee and external auditors as appropriate.
The Committee set the targets for the annual bonus plan for the
year ending 31 December 2022 at its meeting in April 2022. It is the
opinion of the Committee that these are commercially sensitive and
in line with previous practice, the details of annual bonus targets
and the extent to which the targets are met will be disclosed in
detail retrospectively in next year’s report. Full transparency of
corporate and personal objectives is outlined below.
ESG
10%
Proit
30%
Cash generation
30%
Corporate/personal
objectives
30%
inancial
measures
60%
non-inancial
measures
30%
ESG
framework
10%
LTIP awards
Participation levels in 2022 will be 140% for David Kemp. The
number of shares granted will be based, as usual, on the 20
days trading average price as at 1 January 2022. Due to the
announcement of Robin Watson’s retirement, he will not receive a
2022 award.
The performance measures will be relative TSR, EBITDA margin
improvement, revenue growth and an ESG framework. All
measures are key strategic priorities aligned with value generation
for our stakeholders. Our ESG measures align closely with our
long-term sustainability goals to reduce our carbon emissions
(carbon scope 1 and 2) by 40%, and our target of 40% female
gender representation by 2030.
The TSR peer group was reviewed by the Committee and for
2022 will remain unchanged to include: Aecom, Aker Solutions,
Fluor, Hunting, Jacobs Engineering, KBR, Petrofac, Saipem, SBM
Offshore, SNC Lavalin, Stantec, Technip Energies, Technip FMC,
Tetratech, Worley and WSP. McDermott has been removed from
the TSR group for 2021 and 2022 due to no longer being listed on
the London Stock Exchange.
The weightings and targets for each of the performance measures
are detailed below. No award will be made for less than threshold
performance; for TSR and ESG measures 25% becomes payable
on reaching threshold and 100% is payable on reaching maximum
performance, for EBITDA margin improvement and revenue
growth, 10% becomes payable on reaching threshold and 100%
payable on reaching maximum performance. As in prior years,
assurance of achievements against measures will be carried out
by internal audit and validated by the SSABE Committee and
external auditors as appropriate.
Performance
Measure
Weighting
%
Targets
Threshold Maximum
TSR
50% 50
th
percentile 75
th
percentile
EBITDA margin
percentage
improvement
30% 8.8% 9.6%
Revenue growth 10% $7.3bn $8.2bn
Carbon emission
reductions
5% 7% 15%
Improvement in
leadership gender
diversity
5% 35.0% 36.0%
Given the current share price, the Committee is mindful and will
monitor these awards for windfall gains over the vesting period
and continue to make use of the discretionary matrix in line with
stakeholder experience as appropriate.
Base salary
Base salaries will increase by 2.5% for both executive directors in
line with the average increase applied to our wider workforce in
the UK. Robin Watson’s annual salary will be £806,880; and David
Kemp’s will be £511,024 from 1 January 2022.
Beneits
There will be no change to beneits for 2022. The executive
directors will continue to participate in existing beneit
arrangements in line with the agreed Remuneration Policy.
Pensions
As previously communicated, both executive directors will align
to the allowance in place for the wider UK workforce (9%) from
1 January 2022. Any new executive directors will participate in
pension arrangements aligned to their country of employment.
Employee Share Plan (ESP)
Both executive directors will remain eligible to participate in the
ESP and UK SIP, with contributions of up to 10% of gross salary,
subject to plan rules.
Shareholding requirements
As detailed in line our remuneration policy, shareholding
requirements are 250% for the Chief Executive and 200% for all
other executives.
John Wood Group PLC
Annual Report and Accounts 2021
133
John Wood Group PLC
Annual Report and Accounts 2021
132
Strategic report
Governance
Financial statements
Remuneration
Financial statements
Chair of the Board and non-executive directors
Group inancial statements
The audited inancial statements of
Wood for the year ended 31 December
2021.
Independent auditor's report
136
Consolidated income statement
150
Consolidated statement of
comprehensive income/expense
151
Consolidated balance sheet
152
Consolidated statement of changes
in equity
153
Consolidated cash low statement
154
Notes to the inancial statements
155
Company inancial statements
Company balance sheet
226
Statement of changes in equity
227
Notes to the Company inancial
statements
228
Five year summary
235
Information for shareholders
236
Single igure of remuneration*
In line with our Directors’ Remuneration Policy, non-executive
directors receive a base fee in relation to their role. The
remuneration of the non-executive directors is reviewed
annually by the Chair, Chief Executive and Company Secretary,
who make a recommendation to the Board, with changes
ordinarily effective from 1 January. Additional fees may be paid
for related duties including the senior independent directorship
and for chairing, membership, and attendance of certain
Board Committees as outlined in our fee structure table. The
following table sets out the total single igure of remuneration
for the Chair and each of the non-executive directors in the
inancial year. Fees are pro-rata where there was a change of
appointment during the year, further details of Board changes
are outlined on page 103.
Year
Total fees
(£’000)
Roy Franklin
2021
£280.0
2020 £259.0
Adrian Marsh
2021
£67.0
2020 £62.0
Thomas Botts
2021
£67.0
2020 £62.0
Jacqui Ferguson
2021
£67.0
2020 £57.2
Birgitte Brinch Madsen
2021
£57.0
2020 £43.3
Nigel Mills
2021
£67.0
2020 £38.7
Mary Shafer-Malicki
2021
£21.0
2020 £52.7
Brenda Reichelderfer
2021
£42.9
2020 –
Susan Steele
2021
£42.9
2020 –
Jeremy Wilson (to 29 June 2020)
2021
–
2020 £36.6
Note:
Fees include base fee and an additional Committee fees in line with our fee
structure and are calculated pro-rata based on the time in the role. Non-executive
directors do not receive any taxable beneits which require to be reported.
Shareholdings*
Non-executive directors are not permitted to participate in any
of the Company’s incentive arrangements. The table below
details the shareholding of the non-executive directors as at
31 December 2021, including those held by connected persons.
Between 31 December 2021 and 19 April 2022, Jacqui Ferguson
acquired an additional 1,873 shares. There have been no other
changes to non-executive director shareholding detailed below
since 31 December 2021.
Shares owned
outright 1 January
2021
Shares owned
outright 31
December 2021
Roy Franklin 15,000 15,000
Adrian Marsh 2,000 27,000
Thomas Botts 8,500 8,500
Jacqui Ferguson 7,339 12,272
Birgitte Brinch Madsen – 5,000
Nigel Mills –
7,341
Brenda Reichelderfer – –
Susan Steele – –
Agreements for service
Non-executive directors and the Chair have an agreement for
service with an initial three-year term, at the end of which a
rolling agreement takes effect with no ixed expiry date. The
agreement for service can be terminated by either party giving
90 days’ notice. Non-executive directors and the Chair are
subject to annual re-election (or election for new appointments)
at the Annual General Meeting, (AGM). The table below details
the terms for current directors between the 2021 AGM and
expiry of the current term of their agreements if applicable.
Date of
Appointment
Notice
period
Current term
expiry
Roy Franklin
(a)
06 October 2017 90 days
01 September
2022
Adrian Marsh 10 May 2019 90 days 10 May 2022
Thomas Botts No ixed expiry
08 January 2013
90 daysJacqui Ferguson No ixed expiry
01 December 2016
90 daysBirgitte Brinch Madsen 01 March 2020 90 days 01 March 2023
Nigel Mills 01 May 2020 90 days 01 May 2023
Brenda Reichelderfer
31 March 2021 90 days 31 March 2024
Susan Steele 31 March 2021 90 days 31 March 2024
Notes
a. Roy Franklin’s agreement for service was extended for a new three-year
term beginning 1st September 2019 further to his appointment as Chair.
Fee structure
The Chair and non-executive director fee structure for 2021
and 2022 are set out below. Following market benchmarking
analysis and in line with the wider workforce, the Committee
increased the Chair of the Board annual fee by 2.5%; non-
executive director fees by 2.6%; and the fees for the senior
independent director and chairs of the committees by 3% in
recognition of increased workload, effective 1 January 2022.
Fees will be reviewed again in 2022 during the annual process.
The fee structure relects the time commitment of Committee
responsibilities and ensures we continue to attract and retain
from a diverse range of backgrounds.
2021 fees
per annum
2022 fees
per annum
Chair of the Board annual fee £280,000 £287,000
Annual non-executive director fee inclusive
of all Committee attendance
£57,000 £58,500
Additional fee for Senior Independent
Director
£10,000 £10,300
Additional fee for Audit / Remuneration /
Safety, Assurance & Business Ethics Chairs
£10,000 £10,300
Changes to the Board during the year
Directors appointed
Brenda Reichelderfer and Susan Steele appointed to the
Board 31 March 2021
Directors resigned
Mary Shafer-Malicki retired from the Board on 13 May 2021
John Wood Group PLC
Annual Report and Accounts 2021
135
Strategic report Governance
Financial statements
John Wood Group PLC
Annual Report and Accounts 2021
134
Independent auditor's report
Financial statements
to the members of John Wood Group PLC
1. Our opinion is unmodiied
We have audited the inancial statements of John Wood
Group PLC (“the Company”) for the year ended 31 December
2021 which comprise the Consolidated Income Statement, the
Consolidated Statement of Comprehensive Income / Expense,
the Consolidated Balance Sheet, the Consolidated Statement
of Changes in Equity, the Consolidated Cash Flow Statement,
the Company Balance Sheet, the Company Statement
of Changes in Equity, and the related notes, including the
accounting policies on pages 155 to 162 and 228 to 229.
In our opinion:
• the inancial statements give a true and fair view of the state
of the Group’s and of the Parent Company’s affairs as at
31 December 2021 and of the Group’s loss for the year then
ended;
• the Group inancial statements have been properly prepared
in accordance with UK-adopted international accounting
standards;
• the Parent Company inancial statements have been properly
prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework; and
• the inancial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities are described below. We believe that the
audit evidence we have obtained is a suficient and appropriate
basis for our opinion. Our audit opinion is consistent with our
report to the Audit Committee.
We were irst appointed as auditor by the shareholders on
11 May 2018. The period of total uninterrupted engagement
is for the four inancial years ended 31 December 2021. We
have fulilled our ethical responsibilities under, and we remain
independent of the Group in accordance with, UK ethical
requirements including the FRC Ethical Standard as applied to
listed public interest entities. No non-audit services prohibited
by that standard were provided.
Overview
Materiality:
group inancial
statements as a whole
$40m (2020: $44m)
0.5% (2020: 0.5%) of revenue
Coverage
80% (2020: 81%) of group revenue
Key audit matters vs 2020
Recurring risks
Revenue recognition on
ixed price contracts
Goodwill impairment relating
to projects and operations
CGUs
Litigation related provisions
and contingent liabilities
Going concern
US asbestos related
claims provision
Parent Company
recurring risk
Recoverability of Parent
Company’s investment in
subsidiary
2. Key audit matters: our assessment of risks of material misstatement
Key audit matters are those matters that, in our professional judgement, were of most signiicance in the audit of the inancial
statements and include the most signiicant assessed risks of material misstatement (whether or not due to fraud) identiied by us,
including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing
the efforts of the engagement team. We summarise below the key audit matters, in decreasing order of audit signiicance, in
arriving at our audit opinion above, together with our key audit procedures to address those matters and, as required for public
interest entities, our results from those procedures. These matters were addressed, and our results are based on procedures
undertaken, in the context of, and solely for the purpose of, our audit of the inancial statements as a whole, and in forming our
opinion thereon, and consequently are incidental to that opinion, and we do not provide a separate opinion on these matters.
The risk Our response
Revenue recognition on
ixed price contracts
(Revenue from lump
sum contracts – $1,695.8
million, 2020: $2,501.8
million)
Refer to page 107 (Audit
Committee Report), pages
156 and 158 (accounting
policy) and note 2
(inancial disclosures).
Subjective estimate:
Long-term, ixed price contracts can
include complex technical and commercial
requirements and last for a number of years.
Recognition of revenue and proit on such
contracts relies on estimates involving a high
degree of estimation uncertainty which are
required to:
•
estimate the forecast costs to complete
the contract, as revenue is recognised
with reference to the percentage of costs
incurred relative to total forecast costs on
the contract;
• incorporate an allowance in the
assessment of contract revenue and costs
for technical and commercial risks or costs
arising either from customer claims or
contract penalties (liquidated damages);
• estimate the amount of variation orders
that can be claimed under the existing
contracts and estimate the proportion of
these that satisies the highly probable
revenue recognition criteria for variable
consideration; and
• appropriately identify, estimate and
provide for loss making contracts.
In some instances revenue can be recognised
where there are variations or claims that
modify the contracts with customers
however only where these modiications
were approved. Assessing whether that
approval exists and whether the company
has an enforceable right to payment can
require judgement.
The estimates above impacted revenue of
the period, receivables and contract assets,
contract liabilities and provisions including
those from onerous contracts.
As a result of the existence of the group’s
investigation principally in relation to Aegis
contract accounting related matters, as
reported by the Audit Committee in their
report on page 109 (“the investigation”),
there is heightened risk of management
bias in the ixed price contracts revenue
recognition estimates and judgements.
The effect of these matters is that, as part
of our risk assessment, we determined that
revenue from ixed price contracts has a
high degree of estimation uncertainty, with
a potential range of reasonable outcomes
greater than our materiality for the inancial
statements as a whole and possibly many
times that amount. This includes the Aegis
Poland contract disclosed in Note 20,
which has the single greatest effect on the
estimate. The inancial statements (page
156 and Note 2) disclose the estimations
made by the Group.
Our procedures included:
• Historical comparisons:
assessed the Group’s ability to
accurately forecast end of life contract margins by comparing
the previous estimates of total forecast costs and variable
consideration to inal agreed outcomes;
• Personnel interviews:
we obtained an understanding of the
performance and status of a risk-based sample of contracts
through discussion with operational and inance contract
project teams to consider whether relevant information
was included in cost and revenue forecasts. The group
team conducted additional interviews with both group and
component personnel in connection with the investigation
including the Group Audit Partner visiting the US components.
• Test of detail:
for a risk-based sample of contracts, we
inspected the contracts and correspondence with customers
to verify that where variation orders led to recognition of
revenue these were either due to contract modiications that
were determined to be approved, or variable considerations
that were included in the existing contracts and that were
highly probable.
• Test of detail:
inspected a risk-based sample of contracts
for key inancial clauses, such as liquidated damages, and
correspondence with customers. We compared these to
assumptions in the forecasts and challenged where different.
• Test of detail:
for a risk-based sample of contracts the
revenue and cost forecasts were assessed and the estimates
within the forecasts were challenged by considering the
forecast amount of work still to be delivered against
programme run rates.
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John Wood Group PLC
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Strategic report Governance
Financial statements
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk Our response
Revenue recognition on
ixed price contracts
(continued)
(Revenue from lump
sum contracts – $1,695.8
million, 2020: $2,501.8
million)
Refer to page 107 (Audit
Committee Report), pages
156 and 158 (accounting
policy) and note 2
(inancial disclosures).
Our procedures included (continued):
• KPMG specialists:
for certain higher risk or larger contracts,
including Aegis, we utilised KPMG Project specialists to
identify the risks and opportunities associated with the
contract and develop a range of possible contract out-turns
and challenge the appropriateness of revenue recognised and
provisions held in relation to these contracts. Our forensic
specialists assisted us with procedures connected to the
investigation.
• Test of detail:
for a risk-based sample of contracts we
reperformed the calculation of revenue based on percentage
of completion, with reference to costs incurred.
• Test of detail:
as a result of the investigation, for a risk-based
sample of contracts we performed additional subsequent
events procedures to identify any unusual changes in the
reported contract positions since the year end.
• Supported by our forensic specialists, we participated in the
scoping of the investigation, monitored progress throughout,
attended interviews, and inspected inal reporting from
management’s external experts leading the investigation,
which we evaluated for consistency with our audit indings.
•
Assessing transparency:
assessed the adequacy of the
Group’s disclosures about the degree of estimation involved in
arriving at the estimated revenue.
We performed the tests above rather than seeking to rely on
any of the Group’s controls because the nature of the balance
is such that we would expect to obtain audit evidence primarily
through the detailed substantive procedures described.
Our results
We considered the amount of revenue recognised on ixed price
contracts to be acceptable. (2020: acceptable)
Financial statements
Independent auditor's report continued
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk Our response
Goodwill impairment
relating to Projects and
Operations CGUs
(Goodwill - $3,999.2
million, 2020: $4,031.0
million).
Refer to page 107
(Audit Committee
Report), pages 156 and
159 (accounting policy)
and note 9 (inancial
disclosures).
Forecast-based assessment:
The Group estimates recoverable amounts
based on value in use which requires
signiicant estimation in forecasting future
cash lows and determining growth rates
and discount rates.
The conventional energy market conditions
continue to be challenging and the COVID-19
global pandemic has severely impacted the
global economy. These factors continue to
impact the risk of impairment.
The effect of these matters is that, as part
of our risk assessment, we determined that
the value in use of goodwill on the Projects
and Operations Cash Generating Units
(CGUs) has a high degree of estimation
uncertainty, with a potential range of
reasonable outcomes greater than our
materiality for the inancial statements as
a whole. The inancial statements (Note
9) disclose the sensitivity estimated by the
Group.
Our procedures included:
• Assessing methodology:
we assessed whether the principles
and integrity of the cash low model are in accordance with
applicable standards.
• Sensitivity analysis:
we performed our own sensitivity
analysis including a reasonably possible reduction in forecast
cash lows, alternative higher discount rate assumption and
lower revenue growth to assess the level of sensitivity to
these assumptions
• Our sector experience:
we considered the most sensitive
assumptions in determining value-in-use and challenged the
cash low and growth assumptions applied with reference to
the accuracy of historical forecasts, group speciic factors and
wider macro-environment conditions.
• Our sector experience:
we challenged the revenue growth
assumptions in value in use calculations by comparing
management’s assumptions of growth in market share
against external data (such as GDP and industry sector
forecasts where available that relect current market
expectations of the impact of climate on markets).
•
Our valuation expertise:
we challenged the assumptions used
by the Group in the calculation of the discount rates, including
comparisons with external data sources and by involving our
own valuation specialist to assist us in assessing the discount
rate assumptions applied.
•
Assessing transparency:
we assessed whether the Group’s
disclosures relating to the sensitivity of the outcome of the
impairment assessment to a reasonably possible adverse
changein the discount rate and cash lows relected the risks
inherent in the possible impairment of goodwill.
We performed the tests above rather than seeking to rely on
any of the Group’s controls because the nature of the balance
is such that we would expect to obtain audit evidence primarily
through the detailed substantive procedures described.
Our results
We found the carrying amounts of goodwill, with no
impairment, to be acceptable (2020: Acceptable).
Litigation related
provisions and contingent
liabilities
(Certain amounts forming
part of litigation related
provisions – $93.3million,
2020: $333.0 million)
Refer to page 108 (Audit
Committee Report),
pages 156 to 157, and 161
(accounting policy) and
notes 20 and 33 (inancial
disclosures).
Dispute outcome
A number of signiicant customer claims are
being litigated where the potential exposure
could be material. We consider those with a
potential exposure greater than $20 million
to be the most signiicant. The outcome
of any such litigations is uncertain and any
position taken by management involves
signiicant judgements and estimates.
The effect of these matters is that, as part
of our risk assessment, we determined that
the provisions and contingent liabilities for
litigations has a high degree of estimation
uncertainty, with a potential range of
reasonable outcomes greater than our
materiality for the inancial statements
as a whole, and possibly many times that
amount. The inancial statements (notes 20
and 33) disclose the estimations made by
the Group.
Our procedures included:
• Enquiry of lawyers:
On all signiicant legal cases, we
performed an assessment of correspondence with the
Group’s external counsel accompanied by discussions and
formal conirmations from that counsel;we have read the
responses in order to corroborate our understanding of these
matters.
• Personnel interviews:
on all signiicant matters subject to
litigation / adversarial proceedings, we discussed the status
of those matters with internal counsel and considered the
documentation available to support the assessment as to
whether the matter should be provided for as a provision or
disclosed as a contingent liability.
• Assessing provisions:
where provisions were required we
considered the documentation available, evaluated the
assumptions used in determining the likely economic outlow
and assessed the basis of management’s estimate.
•
Assessing transparency:
we assessed whether the Group’s
disclosures detailing signiicant legal proceedings adequately
disclose the potential liabilities of the Group.
We performed the tests above rather than seeking to rely on
any of the Group’s controls because the nature of the balance
is such that we would expect to obtain audit evidence primarily
through the detailed substantive procedures described.
Our results
We considered the level of provisioning and contingent liability
disclosures for litigations to be acceptable. (2020: acceptable)
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Independent auditor's report continued
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk Our response
US asbestos related
claims provision
($342.1 million, 2020:
$403.7 million)
Refer to page 108 (Audit
Committee Report),
pages 156 to 157, and
161 (accounting policy)
and note 20 (inancial
disclosures).
Subjective estimate:
The amount of the US asbestos related
litigation provision depends on a number of
estimates, including the forecast number of
open and future claims, the average cost per
claim, the number of claims that result in no
settlement and the discount rate applied to
the forecast.
There is a considerable amount of
judgement required in setting the above
assumptions and a small change in the
assumptions and estimates may have a
signiicant impact on the US asbestos
related claims provision.
The effect of these matters is that, as part
of our risk assessment, we determined that
estimate of the US asbestos related claims
provision has a high degree of estimation
uncertainty, with a potential range of
reasonable outcomes greater than our
materiality for the inancial statements as a
whole, and possibly many times that amount.
The inancial statements (note 20) disclose
the sensitivity estimated by the Group.
Our procedures included:
• Our actuarial expertise:
we used our own US based actuarial
specialists to challenge key assumptions and estimates used
in the calculation of the US asbestos related claims provision.
The key assumptions and estimates that we tested included
the forecast number of open and future claims, the average
cost per claim, and the discount rate.
• Benchmarking assumptions:
we performed a comparison of
key assumptions against our own benchmark ranges which
are derived from externally-available data.
• Methodology choice:
we used our own USactuarial
specialists to develop our own model to estimate the liability
range.
• Test of detail:
we evaluated the assumption for the average
costs per claim against the recent history of claims settled.
•
Assessing valuer's credentials:
we assessed the directors’
external valuation expert’s competence andobjectivity.
•
Assessing transparency:
we considered the adequacy of
the Group’s disclosure in respect of the US asbestos related
claims provision and the assumptions used.
We performed the tests above rather than seeking to rely on
any of the group’s controls because the nature of the balance
is such that we would expect to obtain audit evidence primarily
through the detailed substantive procedures described.
Our results
We found the carrying amount of the US asbestos related
claims provision recognised to be acceptable. (2020: acceptable)
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk Our response
Going concern
Refer to page 108 (Audit
Committee Report), pages
70 and 71 (Strategic
report) and page 155
(inancial disclosures).
Exceptional items
($175.1 million, 2020:
$283.3 million)
Refer to page 108 (Audit
Committee Report), page
158 (accounting policy)
and note 5 (inancial
disclosures).
Disclosure quality
The inancial statements explain how the
Board has formed a judgement that it is
appropriate to adopt the going concern
basis of preparation for the Group and
Parent Company.
That judgement is based on an evaluation
of the inherent risks to the Group’s and
the Company’s business model and how
those risks might affect the Group’s and
the Company’s inancial resources or ability
to continue operations over a period of at
least a year from the date of approval of the
inancial statements.
The risks most likely to adversely affect
the Group’s and the Company’s available
inancial resources and metrics relevant to
debt covenants over this period were:
• continued compliance with covenant
requirements, in particular those that are
sensitive to Adjusted EBITDA and Net
Debt levels, a failure of which would result
in certain facilities becoming repayable on
demand;
•
challenging conditions within the
conventional energy market;
• the impact of the COVID-19 pandemic on
markets on the Group's ability to achieve
revenue and Adjusted EBITDA forecasts
falling in the going concern period;
• the extent to which new cost savings can
be achieved.
Going concern is assessed as at the date
of signing the inancial statements. There
is risk that post balance sheet date events,
including the war in Ukraine, impact
management's going concern assumptions
As a result of the existence of the Group’s
investigation principally in relation to Aegis
accounting related matters, as reported by
the Audit Committee in their report on page
109 (“the investigation”), there is heightened
risk of management bias in the ixed price
contracts revenue recognition estimates and
judgements which also impact the covenant
headroom.
The risk for our audit was whether or not
those risks were such that they amounted
to a material uncertainty that may have
cast signiicant doubt about the ability
to continue as a going concern. Had they
been such, then that fact would have been
required to have been disclosed.
Presentation appropriateness
The identiication and measurement of
exceptional items is subjective and may
be subject to error if exceptional items are
reported or measured inconsistently from
year to year. The classiication of amounts
as exceptional at 31 December 2021 affects
metrics, notably Adjusted EBITDA, against
which covenant compliance is tested.
We considered whether these risks could plausibly affect the
liquidity or covenant compliance in the going concern period by
assessing the Directors’ sensitivities over the level of available
inancial resources and covenant thresholds indicated by
the Group’s inancial forecasts taking account of severe, but
plausible, adverse effects that could arise from these risks
individually and collectively.
Our procedures also included:
• Funding assessment:
We inspected theRevolving Credit
Facility Agreement (the “RCF Agreement”), the UK Export
Finance loan agreement and the US private placement
loan note agreements to understand the terms, including
deinitions of covenant metrics such as Adjusted EBITDA and
any restrictions in the use of the funds. We assessed whether
the forecasts used for the purpose of assessing compliance
with covenants appropriately relected those deinitions. We
reperformed calculations for key inancial covenants at each
test date falling into the going concern assessment period, in
order to test theexpected compliance with these covenants
and mathematical accuracy of the Directors’ calculations.
• Historical comparisons:
We assessed the ability of the Group
to forecastaccurately, by comparing budgets tohistorical
results for key metrics. We challenged the current forecast
assumptions by reference to the indings from the above and
assessed whether they relected markets forecasts and the
impact of COVID-19
• Key dependency assessment:
We evaluated whether the
key assumptions over revenue growth and Adjusted EBITDA
margin are realistic, achievable and consistent with the
external and internal environment and other matters
identiied in theaudit
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Financial statements
Independent auditor's report continued
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk Our response
Going concern
Refer to page 108 (Audit
Committee Report), pages
70 and 71 (Strategic
report) and page 155
(inancial disclosures).
Exceptional items
($175.1 million, 2020:
$283.3 million)
Refer to page 108 (Audit
Committee Report), page
158 (accounting policy)
and note 5 (inancial
disclosures).
The risk over covenant compliance has
increased as a result of lower adjusted
EBITDA proit metric and higher net debt
compared to prior year.
The inancial statements (note 5) disclose
the exceptional items.
Our procedures included (continued):
• Sensitivity analysis:
We considered the Directors’ sensitivities
over the level of available inancial resources indicated by
the Group’s inancial forecasts taking account of reasonably
possible (but not unrealistic) adverse effects that could arise
from these risks individually and collectively.
We performed additional sensitivity analysis by preparing
an alternative severe but plausible downside scenario, by
taking into account a number of adverse factors which can
impact Group’s EBITDA and cashlows during the going
concern assessment period. We assess whether post balance
sheet events, such as the current war in Ukraine, have been
appropriately considered in management's going concern
analysis
• Our sector experience:
In performing our assessment of the
model and assumptions, we have made enquiries of each
of the BU Finance & Administration Presidents and other
Executives by reference to our knowledge of the business and
general market conditions, and assessed the potential risk of
management bias.
We considered the risk factors as set out by the Board in the
Principal Risks section of the annual report and accounts, and
where relevant ensured that these featured in the projections
prepared to support the base case and the risks applied.
•
Assessing transparency:
We assessed the completeness
and accuracy of the matters covered in the going concern
disclosure, to consider whether they suficiently explain the
uncertainties and related judgements made by the Directors
in assessing whether the going concern basis of preparation is
appropriate.
• Assessing application:
We understood the nature of the
exceptional items identiied by management to challenge
whether the reporting as an exceptional item is consistent
with accounting standards and the Group’s policy. We
challenged items not included as exceptional items which
appeared to be exceptional as per the Group’s policy.
•
Assessing transparency:
We assessed the disclosure and
reconciliation of exceptional items, to ensure that these items
are clearly disclosed and explained in the notes to the inancial
statements. As part of our response to the investigation, we
undertook additional technical consultations in this area.
• Test of detail:
in response to the potential for heightened
bias, we performed additional procedures to verify the
appropriateness of closing cash cut off adjustments, which
would affect the reported covenant metric.
We performed the tests above rather than seeking to rely on
any of the group’s controls because the nature of the balance
is such that we would expect to obtain audit evidence primarily
through the detailed procedures described.
Our results: We found the going concern disclosure on page
155, without any material uncertainty, and the disclosure of
exceptional items to be acceptable (2020 result: acceptable).
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk Our response
Parent Company risk:
Recoverability of parent
company’s investment in
subsidiary
(Investment in subsidiary
- $4,370.4 million, 2020:
$4,348.3 million)
Refer to page 107 (Audit
Committee Report), page
228 (accounting policy)
and note 1 of the Company
inancial statements
(inancial disclosures).
Low risk high value
The carrying amount of the Parent
Company’s investment in subsidiary
represents 52.1% of the Company’s total
assets. Its recoverability is not at a high
risk of signiicant misstatement or subject
to signiicant judgement. However, due
to its materiality in the context of the
Parent Company inancial statements,
this is considered to be the area that had
the greatest overall effect on our Parent
Company audit.
Our procedures included:
• Assessing methodology:
we assessed management’s
identiication of indicators of impairment, which are
quantitative and qualitative.
• Historical comparisons:
we assessed management’s
conclusions on indicators of impairment with reference to the
results of the previous year’s impairment tests for the same
investment which showed considerable headroom.
•
Comparing valuations:
we compared the carrying amountof
the investment with a valuation calculated based on the net
present value of relevant cash lows of the Group that were
assessed through our procedures responsive to the Group’s
goodwill impairment risk. We challenged the keyassumptions
within these cash lowswithreference to the accuracy
of historical forecasts,Group speciic factors and wider
macro-environment conditions as part of addressing the
risks relating to Group’s goodwill impairment testing. We
obtained and corroborated explanations regarding signiicant
differences between market capitalisation and the carrying
value of the investment.
We performed the tests above rather than seeking to rely on
any of the Parent Company's controls because the nature
of the balance is such that we would expect to obtain
audit evidence primarily through the detailed substantive
procedures described.
Our results
We found the carrying amount of the investment in subsidiary
to be acceptable. (2020: acceptable)
3. Changes to key audit matters
Investigations
In the prior year, we determined that contingent liabilities and provisions in relation to investigations had a high degree of
estimation uncertainty. Following settlements reached in 2021 with the regulators in relation to the investigations into historical
business practices and agreements with commercial intermediaries including Unaoil, we have not assessed this as one of the most
signiicant risks in our current year audit and, therefore, it is not separately identiied in our report this year.
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Financial statements
Independent auditor's report continued
Group
revenue
Normalised Revenue
$40m
Whole inancial
statements materiality
(2020: $44m)
$39m
Range of materiality at 21
components ($1.8m-$18m)
(2020: $1.5m to $31m)
$2.0m
Misstatements reported to
the audit committee
(2020: $2.2m)
$7,774.9m
(2020 Revenue: $8,734.3m)
Group materiality
$40m (2020: $44m)
Group Normalised Revenue
Group materiality
Group proit and
losses that made up
proit before tax
Group
total assets
Full scope for group audit purposes 2021
Speciied risk-focused audit procedures 2021
Full scope for group audit purposes 2020
Speciied risk-focused audit procedures 2020
Residual components
4. Our application of materiality and
an overview of the scope of our audit
Materiality for the group inancial statements as a whole
was set at $40 million (2020: $44 million), representing
0.5% (2020: 0.5%) of the benchmark. Our 2021 benchmark
was a normalised revenue amount, calculated based on
averaging the total revenue for 2021, 2020 and 2019, due to
the luctuations caused by COVID-19. In the prior year wealso
used a normalised revenue calculated based on averaging the
total revenue for 2020, 2019 and 2018, due to the luctuations
caused by COVID-19. We consider Group revenue to be the most
appropriate benchmark as it provides a more stable measure
year on year than Group proit before tax.
Materiality for the parent company inancial statements as a
whole was set at $39 million (2020: $30 million), determined
with reference to a benchmark of Company total assets, of
which it represents 0.4% (2020: 0.4%).
In line with our audit methodology, our procedures on individual
account balances and disclosures were performed to a
lower threshold, performance materiality, so as to reduce
to an acceptable level the risk that individually immaterial
misstatements in individual account balances add up to a
material amount across the inancial statements as a whole.
Performance materiality was set at 75% (2020: 65%) of
materiality for the inancial statements as a whole, which
equates to $30m (2020: $28.5m) for the group and $29m
(2020: $19.5m) for the parent company. We applied this
percentage in our determination of performance materiality
because we did not identify any factors indicating an elevated
level of risk.
We agreed to report to the Audit Committee any corrected
or uncorrected identiied misstatements exceeding $2
million (2020: $2.2 million), in addition to other identiied
misstatements that warranted reporting on qualitative
grounds. As a result of the investigation, including a heightened
risk of potential bias and our focus on year end covenant
compliance, we reduced the threshold at which component
teams reported misstatements, from $0.8m to $0.4m.
Of the Group’s reporting components, we subjected 6 (2020:
7) to full scope audits for Group purposes and 15 (2020: 13) to
speciied risk-focused audit procedures over: revenue, cost of
sales and trade receivables (13 components (2020: 10)); gross
amounts due from customers (10 components (2020: 10));
trade payables (9 components (2020: 10)); cash (14 components
(2020: 12)) ; accruals (8 components (2020: 3)); provisions (2
components (2020: 4)); administrative expenses (2 components
(2020: 2)); prepayments (1 component 2020: 1)); other
receivables (3 components (2020: 2)) and; bad debt provision
(0 components (2020: 1)). The latter were not individually
inancially signiicant enough to require a full scope audit, but
were included in the scope of our group reporting work in order
to provide further coverage over the Group’s results.
The components within the scope of our work accounted for the
percentages illustrated opposite.
For the residual components, we performed analysis at an
aggregated group level to re-examine our assessment that there
were no signiicant risks of material misstatement within these.
The Group operates shared service centres, the outputs of
which are included in the inancial information of the reporting
components they service and therefore they are not separate
reporting components. One (2020: one) shared service centre
was subject to speciied risk-focused audit procedures,
predominantly the testing of transaction processing controls.
Additional procedures were performed at certain reporting
components to address the audit risks not covered by the work
performed over the shared service centres.
$30m
Whole inancial statements
performance materiality
(2020: $28.5m)
4. Our application of materiality and
an overview of the scope of our audit
(continued)
The Group team instructed component auditors in 11 (2020: 15)
locations, as to the signiicant areas to be covered, including
the relevant risks detailed above and the information to be
reported back.
The Group team approved the component materialities, which
ranged from $1.8 million to $18 million (2020: $1.5 million to
$31 million), having regard to the mix of size and risk proile
of the Group across the components. The work on 19 of the 21
(2020: 20 of the 20) reporting components was performed by
component auditors and the rest, including the audit of the
parent company, was performed by the Group team.
The Group team visited 2 of 11 (2020: 0 of 15) component
locations to assess the audit risks and indings. This visit
included additional personnel interviews and discussions with
the component teams in connection with the investigation.
Video and telephone conference meetings were also held with
these component auditors. Due to the COVID-19 pandemic
restrictions video and telephone conference meetings were held
with the other component auditors. During these meetings, the
indings reported to the Group team were discussed in more
detail, and any further work required by the Group team was
then performed by the component auditor.
The scope of the audit work performed was predominately
substantive as we placed limited reliance upon the Group’s
internal control over inancial reporting.
5. The impact of climate change on our audit
In planning our audit, we have considered the potential
impact of climate change on the Group’s business and its
inancial statements.
The Group has set out its commitments on climate change to
reduce scope 1 and 2 carbon emissions by 40% by 2030.
Climate change impacts the Group in a variety of ways creating
both risks and opportunities to the group. The opportunities
include potential for capitalising on the growth in markets
arising from energy transition. The risks include demand
uncertainty relating to the market’s response to climate issues,
the pattern of energy transition, and the group’s ability to
respond to this.
As part of our audit we have made enquiries of management
to understand the extent of the potential impact of climate
change risk on the Group’s inancial statements. We have
performed a risk assessment of how the impact of climate
change may affect the inancial statements and our audit. Our
risk assessment focused on the risk climate change may pose
to the determination of future cash lows used in assessments
such as impairment. We held discussions with our own climate
change professionals to challenge our risk assessment.
On the basis of our risk assessment, we determined that
goodwill impairment is the area which will be the most
impacted area of our audit. As explained in Note 9, in preparing
the value-in-use calculations, management has projected
growth in the Cash Generating Unit (“CGU”) based on the
assumptions of increase in market share in future climate
related projects. Our audit response to the goodwill impairment
key audit matter includes speciic procedures to address the
risks arising from climate change. Please refer to that key
audit matter response for further details. In our response
we explain how we have challenged management’s growth
assumptions by comparing them against external data and
performing sensitivity analysis of the carrying amount to the
growth assumptions. Taking into account our risk assessment
procedures and the relatively short term nature of most other
assets we have not identiied any other key audit matters
relating to climate change.
We read the disclosure of climate related information in the
front half of the annual report and considered consistency with
the inancial statements and our audit knowledge.
6. Going concern
The Directors have prepared the inancial statements on the
going concern basis as they do not intend to liquidate the
Group or the Company or to cease their operations, and as they
have concluded that the Group’s and the Company’s inancial
position means that this is realistic. They have also concluded
that there are no material uncertainties that could have cast
signiicant doubt over their ability to continue as a going
concern for at least a year from the date of approval of the
inancial statements (“the going concern period”).
An explanation of how we evaluated management’s
assessment of going concern is set out in the related key audit
matter in section 2 of this report.
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis
of accounting in the preparation of the inancial statements
is appropriate;
• we have not identiied, and concur with the Directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast signiicant doubt on the Group’s or Company's ability to
continue as a going concern for the going concern period;
• we have nothing material to add or draw attention to in
relation to the directors’ statement on page 155 of the
inancial statements on the use of the going concern basis
of accounting with no material uncertainties that may cast
signiicant doubt over the Group and Company’s use of that
basis for the going concern period, and we found the going
concern disclosure on page 155 to be acceptable; and
• the related statement under the Listing Rules set out on page
71 is materially consistent with the inancial statements and
our audit knowledge.
However, as we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the time
they were made, the above conclusions are not a guarantee
that the Group or the Company will continue in operation.
85%
(2020: 85%)
5
80
5
80
72%
(2020: 70%)
56
50
20
16
80%
(2020: 81%)
59
68
13
21
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Financial statements
7. Fraud and breaches of laws and regulations
– ability to detect
Identifying and responding to risks of material
misstatement due to fraud
To identify risks of material misstatement due to fraud (“fraud
risks”) we assessed events or conditions that could indicate an
incentive or pressure to commit fraud or provide an opportunity
to commit fraud. Our risk assessment procedures included:
• Enquiring of Directors, the Audit Committee, internal audit,
the ethics and compliance team, the internal legal team,
external law irms.
• Inspection of policy documentation as to the Group’s high-
level policies and procedures to prevent and detect fraud ,
including the internal audit function, and the Group’s channel
for “whistleblowing”, as well as whether they have knowledge
of any actual, suspected or alleged fraud.
• Reading Board, Audit Committee, Remuneration Committee,
Nomination committee and Safety, Assurance and Business
Ethics Committee minutes.
• Considering remuneration incentive schemes and
performance targets for management and Directors.
• Using analytical procedures to identify any unusual or
unexpected relationships.
•
With regard to the investigations referred to in the Audit
Committee report, we involved our Forensics specialists to
assist in additional risk assessment procedures, as a result
of which additional procedures over journal entries were
performed by the group and component audit teams.
We communicated identiied fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit. This included communication from the Group to in-
scope component audit teams of relevant fraud risks identiied
at the Group level and requests to in-scope component audit
teams to report to the Group audit team any instances of fraud
that could give rise to a material misstatement at Group.
Our forensic specialists assisted us in identifying key fraud
risks. This included holding a discussion with the engagement
partner, engagement manager and engagement quality control
reviewer, and assisting with designing and executing relevant
audit procedures to respond to the identiied fraud risks.
They also attended meetings with management and external
advisers to discuss key fraud risk areas, and in connection with
the investigation.
As required by auditing standards, and taking into account
possible pressures to meet proit targets and external debt
covenant thresholds we performed procedures to address
the risk of management override of controls and the risk of
fraudulent revenue recognition, in particular the risk on the ixed
price contracts, and the risk of bias in accounting estimates and
judgements such as litigations and contingent liabilities, the
classiication of exceptional items, cash cut off, and goodwill
impairment assumptions.
We did not identify any additional fraud risks.
Further detail in respect of revenue recognition on ixed price
contracts, litigations and contingent liabilities and goodwill
impairment is set out in the key audit matter disclosures in
section 2 of this report. Consideration of covenant sensitivity is
described in the going concern key audit matter.
In determining the audit procedures we took into account
the results of our evaluation and testing of the operating
effectiveness of some of the Group-wide fraud risk
management controls.
In light of the matters investigated we reviewed and revised
our risk assessment. We performed additional audit work in
response to the Group’s investigation principally in relation
to Aegis contract accounting related matters as reported
by the Audit Committee in their report on page 109 (“the
investigation”). These procedures were primarily related to a
heightened risk of management bias and were focused on our
fraud risk assessment and the key audit matters of revenue
recognition and going concern, as described in those key audit
matters in section 2.
We also performed procedures including:
• Identifying journal entries to test,based on risk criteria, at
Group level and atin-scope componentsand comparing
the identiied entries to supporting documentation. These
included, where applicable, those containing key words
which may indicate a high risk/ those posted to unusual
accounts.Also, we have tested all material post closing
journal entries. As a result of the investigation, we expanded
our high risk criteria and performed additional sample testing
over journal entries matching those criteria.
• Assessing signiicant accounting estimates for bias.
Financial statements
Independent auditor's report continued
7. Fraud and breaches of laws and regulations
– ability to detect
(continued)
Identifying and responding to risks of material
misstatement due to non-compliance with laws and
regulations
We identiied areas of laws and regulations that could
reasonably be expected to have a material effect on the
inancial statements from our general commercial and sector
experience, and through discussion with the Directors and
other management (as required by auditing standards),
and from inspection of the Group’s regulatory and legal
correspondence and discussed with the Directors and
other management the policies and procedures regarding
compliance with laws and regulations.
We communicated identiied laws and regulations throughout our
team and remained alert to any indications of non-compliance
throughout the audit. This included communication from the
Group to all in-scope component audit teams of relevant laws
and regulations identiied at the Group level, and a request for all
in-scope component auditors to report to the Group team any
instances of non-compliance with laws and regulations that could
give rise to a material misstatement at Group.
The potential effect of these laws and regulations on the
inancial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the inancial statements including inancial
reporting legislation (including related companies legislation),
distributable proits legislation, taxation legislation and
pensions legislation in respect of deined beneit pension
schemes and we assessed the extent of compliance with these
laws and regulations as part of our procedures on the related
inancial statement items.
Secondly, the Group is subject to many other laws and
regulations where the consequences of non-compliance could
have a material effect on amounts or disclosures in the inancial
statements, for instance through the imposition of ines or
litigation. We identiied the following areas as those most likely
to have such an effect: health and safety legislation, fraud,
anti-bribery and anti-corruption, money laundering legislation,
employment law and social security legislation, contract
legislation, Foreign Corrupt Practices Act, environmental
protection legislation and federal acquisition regulations.
Auditing standards limit the required audit procedures to
identify non-compliance with these laws and regulations to
enquiry of the Directors and other management and inspection
of regulatory and legal correspondence, if any. Therefore, if
a breach of operational regulations is not disclosed to us or
evident from relevant correspondence, an audit will not detect
that breach.
For the regulatory investigations and litigations and claims
matters discussed in notes 20 and 33, we assessed disclosures
against our understanding gained through the audit procedures
performed and concluded that these are appropriate.
We discussed with the Audit Committee other matters
related to actual or suspected breaches of laws or regulations,
for which disclosure is not necessary, and considered any
implications for our audit.
Context of the ability of the audit to detect fraud or
breaches of law or regulation
Owing to the inherent limitations of an audit, there is an
unavoidable risk that we may not have detected some material
misstatements in the inancial statements, even though we
have properly planned and performed our audit in accordance
with auditing standards. For example, the further removed non-
compliance with laws and regulations is from the events and
transactions relected in the inancial statements, the less likely
the inherently limited procedures required by auditing standards
would identify it.
In addition, as with any audit, there remained a higher risk of
non-detection of fraud, as these may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of
internal controls. Our audit procedures are designed to detect
material misstatement. We are not responsible for preventing
non-compliance or fraud and cannot be expected to detect
non-compliance with all laws and regulations.
John Wood Group PLC
Annual Report and Accounts 2021
147
John Wood Group PLC
Annual Report and Accounts 2021
146
Strategic report Governance
Financial statements
8. We have nothing to report on the other
information in the Annual Report
The Directors are responsible for the other information
presented in the Annual Report together with the inancial
statements. Our opinion on the inancial statements does not
cover the other information and, accordingly, we do not express
an audit opinion or, except as explicitly stated below, any form
of assurance conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether, based on our inancial statements
audit work, the information therein is materially misstated
or inconsistent with the inancial statements or our audit
knowledge. Based solely on that work we have not identiied
material misstatements in the other information.
Strategic report and Directors’ report
Based solely on our work on the other information:
• we have not identiied material misstatements in the
Strategic report and the Directors’ report;
• in our opinion the information given in those reports for the
inancial year is consistent with the inancial statements; and
• in our opinion those reports have been prepared in
accordance with the Companies Act 2006.
Directors’ remuneration report
In our opinion the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Disclosures of emerging and principal risks and longer-
term viability
We are required to perform procedures to identify whether
there is a material inconsistency between the Directors’
disclosures in respect of emerging and principal risks and the
viability statement, and the inancial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
• the Directors’ conirmation within the Viability Statement
page 71 that they have carried out a robust assessment of
the emerging and principal risks facing the Group, including
those that would threaten its business model, future
performance, solvency and liquidity;
• the Analysis of Principal Risks disclosures describing these
risks and how emerging risks are identiied, and explaining
how they are being managed and mitigated; and
• the Directors’ explanation in the Viability Statement of how
they have assessed the prospects of the Group, over what
period they have done so and why they considered that period
to be appropriate, and their statement as to whether they
have a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related
disclosures drawing attention to any necessary qualiications
or assumptions.
We are also required to review the Viability Statement, set
out on page 71 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the inancial statements and our
audit knowledge.
Our work is limited to assessing these matters in the context
of only the knowledge acquired during our inancial statements
audit. As we cannot predict all future events or conditions
and as subsequent events may result in outcomes that are
inconsistent with judgements that were reasonable at the
time they were made, the absence of anything to report on
these statements is not a guarantee as to the Group’s and
Company’s longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether
there is a material inconsistency between the Directors’
corporate governance disclosures and the inancial statements
and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the inancial statements
and our audit knowledge:
•
the Directors’ statement that they consider that the annual
report and inancial statements taken as a whole is fair,
balanced and understandable, and provides the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy;
• the section of the annual report describing the work of the
Audit Committee, including the signiicant issues that the
Audit Committee considered in relation to the inancial
statements, and how these issues were addressed; and
• the section of the annual report that describes the review
of the effectiveness of the Group’s risk management and
internal control systems.
We are required to review the part of Corporate Governance
Statement relating to the Group’s compliance with the
provisions of the UK Corporate Governance Code speciied by
the Listing Rules for our review.
We have nothing to report in these respects.
9. We have nothing to report on the other matters
on which we are required to report by exception
Under the Companies Act 2006, we are required to report to
you if, in our opinion:
• adequate accounting records have not been kept by the
parent Company, or returns adequate for our audit have not
been received from branches not visited by us; or
• the Parent Company inancial statements and the part of
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration speciied by
law are not made; or
• we have not received all the information and explanations we
require for our audit.
We have nothing to report in these respects.
10. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
87, the Directors are responsible for: the preparation of the
inancial statements including being satisied that they give
a true and fair view; such internal control as they determine is
necessary to enable the preparation of inancial statements
that are free from material misstatement, whether due to
fraud or error; assessing the Group and parent Company’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 they either intend to liquidate the
Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about
whether the inancial statements as a whole are free from
material misstatement, whether due to fraud or error, and to
issue our opinion in an auditor’s report. Reasonable assurance is
a high level of assurance, but does not guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in aggregate, they could reasonably be expected to inluence
the economic decisions of users taken on the basis of the
inancial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at
frc.org.uk/auditorsresponsibilities
11. The purpose of our audit work and to whom we
owe our responsibilities
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters we
are required to state to them in an auditor’s 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 and the Company’s members, as a body, for our audit
work, for this report, or for the opinions we have formed.
Paul Glendenning (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
1 Marischal Square
Broad Street
Aberdeen
AB10 1DD
19 April 2022
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Annual Report and Accounts 2021
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John Wood Group PLC
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148
Strategic report Governance
Financial statements
Consolidated income statement
for the year ended 31 December 2021
Consolidated statement of
comprehensive income/expense
for the year ended 31 December 2021
Financial statements
2021
2020
Note
Pre-
exceptional
items
$m
Exceptional
items
$m
Total
$m
Pre-
exceptional
items
$m
Exceptional
items
$m
Total
$m
Revenue from continuing operations 1,2,5 6,426.0 (25.4 ) 6,400.6 7,564.3 - 7,564.3
Cost of sales
5 (5,715.8 ) - (6,836.6 )
(5,641.9 )
(73.9 )
(6,836.6 )
Gross proit 784.1 684.8 727.7 - 727.7
(99.3 )
Administrative expenses (794.2 )
5 (623.6 )
(60.4 )
(684.0 )
(554.9 )
(239.3 )
Share of post-tax proit/(loss) from joint ventures 31.5 - 31.5 41.6 33.6
5,12
(8.0 )
Operating proit/(loss) 1 192.0 32.3 214.4
(159.7 )
(247.3 )
(32.9 )
Finance income 13.4 - 13.4
3 3.3 - 3.3
Finance expense
3,5 (6.3 ) (116.2 )
(109.9 )
(121.1 )
(8.0 )
(129.1 )
Proit/(loss) before taxation from continuing
operations
4,5 85.4 (166.0 ) (80.6 ) 106.7 (255.3 ) (148.6 )
Taxation 51.5 ) (28.0 )
5,6 (45.8 )
((9.1 )
(54.9 )
(79.5 )
Proit/(loss) for the year from continuing
operations
(228.1 )
Proit/(loss) attributable to
Owners of the parent 35.6 53.8 (283.3 )
(175.1 )
(139.5 )
(229.5 )
Non-controlling interests 1.4 - 1.4
28 4.0 - 4.0
(228.1 )
Earnings per share (expressed in cents per share)
Basic
8 (20.6 )
(34.1 )
Diluted
8
(20.6 )
(34.1 )
The notes on pages 155 to 224 are an integral part of these consolidated inancial statements.
Note
2021
$m
2020
$m
Loss for the year
(135.5 )
(228.1 )
Other comprehensive income/(expense)
Items that will not be reclassiied to proit or loss
Re-measurement gains/(losses) on retirement beneit obligations
32 83.3
(178.7 )
Movement in deferred tax relating to retirement beneit obligations 36.8
6
(9.5 )
Total items that will not be reclassiied to proit or loss 73.8
(141.9 )
Items that may be reclassiied subsequently to proit or loss
Cash low hedges
27 7.9
(8.0 )
Tax on derivative inancial instruments 1.6
6 (3.4 )
Exchange movements on retranslation of foreign operations 92.9
27 (56.3 )
Total items that may be reclassiied subsequently to proit or loss
(51.8 ) 86.5
Other comprehensive income/(expense) for the year, net of tax 22.0
(55.4 )
Total comprehensive expense for the year
(113.5 )
(283.5 )
Total comprehensive expense for the year is attributable to:
Owners of the parent
(117.5 )
(284.9 )
Non-controlling interests 4.0 1.4
(113.5 )
(283.5 )
Total comprehensive expense for the year is attributable to continuing operations.
Exchange movements on the retranslation of foreign operations could be subsequently reclassiied to proit or loss in the event of
the disposal of a business.
The notes on pages 155 to 224 are an integral part of these consolidated inancial statements.
John Wood Group PLC
Annual Report and Accounts 2021
151
John Wood Group PLC
Annual Report and Accounts 2021
150
Strategic report Governance
Financial statements
Consolidated balance sheet
Consolidated statement of changes in equity
Financial statements
as at 31 December 2021 for the year ended 31 December 2021
Note
2021
$m
2020
$m
Assets
Non-current assets
Goodwill and other intangible assets 6,216.2
9 6,075.3
Property plant and equipment 126.4
10 102.2
Right of use assets 408.9
11 356.1
Investment in joint ventures 168.7
12 169.7
Other investments
12 75.9 79.8
Long term receivables
14 107.5 187.0
Retirement beneit scheme surplus
32 259.6 188.8
Deferred tax assets 80.4
21 75.7
Current assets
Inventories
13 15.9 11.9
Trade and other receivables 1,698.6
14 1,791.3
Financial assets 20.7
14 7.7
Income tax receivable 55.2 50.6
Cash and cash equivalents 585.0
15 503.0
Total assets 9,595.1 9,823.0
Liabilities
Current liabilities
Borrowings 315.3
17 281.9
Trade and other payables 2,019.7
16 1,998.6
Income tax liabilities 183.2 183.2
Lease liabilities 133.4
11 118.3
Provisions 172.5
20 159.0
Net current liabilities
(367.9 )
(457.3 )
Non-current liabilities
Borrowings
17 1,614.1 1,296.5
Deferred tax liabilities 89.0
21 72.5
Retirement beneit scheme deicit 124.4
32 74.7
Lease liabilities 408.0
11 331.5
Other non-current liabilities 138.1
18 199.8
Provisions 770.1
20 476.2
Total liabilities 5,509.8 5,650.2
Net assets 4,085.3 4,172.8
Equity attributable to owners of the parent
Share capital 41.1
23 41.3
Share premium 63.9 63.9
24
Retained earnings 1,455.2
25 1,415.0
Merger reserve 2,540.8
26 2,540.8
Other reserves 69.0
27 21.0
Total equity attributable to owners of the parent 4,082.0 4,170.0
Non-controlling interests 2.8
28 3.3
Total equity 4,085.3 4,172.8
The inancial statements on pages 150 to 224 were approved by the board of directors on 19 April 2022 and signed on its behalf by:
Robin Watson, Director David Kemp, Director
The notes on pages 155 to 224 are an integral part of these consolidated inancial statements.
Note
Share
capital
$m
Share
premium
$m
Retained
earnings
$m
Merger
reserve
$m
Other
reserves
$m
Equity
attributable
to owners of
the parent
$m
Non-
controlling
interests
$m
Total
equity
$m
At 1 January 2020 40.9 63.9 1,806.4 2,540.8 (33.2 ) 4,418.8 5.5 4,424.3
(Loss)/Proit for the year - - - - 1.4
(229.5 )
(229.5 )
(228.1 )
Other comprehensive income/(expense):
Re-measurement losses on retirement beneit
schemes
32 - - - - -
(178.7 )
(178.7 )
(178.7 )
Movement in deferred tax relating to retirement
beneit schemes
6 - - 36.8 - - 36.8 - 36.8
Cash low hedges - - - - -
27
(8.0 )
(8.0 )
(8.0 )
Tax on derivative inancial instruments - - 1.6 - - 1.6 - 1.6
6
Net exchange movements on retranslation of
foreign operations
27 - - - - 92.9 92.9 - 92.9
Total comprehensive (expense)/income for the year - - - 84.9 1.4 (283.5 )
(369.8 )
(284.9 )
Transactions with owners:
Dividends paid - - - - - -
7,28
(4.9 )
(4.9 )
Credit relating to share based charges - - 24.3 - - 24.3 - 24.3
22
Deferred tax impact of rate change in equity - - (1.3 ) - - -
6
(1.3 )
(1.3 )
Other tax movements in equity - - - - -
6
(0.7 )
(0.7 )
(0.7 )
Shares allocated to employee share trusts 0.2 - - - - - -
25
(0.2 )
Exchange movements in respect of shares held by
employee share trusts
25 - - (3.5 ) - - (3.5 ) - (3.5 )
Net exchange movements on disposal of foreign
currency operations
27 - - - - 17.3 17.3 - 17.3
Transactions with non-controlling interests - - - - - - 0.8 0.8
28
At 31 December 2020 41.1 63.9 1,455.2 2,540.8 69.0 4,170.0 2.8 4,172.8
(Loss)/Proit for the year - - - - 4.0
(139.5 )
(139.5 )
(135.5 )
Other comprehensive income/(expense):
Re-measurement gains on retirement beneit
schemes
32 - - 83.3 - - 83.3 - 83.3
Movement in deferred tax relating to retirement
beneit schemes
6 - - - - -
(9.5 )
(9.5 )
(9.5 )
Cash low hedges - - - - 7.9 7.9 - 7.9
27
Tax on derivative inancial instruments - - - - -
6
(3.4 )
(3.4 )
(3.4 )
Net exchange movements on retranslation of
foreign operations
27 - - - - (56.3 ) (56.3 ) - (56.3 )
Total comprehensive (expense)/income for the year - - - 4.0 (113.5 )
(69.1 )
(48.4 )
(117.5 )
Transactions with owners:
Dividends paid - - - - - - (2.7 )
7,28
(2.7 )
Credit relating to share based charges - - 22.1 - - 22.1 - 22.1
22
Deferred tax impact of rate change in equity - - 4.5 - - 4.5 - 4.5
6
Other tax movements in equity - - - - -
6
(0.1 )
(0.1 )
(0.1 )
Shares allocated to employee share trusts 0.2 - - - - - -
25
(0.2 )
Exchange movements in respect of shares held by
employee share trusts
25 - - 1.1 - - 1.1 - 1.1
Purchase of company shares by employee share
trust for the Share Incentive Plan (SIP)
25 - - 1.5 - - 1.5 - 1.5
Net exchange movements on disposal of foreign
currency operations
30 - - - - 0.4 0.4 - 0.4
Transactions with non-controlling interests - - - - - -
28
(0.8 )
(0.8 )
At 31 December 2021 41.3 63.9 1,415.0 2,540.8 21.0 4,082.0 3.3 4,085.3
The notes on pages 155 to 224 are an integral part of these consolidated inancial statements.
John Wood Group PLC
Annual Report and Accounts 2021
153
John Wood Group PLC
Annual Report and Accounts 2021
152
Strategic report Governance
Financial statements
Consolidated cash low statement
Notes to the inancial statements
Financial statements
for the year ended 31 December 2021 for the year ended 31 December 2021
Note
2021
$m
2020
$m
Cash generated from operations 29 13.9 346.2
Tax paid 43.2 )
(73.5 )
(Net cash (used in)/generated from operating activities 303.0
(59.6 )
Cash lows from investing activities
Acquisition of subsidiaries (cash acquired less consideration paid) 21.0 )
30 -
(Disposal of businesses (net of cash disposed)
30 19.3 455.2
Purchase of property plant and equipment
10 (22.4 )
(15.0 )
Proceeds from sale of property plant and equipment 22.1 6.8
Purchase of intangible assets 73.4 )
9 (92.5 )
(Interest received 3.1 3.6
Cash from short term investments and restricted cash 12.5 )
15 12.5
(Repayment of loans from joint ventures 1.0 4.5
Net cash (used in)/generated from investing activities 348.2
(56.9 )
Cash lows from inancing activities
Repayment of short-term borrowings 1,438.4 )
29 (33.5 )
(Proceeds from long term borrowings 200.0
29 664.9
Repayment of long-term borrowings
29 (335.6 )
(477.5 )
Payment of lease liabilities
29
(167.6 )
(188.4 )
Proceeds from SIP shares -
25 1.5
Interest paid
(87.5 )
(86.5 )
Dividends paid to non-controlling interests
28
(2.7 )
(4.9 )
Net cash generated from/(used in) inancing activities 39.5
(1,995.7 )
Net decrease in cash and cash equivalents 29
(77.0 )
(1,344.5 )
Effect of exchange rate changes on cash and cash equivalents 27.6
29 (5.0 )
Opening cash and cash equivalents 585.0 1,901.9
Closing cash and cash equivalents 15 503.0 585.0
The proceeds of long-term borrowings of $664.9 m includes $600.0 m of proceeds from the new UK government export facility and
additional borrowings of64.9 m under the Revolving Credit Facility. The repayment of long term borrowings of $335.6 m includes
$
the repayment of the $300.0 m of bilateral facilities and the impact of the classiication of senior loan notes, now falling due within
one year, being reclassiied from long-term to short-term borrowings.
Payment of lease liabilities includes the cash payments for the principal portion of lease payments of $147.3 m (2020: $158.3 m) and
for the interest portion of $20.3 m (2020: $30.1 m). The classiication of interest paid within inancing activities is in line with the
Group accounting policy.
The notes on pages 155 to 224 are an integral part of these consolidated inancial statements.
General information
(‘the Group’) delivers comprehensive services to support
its customers across the complete lifecycle of their assets,
from concept to decommissioning, across a range of energy,
industrial and utility markets. Details of the Group’s activities
during the year are provided in the Strategic Report. John
Wood Group PLC is a public limited company , incorporated
and domiciled in the United Kingdom
Stock Exchange. Copies of the Group inancial statements are
available from the Company’s registered ofice at 15 Justice Mill
Lane, Aberdeen AB11 6EQ.
Accounting Policies
Basis of preparation
These inancial statements have been prepared in accordance
with international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance
with UK-adopted international accounting standards. The
Group inancial statements have been prepared on a going
concern basis under the historical cost convention as modiied
by the revaluation of inancial assets and liabilities at fair value
through the income statement.
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 inancial statements (the going
concern period), as well as preparing inancial forecasts up
to the end of 2023 to relect reasonably possible downsides.
The directors have considered as part of this assessment the
impact of the events, including the current war in Ukraine, that
happened post balance sheet date and up to the date of issue
of these inancial statements.
The directors did not declare an interim or inal 2021 dividend
in order to protect cashlows and preserve long term value. No
dividends are included in the going concern assessment. Any
decision to resume payment of a dividend will consider the
Group’s future proitability and cash requirements.
In assessing the basis of preparation of the inancial
statements for the year ended 31 December 2021, the directors
have considered the principles of the Financial Reporting
Council’s ‘Guidance on Risk Management, Internal Control
and Related Financial and Business Reporting, 2014’; namely
assessing the applicability of the going concern basis, the review
period and disclosures.
In order to satisfy themselves that they have adequate
resources for the future, the directors have reviewed the
Group’s existing debt levels, the forecast compliance with debt
covenants including any impact on committed funding and
liquidity positions and the Group’s ability to generate cash
from trading activities. As of 31 December 2021, the Group’s
principal debt facilities comprise a $1,200.0m revolving credit
facility maturing in October 2026; a $600.0m term loan
maturing in July 2026 and $803.3m of US private placement
debt repayable in various tranches between July 2022 and July
2031, with over 95% due in 2024 or later. At 31 December 2021,
the Group had headroom of $935.1m under its main facilities
and a further $148.9m of other undrawn borrowing facilities.
The Group’s key inancial covenants are set at a ratio of 3.5x for
both net debt/maximum rolling 12-month adjusted EBITDA and
minimum interest cover. These covenants are measured on a
semi-annual basis and excludes the impact of IFRS 16. There are
no indications from the scenarios modelled that any of these
covenants will be breached in the period assessed.
At 31 December 2021, the Group had net current liabilities of
$367.9m (2020: $457.3m) and the reduction mainly relates to
the extension of the maturity of the Groups principal borrowing
facilities during 2021. The cash low forecasts show that the Group
will have suficient funds to meet its liabilities as they fall due.
The directors have considered a range of scenarios on the
Group’s future inancial performance and cash lows. These
scenarios relect our outlook for the broad range of end
markets that the Group operates in, whilst also considering
the growth in the order book during 2021 and an improved
outlook for activity across Projects, Operations and Consulting.
Approximately 62% of the Group’s revenues are driven by
Renewables and Other Energy; Process and Chemicals and the
built environment. The Group anticipates growth opportunities
due to the post covid recovery in industrial activity. Additionally,
there are growth opportunities in the built environment due to
iscal stimulus measures adopted by governments across the
world in response to the pandemic and longer-term demand
supported by changing attitudes to infrastructure spending
to provide climate and economic resilience. The conventional
energy business, which makes up around 38% of revenue
is supported by the global recovery in energy demand and
improved commodity prices. This backdrop of strong order book
growth and improved activity levels in 2021 gives the directors
improved conidence around the 2022 forecast and the growth
assumptions for 2023.
The base case going concern scenario assumes the retention
of the built environment business. Additionally, the directors
have modelled the disposal of the built environment business
following the outcome of the strategic review being announced
in January 2022. The proceeds from the disposal would lead
to a strengthening of the balance sheet through a pay down
of debt and other liabilities currently included on the balance
sheet. Both scenarios indicated that covenants will be passed
at the covenant remeasurement dates.
The directors have considered severe, but plausible downside
scenarios. The most severe of these relect further material
reductions in revenue and EBITDA from the base scenario,
which is the Board approved forecast, the basis of which is
described above. This could result from a worsening economic
climate or a signiicantly reduced oil price. In each of the
scenarios modelled, the inancial covenants were met, with
signiicant facility headroom remaining available.
Consequently, the directors are conident that the company will
have suficient funds to continue to meet its liabilities as they
fall due for at least 12 months from the date of approval of the
inancial statements and therefore have prepared the inancial
statements on a going concern basis.
Signiicant accounting policies
The Group’s signiicant accounting policies adopted in the
preparation of these inancial statements are set out below.
These policies have been consistently applied to all the years
presented.
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Notes to the inancial statements continued
Critical accounting judgements and estimates
The preparation of the inancial statements requires the use of
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the inancial statements and
the reported amounts of revenue and expenses during the year.
These estimates and judgements are based on management’s
best knowledge of the amount, event or actions and actual
results ultimately may differ from those estimates. Group
management believe that the estimates and assumptions listed
below have a signiicant risk of resulting in a material adjustment
to the carrying amounts of assets and liabilities.
(a) Revenue recognition on ixed price and long-term
The Group has a large number of ixed price long-term
contracts which are accounted for in accordance with IFRS 15
and require estimates to be made for contract revenue. These
contracts do not typically generate individually material revenue
however they are material in aggregate. Contract revenues are
affected by uncertainties that depend on the outcome of future
events. Lump sum revenue amounted to $1,695.8m in 2021
(2020: $2,501.8m).
Uncertainties include the estimation of:
Forecast costs to complete the contract
At the end of the reporting period the Group is required
to estimate costs to complete on lump sum or ixed price
contracts based on the work to be performed after the
reporting date, which may span more than one reporting
period. This involves an objective evaluation of project progress
against the delivery schedule, evaluation of the work to be
performed and the associated costs to fully deliver the contract
to the customer and contingencies. These factors are affected
by a variety of uncertainties that depend on the outcome of
future events, and so often need to be revised as events unfold,
and therefore it is not practically possible to present these
sensitivities which will be different across a large number of
individually immaterial contracts. The estimates from these
contracts, in aggregate, could nevertheless have a possible
material impact on revenue, cost of sales, gross amounts due to
customers and gross amounts due from customers.
Recognition of revenue from variation orders (“VOs”)
As contracts progress management may deem that the
company is entitled to VOs increasing the contracts price
under the existing contracts (variable considerations). In some
instances, changes to the scope or requirements of a project
equate to changing the contract in a way that entitles the
Company to additional consideration (contract modiications).
Where VOs are linked to variable considerations management
estimate the value of revenue to be recognised such that it
is considered highly probable that a signiicant reversal in
the amount of cumulative revenue recognised to date will
not occur when the uncertainty associated with the VO is
subsequently resolved. This assessment is reconsidered at each
reporting date. The assessment is based on discussions with
the customer and a range of factors, including contractual
entitlement, prior experience of the customer and of similar
contracts with other customers.
Where VOs are linked to contract modiications, management
recognise associated revenue when such modiications are
approved and when the company has an enforceable right
to payment. In cases where the price has not been agreed,
management estimate the value of revenue to be recognised
such that it is considered highly probable that a signiicant
reversal in the amount of cumulative revenue recognised
to date will not occur when the inal price for the contract
modiication has been agreed.
The recording of provisions is an area which requires the exercise
of management judgement relating to the nature, timing and
probability of the liability and typically the Group’s balance
sheet includes contract provisions and provisions for pending
legal issues.
As a result of the acquisition of Amec Foster Wheeler (“AFW”)
in 2017, the Group has acquired a signiicant asbestos related
liability. Some of AFW’s legacy US and UK subsidiaries are
defendants in asbestos related lawsuits and there are out of
court informal claims pending in both jurisdictions. Plaintiffs
claim damages for personal injury alleged to have arisen
from exposure to the use of asbestos in connection with work
allegedly performed by subsidiary companies in the 1970s and
earlier. The provision for asbestos liabilities is the Group’s best
estimate of the obligation required to settle claims up until
2050. Group policy is to record annual changes to the underlying
gross estimates where they move by more than 5%.
The critical assumptions applied in determining the asbestos
provision include: indemnity settlement amount, forecasted
number of new claims, estimated defence costs and the
discount rate. The Group uses a 30-year US Treasury bond rate
to discount its asbestos liabilities. The 30-year US Treasury rate,
has increased to 1.9% from 1.65% at the end of December 2020.
This has resulted in a credit of $5.6m being recognised through
the income statement and has been treated as exceptional due
to being outwith the control of the Group.
Further details of the asbestos liabilities are provided in note 20
including a sensitivity analysis showing the impact of changes
to the key assumptions.
(d) Retirement beneit schemes (estimate)
The value of the Group’s retirement beneit schemes surplus/
deicit is determined on an actuarial basis using several
assumptions. Changes in these assumptions will impact the
carrying value of the surplus/deicit. A sensitivity analysis
showing the impact of changes to these assumptions is
provided in note 32. The principal assumptions that impact
the carrying value are the discount rate, the inlation rate
and life expectancy. The Group determines the appropriate
assumptions to be used in the actuarial valuations at the end of
each inancial year following consultation with the retirement
beneit schemes’ actuaries. In determining the discount rate,
consideration is given to the interest rates of high-quality
corporate bonds in the currency in which the beneits will
be paid and that have terms to maturity similar to those of
the related retirement beneit obligation. The inlation rate
is derived from the yield curve used in deriving the discount
rate and adjusted by an agreed risk premium. Assumptions
regarding future mortality are based on published statistics and
the latest available mortality tables. The Group, in conjunction
with the schemes’ actuaries, continues to monitor the impact of
the Covid-19 pandemic on mortality data. The tax rate applied
to the surplus of the UK scheme is 25%, on the basis that the
scheme is in a technical funding deicit with commitments
for future contributions and there is no expectation that the
manner of any future recovery would be in the form of a refund,
which would be taxed at 35%.
The majority of pension scheme assets have quoted prices in
active markets. Scheme assets are revalued at least once per
annum to relect their fair value. Fair value is based on market
price information. If this is not available, the most recent
transaction price, revenue or earnings-based valuations using
unobservable inputs may be used for level 3 investments in the
fair value hierarchy.
Further details of the assumptions and measurements outlined
can be seen in note 32.
On the Aegis contract, management deem that the Company
is entitled to variable considerations under the existing
contractual arrangements. Only the proportion of this deemed
entitlement that is assessed as highly probable is recognised
as part of the revenue calculation. The assessment of the
proportion of the deemed entitlement to VOs that is considered
to be highly probable is a judgement made by management in
consultation with internal and external experts. The amount
of the accumulated recognised VOs in relation to the Aegis
contract is material. Refer to note 20 for further details of the
additional provisions recognised in respect of this contract.
Liquidated damages (“LDs”)
LDs are penalties (negative variable considerations) that are
determined when certain contractual requirements are not
met. Management make an assessment of the value of LDs
to be provided at the reporting date such that it is considered
highly probable that a signiicant reversal in the amount
of cumulative revenue recognised will not occur when the
uncertainty associated with the LD is subsequently resolved.
This initial assessment is reconsidered at each reporting date.
The assessment is based on a best estimate of the monetary
amount of LDs payable which involves a number of management
assumptions and judgements including discussions with the
customer, contractual entitlement, prior experience of the
customer, prior experience of similar contracts with other
customers and other forms of documentary evidence.
Estimates are updated regularly, and signiicant changes are
highlighted through established internal review procedures.
The contract reviews focus on the timing and recognition of
revenue including income from incentive payments, scope
variations and claims.
See note 2 for further details.
(b) Impairment of goodwill (estimate)
The Group carries out impairment reviews whenever events
or changes in circumstance indicate that the carrying value of
goodwill may not be recoverable. In addition, the Group carries
out an annual impairment review. Management expectations
are formed in line with performance to date and experience, as
well as available external market data.
An impairment loss is recognised when the recoverable amount
of goodwill is less than the carrying amount. The impairment
tests are carried out by CGU (‘Cash Generating Unit’) and
relect the latest Group budgets and forecasts as approved
by the Board. The budgets and forecasts are based on various
assumptions relating to the Group’s businesses including
assumptions relating to market outlook, resource utilisation,
contract awards and contract margins. The outlook for the
Group is discussed in the Chief Executive’s Review. Pre-tax
discount rates of between 10.2% and 10.8% have been used
to discount the CGU cash lows and a terminal value is applied
using long term growth rates of between 2.5% and 2.7%. A
sensitivity analysis has been performed allowing for possible
changes to the key assumptions used in the impairment model.
See note 9 for further details.
(c) Provisions and contingent liabilities (judgement
The Group records provisions where it has a present obligation
(legal or constructive) as a result of a past event, it is probable
that an outlow of resources will be required to settle the
obligation and a reliable estimate of the obligation can be
made. Where the outcome is less than probable, but more than
remote, or a reliable estimate cannot be made, no provision is
recorded but a contingent liability is disclosed in the inancial
statements, if material.
Basis of consolidation
The Group inancial statements are the result of the
consolidation of the inancial statements of the Group’s
subsidiary undertakings from the date of acquisition or up
until the date of divestment as appropriate. Subsidiaries are
entities controlled by the Group. The Group ‘controls’ an entity
when it is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect
those returns through its power over the entity. All Group
companies apply the Group’s accounting policies and prepare
inancial statements to 31 December. Intra-group balances and
transactions, and any unrealised income and expenses arising
from intra-group transactions, are eliminated.
Joint ventures and joint operations
A joint venture is a type of joint arrangement where the
parties to the arrangement share rights to its net assets. A
joint arrangement is an arrangement of which two or more
parties have joint control. Joint control is the contractually
agreed arrangement which exists only when decisions about
the relevant activities require unanimous consent of the parties
sharing control. The considerations made in determining joint
control are similar to those necessary to determine control over
subsidiaries.
The Group’s interests in joint ventures are accounted for using
equity accounting. Under the equity method, the investment
in a joint venture is initially recognised at cost. The carrying
amount of the investment is adjusted to recognise changes in
the Group’s share of net assets of the joint venture from the
acquisition date. The results of the joint ventures are included
in the consolidated inancial statements from the date the
joint control commences until the date that it ceases. The
Group includes its share of joint venture proit on the line ‘Share
of post-tax proit from joint ventures’ in the Group income
statement and its share of joint venture net assets in the
‘investment in joint ventures’ line in the Group balance sheet.
A joint operation is a joint arrangement whereby the parties
that have joint control of the arrangement have rights to
the assets and obligations for the liabilities relating to the
arrangement. The Group accounts for joint operations by
recognising the appropriate proportional share of revenue,
expenses, assets and liabilities.
Presentational currency
The Group’s earnings stream is primarily US dollars and the
Group therefore uses the US dollar as its presentational
currency.
The following exchange rates have been used in the preparation
of these inancial statements:
2021
2020
Average rate £1 = $
1.3757
1.2844Closing rate £1 = $
1.3545
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Notes to the inancial statements continued
Foreign currencies
In each individual entity, transactions in foreign currencies are
translated into the relevant functional currency at the exchange
rates ruling at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are retranslated
at the exchange rates ruling at the balance sheet date. Any
exchange differences are taken to the income statement.
Income statements of entities whose functional currency is
not the US dollar are translated into US dollars at average
rates of exchange for the period and assets and liabilities are
translated into US dollars at the rates of exchange ruling at the
balance sheet date. Exchange differences arising on translation
of net assets in such entities held at the beginning of the year,
together with those differences resulting from the restatement
of proits and losses from average to year end rates, are taken
to the currency translation reserve.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on the acquisition
of a foreign entity are treated as assets and liabilities of the
foreign entity and translated at the exchange rate ruling at the
balance sheet date with any exchange differences taken to the
currency translation reserve.
Foreign currency differences are recognised in Other
Comprehensive Income (“OCI”) and accumulated in the
translation reserve, except to the extent that the translation
difference is allocated to Non-Controlling Interests (“NCI”).
When a foreign operation is disposed of in its entirety or
partially such that control, signiicant inluence or joint control
is lost, the cumulative amount in the translation reserve related
to the foreign operation is reclassiied to proit or loss as part
of the gain or loss on disposal. If the Group disposes of part of
its interest in a subsidiary but retains control, then the relevant
proportion of the cumulative amount is reattributed to NCI.
When the Group disposes of only part of an associate or joint
venture while retaining signiicant inluence or joint control, the
relevant proportion of the cumulative amount is reclassiied to
proit or loss. The directors consider it appropriate to record
sterling denominated equity share capital in the inancial
statements of John Wood Group PLC at the exchange rate
ruling on the date it was raised.
Revenue recognition
Revenue comprises the fair value of the consideration speciied
in a contract with a customer and is stated net of sales taxes
(such as VAT) and discounts. The Group recognises revenue
when it transfers control over a good or service to a customer.
With regard to cost reimbursable projects and lump sum
projects, further detail is provided below about the nature
and timing of the satisfaction of performance obligations in
contracts with customers, including payment terms and the
related revenue recognition policies.
Cost reimbursable projects
Revenue is recognised over time as the services are provided
based on contractual rates per man hour in respect of multi-
year service contracts. The amount of variable revenue related
to the achievement of key performance indicators (KPIs)
is estimated at the start of the contract, but any revenue
recognised is constrained to the extent that it is highly probable
there will not be a signiicant reversal in future periods.
Interest income or expense is recognised using the effective
interest method. The ‘effective interest rate’ is the rate that
exactly discounts estimated future cash payments or receipts
through the expected life of the inancial instrument to:
• The gross carrying amount of the inancial asset; or
• The amortised cost of the inancial liability.
Dividends payable
Dividends to the Group’s shareholders are recognised as a
liability in the period in which the dividends are approved by
shareholders. Interim dividends are recognised when paid. See
note 7 for further details.
Business combinations
The Group accounts for business combinations using the
acquisition method of accounting when control is transferred
to the Group. The consideration transferred is measured at fair
value, as are the identiiable net assets acquired. Any goodwill
that arises is tested annually for impairment. Intangible assets
arising on business combinations are tested for impairment when
indicators of impairment exist. Acquisition costs are expensed and
included in administrative expenses in the income statement.
Goodwill
Goodwill represents the excess of the cost of an acquisition over
the fair value of the net assets acquired. Goodwill is carried at cost
less accumulated impairment losses. Goodwill is not amortised.
Intangible assets
Intangible assets are carried at cost less accumulated
amortisation. Intangible assets are recognised if it is probable
that there will be future economic beneits attributable to the
asset, the cost of the asset can be measured reliably, the asset
is separately identiiable and there is control over the use of
the asset. Where the Group acquires a business, intangible
assets on acquisition are identiied and evaluated to determine
the carrying value on the acquisition balance sheet. Intangible
assets are amortised over their estimated useful lives on a
straight-line basis, as follows:
Software 3-5 years
Development costs and licenses 3-5 years
Intangible assets on acquisition
Customer contracts and relationships 5-13 years
Order backlog 2-5 years
Brands 20 years
Property plant and equipment
Property plant and equipment (PP&E) is stated at cost less
accumulated depreciation and impairment. No depreciation is
charged with respect to freehold land and assets in the course
of construction.
Depreciation is calculated using the straight-line method over
the following estimated useful lives of the assets:
Freehold buildings 2550 years
Leasehold improvements period of lease
Plant and equipment 310 years
When estimating the useful life of an asset group, the principal
factors the Group takes into account are the durability of the
assets, the intensity at which the assets are expected to be
used and the expected rate of technological developments.
Asset lives and residual values are assessed at each balance
sheet date.
Refer to the Leases policy for the Group’s policy with respect to
the right of use assets.
Lump sum or ixed price contacts
Revenue on ixed price or lump sum contracts for services,
construction contracts and ixed price long-term service
agreements is recognised over time according to the stage of
completion reached in the contract by measuring the proportion
of costs incurred for work performed to total estimated costs.
Margin is only recognised when the outcome of the contract can
be measured reliably.
Management assess the value of revenue to be recognised
in respect of variation orders based on the considerations
described in the critical accounting judgements and estimates
section above in the paragraph regarding recognition of revenue
from variation orders (“VOs”).
A claim is an amount that the contractor seeks to collect from
the customer as reimbursement for costs whose inclusion in
the contract price is disputed, and may arise from, for example,
delays caused by the customer, errors in speciication or design
and disputed variations in contract work. Claims are also usually
variable considerations and are included in contract revenue
only to the extent that it is highly probable that a signiicant
reversal of revenue will not occur. Appropriate legal advice is
taken in advance of any material revenue being recognised in
respect of claims.
The related contract costs are recognised in the income
statement when incurred. When it is probable that total
contract costs will exceed total contract revenue, the expected
loss is recognised immediately.
The Group’s payment terms state that all invoices are generally
payable within 30 days.
Details of the services provided by the Group are provided under
the ‘Segmental Reporting’ heading.
Exceptional items
Exceptional items are those signiicant items which are
separately disclosed by virtue of their size or incidence to enable
a full understanding of the Group’s inancial performance.
Transactions which may give rise to material exceptional
items include gains and losses on divestment of businesses;
write downs or impairments of assets including goodwill;
restructuring and redundancy costs or provisions; litigation or
regulatory settlements; asbestos related income or charges;
tax provisions or payments; provisions for onerous contracts
and acquisition and divestment costs. The tax impact on these
transactions is shown separately in the exceptional items note
to the inancial statements (note 5).
Restructuring and redundancy costs or provisions will
include those costs associated with major Board approved
programmes which will deliver longer term beneits to the
Group. If this involves closure of a material ofice, discrete
operating unit or service line the exceptional cost will include
redundancy and severance of impacted employees, onerous
contract provisions, the write off any unrecoverable net assets
and any reversals in future periods.
Finance expense/income
Interest income and expense is recorded in the income
statement in the period to which it relates. Arrangement
fees and expenses in respect of the Group’s debt facilities are
amortised over the period which the Group expects the facility
to be in place. Interest relating to the unwinding of discount on
deferred and contingent consideration, IFRS 16 lease liabilities
and asbestos liabilities is included in inance expense. Interest
expense and interest income on scheme assets relating to the
Group’s retirement beneit schemes are also included in inance
income/expense. See note 3 for further details.
Impairment
The Group performs impairment reviews in respect of PP&E,
investment in joint ventures and intangible assets whenever
events or changes in circumstance indicate that the carrying
amount may not be recoverable. In addition, the Group carries
out impairment reviews in respect of goodwill, at least annually.
An impairment loss is recognised when the recoverable amount
of an asset, which is the higher of the asset’s fair value less
costs to sell and its value in use, is less than its carrying amount.
Impairment losses are recognised in proit or loss. They are
allocated to irst reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts
of the other assets in the CGU on a pro-rata basis.
For the purposes of impairment testing, assets are grouped
together into the smallest group of assets that generates cash
inlows from continuing use that are largely independent of the
cash inlows of other assets or cash generating units (“CGUs”).
Goodwill arising from a business combination is allocated to
the appropriate CGU or groups of CGUs that are expected to
beneit from the synergies of the combination. The CGUs are
aligned to the structure the Group uses to manage its business.
Cash lows are discounted in determining the value in use.
See note 9 for further details of goodwill impairment testing
and note 12 for details of impairment of investment in joint
ventures.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and other
short-term bank deposits with original maturities of three
months or less. Bank overdrafts are included within borrowings
in current liabilities. The Group presents balances that are part
of a pooling arrangement with no right of offset on a gross
basis in both cash and short-term borrowings.
Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. Trade
receivables are typically classiied as Held to Collect.
The Group recognises loss allowances for Expected Credit
Losses (‘ECLs’) on trade receivables and gross amounts due
from customers, measured at an amount equal to lifetime
ECLs. ECLs are a probability-weighted estimate of credit
losses. Credit losses are measured as the present value of all
cash shortfalls (i.e. the difference between the cash lows due
to the entity in accordance with the contract and the cash
lows that the Group expects to receive). ECLs are discounted
at the effective interest rate of the inancial asset.
At each reporting date, the Group assesses whether inancial
assets carried at amortised cost are credit-impaired. A inancial
asset is ‘credit-impaired’ when one or more events that have
a detrimental impact on the estimated future cash lows of
the inancial asset have occurred. Evidence that a inancial
asset is credit-impaired includes a customer being in signiicant
inancial dificulty or a breach of contract such as a default.
The gross carrying amount of a inancial asset is written off
when the Group has no reasonable expectation of recovering a
inancial asset in its entirety or a portion thereof. For individual
customers, the Group individually makes an assessment with
respect to the timing and amount of write-off based on
whether there is a reasonable expectation of recovery.
The Group has a non-recourse inancing arrangement with
one of its banks in which funds are received in relation to trade
receivable balances before the due date for payment. Trade
receivables are derecognised on receipt of the payment from
the bank. See note 14 for further details.
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Notes to the inancial statements continued
Asbestos related receivables
Asbestos related receivables represents management’s best
estimate of insurance recoveries relating to liabilities for
pending and estimated future asbestos claims. They are only
recognised when it is virtually certain that the claim will be paid.
Asbestos related assets under executed settlement agreements
with insurers due in the next 12 months are recorded within
Trade and other receivables and beyond 12 months are recorded
within Long term receivables. The Group’s asbestos related
assets have been discounted using an appropriate rate of
interest.
Trade payables
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost.
Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated
at amortised cost using the effective interest method.
Deferred and contingent consideration
Where deferred or contingent consideration is payable on the
acquisition of a business based on an earn out arrangement,
an estimate of the amount payable is made at the date
of acquisition and reviewed regularly thereafter, with any
change in the estimated liability being relected in the income
statement. Where the change in liability is considered material,
it is disclosed as an exceptional item in the income statement.
Where deferred consideration is payable after more than one
year, the estimated liability is discounted using an appropriate
rate of interest. Deferred consideration is initially recognised
at fair value and subsequently measured at amortised cost.
Contingent consideration is recognised at fair value.
Taxation
Tax provisions are based on management’s interpretation
of country speciic tax law and the likelihood of settlement.
This involves a signiicant amount of judgement as tax
legislation can be complex and open to different interpretation.
Management uses in-house tax experts, professional irms and
previous experience when assessing tax risks. When actual
liabilities differ from the provisions, adjustments are made
which can have a material impact on the Group’s tax charge for
the year.
Deferred tax asset recognition is based on two factors. Firstly,
deferred tax liabilities in the same jurisdiction as assets that
are legally capable of being offset and the timing of the
reversal of the asset and liability would enable the deduction
from the asset to be utilised against the taxable income from
the liability. Secondly, forecast proits support the recognition
of deferred tax assets not otherwise supported by deferred
tax liabilities. Management uses in-house tax experts to
determine the forecast period to support recognition, this is
considered by jurisdiction or entity dependent on the tax laws
of the jurisdiction. If actual results differ from the forecasts
the impact of not being able to utilise the expected amount of
deferred tax assets can have a material impact on the Group’s
tax charge for the year.
See note 6 and 21 for details.
The tax charge represents the sum of tax currently payable
and deferred tax. Tax currently payable is based on the taxable
proit for the year. Taxable proit differs from the proit
reported in the income statement due to items that are not
taxable or deductible in any period and also due to items that
are taxable or deductible in a different period.
When one is available, the Group measures the fair value of
an instrument using the quoted price in an active market for
that instrument. If there is no quoted price in an active market,
then the Group uses valuation techniques that maximise
the use of relevant observable outputs and minimise the use
of unobservable outputs. The chosen valuation technique
incorporates all of the factors that market participants would
take into account in pricing a transaction.
The fair value of interest rate swaps is calculated as the present
value of their estimated future cash lows. The fair value
of forward foreign exchange contracts is determined using
forward foreign exchange market rates at the balance sheet
date. The fair values of all derivative inancial instruments
are veriied by comparison to valuations provided by inancial
institutions.
The carrying values of trade receivables and payables
approximate to their fair values.
The fair value of inancial liabilities is estimated by discounting the
future contractual cash lows at the current market interest rate
that is available to the Group for similar inancial instruments.
Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control or use
an identiied asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right
to control the use of an asset, the Group uses the deinition of a
lease in IFRS 16.
This policy is applied to contracts entered into, on or after 1
January 2019. The Group recognises a right of use asset and
a lease liability at the lease commencement date. The right of
use asset is initially measured at cost, and subsequently at cost
less any accumulated depreciation and impairment losses and
adjusted for certain remeasurements of the lease liability.
The right of use asset is subsequently depreciated using the
straight-line method from the commencement date to the
end of the lease term. The right of use asset is periodically
reduced by impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present value of
the lease payments that are not paid at the commencement
date, discounted using the Group’s incremental borrowing rate
(“IBR”) and is subsequently increased by the interest cost on the
lease liability and reduced by repayments. It is remeasured when
there is a change in future lease payments arising from a change
in an index or rate, a change in the assessment of whether
an extension option is reasonably certain to be exercised or a
termination option is reasonably certain not to be exercised.
The Group has applied judgement to determine the lease term
for some lease contracts in which it is a lessee that includes
renewal options. The assessment of whether the Group is
reasonably certain to exercise such options impacts the lease
term, which may signiicantly affect the amount of lease
liabilities and right of use assets recognised.
The Group applies the practical expedient for short-term leases
in which a lessee is permitted to make an accounting policy
election not to recognise lease assets and lease liabilities for
leases with a term of 12 months or less and do not include an
option to purchase the underlying asset. Lease costs of short-
term leases are recognised on a straight-line basis over the
term of the lease term and disclosed within the consolidated
inancial statements. The Group believes short-term lease
commitments are not materially different than the short-term
lease cost for the period.
The Group’s liability for current tax is calculated using tax rates
enacted or substantively enacted at the balance sheet date.
Tax is recognised in the income statement except to the extent
that it relates to items recognised in other comprehensive
income or equity, in which case it is recognised in other
comprehensive income or equity as appropriate.
A current tax provision is recognised when the Group has a
present obligation as a result of a past event, it is probable
that the Group will be required to settle that obligation and a
reliable estimate can be made of the amount of the obligation.
In line with IFRIC 23, depending on the circumstances, the
provision is either the single most likely outcome, or a probability
weighted average of all potential outcomes. The provision
incorporates tax and penalties where appropriate. Separate
provisions for interest are also recorded. Interest in respect of
the tax provisions is not included in the tax charge, but disclosed
within proit before tax.
Deferred tax is provided, using the full liability method, on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated
inancial statements. The principal temporary differences arise
from depreciation on PP&E, tax losses carried forward and, in
relation to acquisitions, the difference between the fair values
of the net assets acquired and their tax base. Tax rates enacted,
or substantively enacted, at the balance sheet date are used to
determine deferred tax.
Deferred tax assets are recognised to the extent that it is
probable that future taxable proits will be available against
which the temporary differences can be utilised.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and joint
ventures, except where the Group is able to control the
reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Tax assets and liabilities are offset when they relate to income
taxes levied by the same taxation authority and it is intended
that they will be settled on a net basis.
Accounting for derivative inancial instruments and
hedging activities
Derivatives are initially recognised at fair value on the date the
contract is entered into and are subsequently re-measured
at fair value. Where hedging is to be undertaken, the Group
documents the relationship between the hedging instrument
and the hedged item at the inception of the transaction,
as well as the risk management objective and strategy for
undertaking the hedge transaction. The Group also documents
its assessment, both at hedge inception and on an ongoing
basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair
values or cash lows of the hedged items.
Fair value measurement
‘Fair value’ is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal
or, in its absence, the most advantageous market to which
the Group has access at that date. The fair value of a liability
relects its non-performance risk. A number of the Group’s
accounting policies and disclosures require the measurement
of fair values, for both inancial and non-inancial assets and
liabilities.
Retirement beneit scheme surplus/deicit
The Group operates a number of deined beneit and deined
contribution pension schemes. The surplus or deicit recognised
in respect of the deined beneit schemes represents the
difference between the present value of the deined beneit
obligations and the fair value of the scheme assets. The assets
of these schemes are held in separate trustee administered
funds. The schemes are largely closed to future accrual.
The deined beneit schemes’ assets are measured using fair
values. Pension scheme liabilities are measured annually by
an independent actuary using the projected unit method and
discounted at the current rate of return on a high-quality
corporate bond of equivalent term and currency to the liability.
The increase in the present value of the liabilities of the Group’s
deined beneit schemes expected to arise from employee
service in the period is charged to operating proit. The interest
income on scheme assets and the increase during the period
in the present value of the scheme’s liabilities arising from the
passage of time are netted and included in inance income/
expense. Re-measurement gains and losses are recognised in
the statement of comprehensive income in full in the period in
which they occur. The deined beneit schemes surplus or deicit
is recognised in full and presented on the face of the Group
balance sheet.
Group management consider it appropriate to recognise the
IAS 19 surplus in the Wood Pension Plan as the rules governing
the scheme provide an unconditional right to a refund assuming
the gradual settlement of the scheme’s liabilities over time until
there are no members left, as per IFRIC 14.11 (b). On a winding
up scenario, any surplus would be returned to the Group.
The Group’s contributions to deined contribution schemes are
charged to the income statement in the period to which the
contributions relate.
The Group operates a SERP pension arrangement in the
US for certain employees. Contributions are paid into a
separate investment vehicle and invested in a portfolio of US
funds that are recognised by the Group in other investments
with a corresponding liability in other non-current liabilities.
Investments are carried at fair value.The fair value of listed
equity investments and mutual funds is based on quoted
market prices and so the fair value measurement can be
categorised in Level 1 of the fair value hierarchy.
Provisions
Provisions are recognised where the Group is deemed to have
a legal or constructive obligation, it is probable that a transfer
of economic beneits will be required to settle the obligation,
and a reliable estimate of the obligation can be made. Where
amounts provided are payable after more than one year the
estimated liability is discounted using an appropriate rate of
interest.
The Group has taken internal and external advice in considering
known and reasonably likely legal claims made by or against the
Group. It carefully assesses the likelihood of success of a claim
or action. Appropriate provisions are made for legal claims
or actions against the Group on the basis of likely outcome,
but no provisions are made for those which, in the view of the
directors, are less than probable or for which no amount can be
reliably measured.
See note 20 for further details.
Where the outcome is less than probable, but more than
remote or a reliable estimate cannot be made, no provision is
recorded but a contingent liability is disclosed in the inancial
statements, if material.
John Wood Group PLC
Annual Report and Accounts 2021
161
John Wood Group PLC
Annual Report and Accounts 2021
160
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
Share based charges relating to employee share
schemes
The Group has recorded share based charges in relation to a
number of employee share schemes.
Charges are recorded in the income statement as an employee
beneit expense for the fair value of share options (as at the
grant date) expected to be exercised under the Executive
Share Option Schemes (‘ESOS’). Amounts are accrued over
the vesting period with the corresponding credit recorded in
retained earnings.
Options are also awarded under the Group’s Long Term Plan
(‘LTP’) which is the incentive scheme in place for executive
directors and certain senior executives. The charge for options
awarded under the LTP is based on the fair value of those
options at the grant date, spread over the vesting period. The
corresponding credit is recorded in retained earnings. For
awards that have a market related performance measure, the
fair value of the market related element is calculated using a
Monte Carlo simulation model.
The Group has an Employee Share Plan (“ESP”) under which
employees contribute regular monthly amounts which are
used to purchase shares over a one year period. At the end of
the year the participating employees are awarded one free
share for every two shares purchased providing they remain in
employment for a further year. A charge is calculated for the
award of free shares and accrued over the vesting period with
the corresponding credit taken to retained earnings. The Group
introduced the Share Incentive Plan (“SIP”) in 2021. Under
the plan, which is recognised by HM Revenue and Customs,
employees contribute regular monthly amounts of up to £150
per month to purchase shares. The participating employees
are awarded one free share for every two purchased, provided
that they hold the purchased shares for 3 years and remain in
employment.
Share capital
John Wood Group PLC has one class of ordinary shares and
these are classiied as equity. Dividends on ordinary shares are
not recognised as a liability or charged to equity until they have
been approved by shareholders.
The Group is deemed to have control of the assets, liabilities,
income and costs of its employee share trusts, therefore they
have been consolidated in the inancial statements of the
Group. Shares acquired by and disposed of by the employee
share trusts are recorded at cost. The cost of shares held by the
employee share trusts is deducted from equity.
Merger reserve
Where an acquisition qualiies for merger relief under Section
612 of the Companies Act 2006, the premium arising on the
issue of shares to fund the acquisition is credited to a merger
reserve. See note 26 for further information.
Segmental reporting
The Group has determined that its operating segments are
based on management reports reviewed by the Chief Operating
Decision Maker (‘CODM’), the Group’s Chief Executive. From
1 Segmental reporting
The Group monitors activity and performance through four operating segments; Projects, Operations, Consulting and Investment
Services (‘IVS’). This new operating model has been effective from 1 January 2021. Comparatives in the table below have been
restated to relect the new operating model.
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 proits and excludes exceptional items, which is consistent with the
way management review the performance of the business units. Revenue is reported on an equity accounting basis and therefore
revenue igures exclude joint venture revenue.
The segment information provided to the Group’s Chief Executive for the operating segments for the year ended 31 December 2021
includes the following:
Reportable operating segments Revenue
(3)
Adjusted EBITDA
(1)
Operating proit before
exceptionals
2021
$m
2020
$m
2021
$m
2020
$m
2021
$m
2020
$m
Projects
2,339.8
3,569.3167.7
205.4
26.4
34.9
Operations
2,098.1
2,033.2
225.1256.1
113.0
117.0Consulting
1,787.5
1,823.2
226.8224.3
139.1132.8
Investment Services
200.6
138.610.9
12.86.6
7.7
Central costs
(2)
-
-
(76.6)(68.2)
(93.1)(78.0)
Total 6,426.0
7,564.3
553.9
630.4192.0
214.4Exceptional items
(159.7)
(247.3)
Operating proit/(loss) 32.3
(32.9)
Finance income
3.3
13.4Finance expense
(116.2)
(129.1)Loss before taxation from continuing operations (80.6)
(148.6)
Taxation
(54.9)
(79.5)Loss for the year from continuing operations
(135.5)
(228.1)
Notes
1. A reconciliation of operating proit/(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 5).
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 $25.4m which is in respect of the Investment Services operating segment.
Reconciliation of Alternative Performance Measures
2021
$m
2020
$m
Operating proit/(loss) per income statement 32.3
(32.9)
Exceptional items (note 5)
159.7
247.3Operating proit before exceptionals 192.0
214.4
Operating proit/(loss) per income statement 32.3
(32.9)
Share of joint venture inance expense and tax (note 12)
15.3
8.3Exceptional items (note 5)
159.7
247.3Amortisation (including joint ventures)
191.7
227.7
Depreciation (including joint ventures)
39.1
45.4Depreciation of right of use assets
109.8
134.6
Impairment of PP&E and right of use assets
6.0
-Adjusted EBITDA 553.9
630.4
1 January 2021, our inancial reporting segments relect our
revised operating model which consists of Projects, Operations,
Consulting and Investment Services (“IVS”). Projects is focused
on providing front-end engineering services, procurement and
project management. Our Operations segment focuses on
improving operational eficiency by providing maintenance,
modiication and decommissioning services. Consulting is a
multi-sector specialist technical consultancy division providing
innovative thinking needed to maximise value at every stage of
the asset life cycle. Investment Services manages a range of
legacy or non-core businesses and investments with a view to
generating value via remediation and restructuring prior to their
eventual disposal.
The Chief Executive measures the operating performance
of these segments using ’Adjusted EBITDA’ (Earnings before
interest, tax, depreciation and amortisation). Operating
segments are reported in a manner consistent with the internal
management reports provided to the Chief Executive who is
responsible for allocating resources and assessing performance
of the operating segments.
Assets and liabilities held for sale
Disposal groups are classiied as assets and liabilities held for
sale if it is highly probable that they will be recovered primarily
through sale rather than continuing use. Disposal groups are
measured at the lower of carrying value and fair value less costs
to sell and their assets and liabilities are presented separately
from other assets and liabilities on the balance sheet.
Research and development government credits
The Group claims research and development government
credits predominantly in the UK, US, Canada and Australia.
These credits are similar in nature to grants and are offset
against the related expenditure category in the income
statement. The credits are recognised when there is reasonable
assurance that they will be received, which in some cases can be
some time after the original expense is incurred.
Government grants
The Group recognises a government grant when it has
reasonable assurance that it will comply with the relevant
conditions and that the grant will be received. This may be
a judgemental matter, particularly when governments are
introducing new programmes that may require new legislation,
or for which there is little established practice for assessing
whether the conditions to receive a grant are met. If the
conditions are met, then the Group recognises government
grants as a credit in proit or loss in line with its recognition of
the expenses that the grants are intended to compensate.
During 2021, the Group generated cash savings through
temporary furlough schemes, mainly from the Canadian
Emergency Wage Subsidy (CEWS) totalling $20.3m. The Group
also beneitted from the American Rescue Plan Act of 2021
(ARPA), signed into US law in March 2021, which provided relief
through changes in the assumptions used to the determine
the ongoing Required Minimum Contributions in respect of
its US deined beneit pension schemes as detailed in note
32. The amounts claimed under the UK furlough scheme were
subsequently repaid in full.
The Disclosure of impact of new and future accounting
standards
There have been no new relevant standards that have been
published and are mandatory for the Group’s accounting
periods beginning on or after 1 January 2021. Amendments
to existing standards do not have a material impact on the
inancial statements.
John Wood Group PLC
Annual Report and Accounts 2021
163
John Wood Group PLC
Annual Report and Accounts 2021
162
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
1 Segmental reporting
(continued)
Analysis of joint venture proits by segment Adjusted EBITDA(1) Operating proit
2021
$m
2020
$m
2021
$m
2020
$m
Projects
3.5
2.83.2
2.4
Operations
57.1
65.043.5
39.5Consulting
0.1
-0.1
-Total
60.7
67.8
46.8
41.9
The main joint ventures contributing to Adjusted EBITDA and Operating Proit within the Group’s Operations segment are
EthosEnergy and RWG. The results of these joint ventures are disclosed further in note 12.
Other segment items
At 31 December 2021
Projects
$m
Operations
$m
Consulting
$m
Investment
Services
$m
Unallocated
$m
Total
$m
Capital expenditure
PP&E
7.1
8.3 5.2 - 1.8 22.4
Intangible assets
28.6 33.0 1.6
31.0
-94.2
Non-cash expense
Depreciation
9.9
12.8
5.1
1.0
6.134.9
Depreciation of right of use assets
36.9 3.3 8.3 101.9
17.4
36.0Amortisation
93.9 22.3
27.7
-46.0
189.9
Exceptional items (non-cash element)
1.3 35.4
7.3
101.6(19.4)
126.2At 31 December 2020
Projects
$m
Operations
$m
Consulting
$m
Investment
Services
$m
Unallocated
$m
Total
$m
Capital expenditure
PP&E
8.7
10.22.7
-0.6
22.2Intangible assets 21.8 - 1.5
29.9
23.977.1
Non-cash expense
Depreciation 13.0 16.9 6.6 -
2.4
38.9Depreciation of right of use assets 38.1 125.4
47.8
28.05.1
6.4Amortisation 109.2 68.6
46.7
-1.0
225.5Exceptional items (non-cash element) 2.8 - 183.5 205.1
17.4
1.4The igures in the tables above are prepared on an equity accounting basis and therefore exclude the share of joint ventures.
Depreciation in respect of joint ventures totals $4.2m (2020: $6.5m), depreciation in respect of joint venture right of use assets
totals $7.9m (2020: $9.2m) and joint venture amortisation amounts to $1.8m (2020: $2.2m).
Non-current assets Revenue
Geographical segments
2021
$m
2020
$m
2021
$m
2020
$m
United Kingdom
960.4
920.5769.3
714.8United States of America
3,214.9
3,305.12,422.4
3,585.5Canada
728.5
741.9
598.2
534.0
Australia
196.6
218.0344.6
345.1Norway
112.1
118.8
193.4118.9
Germany
16.5
17.1
173.3
198.6Brunei
11.5
11.5210.3
163.3Singapore
104.3
107.8142.5
153.4Kuwait
234.4
240.6133.1
211.4
Saudi Arabia
105.2
112.2
94.8
142.7
Rest of the world
1,094.8
1,206.5
1,344.11,396.6
6,779.2
7,000.0
6,426.0
7,564.3
Non-current assets includes goodwill and other intangible assets, property plant and equipment, right of use assets, investment in
joint ventures and other investments.
2 Revenue
Revenue by geographical segment is based on the location of the ultimate project. Revenue is attributable to the provision of
services.
In the following table, revenue is disaggregated by primary geographical market and major service line. The tables provided below
analyses total revenue and does not relect the $25.4m exceptional item as disclosed on the Income Statement. The exceptional
item is in respect of Investment Services.
Primary geographical
market
Projects
2021
$m
Projects
2020
$m
Operations
2021
$m
Operations
2020
$m
Consulting
2021
$m
Consulting
2020
$m
IVS
2021
$m
IVS
2020
$m
Total
2021
$m
Total
2020
$m
USA
856.3
2,020.7
459.9
526.6
1,002.0961.7
144.5
36.2
2,422.43,585.5
Europe
374.7
377.4
723.5
580.0
284.2
288.323.8
84.0
1,406.2
1,329.7Rest of the world
1,108.8
1,171.2
914.7
926.6541.6
532.932.3
18.42,597.4
2,649.1
Revenue 2,339.8
3,569.3
2,098.12,033.2
1,787.51,823.2
200.6138.6
6,426.07,564.3
Major service lines
Renewables & other energy
877.6
1,358.0
159.0
180.2
209.7323.8
200.688.2
1,446.91,950.2
Process & chemicals
755.6
1,320.9226.9
254.2
93.387.6
--
1,075.81,662.7
Conventional energy
564.5
699.7
1,643.4
1,535.8232.6
265.5-
-2,440.5
2,501.0Built environment
142.1
190.7
68.8
63.01,251.9
1,146.3
-
50.4
1,462.8
1,450.4Revenue 2,339.8
3,569.3
2,098.12,033.2
1,787.51,823.2
200.6138.6
6,426.07,564.3
The Group’s revenue is largely derived from the provision of services over time.
Revenue in 2021 included $4,730.2m (74%) (2020: $5,062.5m, 67%) from reimbursable contracts and $1,695.8m (26%) (2020:
$2,501.8m, 33%) from lump sum contracts. The calculation of revenue from lump sum contracts is based on estimates and the
amount recognised could increase or decrease.
Included within Operations is $7.5m of revenue in 2021 which had no associated cost.
Contract assets and liabilities
The following table provides a summary of contract assets and liabilities arising from the Group’s contracts with customers.
2021
$m
2020
$m
Trade receivables
729.6
646.9
Non-current contract assets
66.5
111.3Gross amounts due from customers
628.1
638.6
Gross amounts due to customers
(87.5)
(203.2)
Deferred income
(115.0)
(69.7)
1,221.7
1,123.9
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.
The net increase in trade receivables and amounts due from customers is due to increased activity levels in the inal quarter
compared with the same period in 2020 and higher DSO. There have been no instances of material default by our customers as
a result of the current market conditions. The net reduction in amounts due to customers and deferred income was $70.4m and
primarily related to the unwind of advances received on contracts in the Projects business.
Non-current contract assets of $66.5m includes $46.6m of gross amounts due from customers and $19.9m of trade receivables in
relation to the Aegis contract as at 31 December 2021. The corresponding balances as at 31 December 2020 amounted to $111.3m,
with $94.1m included in gross amounts due from customers and $17.2m of trade receivables. The decrease in the non-current
contract assets is mainly as a result of the Aegis contract loss as disclosed in exceptional items (note 5). The Group’s current
estimate is that the receivables on the Aegis contract will not be settled until 2023 at the earliest. Refer to note 20 for further
details of the additional provisions recognised in respect of this contract.
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 are included within the ‘Trade and other payables’ heading in
the Group balance sheet.
John Wood Group PLC
Annual Report and Accounts 2021
165
John Wood Group PLC
Annual Report and Accounts 2021
164
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
2 Revenue
(continued)
Revenue recognised in 2021 which was included in gross amounts due to customers and deferred income at the beginning of the
year of $248.0m represents amounts included within contract liabilities at 1 January 2021. Revenue recognised from performance
obligations satisied in previous periods of $61.1m represents revenue recognised in 2021 for performance obligations which were
considered operationally complete at 31 December 2020.
Transaction price allocated to the remaining performance obligations
The transaction price allocated to the remaining performance obligations (unsatisied or partially unsatisied) as at 31 December
2021 was as follows:
$m
Year 1 Year 2
Total
Revenue 3,516.2 2,336.3
5,852.5
The above table includes all contracts including those which have an original expected duration of one year or less.
3 Finance expense/(income)
2021
$m
2020
$m
Interest payable on senior loan notes
35.9
38.0
Interest payable on borrowings
32.8
33.3Amortisation of bank facility fees
7.4
3.9
Unwinding of discount on deferred and contingent consideration liabilities (note 19)
-
0.2
Unwinding of discount on other liabilities
0.1
0.4
Lease interest (note 11)
20.3
30.1
Other interest expense
13.4
15.2Finance expense – continuing operations
109.9
121.1
Unwinding of discount on asbestos provision (note 5)
6.3
8.0
Finance expense - total 116.2
129.1
Interest on uncertain tax provisions
-
(4.9)
Interest receivable
(3.1)
(3.6)
Interest income – retirement beneit obligations (note 32)
(0.2)
(3.8)
Lease interest on lease investment
-
(1.1)Finance income (3.3)
(13.4)
Finance expense – total – net 112.9
115.7
Net interest expense of $3.6m (2020: $3.5m) has been deducted in arriving at the share of post-tax proit from joint ventures.
The unwinding of discount on the asbestos provision is $6.3m (2020: $8.0m) and includes the unwinding of discount on long-term
asbestos receivables (note 20). This is presented within exceptional items in line with the Group’s accounting policies.
4 Proit before taxation
2021
$m
2020
$m
The following items have been charged/(credited) in arriving at proit before taxation:
Employee beneits expense (note 31)
3,169.6
3,399.9
Amortisation of intangible assets (note 9)
189.9
225.5Depreciation of property plant and equipment (note 10)
34.9
38.9Depreciation of right of use assets (note 11)
101.9
125.4
(Gain)/loss on disposal of property plant and equipment
(10.0)
8.0
Foreign exchange losses
2.0
4.0
Depreciation of property plant and equipment is included in cost of sales or administrative expenses in the income statement.
Amortisation of intangible assets is included in administrative expenses in the income statement.
4 Proit before taxation
(continued)
Services provided by the Group’s auditors and associate irms
During the year the Group obtained the following services from its auditors, KPMG and associate irms at costs as detailed below:
2021
$m
2020
$m
Fees payable to the Group’s auditors and its associate irms for
Audit of parent company and consolidated inancial statements
5.5
4.8Audit of inancial statements of subsidiaries of the Company
2.8
1.7
Audit related assurance services
0.4
0.5
Tax and other services
0.1
0.1
8.8
7.1
The ratio of audit related services to other non-audit services is 1: 0.06.
Included in the $2.8m of fees for ‘audit of inancial statements and subsidiaries of the Company’ is $0.5m in respect of additional
statutory audits undertaken for the 2020 inancial year.
5 Exceptional items
2021
$m
2020
$m
Exceptional items included in continuing operations
Aegis contract loss (revenue)
25.4
-Aegis contract loss (cost of sales)
73.9
-Gain on sale of business (see note 30)
(14.4)
(59.1)Impairment losses on non-core business
-
20.1
Redundancy, restructuring and integration costs
77.9
100.8Investigation support costs and provisions
-
161.6Asbestos yield curve and fees
(3.1)
19.8
GMP equalisation
-
4.1
Continuing operations exceptional items, before interest and tax
159.7
247.3
Unwinding of discount on asbestos provision
6.3
8.0
Tax (credit)/charge in relation to exceptional items
(1.2)
0.7
Impact of change in UK rate on prior year exceptional deferred tax
10.3
-Derecognition of deferred tax assets due to UK pension actuarial loss
-
27.3
Continuing operations exceptional items, net of interest and tax 175.1
283.3
Exceptional items are those signiicant items which are separately disclosed by virtue of their size or incidence to enable a full
understanding of the Group’s inancial performance.
The gain on sale of business of $14.4m relates to the disposal of the Group’s interest in Sulzer Wood Limited for a consideration of
$19.3m. The gain in 2020 related to the disposal of the Group’s share in the TransCanada Turbines JV and the nuclear and industrial
services businesses.
The increase in the Aegis contract loss in 2021 was $99.3m, which relects the latest estimate of the full contract loss. The increased
loss recognised in the year was due to changes in the best estimates of the outcome of the contract, based on the director’s current
strategy for completing this complex project. The estimate relects an increase in the expected future legal costs, along with
increases in the expected costs to complete and potential liquidated damages. The changes to these estimates at 31 December
2021 are predominantly a result of adverse events and circumstances in the current period. These included additional delays on the
contract as further commissioning took place, updated assessments of variation orders and a change to the expected process to
recover variation orders. By virtue of its size and the nature of Aegis being a legacy contract in a sector where the group no longer
operates, this was recorded as an exceptional charge through revenue and cost of sales. No revenue has been recognised on the
Aegis Poland contract in 2021. The negative revenue of $25.4m presented represents the impact of the reduction in percentage
completion and reduction in the total forecast revenue on the contract. During 2020 a charge of $11m was taken to EBITDA to
relect the estimated full loss as at 31 December 2020. The updated contract loss relects the Group’s latest assessment of cost to
complete, claims, liquidated damages and legal costs.
During the year to 31 December 2021, $77.9m was incurred in relation to redundancy and restructuring activities. During 2021 the
Group has continued to progress various initiatives which support improved eficiency and the enhancement of underlying group
proitability in the medium to longer term. These initiatives have included ‘Future Fit’, which is a Group wide strategic initiative
aimed at improving eficiency, transforming our project and operations delivery, and creating greater earnings potential through
changes to our supply chain and our digital capability. Future Fit is an 18-month programme, which kicked off during the irst half of
2021 and is due to complete in the irst half of 2022. We have also taken steps to simplify our legal entity structure and closed legal
entities to make our business more eficient. The direct costs of running these programmes along with the costs of redundancies
and other investments are included in the exceptional charge.
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166
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
5 Exceptional items
(continued)
Complimentary to ‘Future Fit’, the Group has sharpened its focus on markets where we know we can make an impact and deliver
higher margins, and those businesses where the returns are commensurate to the risks involved. This has resulted in strategic
decisions to exit certain locations, and end markets that do not it this proile, the most material of which were our Paris
engineering ofice, the Power and Industrial Large EPC sector, the ATG automation businesses in the UK and the IPM business in
Spain. Where relevant, all staff were notiied prior to the year-end and no new work is being undertaken by these businesses. In line
with our accounting policy on exceptional items the costs mainly relate to redundancy of staff, which were calculated in line with
local regulations, the wind down of onerous contracts and write down of receivables balances considered to be unrecoverable as a
result.
The regulatory investigations were all closed out during the irst half of 2021 and was materially in line with the provision made at 31
December 2020.
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 amounts from the trading results improves
the understandability of the underlying trading performance of the Group. The credit of $3.1m in 2021 relates to a $5.6m yield curve
credit (2020: $17.9m charge) and $2.5m (2020: $1.9m) of costs in relation to managing the claims. The 30-year US Treasury rate
has increased to 1.9% from 1.65% at the end of December 2020 and led to the income statement credit in 2021. $6.3m of interest
costs which relate to the unwinding of discount on the asbestos provision are shown as exceptional (2020: $8.0m).
An exceptional tax charge of $9.1m (2020: $28.0m) has been recorded in the period and consists of a $1.2m tax credit on pre-tax
exceptional items (2020: $0.7m charge) and a $10.3m tax charge relating to the change of the UK tax rate impacting on deferred
tax balances created in prior years through exceptional items (2020: $nil). The 2020 charge also included $27.3m which relected
an impairment of deferred tax assets in the income statement arising from a reduction in deferred tax assets through other
comprehensive income due to the UK pension actuarial loss.
6 Taxation
2021
$m
2020
$m
Current tax
Current year
104.7
55.8
Adjustment in respect of prior years
(29.5)
(27.5)
75.2
28.3
Deferred tax
Origination and reversal of temporary differences
(23.7)
52.6Adjustment in respect of prior years
3.4
(1.4)
(20.3)
51.2
Total tax charge
54.9
79.5
Comprising
Tax on continuing operations before exceptional items
45.8
51.5Tax charge in relation to exceptional items (note 5)
9.1
0.7
Derecognition of deferred tax assets due to UK pension actuarial loss (note 5)
-
27.3
Total tax charge
54.9
79.5
Tax credited to other comprehensive income/expense
2021
$m
2020
$m
Deferred tax movement on retirement beneit liabilities
9.5
(36.8)Tax on derivative inancial instruments
3.4
(1.6)Total charged/(credited) to other comprehensive income/expense
12.9
(38.4)
Tax (credited)/charged to equity
2021
$m
2020
$m
Deferred tax impact of rate change
(4.5)
1.3Other
0.1
0.7
Total (credited)/charged to equity
(4.4)
2.0
6 Taxation
(continued)
Tax payments differ from the current tax charge primarily due to the time lag between tax charge and payments in most
jurisdictions and movements in uncertain tax provisions differing from the timing of any related payments.
Reconciliation of applicable tax charge at statutory rates to tax charge
2021
$m
2020
$m
Loss before taxation from continuing operations
(80.6)
(148.6)Less: Share of post-tax proit from joint ventures (note 12)
(31.5)
(33.6)Loss before taxation from continuing operations (excluding proits from joint ventures)
(112.1)
(182.2)
Applicable tax charge at statutory rates (16.6)
(28.7)
Effects of:
Non-deductible expenses
11.4
16.5Non-taxable income
(4.2)
(6.3)Non-deductible expenses - exceptional
1.1
28.1Non-taxable income - exceptional
(3.0)
(5.4)
Deferred tax recognition:
Recognition of deferred tax assets not previously recognised
(19.4)
- Utilisation of tax assets not previously recognised
(12.7)
(4.5)
Current year deferred tax assets not recognised
66.9
47.1
Write off of previously recognised deferred tax assets
22.4
25.8 Derecognition of deferred tax assets due to UK pension loss - exceptional
-
27.3
Irrecoverable withholding tax
10.4
16.4
CFC charges
2.0
1.8Uncertain tax provisions
23.6
5.1
Uncertain tax provisions – prior year adjustments
(24.9)
(16.1)Uncertain tax provisions – prior year adjustments - exceptional
-
1.8Prior year adjustments
0.9
(14.3)
Prior year adjustments - exceptional
(2.2)
1.4Impact of change in rates on deferred tax
(0.8)
(2.0)
US CARES Act
-
(14.5)
Total tax charge
54.9
79.5
The weighted average of statutory tax rates was 14.8% in 2021 (2020: 15.8%).
The adjustments in respect of prior years largely relates to the release of uncertain tax positions as the inal outcome on certain
issues was agreed with tax authorities during the year or the statute of limitations for audit by the tax authorities expiring without
challenge.
The write off of previously recognised deferred tax assets relects lower forecast proits when compared to the expectation at
31 December 2020. In terms of jurisdictions, the most signiicant impact is in the US which represents $16.9m of the adjustment.
Similarly, the current year deferred tax assets not recognised primarily relates to $51.1m in the US.
Deferred tax of $18.3m in relation to undistributed reserves in Chile and Russia has been released in the period as it is not
anticipated distributions will be paid in the foreseeable future triggering a tax liability. This amount is included within irrecoverable
withholding tax.
During the year, the UK deined beneit pension fund asset on the Wood Pension Plan increased due to actuarial gains of $50.1m,
resulting in the associated deferred tax liability increasing, with a debit shown in Other Comprehensive Income. The deferred tax
liability supports the recognition of deferred tax assets, and as a result $12.5m has been recognised and a corresponding credit
recognised in the proit and loss account.
Net income tax liabilities in the Group balance sheet include $135.6m (2020: $140.8m) relating to uncertain tax positions where
management has had to exercise judgement in determining the most likely outcome in respect of the relevant issue. The larger
amounts relate to recoverability of withholding taxes ($49.2m, 2020: $52.0m), group inancing ($27.1m, of which $6.6m relates to
deferred tax, 2020: $30.1m) and transfer pricing and tax residence ($9.2m, 2020: $11.8m). Where the inal outcome on these issues
differs to the amounts provided, the Group’s tax charge will be impacted.
John Wood Group PLC
Annual Report and Accounts 2021
169
John Wood Group PLC
Annual Report and Accounts 2021
168
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
6 Taxation
(continued)
Of the uncertain tax positions, $100.0m are currently under audit by tax authorities and the provision relects the maximum
potential liability relecting the outcome of the audits being either no liability or the full risk being challenged. The outcome of the
audits will determine if there is a credit to taxation in 2022. The remaining $35.6m comprises uncertain tax positions not yet under
audit, none of which are individually material. Of the $35.6m, $0.4m will become statute barred for tax authority audit during 2022
if the tax authorities do not commence an audit.
Factors affecting the tax charge in future years
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 8 October 2021, 136 countries signed up to the OECDs Inclusive Framework. This includes an agreement for a minimum level of
tax of 15% which it is planned will be in place for 2023. Based on the 2021 results, this would have resulted in an increase in the tax
charge of $4.0m relecting additional tax on proits in the UAE and the captive insurance company in Guernsey.
During 2021, the actuarial gain in relation to the UK pension fund has resulted in a recognition of deferred tax assets which can now
be supported by the deferred tax liability related to the pensions asset. Whilst the movement in the deferred tax liability is taken
to Other Comprehensive Income, the additional recognition of assets is taken to the Income Statement. The future tax charge will
therefore be impacted by movements in the pension asset valuation with actuarial gains increasing deferred tax asset recognition
and actuarial losses decreasing recognition. The deferred tax liability in relation to the UK pension fund at 31 December 2021 is
$64.9m.
Governments have started to take action to fund the expenditure incurred in relation to Covid-19, which includes tax changes. Tax
authorities are also starting to be more aggressive in their audits, and as a result of both of these factors we may see an increase in
future tax charges.
The UK Government announced in its budget on 3 March 2021, a rise in the rate of Corporation Tax from 19% to 25% from 1 April
2023. The increase is relected in deferred tax in the accounts, however there is no impact as deferred tax assets are only recognised
to the extent there are deferred tax liabilities in the UK. We anticipate the tax charge and cash tax payable is likely to increase
from the 2023 year end onwards as a result of the rate rise. The UK Government also announced an investment in HM Revenue &
Customs with an expectation of increasing tax collected from tax audits by £1.3bn per annum by 2022.
Potential sale of built environment business
The potential sale of the built environment business (note 36) is likely to result in the utilisation of all US losses and deferred interest
deductions. Not all of these assets are recognised on the balance sheet and as a result the tax charge from the disposal of the US
element of the business is likely to be signiicantly below the statutory rate. Following the utilisation of those assets, the tax charge
will no longer show a beneit for the recognition of additional US attributes as they are utilised and forecast, which will increase the
tax charge in the years after the disposal.
Following any disposal of the built environment business, a reduction in the level of debt is likely to reduce the interest charge. The
Group cannot currently obtain a deduction for all interest, with deductions deferred in the UK and US. It is likely all deferred interest
in the US will be deducted from any future gain. In the UK, we anticipate the Group will be able to access the deferred interest
deductions which will enable the Group to recognise deferred tax assets and thereby decrease the tax charge. Deferred UK interest
deductions could reduce the tax charge by $49.7m, although this beneit may not all be recognised in one year.
As part of any disposal of the built environment business, certain intangible assets will be sold including those relating to the
business on the acquisition of Amec Foster Wheeler. These intangible assets have related deferred tax liabilities which give rise to a
tax credit as the intangible assets are amortised. The book value of the business disposed will incorporate the relevant deferred tax
liabilities and be relected in the proit on disposal before tax. In future years, the deferred tax credit in relation to the amortisation
of intangibles will reduce relecting the disposals.
Tax Policy
The Group is committed to complying with all relevant tax laws, rules, regulations and reporting and disclosure requirements
wherever it operates. All tax planning undertaken is consistent with the Group’s overall strategy and approach to risk. The Group
aims to use incentives and reliefs to minimise the tax cost of conducting business but will not use them for purposes which are
knowingly contradictory to the intent of the legislation. A full copy of the Group’s tax strategy can be found on the Group’s website
at
woodplc.com
7 Dividends
No decision has been taken to resume the dividend and this will be kept under review by the directors. Any decision to resume
payment of a dividend will consider the Group’s future proitability and cash requirements.
8 Earnings per share
2021
2020
Earnings/(losses)
attributable to
owners of
the parent
$m
Number
of shares
m
Earnings/
(losses) per
share
cents
Earnings/(losses)
attributable to
owners of
the parent
$m
Number
of shares
m
Earnings/
(losses) per
share
cents
Basic pre-exceptional 35.6 675.6 5.3
53.8 672.5
8.0
Exceptional items, net of tax
(175.1) - (25.9)
(283.3) - (42.1)
Basic (139.5) 675.6 (20.6)
(229.5) 672.5
(34.1)
Effect of dilutive ordinary shares - -
- - -
-Diluted (139.5) 675.6 (20.6)
(229.5) 672.5
(34.1)
Adjusted diluted earnings per share calculation
Basic (139.5) 675.6 (20.6)
(229.5) 672.5
(34.1)
Effect of dilutive ordinary shares - -
- - -
-(139.5) 675.6 (20.6)
(229.5) 672.5
(34.1)
Exceptional items, net of tax
175.1 - 25.9
283.3 -
42.1
Amortisation related to acquisitions, net of tax - 15.2
82.7
- 12.2
102.2Adjusted diluted 118.3 675.6 17.5
156.0 672.5 23.2
Adjusted basic 118.3 675.6 17.5
156.0 672.5 23.2
As the Group has reported a basic loss (2020: loss) per ordinary share, any potential ordinary shares that are dilutive are excluded
in the calculation of diluted earnings per share. These options could potentially dilute earnings per share in future periods. In
accordance with IAS 33, the same weighted average number of shares has been used to calculate the adjusted EPS measures and
as the unadjusted result is a loss, the dilutive effects have not been taken into account in this calculation. Had the result been a
proit, an additional 28.2m dilutive potential shares would have been used in the calculation of diluted EPS metrics, which would
have reduced the adjusted diluted EPS by 0.7 cents.
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. The Group’s
dilutive ordinary shares comprise share options granted to employees under Executive Share Option Schemes, shares and share
options awarded under the Group’s Long-Term Plan and shares awarded under the Group’s Employee Share Plan and Share
Incentive Plan. Adjusted basic and adjusted diluted earnings per share are disclosed to show the results excluding the impact of
exceptional items and amortisation related to acquisitions, net of tax.
John Wood Group PLC
Annual Report and Accounts 2021
171
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Annual Report and Accounts 2021
170
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
9 Goodwill and other intangible assets
Goodwill
$m
Software and
development costs
$m
Customer contracts
and relationships
$m
Order
backlog
$m
Brands
$m
Total
$m
Cost
At 1 January 2021 5,266.4 323.6 822.2 184.9
664.4
7,261.5Exchange movements (40.2) (3.6) (6.5)
(1.0)
(54.7)(3.4)
Additions - - -
94.2
-94.2
Disposals - (125.4) - - - (125.4)
At 31 December 2021 5,226.2 288.8 815.7 183.9 661.0 7,175.6
Amortisation and impairment
At 1 January 2021 542.5 148.3 108.4 1,045.3
0.8
245.3Exchange movements - (3.2)
(4.8)
(0.8)
(0.7)
(9.5)
Amortisation charge - 24.2 33.2 189.9
89.0
43.5Disposals - (125.4) - - - (125.4)
At 31 December 2021 581.2 171.7 140.9 1,100.3
0.8
205.7Net book value at 31 December 2021 5,225.4 83.1 234.5 12.2
520.1
6,075.3Cost
At 1 January 2020 5,209.7 303.5 814.5 183.1 658.4 7,169.2
Exchange movements 76.8 13.7
8.1
1.86.7
107.1
Additions - - -
77.1
-77.1
Disposals -
(69.9)
- - -
(69.9)Businesses divested (20.1)
(0.8) (0.4)
-(0.7)
(22.0)At 31 December 2020 5,266.4 323.6 822.2 7,261.5
184.9
664.4Amortisation and impairment
At 1 January 2020 481.6 109.8
0.8
203.274.8
870.2
Exchange movements - 1.5
12.9
1.44.1
19.9
Amortisation charge - 225.5
99.8
56.437.1
32.2Impairment - - -
9.1
-9.1
Disposals -
(69.9)
- - -
(69.9)Businesses divested
(9.1)
-(0.7)
0.4
(0.1)
(9.5)
At 31 December 2020 542.5 148.3 108.4 1,045.3
0.8
245.3Net book value at 31 December 2020 5,265.6 78.3 279.7 36.6 556.0 6,216.2
The carrying value of software held under deferred payment arrangements at 31 December 2021 was $0.1m (2020: $0.1m). There
were no additions to software held under deferred payment arrangements during the year (2020: $nil).
In accordance with IAS 36 ‘Impairment of assets’, goodwill was tested for impairment during the year. The impairment tests were
carried out by Cash Generating Unit (‘CGU’) as at 31 December 2021 (the “test date”). The Group has ive CGUs and Goodwill is
monitored by management at CGU level. The allocation of Goodwill by CGU as at the test date is shown in the table below.
Value-in-use calculations have been prepared for each CGU using the cash low projections included in the inancial forecasts
prepared by management and approved by the Board for 2022 through to 2026. In preparing the forecasts management have
considered market outlook, growth in market share, resource utilisation, contract backlog, contract margins and assumed contract
awards. The Group’s impairment model assumes annual growth in market share for the majority of sectors of between 3% and
6% of its current market share over the forecast period. If this growth does not materialise, there is a risk of an impairment in
the Projects and Operations CGUs. The cumulative annual growth rates (CAGR) in revenue over the forecast period was 6.7% for
Consulting, 6.2% for Projects and 8.0% for Operations. The projected growth in the CGUs is underpinned by the Group’s strategy to
fully capitalise on the engineering capabilities of each of the CGUs to help our clients move to net-zero through the energy transition
and industrial decarbonisation. During 2021 each of the CGUs have had signiicant contract wins in energy transition and industrial
decarbonisation and is therefore well placed to beneit from signiicant levels of investment required by our clients to achieve net-
zero. The Group have also considered that there are risks associated with energy transition, including the energy transition and
industrial decarbonisation markets not generating suficient revenues to meet targets, which may also impact the Group’s ability
to attract or retain the appropriately skilled workforce which could prevent the Group from competing for work in this space. In
addition, undertaking high carbon projects that are inconsistent with the Group’s positioning of pivoting to support clients in pursuit
of net-zero and decarbonisation, potentially exposing the Group to disinvestment in the fossil fuel industry.
9 Goodwill and other intangible assets
(continued)
The terminal growth rates assumed from 2026 do not exceed the long-term average growth rates for the regions and sectors in
which the CGUs operate. The Group is well placed to beneit from the signiicant long term growth opportunities from Energy
Transition, which has been considered in determining long term growth rates. Management reviewed independent forecasts which
set out the long-term investment required in order to achieve net-zero. This long-term annual growth was then applied to each of
the CGUs based on current activity levels. Accordingly, the long-term growth rates assumed in the model are 2.6% for Operations
(2020: 2.6%); 2.7% for Projects (2020: 2.4%); and 2.5% (2020: 2.4%) for Consulting.
The cash lows have been discounted using discount rates appropriate for each CGU, and these rates are reviewed for each
impairment review performed. The discount rate is a critical assumption in the impairment test and the signiicant volatility in
inancial markets has led to reductions in the equity risk premium being used in the calculation due to higher interest rates and
volatile equity returns. The Group have considered the additional speciic risks related to each business such as country risk and
forecasting risk.
The pre-tax rates used for the 2021 review are tabulated as follows and were derived from the Group WACC calculation with
speciic adjustments for CGU speciic risks including country risk premiums:
Cash Generating Unit
Pre-tax
discount rate
2021
%
Pre-tax
discount rate
2020
%
Post-tax
discount rate
2021
%
Post-tax
discount rate
2020
%
Projects
10.6
11.39.3
10.0
Operations
10.2
10.4
8.9
9.1
Consulting
10.2
11.1
8.8
9.6
Kelchner
10.8
11.3
9.6
9.9
Swaggart
10.8
11.39.6
9.9
In order to reduce headroom to $nil for each of the CGUs, the post-tax discount rate would need to increase to:
Cash Generating Unit
%
Projects 11.0
Operations 11.5
Consulting 14.6
Kelchner
29.4
Swaggart 11.7
The carrying value of the goodwill for each CGU as at the test date is shown in the table below.
Cash Generating Unit
Goodwill carrying
value
2021 Test date
$m
Goodwill carrying
value
2020 Test date
$m
Projects
2,353.8
2,381.7Operations
1,645.4
1,649.3Consulting
1,193.0
1,201.4
Kelchner
16.9
16.9
Swaggart
16.3
16.3The carrying values of the corporate assets that were not allocated to the above cash generating units above were $91m (2020:
$80m) and were tested for impairment at the group level, taking into account the estimates and assumptions discussed above in
respect of the Group’s cash generating units.
The headroom for Projects and Operations is $630m and $731m respectively based on the assumptions described above. The key
assumptions used in the impairment model for these CGUs are discount rate, long term growth rate and revenue growth. There are
reasonable changes in assumptions that would result in an impairment for Projects and Operations. If the post-tax discount rate
was 1.5% higher for Projects and Operations, the headroom would be $68m and $251m respectively. If the post-tax discount rate
was 1.5% higher for Projects and Operations, the long-term growth rate would need to be 0.3% and 1.7% lower for Projects and
Operations respectively to reduce headroom to $nil. If the post-tax discount rate was 1.5% higher for Projects and Operations, then
the revenue CAGR would need to be 1.0% and 4.2% lower for Projects and Operations respectively to reduce headroom to $nil.
Intangible assets arising on acquisition include the valuation of customer contracts and relationships, order backlog and brands
recognised on business combinations. As part of the annual impairment review, Group management has assessed whether there
were any impairment triggers and none were identiied.
Customer relationships relate mainly to the acquisition of Amec Foster Wheeler in 2017 and are being amortised over periods of
5 to 13 years. Order backlog relates entirely to the acquisition of AFW and is being amortised over periods of 2 to 5 years. Brands
recognised relate entirely to the acquisition of AFW and are being amortised over a 20 year period.
Software and development costs includes internally generated assets with a net book value of $25.4m at 31 December 2021 (2020:
$21.6m). $9.4m (2020: $8.5m) of internally generated intangibles is included in additions in the year.
The software disposals relate to the write off of fully depreciated assets that are no longer in use.
John Wood Group PLC
Annual Report and Accounts 2021
173
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172
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
10 Property plant and equipment
Land and Buildings
$m
Plant and equipment
$m
Total
$m
Cost
At 1 January 2021 63.1 174.5 237.6
Exchange movements (1.2) (3.2)
(4.4)
Additions
2.7
22.419.7
Disposals (5.4)
(47.8)
(53.2)Reclassiications -
27.5
(27.5)At 31 December 2021 86.7 115.7
202.4
Accumulated depreciation and impairment
At 1 January 2021 31.2
80.0
111.2Exchange movements
(0.8)
(5.2)(4.4)
Charge for the year
9.0
25.9
34.9
Disposals (5.0) (39.7)
(44.7)
Reclassiications 12.5 (12.5) -
Impairment 3.6
0.4 4.0
At 31 December 2021 50.5
49.7
100.2Net book value at 31 December 2021 36.2 66.0 102.2
Cost
At 1 January 2020 91.2 187.5
278.7
Exchange movements
(2.9) (3.9)
(6.8)Additions
2.1 20.1
22.2Disposals (22.3) (34.2) (56.5)
Reclassiications (5.0)
5.0
-At 31 December 2020 63.1 174.5 237.6
Accumulated depreciation and impairment
At 1 January 2020 36.7
77.7
114.4Exchange movements (3.2)
(4.1)
(7.3)Charge for the year
9.9
29.0
38.9
Disposals (13.6) (28.1) (41.7)
Reclassiications (1.6) 1.6 -
Impairment
3.0
3.9 6.9
At 31 December 2020 31.2
80.0
111.2Net book value at 31 December 2020
31.9
126.494.5
The net book value of Land and Buildings includes $21.8m (2020: $12.5m) of Long Leasehold and Freehold property and $14.4m
(2020: $19.4m) of Short Leasehold property. There were no material amounts in assets under construction at 31 December 2021.
Net book value of $15.0m relating to Long Freehold property which was previously included within ‘Plant and equipment’ was
reclassiied to ‘Land and Buildings’ during the year. This net book value comprises $27.5m of cost offset by $12.5m of accumulated
depreciation and impairment.
11 Leases
Right of use assets
Land and Buildings
$m
Plant and equipment
$m
Total
$m
Net book value
At 1 January 2021 380.5 28.4 408.9
Exchange movements
(3.4)
(2.6)(6.0)
Additions 35.9 30.8
66.7
Disposals
(9.3)
(0.3)
(9.6)Impairment
(2.0)
-(2.0)
Depreciation of right of use assets (85.1) (16.8) (101.9)
At 31 December 2021 316.6 39.5 356.1
Lease liabilities
At 1 January 2021
541.4
Exchange movements (4.2)
Additions
70.5
Disposals
(10.6)
Interest expense related to lease liabilities 20.3
Repayment of lease liabilities (167.6)
At 31 December 2021
449.8
Right of use assets
Net book value
At 1 January 2020 391.4
20.7
412.1
Reclassiication
(4.1)
-(4.1)
Exchange movements
8.7
0.5
9.2
Additions 100.7 29.8 130.5
Disposals (12.2)
(12.0)
(0.2)Impairment (1.2) - (1.2)
Depreciation of right of use assets (125.4)
(103.0)
(22.4)At 31 December 2020 380.5 28.4 408.9
Lease liabilities
At 1 January 2020 583.3
Exchange movements
9.3
Additions 124.5
Disposals
(17.4)
Interest expense related to lease liabilities
30.1
Repayment of lease liabilities (188.4)
At 31 December 2020
541.4
John Wood Group PLC
Annual Report and Accounts 2021
175
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174
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
11 Leases
(continued)
The Group has inance leases liabilities totalling $13.5m (2020: $21.1m) in addition to the IFRS 16 lease liabilities in respect of leases
previously classiied as operating leases under IAS 17.
A maturity analysis of the Group’s total lease liability is shown below:
2021
$m
2020
$m
Current lease liability
118.3
133.4Non-current lease liability
331.5
408.0Total lease liability
449.8
541.4
The following table shows the breakdown of lease expense between amounts charged to operating proit and amounts charged to inance
costs.
$m
$m
Depreciation charge for right of use assets
Property
85.1
103.0
Plant and equipment
16.8
22.4Charged to operating proit 101.9
125.4
Interest expense related to lease liabilities
20.3
30.1
Interest income on lease investment
-
(1.1)Charge to proit/(loss) before taxation for leases
122.2
154.4
The Group leases real estate, including land, buildings and warehouses, machinery/equipment, vehicles and IT equipment. The right
of use assets generate cash lows as part of the cash generating units disclosed in note 9. The majority of the lease liability relates
to real estate with leases generally entered into for ixed periods of up to ive years, unless of strategic importance to the Group.
Some leases have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide
range of terms and conditions. The lease agreements do not impose any covenants other than the security interests in the leased
assets that are held by the lessor. Leased assets are not used as security for borrowing purposes.
The Group recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially
measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain
remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not
paid at the commencement date, discounted using the Group’s incremental borrowing rate (“IBR”).
The lease liability is subsequently increased by the interest cost on the lease liability and reduced by the lease payment made. It is
remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the assessment
of whether an extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be
exercised.
The Group has applied judgement to determine the lease term for some lease contracts in which it is a lessee that includes renewal
options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which may
signiicantly affect the amount of lease liabilities and right of use assets recognised.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is
generally the case for leases in the Group, the Group’s IBR is used. The IBR is the rate that the individual lessee would have to pay
to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with
similar terms, security and conditions.
12 Investment in joint ventures and other investments
The Group operates a number of joint ventures companies, the most signiicant of which are its turbine JV’s, EthosEnergy Group
Limited and RWG (Repair & Overhauls) Limited. The Group considers these to be joint arrangements on the basis that two or
more parties have joint control, which is deined as the contractually agreed sharing of control and exists only when decisions
about the relevant activities of the joint arrangement require the unanimous consent of the parties sharing control. The Group
has a 51% shareholding in EthosEnergy, a provider of rotating equipment services and solutions to the power, oil and gas and
industrial markets. EthosEnergy is domiciled and headquartered in Aberdeen, Scotland. The Group has a 50% shareholding in RWG,
a provider of repair and overhaul services to the oil and gas, power generation and marine propulsion industries. RWG is based in
Aberdeen, Scotland.
The assets, liabilities, income and expenses of the EthosEnergy and RWG are shown below. The inancial information below has
been extracted from the management accounts for these entities.
EthosEnergy (100%) RWG (100%)
2021
$m
2020
$m
2021
$m
2020
$m
Non-current assets
121.7
126.865.7
70.5
Current assets
517.9
465.7
155.3126.6
Current liabilities
(335.9)
(293.8)(94.2)
(75.0)Non-current liabilities
(66.9)
(76.2)
(6.8)(6.1)
Net assets 236.8
222.5
120.0
116.0
Wood Group share
120.8
113.560.0
58.0Accumulated impairments and other adjustments
(70.8)
(67.2)-
-Wood Group investment
50.0
46.3
60.0
58.0
Revenue
832.7
783.2237.9
216.3
Cost of sales
(701.4)
(656.5)(170.9)
(160.2)Administrative expenses
(103.3)
(96.8)
(32.7)
(31.4)Exceptional items
-
(12.2)-
-Operating proit 28.0
17.7
34.324.7
Finance expense
(6.1)
(5.9)
(0.8)
(0.8)
Proit before tax
21.9
11.8
33.5
23.9Tax
(8.5)
3.7
(7.1)
(3.6)
Post-tax proit from joint ventures 13.4
15.5
26.420.3
Wood Group share 6.8
7.9
13.210.2
Cash and cash equivalents amounted to $77.5m (2020: $71.7m) and $8.2m (2020: $4.3m) for EthosEnergy and RWG respectively.
Depreciation amounted to $16.6m (2020: $16.9m) and $4.3m (2020: $4.2m) for EthosEnergy and RWG respectively.
Amortisation amounted to $1.0m (2020: $1.0m) and $2.5m (2020: $2.8m) for EthosEnergy and RWG respectively.
EthosEnergy’s net borrowings at 31 December 2021 amounted to $37.5m (2020: $43.3m).
RWG had net debt at 31 December 2021 of $1.8m (2020: net cash $5.6m).
The aggregate carrying amount of the Group’s other equity accounted joint ventures, which individually are not material, amounted
to $59.7m at 31 December 2021 (2020: $62.9m).
John Wood Group PLC
Annual Report and Accounts 2021
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176
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
12 Investment in joint ventures and other investments
(continued)
The Group’s share of its joint venture income and expenses is shown below.
2021
$m
2020
$m
Revenue
753.1
798.2
Cost of sales
(624.9)
(663.5)Administrative expenses
(81.4)
(84.8)
Exceptional items
-
(8.0)
Operating proit 46.8
41.9
Net inance expense
(3.6)
(3.5)
Proit before tax
43.2
38.4
Tax
(11.7)
(4.8)
Share of post-tax proit from joint ventures 31.5
33.6
The movement in investment in joint ventures is shown below
2021
$m
2020
$m
At 1 January
168.7
168.3
Exchange movements on retranslation of net assets
0.3
0.5
Share of proit after tax
31.5
33.6Dividends received
(26.3)
(29.6)Impairment of joint ventures
-
(0.7)
Disposals (note 30)
(4.5)
(3.4)
At 31 December
169.7
168.7
The joint ventures have no signiicant contingent liabilities to which the Group is exposed, nor has the Group any signiicant
contingent liabilities in relation to its interest in the joint ventures.
The $4.5m disposal relates to movements on a joint venture investment in the year and other non-core joint venture disposals
completed during 2021.
A full list of subsidiary and joint venture entities is included in note 37.
Other investments
Other investments of $75.9m (2020: $79.8m) relate to the US SERP deined contribution scheme referred to in note 32. The SERP
invests in a mixture of equities, bonds and money market funds as part of a pension arrangement for US based employees. The
liabilities of the SERP are included in non-current liabilities (see note 18).
13 Inventories
2021
$m
2020
$m
Materials
3.7
3.9
Work in progress
0.3
0.1
Finished goods and goods for resale
11.9
7.9
15.9
11.9
14 Trade and other receivables
2021
$m
2020
$m
Trade receivables
805.5
741.7
Less: provision for impairment of trade receivables
(75.9)
(94.8)
Trade receivables – net
729.6
646.9
Gross amounts due from customers
628.1
638.6
Prepayments
105.8
106.8Amounts due from joint ventures
13.1
18.0
Asbestos related insurance recoveries
13.5
18.8Research and development credits
119.1
102.7
Other receivables
182.1
166.8
Trade and other receivables – current 1,791.3
1,698.6
Long term receivables – asbestos related insurance recoveries
34.0
61.9
Long term receivables – other
73.5
125.1Total receivables 1,898.8
1,885.6
As at 31 December 2021, the Group had received $200.0m (2020: $190.0m) of cash relating to a non-recourse inancing
arrangement with one of its banks. An equivalent amount of trade receivables was derecognised on receipt of the cash. At 31
December 2021, $79.4m (2020: $19.7m) had been received from customers in the normal course of business in relation to the same
amounts received from the factor. This $79.4m (2020: $19.7m) is due to be paid over to the factor and is included in trade payables.
The beneit of this arrangement of $200m is included within cash generated from operations.
Included within other long-term receivables of $73.5m (2020: $125.1m) are contract assets of $66.5m (2020: $111.3m) in relation to
the Aegis contract. Refer to note 20 for further details of the additional provisions recognised in respect of this contract.
Financial assets
2021
$m
2020
$m
Restricted cash
-
12.5Derivative inancial instruments (note 19)
7.7
8.27.7
20.7
The restricted cash balance in 2020 represents cash held in jurisdictions where there is insuficient liquidity in the local market
to allow for immediate repatriation. Management considers it appropriate to include the restricted cash balance in the Group’s
net debt igure (see note 29) on the basis that it meets the deinition of cash, albeit is not readily available to the Group. In 2021,
restricted cash balances are shown within cash and cash equivalents (note 15).
John Wood Group PLC
Annual Report and Accounts 2021
179
John Wood Group PLC
Annual Report and Accounts 2021
178
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
14 Trade and other receivables
(continued)
The Group’s trade receivables balance is shown in the table below.
31 December 2021
Trade
receivables -
Gross
$m
Provision for
impairment
$m
Trade
receivables –
Net
$m
Receivable
days
Projects
318.1 (43.7)
274.4
73Operations
162.2 (8.2)
154.0
47
Consulting
266.8
(8.8)
258.076
Investment Services
58.4 (15.2) 43.2
49
Total Group 805.5 (75.9) 729.6
69
31 December 2020
Trade
receivables -
Gross
$m
Provision for
impairment
$m
Trade
receivables –
Net
$m
Receivable
days
Projects 278.6
337.4
(58.8)61
Operations
77.2
(7.3)69.9
35Consulting 86
272.1
261.8(10.3)
Investment Services 55.0 (18.4) 36.6 55
Total Group
741.7
(94.8)
646.9
66
Receivable days are calculated by allocating the closing trade receivables and gross amounts due from customers balances to
current revenue. A receivable days calculation of 69 indicates that closing trade receivables represent on average the most recent 69
days of revenue.
Receivable days for Investment Services has been adjusted to exclude the impact of the Aegis project for both 2021 and 2020. The
Total Group Receivable days relects all Group activity including Aegis.
The ageing of the provision for impairment of trade receivables is as follows:
2021
$m
2020
$m
Up to 3 months
0.8
3.9
Over 3 months
75.1
90.9
75.9
94.8
14 Trade and other receivables
(continued)
The movement on the provision for impairment of trade receivables is as follows:
2021
Projects
$m
Operations
$m
Consulting
$m
Investment
Services
$m
Total
$m
At 1 January
58.8 18.4
7.3
10.394.8
Exchange movements
(2.8)
(0.1) (0.1)
(3.7)(0.7)
Reclassed during year
Tran
- -
(0.1)
1.0
0.9
Transfers during year
Tran
(0.1) 0.1 (0.1)
-
(0.1)Provided during year
3.0
2.2
0.30.1
5.6
Utilised during year
(2.4)
(0.9)
(1.0)
(3.6)
(7.9)
Released during year
(12.8)
(0.4) (0.3)
(0.2) (13.7)
At 31 December 43.7 8.2 8.8 15.2 75.9
2020
At 1 January
49.6
9.1
13.6 18.8
91.1
Exchange movements
3.1 0.1
0.3 0.6
4.1Transfers during year
2.3
(2.9)
-(0.1)
0.7
Provided during year
8.0
8.9
- - 16.9
Utilised during year
(0.4)
(2.3) (2.8)
(0.1)
-Released during year
(3.8) (6.5) (3.5) (1.7) (15.5)
Disposed during year
-
0.9
-0.1
1.0
At 31 December 58.8 18.4
7.3
10.394.8
The other classes within trade and other receivables do not contain impaired assets.
Included within gross trade receivables of $805.5m above (2020: $741.7m) and gross amounts due from customers of $628.1m
(2020: $638.6m) are contract assets of $203.4m (2020: $240.4m) which were past due. These relate to customers for whom there
is no recent history or expectation of default. The ageing analysis of these contract assets is as follows:
2021
$m
2020
$m
Up to 3 months overdue
89.6
93.4
Over 3 months overdue
113.8
147.0
203.4
240.4
The above analysis excludes retentions relating to contracts in progress of $90.5m (2020: $106.4m).
15 Cash and cash equivalents
2021
$m
2020
$m
Cash at bank and in hand
480.0
565.9Short-term bank deposits
10.5
19.1
Restricted cash
12.5
-503.0
585.0
Cash at bank and in hand at 31 December 2021 includes $240.4m (2020: $234.9m) that is part of the Group’s cash pooling
arrangements and both cash and borrowings are grossed up by this amount in the inancial statements.
The effective interest rate on short-term deposits at 31 December 2021 was 2.8% (2020: 2.3%) and these deposits have an average
maturity of 20 days (2020: 11 days).
The restricted cash balance represents cash held in jurisdictions where there is insuficient liquidity in the local market to allow for
immediate repatriation. Management considers it appropriate to include the restricted cash balance in the Group’s net debt igure
(see note 29) on the basis that it meets the deinition of cash, albeit is not readily available to the Group. The 2020 comparative
was included in inancial assets (note 14).
John Wood Group PLC
Annual Report and Accounts 2021
181
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Annual Report and Accounts 2021
180
Strategic report Governance
Financial statements
Financial statements
Notes to the inancial statements continued
16 Trade and other payables
2021
$m
2020
$m
Trade payables
856.6
804.8Gross amounts due to customers
87.5
203.2
Deferred income
115.0
69.7
Other tax and social security payable
58.3
54.1
Accruals
483.1
480.7
Derivative inancial instruments
3.7
2.9
Amounts due to joint ventures
0.4
1.1
Asbestos related payables
54.5
57.9
Other payables
339.5
345.3
1,998.6
2,019.7
Trade payables includes $79.4m (2020: $19.7m) relating to cash received from customers which is due to be paid over to the factor.
Gross amounts due to customers included above represent payments on account received in excess of amounts due from customers
on ixed price contracts.
Accruals includes amounts due to suppliers and sub-contractors that have not yet been invoiced, unpaid wages, salaries and
bonuses.
Other payables includes project related and other liabilities which include the amounts due under the investigation which was
concluded in 2021 of $40.6m.
17 Borrowings
2021
$m
2020
$m
Bank loans and overdrafts due within one year or on demand
Unsecured
246.9
238.3
Senior loan notes
Unsecured
35.0
77.0
Total current borrowings 281.9
315.3
Non-current bank loans
Unsecured
845.8
493.0
Senior loan notes
Unsecured
768.3
803.5Total non-current borrowings 1,614.1
1,296.5
Borrowings of $240.4m (2020: $234.9m) that are part of the Group’s cash pooling arrangements and are netted against cash for
internal reporting purposes are grossed up in the short-term borrowings igure above.
Bank overdrafts are denominated in a number of currencies and bear interest based on LIBOR or the relevant foreign currency
equivalent.
During the year, the Group completed planned debt reinancing which includes a $600.0m UK Government backed term-loan
maturing in July 2026 and a new $1,200.0m Revolving Credit Facility (‘RCF’) maturing in October 2026. These new facilities extend
the maturity proile of the Group’s debt facilities by replacing the previous RCF facility of $1,514m which was due to fully mature in
May 2023 and $300m of bilateral loan facilities which were originally due to mature in May 2022 but repaid in 2021 following the
receipt of the $600m UK Government backed term loan.
The Group had total facilities of $2,758.7m as at 31 December 2021, which comprises of a $600.0m term loan maturing in July
2026, $1,200.0m of Revolving Credit Facility maturing in October 2026, $803.3m of senior loan notes in the US private placement
market with varying maturities, of which $35.0m is payable in 2022, and $155.4m of other banking facilities.
Of the non-current borrowings of $1,614.1m, $20.3m is denominated in sterling, $164.9m in Euros and the balance in US dollars.
17 Borrowings
(continued)
The Group’s principal borrowing facilities at 31 December 2021 are set out in the table below.
Facility
Total available
$m
Drawn at 31
December 2021
$m
Undrawn at 31
December 2021
$m Repayable
Term loan
600.0 600.0
-
July 2026Revolving credit facility
1,200.0
264.9
935.1October 2026
Senior loan notes
803.3 803.3 -
Various datesOther facilities
155.4 6.5 148.9
Various dates
Unamortised fees
- (19.1)
19.1
N/A
2,758.7 1,655.6 1,103.1
The above table excludes borrowings of $240.4m that are part of the Group’s cash pooling arrangements and are offset by
equivalent cash balances.
The Group has $803.3m (2020: $880.5m) of unsecured senior loan notes issued in the US private placement market. The notes
mature at varying dates between 2022 and 2031 as shown in the table below. Interest is payable at an average rate of 4.21%
(2020: 4.13%).
Repayable
2021
$m
2020
$m
August 2021
-
30.0
November 2021
-
47.0
July 2022
35.0
35.0July 2024
25.0
25.0August 2024
120.0
120.0
November 2024
50.0
50.0
July 2026
127.3
127.5
August 2026
128.0
128.0February 2027
40.0
40.0
February 2029
100.0
100.0
July 2029
129.5
129.5July 2031
48.5
48.5803.3
880.5
The effective interest rates on the Group’s bank loans and overdrafts at the balance sheet date were as follows:
2021
%
2020
%
US dollar
1.79
0.78
Sterling
1.40
1.25Euro
1.11
1.15
Australian dollar
0.55
0.55The carrying amounts of the Group’s borrowings, including those held within pooling arrangements, are denominated in the
following currencies:
2021
$m
2020
$m
US Dollar
1,537.3
1,477.7
Sterling
69.0
122.2Euro
282.1
3.9
Australian dollar
0.7
0.7
Other
6.9
7.3
1,896.0
1,611.8
The Group is required to issue tender bonds, performance bonds, retention bonds, advance payment bonds and standby letters of
credit to certain customers. Management have assessed that the possibility of these being triggered is remote. At 31 December
2021, the Group’s bank facilities relating to the issue of bonds, guarantees and letters of credit amounted to $1,292.9m (2020:
$1,542.8m). At 31 December 2021, these facilities were 65% utilised (2020: 63%).
John Wood Group PLC
Annual Report and Accounts 2021
183
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Annual Report and Accounts 2021
182
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
17 Borrowings
(continued)
Borrowing facilities
The Group has the following undrawn borrowing facilities available at 31 December:
2021
$m
2020
$m
Expiring within one year
148.9
181.8
Expiring between one and two years
-
209.0Expiring between two and ive years
954.2
1,348.01,103.1
1,738.8
All undrawn borrowing facilities are loating rate facilities. The facilities expiring within one year are annual facilities subject to
review at various dates during 2022. The Group was in compliance with its bank covenants throughout the year.
A reconciliation of movements of borrowings and lease liabilities to cash lows arising from inancing activities is presented in the
table below.
Short term
borrowings
$m
Long term
borrowings
$m
Lease liabilities
$m
Total
$m
Balance 1 January 2021
315.3 1,296.5
541.4
2,153.2Changes from inancing cash lows
Proceeds from long-term borrowings
- 329.3 - 329.3
Repayment of short-term borrowings
(33.5) - - (33.5)
Payment of lease liabilities (note 11)
- - (167.6) (167.6)
Total changes from inancing activities
(33.5) 329.3 (167.6) 128.2
Effects of changes in foreign exchange rates (note 29)
0.1
0.4
(4.2) (3.7)
Other changes
New leases (note 11)
- -
59.9 59.9
Interest expense (note 3)
- 87.5 20.3 107.8
Interest paid
- (87.5) - (87.5)
Other movements
- (12.1) - (12.1)
Total liability other changes
- (12.1) 80.2 68.1
Balance at 31 December 2021 281.9 1,614.1
449.8
2,345.8Short term
borrowings
$m
Long term
borrowings
$m
Lease liabilities
$m
Total
$m
Balance 1 January 2020 1,752.7 1,573.2 583.3 3,909.2
Changes from inancing cash lows
Repayment of long-term borrowings - (277.5) - (277.5)
Repayment of short-term borrowings (1,438.4) - - (1,438.4)
Payment of lease liabilities (note 11) - - (188.4) (188.4)
Total changes from inancing activities (1,438.4) (277.5) (188.4) (1,904.3)
Effects of changes in foreign exchange rates (note 29)
1.0
11.41.1
9.3
Other changes
New leases (note 11) - -
107.1 107.1
Interest expense (note 3) - 86.5
30.1
116.6Interest paid - (86.5) - (86.5)
Other movements -
(0.3)
-(0.3)
Total liability other changes - 136.9
(0.3)
137.2Balance at 31 December 2020
315.3 1,296.5
541.4
2,153.218 Other non-current liabilities
2021
$m
2020
$m
Derivative inancial instruments
8.1
16.9Other payables
191.7
121.2199.8
138.1
Other payables include $79.8m in respect of the regulatory investigations, which were closed out during the irst half of 2021 and
represents payments due between 2023 and 2024, $75.9m (2020: $79.8m) relating to the US SERP pension arrangement referred
to in note 32 and unfavourable leases of $8.6m (2020: $17.3m). Unfavourable lease liabilities represent non-lease components, such
as facilities costs which are not included within the IFRS 16 lease liability.
19 Financial instruments
The Group’s activities give rise to a variety of inancial risks: market risk (including foreign exchange risk and cash low interest rate
risk), credit risk and liquidity risk. The Group’s overall risk management strategy is to hedge exposures wherever practicable in order
to minimise any potential adverse impact on the Group’s inancial performance.
Risk management is carried out by the Group Treasury department in line with the Group’s Treasury policies. Group Treasury,
together with the Group’s business units identify, evaluate and where appropriate, hedge inancial risks. The Group’s Treasury
policies cover speciic areas, such as foreign exchange risk, interest rate risk, use of derivative inancial instruments and investment
of excess cash.
Where the Board considers that a material element of the Group’s proits and net assets are exposed to a country in which there is
signiicant geo-political uncertainty a strategy is agreed to ensure that the risk is minimised.
(a) Market risk
(i) Foreign exchange risk
The Group is exposed to foreign exchange risk arising from various currencies. The Group has subsidiary companies whose revenue
and expenses are denominated in currencies other than the US dollar. Where possible, the Group’s policy is to eliminate all
signiicant currency exposures at the time of the transaction by using inancial instruments such as forward currency contracts.
Changes in the forward contract fair values are booked through the income statement, except where hedge accounting is used in
which case the change in fair value is recorded in equity.
Hedging of foreign currency exchange risk – cash low hedges
The notional contract amount, carrying amount and fair values of forward contracts and currency swaps designated as cash low
hedges at the balance sheet date are shown in the table below.
2021
Notional
contract
amount
$m
2020
Notional
contract
amount
$m
2021
Carrying
amount and
fair value
$m
2020
Carrying
amount and
fair value
$m
Current assets
99.4
66.61.3
1.8Current liabilities
(52.5)
(50.1)(1.0)
(0.6)
A net foreign exchange loss of $0.9m (2020: $1.6m) was recognised in the hedging reserve as a result of fair value movements on
forward contracts and currency swaps designated as cash low hedges.
Hedging of foreign currency exchange risk – fair value through income statement
The notional contract amount, carrying amount and fair value of all other forward contracts and currency swaps at the balance
sheet date are shown in the table below.
2021
Notional
contract
amount
$m
2020
Notional
contract
amount
$m
2021
Carrying
amount and
fair value
$m
2020
Carrying
amount and
fair value
$m
Current assets
583.2
458.96.4
6.4Current liabilities
(411.9)
(189.4)
(2.7)
(2.3)The Group’s largest foreign exchange risk relates to movements in the sterling/US dollar exchange rate. Movements in the sterling/
US dollar rate can impact the translation of sterling proit earned in the UK and the translation of sterling denominated net assets.
A weakening of the pound has a negative impact on translation of UK companies’ proits and net assets. Sterling denominated
trading proits in the UK are offset by the Group’s corporate overhead and a 10% change in the sterling/dollar rate would result in a
change to Adjusted EBITDA of less than 1%. A 10% change in the sterling/dollar rate would impact net assets by less than 1%. 10%
has been used in these calculations as it represents a reasonable possible change in the sterling/US dollar exchange rate. The Group
also has foreign exchange risk in relation a number of other currencies, such as the Australian dollar, the Canadian dollar and the Euro.
John Wood Group PLC
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Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
19 Financial instruments
(continued)
(ii) Interest rate risk
The Group inances its operations through a mixture of retained proits and debt. The Group borrows in the desired currencies at
a mixture of ixed and loating rates of interest and then uses interest rate swaps to generate the desired interest proile and to
manage the Group’s exposure to interest rate luctuations. At 31 December 2021, 52% (2020: 65%) of the Group’s borrowings were
at ixed rates after taking account of interest rate swaps. The Group is also exposed to interest rate risk on cash held on deposit.
The Group’s policy is to maximise the return on cash deposits and where possible and deposit cash with a inancial institution with a
credit rating of BBB+ or better.
Hedging of interest rate risk – cash low hedges
The notional contract amount, carrying amount and fair value of interest rate swaps designated as cash low hedges at the
balance sheet date are shown in the table below.
2021
Hedged
amount
$m
2020
Hedged
amount
$m
2021
Carrying
amount and
fair value
$m
2020
Carrying
amount and
fair value
$m
Interest rate swaps
250.0
250.0
(8.1)
(16.9)
A net gain of $8.8m (2020 loss: $6.4m) was recognised in the hedging reserve as a result of fair value movements on interest rate
swaps designated as cash low hedges.
In 2021, the Group replaced its previous Revolving Credit Facility (‘RCF’) with a new $1,200.0m RCF maturing in October 2026. The
variable interest rate terms of the previous RCF were based on LIBOR whilst the new interest rate terms under the new RCF are
based on the Risk-Free Interest rates for USD and GBP drawdowns.
The interest rate swaps are put in place to hedge against movements in the variable rate on the RCF. The variable rate terms on
the RCF have transitioned from a three-month USD LIBOR to a three-month cumulative compound SOFR rate as a result of the
reinancing. Therefore, the variable interest rate terms of the interest rate swaps were modiied to match the new variable interest
rate terms from 31 December 2021.
The new RCF debt matures in October 2026 and the interest rate swap matures in June 2023. It is therefore assumed that the
hedge will be effective for the full period to June 2023.
If average interest rates had been 1% higher or lower during 2021 (2020: 1%), post-tax proit for the year would have been $6.3m
lower or higher respectively (2020: $6.3m). 1% has been used in this calculation as it represents a reasonable possible change in
interest rates.
(iii) Price risk
The Group is not exposed to any signiicant price risk in relation to its inancial instruments.
(b) Credit risk
The Group’s credit risk primarily relates to its trade receivables. The Group assumes that the credit risk on a inancial asset has
increased signiicantly if it is more than 6 months past due and considers a inancial asset to be in default when the inancial asset
is more than 12 months past due. Responsibility for managing credit risk lies within the businesses with support being provided by
Group and divisional management where appropriate.
The credit risk associated with customers is considered as part of each tender review process and is addressed initially through
contract payment terms. Trade inance instruments such as letters of credit, bonds, guarantees and credit insurance are used to
manage credit risk where appropriate. Credit control practices are applied thereafter during the project execution phase. A right to
interest and suspension is normally sought in all contracts. There is signiicant management focus on customers that are classiied
as high risk in the current challenging market although the Group had no material write offs in the year.
The Group’s major customers are typically large companies which have strong credit ratings assigned by international credit rating
agencies. Where a customer does not have suficiently strong credit ratings, alternative forms of security such as the trade inance
instruments referred to above may be obtained.
The Group uses the simpliied provision matrix when calculating expected credit losses on inancial assets. The provision matrix
is based on historical default rates and is adjusted for forward looking estimates. The historical default rate is determined by
comparing actual contract write offs against revenue recognised over each of the prior ive years. The average write off over
the historical period can be applied to current year revenue. The forward-looking assessment also considers post-year end cash
collection, country risk scoring, customer disputes and speciic inancial uncertainties.
19 Financial instruments
(continued)
Management review trade receivables based on receivable days calculations to assess performance. A table showing trade
receivables and receivable days is provided in note 14. Receivable days calculations are not provided on non-trade receivables as
management do not believe that this information is a relevant metric.
The maximum credit risk exposure on cash and cash equivalents and bank deposits (more than three months) at 31December2021
was $503.0m (2020: $585.0m). The Group treasury department monitors counterparty exposure on a global basis to avoid any
over exposure to any one counterparty.
The Group’s policy is to deposit cash at institutions with a credit rating of at least BBB+. 100% of cash held on deposit at 31
December 2021 was held with such institutions.
(c) Liquidity risk
The Group’s policy is to ensure the availability of an appropriate amount of funding to meet both current and future forecast
requirements consistent with the Group’s budget and strategic plans. The Group will inance operations and growth from its
existing cash resources and the $1,103.1m undrawn portion of the Group’s committed banking facilities. The 2021 average net debt
(excluding leases) was $1,680.0m (2020: $1,597.8m). The cash balance and undrawn portion of the Group’s committed banking
facilities can luctuate throughout the year. Around the covenant remeasurement dates of 30 June and 31 December the Group’s
net debt is typically lower than these averages due to a combination of factors including a strong focus on collection of receipts
from customers and the timing of payments to suppliers. Although revenue is typically weighted towards the second half of the
year it is usually higher in June than in December, which means the level of working capital required is typically higher at the end of
June and net debt is typically lower by the end of December.
At 31 December 2021, 93% (2020: 94%) of the Group’s principal borrowing facilities (including senior loan notes) were due to
mature in more than one year. Based on the Group’s latest forecasts the Group has suficient funding in place to meet its future
obligations.
The Group’s total bank facilities comprise of a $600.0m term loan maturing in July 2026 and a $1,200.0m revolving credit facility
which matures in October 2026.
The Group has $803.3m of unsecured senior loan notes issued in the US private placement market. The notes mature in various
tranches between July 2022 and 2031.
(d) Capital risk
The Group seeks to maintain an optimal capital structure by monitoring its ratio of net debt to EBITDA, its interest cover and its
gearing ratio.
The ratio of net debt to Adjusted EBITDA at 31 December 2021 was 3.3 times (2020: 2.1 times). This ratio is calculated by dividing
net debt before leases by Adjusted EBITDA, excluding the impact of IFRS 16.
Interest cover is calculated by dividing Adjusted EBITDA, excluding the impact of IFRS 16, by net inance expense and was 4.5 times
for the year ended 31 December 2021 (2020: 5.5 times).
Gearing is calculated by dividing net debt, before leases, by equity attributable to owners of the parent. Gearing at 31 December
2021 was 34.1% (2020: 24.3%).
Deferred and contingent consideration
Deferred and contingent consideration is payable on the acquisition of businesses based on earn out arrangements and is initially
recognised at fair value. The amount payable is dependent on the post-acquisition proits of the acquired entities and the provision
made is based on the Group’s estimate of the likely proits of those entities based on the relevant Acquisition Approval Paper
submitted to the Group Board. Where actual proits are higher or lower than the Group’s estimate and the amount of contingent
consideration payable is consequently different to the amount estimated then the variance is charged or credited to the income
statement. Where deferred and contingent consideration is payable after more than one year the estimated liability is discounted
using an appropriate rate of interest. The fair value of contingent consideration is not based on observable market data and as
such the valuation method is classiied as level 3 in the fair value hierarchy. The process for valuation is consistently applied to all
acquisitions.
The table below presents the changes in level 3 inancial instruments during the year:
Contingent consideration arising from business combinations
2021
$m
2020
$m
At 1 January
-
20.0
Exchange movements
-
0.8
Interest relating to discounting of contingent consideration
-
0.2
Payments during the year
-
(21.0)
At 31 December -
-
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Annual Report and Accounts 2021
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Annual Report and Accounts 2021
186
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
19 Financial instruments
(continued)
Financial liabilities
The table below analyses the Group’s inancial liabilities into relevant maturity groupings based on the remaining period from the
balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash
lows which are not usually closed out before contractual maturity.
At 31 December 2021
Less than
1 year
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
Over 5
years
$m
Borrowings
333.8 51.4 1,443.6 356.1
Trade and other payables
1,935.7 - - -
Lease liabilities
109.2 154.3 131.5 128.8
Other non-current liabilities
- 26.9 172.6 -
At 31 December 2020
Borrowings 357.2 399.3 458.7 633.6
Trade and other payables 1,965.6 - - -
Lease liabilities 146.3 124.1 200.3 150.5
Other non-current liabilities - 41.3
96.7
-Fair value of non-derivative inancial assets and inancial liabilities
The fair value of short-term borrowings, trade and other payables, trade and other receivables, inancial assets, 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.
The fair value of non-current bank borrowings as at 31 December 2021 was $773.4m (book value $845.8m) (2020: $478.8m, book
value $493.0m). The fair value of the US Private Placement debt at 31 December 2021 was $809.2m (book value $803.3m) (2020:
$883.9m, book value $880.5m).
Fair values (excluding the fair value of assets and liabilities classiied as held for sale) are determined using observable market prices
(level 2 as deined by IFRS 13 ‘Fair Value Measurement’) as follows:
• The fair value of forward foreign exchange contracts is estimated by discounting the difference between the contractual forward
price and the current forward price for the residual maturity of the contract using a risk-free interest rate.
• The fair value of interest rate swaps is estimated by discounting estimated future cash lows based on the terms and maturity of
each contract and using market rates.
All derivative fair values are veriied by comparison to valuations provided by the derivative counterparty banks.
The Group determines whether transfers have occurred between levels in the hierarchy by reassessing categorisation (based on the
lowest level input that is signiicant to the fair value measurement as a whole) at the end of each reporting period. During the year
ended 31 December 2021 and 31 December 2020, there were no transfers into or out of level 2 fair value measurements.
20 Provisions
2021
Asbestos related
litigation
$m
Insurance and
property
$m
Litigation related
provisions
$m
Project related
provisions
$m
Total
$m
At 1 January 2021 403.7 105.0 333.0 100.9 942.6
Reclassiications (18.9) (1.6) (235.2)
(0.1)
(214.6)Utilised (42.5) (8.1) (65.2)
(0.4)
(14.2)Charge to income statement 6.3
9.1
60.80.7 44.7
Release of provisions (6.3) (25.7) (11.7) (22.0) (65.7)
Exchange movements (0.2) (2.1)
(0.3)
(1.7)0.1
At 31 December 2021 93.3 112.2 635.2
342.1
87.6Presented as
Current -
9.0 89.0
61.0
159.0Non-current 4.3 51.2 476.2
342.1
78.62020
At 1 January 2020 418.9 110.2 111.8 151.3 792.2
Reclassiications (1.5) 26.2 33.0
6.1
2.2Utilised (41.8) (75.2)
(2.9)
(27.1)(3.4)
Charge to income statement 226.8 18.0
27.8
6.8279.4
Release of provisions (1.3) (16.1) (90.3)
(4.8)
(68.1)Exchange movements 1.6
0.9
3.50.4 0.6
At 31 December 2020 403.7 105.0 333.0 100.9 942.6
Presented as
Current - 11.1 116.9 44.5 172.5
Non-current 403.7 93.9 216.1 56.4
770.1
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 iled 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 inancial position, its results and its
cash lows.
The Group expects these subsidiaries to be named as defendants in similar suits and that new claims will be iled in the future. For
purposes of these inancial 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 iled and an increase in the number of new claimants
• increases in legal fees or other defence costs associated with asbestos claims
• 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 31 December 2021 is based on estimated indemnity and defence costs
expected to be incurred to 2050. Management believe that any new claims iled after 2050 will be minimal.
John Wood Group PLC
Annual Report and Accounts 2021
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Annual Report and Accounts 2021
188
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
20 Provisions
(continued)
Asbestos related liabilities and assets recognised on the Group’s balance sheet are as follows:
2021
2020
US
$m
UK
$m
Total
$m
US
$m
UK
$m
Total
$m
Asbestos related provision
Gross provision 65.7 510.7
406.0 38.2
445.0444.2
Effect of discounting
(47.6)
-
(47.6)
(47.9)
(1.2)(49.1)
Net provision 358.4 38.2 396.6
397.1
64.5 461.6
Insurance recoveries
Gross recoveries
(13.1) (34.6)
(47.7)
(25.0)
(57.4)
(82.4)
Effect of discounting
0.2
-
0.2
0.6
1.1
1.7
Net recoveries
(12.9)
(34.6)(47.5)
(24.4) (56.3) (80.7)
Net asbestos related liabilities 345.5 3.6
349.1
372.7
8.2 380.9
Presented in accounts as follows
Provisions – non-current
Trade and other payables
Trade and other receivables
Long term receivables
342.1
54.5
(13.5)
(34.0)
403.7
57.9
(18.8)
(61.9)
349.1
380.9
A net interest charge of $6.3m (2020: $8.0m) representing the time value of money and a credit of $6.3m (2020: charge $17.9m),
of which $5.6m relates to the yield curve credit due to the increase in the 30-year US Treasury Bond rate in 2021 are included within
exceptional items since the movements in the provision are non-trading, can be large and are driven by market conditions which are
out with the Group’s control.
A summary of the Group’s US asbestos claim activity is shown in the table below:
Number of open claims
2021
Number
2020
Number
At 1 January
60,400
62,070
New claims
2,440
2,320Claims resolved
(5,350)
(3,990)At 31 December
57,490
60,400
Claims not valued in liability
(42,570)
(45,740)Open claims valued in liability at 31 December 14,920
14,660
Claims not valued in the liability include claims on certain inactive court dockets, claims over six years old that are considered
abandoned and certain other items.
Based on 2021 activity, the Group’s current forecast liabilities have been adjusted for payments made in 2021 of $41.2m and to
relect the impact of discounting. In 2021, the liability for asbestos indemnity and defence costs to 2050 was calculated at a gross
nominal amount of $444.2m (present value $396.6m), which brought the liability to a level consistent with our advisor’s reasonable
best estimate. The total asbestos-related liabilities are comprised of estimates for liabilities relating to open (outstanding) claims
being valued and the liability for future unasserted claims to 2050.
The estimate takes account of the following information and/or assumptions:
• number of open claims
• forecasted number of future claims
• estimated average cost per claim by disease type – mesothelioma, lung cancer and non-malignancies
The total estimated liability, which has been discounted for the time value of money, includes both the estimate of forecasted
indemnity amounts and forecasted defence costs. Total defence costs and indemnity liability payments are estimated to be
incurred through to 2050. The Group believes that it is likely that there will be some claims iled after 2050, however these are
projected to be minimal.
In the period from 2011 to 2021, the average combined indemnity and defence cost per resolved claim has been approximately $5k.
The average cost per resolved claim is increasing and management believe it will continue to increase in the future. A sensitivity
analysis on average indemnity settlement and defence costs is included in the table below.
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.
20 Provisions
(continued)
The following table sets out the sensitivities associated with a change in certain estimates used in relation to the US asbestos-
related liabilities:
Assumption
Impact on asbestos
liabilities (range)
$m
25% change in average indemnity settlement amount 50-60
25% change in forecasted number of new claims 50-60
25% change in estimated defence costs 40-50
In addition to the above, the impact on the income statement in the year is sensitive to changes in the discount rate used to
calculate the time value of money.
The Group has used the 30-year US Treasury Bond rate to discount its asbestos liabilities. The table below sets out the current year
charge associated with a 30-year rate alongside the charge that would have arisen had a 10 or a 20-year rate been used.
Duration
Rate as at 31 December
2021
Exceptional items
$m
10 year
1.52%
3.0
20 year
1.94% (6.5)
30 year (basis used) 1.90% (5.6)
A change of 0.1% in the 30-year US Treasury Bond rate would give rise to a change to the income statement charge/credit of
approximately $2.2m.
The Group’s subsidiaries have been effective in managing the asbestos litigation, in part, because the Group has access to historical
project documents and other business records going back more than 50 years, allowing it to defend itself by determining if the
claimants were present at the location of the alleged asbestos exposure and, if so, the timing and extent of their presence. In
addition, the Group has identiied and validated insurance policies issued since 1952 and has consistently and vigorously defended
claims that are without merit and settled meritorious claims for reasonable amounts.
The table below summarises the asbestos-related net cash impact for indemnity and defence costs and collection of insurance
proceeds:
2021
$m
2020
$m
Asbestos litigation, defence and case resolution payments
42.5
41.8Insurance proceeds
(13.5)
(14.0)
Net asbestos related payments
29.0
27.8
The Group expects to have a net cash outlow of approximately $35m as a result of asbestos liability indemnity and defence
payments in excess of insurance proceeds during 2022. This estimate assumes no new settlements with insurance companies and
no elections by the Group to fund additional payments. As the Group continues to collect cash from previous insurance settlements,
the asbestos-related insurance receivable recorded on our consolidated balance sheet will decrease.
The Group has discounted the expected future cash lows with respect to the asbestos related liabilities and the expected insurance
recoveries using discount rates determined by reference to appropriate risk free market interest rates.
Insurance and property provisions
The Group has liabilities in relation to its captive insurance companies of $55.3m (2020: $71.0m) and for property dilapidations of
$32.3m (2020: $34.0m).
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 dilapidations relate 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 outlows 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 identiied, 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 outlow will
be required.
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Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
20 Provisions
(continued)
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 materially from the
amounts that are recognised in the inancial statements. Litigation related provisions include estimated balances related to
exposures acquired with Amec Foster Wheeler, which were originally measured at fair value on acquisition as required by IFRS 3
even though the relating possible cash outlow was not deemed to be probable. These liabilities continue to be recognised until the
liability is settled, cancelled or expired at the higher of the fair value initially recorded or the amount recognised in accordance with
IAS 37.
Investigations
In March 2021, WGPSN (Holdings) Ltd, a subsidiary of the Company reached a civil settlement with Scotland’s Civil Recovery Unit
in relation to the historical engagement of Unaoil by a legacy joint venture and potential unlawful conduct. The civil settlement
relates to conduct in Kazakhstan in the period between 2008 and 2010. The settlement concludes the issue which started after
the Group self-reported, having conducted a thorough internal investigation, before cooperating fully with the Crown Ofice and
Procurator Fiscal Service (“COPFS”) and the Civil Recovery Unit throughout their investigation. Under the terms of the settlement,
Wood has agreed to pay approximately $9m to the COPFS, of which around $3m was paid during 2021 and the balance will be paid
in instalments in 2022 and 2023.
In June and July 2021, the Group entered into agreements with authorities in the UK, the US, and Brazil to resolve their respective
bribery and corruption investigations into the past use of third parties in the legacy Amec Foster Wheeler business. Under the
terms of these agreements, the Group will pay compensation, disgorgement and prejudgment interest, ines and penalties of
approximately $177m, of which around $62m was paid in July 2021 and the remaining balance will be paid in instalments in 2022,
2023 and 2024. At the same time, the Group also provided for associated legal fees of approximately $12m, which were fully utilised
during 2021.
In the UK, the Company’s subsidiary, Amec Foster Wheeler Energy Limited (“AFWEL”) entered into a three-year deferred
prosecution agreement with the Serious Fraud Ofice (“SFO”) relating to the historical use of third-party agents for bribery and
corruption in Nigeria, Saudi Arabia, Malaysia, India and Brazil over the period 1996 to 2014.
In the US, AFWEL entered into a three-year deferred prosecution agreement with the Department of Justice (“DOJ”) and another
subsidiary of the Company, Amec Foster Wheeler Limited (“AFWL”) entered into a Cease and Desist Order with the Securities and
Exchange Commission (“SEC”). In Brazil, AFWEL and Amec Foster Wheeler Americana Limitada entered into 18-month leniency
agreements with the Ministério Público Federal (”MPF”), the Comptroller General’s Ofice (“CGU”) and the Solicitor General
(“AGU”). The agreements in the US and Brazil all related to the historical use of third-party agents for bribery and corruption in
connection with the award of a project in Brazil.
In light of the above, the Group has reclassed the provision recognised in December 2020 to Trade and other payables of which the
current portion is $40.6m and the non-current portion of $79.8m is included in other non-current liabilities (note 18).
Chemical plant litigation
In 2013, one of Amec Foster Wheeler plc’s subsidiaries was contracted to engineer, procure and construct a chemical plant for a
client in Texas. The cost of the project exceeded the client’s budget which led to the client partially terminating the contract in
December 2015, before terminating the remainder of the contract and commencing a lawsuit in Texas against the subsidiary and
also Amec Foster Wheeler plc in September 2016. The client seeks recovery of actual damages, plus punitive damages, interest and
attorney’s fees for breach of contract and warranty, gross negligence and fraud. The alleged actual damages total $761.8m, which
include an alleged $317m in lost revenue from delayed commercial operation.
The Group believes that the claims lack legal and factual merit but provided for an amount representing the fair value of the
exposure upon acquisition of Amec Foster Wheeler. The estimate that the subsidiary provided was in connection with the client’s
initial request for a lump sum bid and highly conditioned. The contract that was ultimately signed, and that governs the dispute, is
a reimbursable cost plus ixed fee contract, with no guaranteed price or schedule, wherein the client assumed joint responsibility for
management of the work and development of the project schedule. Liability for consequential damages is barred, except in the case
of wilful misconduct. Except for gross negligence, wilful misconduct, and warranty claims, overall liability is capped at 10 percent
of the contract price (or approximately $100 million). The Group has denied the claims and is vigorously defending the lawsuit. The
trial of the lawsuit is scheduled to commence in late April 2022 and is expected to continue into the third quarter of this year. It is
premature to predict the ultimate outcome of the matter.
Other litigations
Other items relating to litigation are included within the overall provision, none of which are individually material.
20 Provisions
(continued)
Project related provisions
The Group has numerous provisions relating to the projects it undertakes for its customers.The value of these provisions relies on
speciic 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. The project was around 90% complete by value at 31 December 2021 and 93.3% complete
by physical progress and is expected to be operationally complete by late 2022.Management’s latest estimate is that the loss at
completion will be $222m representingthe expected costs to complete less estimated revenue to be earned. A charge of $99m was
made to the income statement during 2021 in relation to this project and the full amount of this loss has been recognised to date.
The increased loss recognised in the year was due to changes in the best estimates of the outcome of the contract, based on the
director’s current strategy for completing this complex project. The estimate relects an increase in the future legal costs, along
with increases in the expected costs to complete and potential liquidated damages.
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 current estimate
is that these will not be settled until 2023 at the earliest. 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 31 December 2021, provisions of $31.2m 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. Refer to note 14 for further details of the additional contract assets recognised in respect of
this contract.
In reaching its assessment of this loss, management have made certain estimates and assumptions relating to the date of
completion, productivity of workers on site and the 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.
The Group has also 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 and/or remediation. As at 31 December 2021, the
Group held provisions totaling $15.3m (2020: $18.5m) for the estimated future environmental clean-up costs in relation to industrial
facilities that it no longer operates. Whilst the timing of the related cash lows is typically uncertain, the Group expects that certain
of its remediation obligations may continue for up to 100 years.
During the period the Group reassessed the provisions created on prior period acquisitions and to the extent that they do not meet
the criteria for exceptional items set out in our accounting policies, the resulting debits or credits are recorded in EBITDA.
As described in note 33, 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. During the year, legacy provisions were utilised or released as claims were closed out or due to the expiry
of indemnity time periods where no claims had been received, meaning that the likelihood of an outlow was no longer probable.
The balance of project related provisions relates to a number of provisions which are not individually material or signiicant.
John Wood Group PLC
Annual Report and Accounts 2021
193
John Wood Group PLC
Annual Report and Accounts 2021
192
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
21 Deferred tax
Deferred tax is calculated in full on temporary differences under the liability method using the tax rate applicable to the territory
in which the asset or liability has arisen. The Group has provided deferred tax in relation to UK companies at 25% (2020: 19%). The
movement on the deferred tax account is shown below:
(Asset)/liability
As at
1 January
2021
$m
Income
statement
$m
OCI
$m
Other
$m
As at
31 December
2021
$m
Accelerated capital allowances (24.5)
(2.0)
(26.8)0.3
(0.6)Intangibles 259.3 (14.6) (1.3) (3.1) 240.3
Pension 34.5 - 63.6
24.9
4.2Share based charges (2.3)
0.1
-(0.1)
(2.3)Other temporary differences
10.7
(16.1)
2.7
(3.3)(0.6)
Provisions 2.5
(96.8)
42.80.8
(50.7)Unremitted earnings 40.3 (18.8) 21.7
0.2
-Deferred interest deduction (63.3) 8.6 (54.2)
0.5
-Losses 1.4 1.6 (191.5)
(149.3)
(45.2)Total
8.6 (20.3) 10.5
(2.0)
(3.2)As at
1 January
2021
$m
Income
statement
$m
OCI
$m
Other
$m
As at
31 December
2021
$m
Accelerated capital allowances 4.5 (23.0) (24.5)
(0.6)
(5.4)Intangibles 273.4
(9.4)
2.2(6.9)
259.3Pension - 34.5
61.1
(33.6)7.0
Share based charges (6.2)
3.7
(2.3)0.1 0.1
Other temporary differences
2.9
3.2
(0.5)
5.1
10.7
Provisions (132.8) 38.5
(2.4)
(0.1)
(96.8)
Unremitted earnings 41.8 (1.8) 40.3
0.3
-Tax credits -
0.8
(1.6)0.8
-Deferred interest deduction (42.7) (19.5) (1.1) - (63.3)
Losses (201.5)
54.1
(1.4)
(0.5)
(149.3)
Total
1.3 51.2 (37.0)
(6.9)
8.6Deferred tax is presented in the inancial statements as follows:
2021
2020
$m
$m
Deferred tax assets
(75.7)
(80.4)
Deferred tax liabilities
72.5
89.0
Net deferred tax (asset)/liability (3.2)
8.6
No deferred tax liability has been recognised in respect of $19,607.7m (2020: $19,807.9m) of unremitted reserves of subsidiaries
because the Group is in a position to control the timing of the reversal of the temporary difference and it is not probable that such
differences will reverse in the foreseeable future. The amount of unrecognised deferred tax liabilities in respect of these unremitted
reserves is estimated to be $55.6m (2020: $35.2m).
21 Deferred tax
(continued)
The deferred tax balances are analysed below.
31 December 2021
Accelerated
capital
allowances
$m
Intangibles
$m
Pension
$m
Share
based
charges
$m
Other
temporary
differences
$m
Provisions
$m
Unremitted
earnings
$m
Deferred
interest
deduction
$m
Losses
$m
Netting
$m
Total
$m
Deferred tax assets
(34.8)
(133.2) (1.5) (2.3) (46.8) (50.7) - (54.2) (191.5) 439.3 (75.7)
Deferred tax
liabilities
8.0
373.5 65.1 - 43.5 - 21.7 - - (439.3) 72.5
Net
(26.8) 240.3 63.6 (2.3) (3.3) (50.7) (191.5) - (3.2)
21.7
(54.2)Included in the $191.5m of deferred tax assets in respect of losses is an amount of $42.2m relating to the UK tax group which
has suficient deferred tax liabilities to offset, and $129.4m relating to the US tax group of which $32.7m is recognised based on
forecast proits of the US business, the balance is supported by deferred tax liabilities.
31 December 2020
Accelerated
capital
allowances
$m
Intangibles
$m
Pension
$m
Share
based
charges
$m
Other
temporary
differences
$m
Provisions
$m
Unremitted
earnings
$m
Deferred
interest
deduction
$m
Losses
$m
Netting
$m
Total
$m
Deferred tax assets
(29.6) (137.2)
(1.4)
(2.3)(60.9)
(96.8)
- (63.3)
(149.3) 460.4
(80.4)
Deferred tax
liabilities
5.1
396.5 35.9 - 71.6 - 40.3 - -
(460.4)
89.0
Net
(24.5) 259.3 34.5 (2.3) 40.3 (63.3) 8.6
10.7
(96.8)(149.3)
-The expiry dates of unrecognised gross deferred tax assets carried forward are as follows:
31 December 2021
Tax losses
$m
Deductible temporary differences
$m
Total
$m
Expiring within 5 years
676.0
128.1
804.1
Expiring within 6-10 years
- 34.5 34.5
Expiring within 11-20 years
270.8
-
270.8
Unlimited 5,720.4 931.5 6,651.9
6,667.2 1,094.1 7,761.3
31 December 2020
Tax losses
$m
Deductible temporary differences
$m
Total
$m
Expiring within 5 years
725.3 143.8
869.1
Expiring within 6-10 years
- 34.6 34.6
Expiring within 11-20 years
308.8 - 308.8
Unlimited 5,630.4
849.0
6,479.4
6,664.5 1,027.4 7,691.9
John Wood Group PLC
Annual Report and Accounts 2021
195
John Wood Group PLC
Annual Report and Accounts 2021
194
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
22 Share based charges
The Group currently has a number of share schemes that give rise to equity settled share based charges. These are the Executive
Share Option Scheme (‘ESOS’), the Long Term Plan (‘LTP’), the Employee Share Plan (‘ESP’) and the Share Incentive Plan (‘SIP’).
The charge to operating proit for these schemes for the year amounted to $22.1m (2020: $24.3m) and is included in administrative
expenses with the corresponding credit included in retained earnings.
Long Term Plan
The Group’s Long-Term Plan (‘LTP’) was introduced in 2013. There are two distinct awards made under the LTP. Awards to senior
management are made based on achievement of performance measures, these being total shareholder return, gross margin,
overhead improvement, EBITDA margin, revenue growth and ESG targets including reducing carbon emissions and leadership
gender diversity. Participants may be granted conditional share awards or nil cost options at the start of the cycle. Where
performance applies, this is measured over a three year period and up to 80% of an award may vest based on the performance
over that period. The vesting of at least 20% of any award is normally deferred for a further period of at least two years. Nil value
share options may also be awarded under the LTP.
Performance based awards
Details of the LTP awards are set out in the table below. The charge for market related performance targets has been calculated
using a Monte Carlo simulation model taking account of share price volatility against peer group companies, risk free rate of return,
dividend yield and the expected lifetime of the award. Further details of the LTP are provided in the Directors’ Remuneration
Report.
Cycle Performance period Fair value of award
Awards outstanding
31 December 2021
Awards outstanding
31 December 2020
8 2015-17 £5.95
-
12,23211 2018-20 £6.67
773,800
3,613,46012 2019-21 £5.69
5,085,975
5,383,090
13 2020-22 £3.64
7,943,623
8,442,322
14 2021-23 £3.17
9,448,976
-23,252,374
17,451,104
9,885,096 awards were made during the year, 183,895 awards accrued in respect of dividends, 1,257,013 awards were exercised
during the year and 3,010,708 awards lapsed or were cancelled due to performance targets not being achieved.
The awards outstanding under cycle 11 represent 100% of the deferred award for directors and 20% of the award for all other
participants at vesting which is deferred for two years.
Further details on the LTP are provided in the Directors’ Remuneration Report.
ESOS
For the purposes of calculating the fair value of the share options, a Black-Scholes option pricing model has been used. Based on
past experience, it has been assumed that options will be exercised, on average, six months after the earliest exercise date, which is
four years after grant date, and a lapse rate of 25% has been assumed. The share price volatility used in the calculation of 40% is
based on the actual volatility of the Group’s shares as well as that of comparable companies. The risk-free rate of return is based
on the implied yield available on zero coupon gilts with a term remaining equal to the expected lifetime of the options at the date of
grant.
22 Share based charges
(continued)
Share options
A summary of the basis for the charge for ESOS and LTP options is set out below together with the number of options granted,
exercised and lapsed during the year.
ESOS
LTP and deferred bonus
2021
2020
20212020
Number of participants
400
40085
85Lapse rate
25%
25%10%
10%Risk free rate of return on grants during year
N/A
N/A
0.43%
0.27%Share price volatility
40%
40%
40%40%
Dividend yield on grants during year
N/A
N/A
0%
5.06%Fair value of options granted during year
N/A
N/A
£2.30-£2.48
£3.15-£3.57Weighted average remaining contractual life
1.4 years
2.2 years
2.4 years
1.7 yearsOptions outstanding 1 January
1,991,512
2,317,065
2,060,519
2,100,200Options granted during the year
-
-2,134,000
1,176,834
Options exercised during the year
-
(5,419)(891,340)
(1,184,884)Options lapsed during the year
(451,224)
(320,134)
(50,001)
(52,367)Dividends accrued on options
-
-31,090
20,736Options outstanding 31 December
1,540,288
1,991,5123,284,268
2,060,519No. of options exercisable at 31 December
1,487,538
1,991,512
219,300
93,932
Weighted average share price of options exercised during year
N/A
£4.12£2.45
£1.74Executive Share Option Schemes
The following options to subscribe for new or existing shares were outstanding at 31 December:
Number of ordinary
shares under option
Year of Grant
2021
2020
Exercise price
(per share)
Exercise
period
2011 529½p 2015-2021
-
212,6352012 680½p 2016-2022
338,788
406,8772013 845⅓p 2017-2023
622,000
707,0002014 767⅔p 2018-2024
579,500
665,0001,540,288
1,991,512
Share options are granted at an exercise price equal to the average mid-market price of the shares on the three days prior to the
date of grant.
John Wood Group PLC
Annual Report and Accounts 2021
197
John Wood Group PLC
Annual Report and Accounts 2021
196
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
22 Share based charges
(continued)
Nil value share options
The following options granted under the Group’s LTP were outstanding at 31 December:
Number of ordinary
shares under option
Year of Grant
2021
2020
Exercise price
(per share)
Exercise
period
2016
-
29,7920.00p
2020-20212017
-
-0.00p
2019-20202017
110,000
367,0830.00p
2021-20222018
-
4,461
2020-20210.00p
2018
189,970
227,365
0.00p
2022-20232019
-
50,0000.00p
2020-20212019
109,300
490,462 0.00p
2021-2022
2019
-
2,5000.00p
2023-20242020
765,998
883,856
0.00p
2022-20232020
5,000
5,0000.00p
2023-20242021
100,000
-
0.00p
2023-20242021
2,004,000
-0.00p
2025-20263,284,268
2,060,519
Options are granted under the Group’s LTP at nil value. There are no performance criteria relating to the exercise of the options.
Further details on the LTP are provided in the Directors’ Remuneration Report.
Employee share plan
The Group introduced the ESP in 2016. Under the plan employees contribute regular monthly amounts which are used to purchase
shares over a one-year period. At the end of the year, the participating employees are awarded one free share for every two shares
purchased, providing they remain in employment for a further year. During 2021, 1,537,990 shares were awarded in relation to the
ESP, of which 433,118 and 1,104,872 shares related to the 2020/21 and 2021/22 schemes respectively.
Share incentive plan
The Group introduced the SIP in 2021. Under the plan, which is recognised by HM Revenue and Customs, employees contribute
regular monthly amounts of up to £150 per month to purchase shares. The participating employees are awarded one free share
for every two purchased, provided that they hold the purchased shares for 3 years and remain in employment. During 2021, 212,436
matching shares were awarded.
23 Share capital
Ordinary shares of 4⁄ pence each (2020: 4⁄ pence)
Authorised, issued and fully paid shares
2021
$m
shares
2020
$m
At 1 January
688,339,369
41.1
684,939,369
40.9
Allocation of new shares to employee share trusts
3,500,000
3,400,0000.2
0.2
At 31 December 691,839,369 41.3
688,339,369
41.1
Holders of ordinary shares are entitled to receive any dividends declared by the Company and are entitled to vote at general
meetings of the Company.
24 Share premium
2021
$m
2020
$m
At 1 January and 31 December 63.9
63.9
The shares allocated to the trust during the year were issued at 4⁄ pence (2020: 4⁄ pence).
25 Retained earnings
2021
$m
2020
$m
At 1 January
1,455.2
1,806.4
Loss for the year attributable to owners of the parent
(139.5)
(229.5)
Credit relating to share based charges (note 22)
22.1
24.3Re-measurement loss on retirement beneit liabilities (note 32)
83.3
(178.7)Movement in deferred tax relating to retirement beneit liabilities
(9.5)
36.8Shares allocated to employee share trusts
(0.2)
(0.2)
Deferred tax impact of rate change in equity
4.5
(1.3)Tax on derivative inancial instruments
(3.4)
1.6Other tax movements in equity
(0.1)
(0.7)
Exchange movements in respect of shares held by employee share trusts
1.1
(3.5)Purchase of shares by employee share trusts for the Share Incentive Plan (SIP)
1.5
-At 31 December
1,415.0
1,455.2Retained earnings are stated after deducting the investment in own shares held by employee share trusts. No options have been
granted over shares held by the employee share trusts (2020: nil).
Shares held by employee share trusts
2021
2020
Shares $m
Shares $m
Balance 1 January
15,006,961 112.8
13,678,914 109.1
New shares allocated
3,500,000
3,400,0000.2
0.2
Shares issued to satisfy option exercises -
(870,503) -
(1,369,582)Shares issued to satisfy awards under Long Term Incentive Plan
(1,257,013) -
(49,960)
-
Shares issued to satisfy awards under Employee Share Plan -
(1,383,506) -
(652,199)Shares issued to satisfy awards under Share Incentive Plan
(637,925) -
- -
Other share transactions
- -
(212) -
Exchange movement
- (1.1)
- 3.5
Balance 31 December 14,358,014 111.9
15,006,961 112.8
Shares acquired by the employee share trusts are purchased in the open market using funds provided by John Wood Group PLC to
meet obligations under the Employee Share Option Schemes and LTP. Shares are allocated to the employee share trusts in order to
satisfy future option exercises at various prices.
The costs of funding and administering the trusts are charged to the income statement in the period to which they relate. The
market value of the shares at 31 December 2021 was $37.1m (2020: $63.6m) based on the closing share price of £1.91 (2020: £3.10)
and closing exchange rate of 1.3545 (2020: 1.3669). The employee share trusts have waived their rights to receipt of dividends on
ordinary shares.
John Wood Group PLC
Annual Report and Accounts 2021
199
John Wood Group PLC
Annual Report and Accounts 2021
198
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
26 Merger reserve
2021
$m
2020
$m
At 1 January and 31 December 2,540.8
2,540.8
On 6 October 2017, 294,510,217 new shares were issued in relation to the acquisition of Amec Foster Wheeler Group. As the
acquisition resulted in the Group securing 90% of Amec Foster Wheeler’s share capital, the acquisition qualiied for merger relief
under section 612 of the Companies Act 2006 and the premium arising on the issue of the shares was credited to a merger reserve
rather than the share premium account.
In November 2019, John Wood Group PLC (the Company) sold its investment in Amec Foster Wheeler Limited and other
subsidiaries to another subsidiary company, John Wood Group Holdings Limited for $2,815.2m in exchange for a promissory note.
To the extent that the promissory note is settled by qualifying consideration, the related portion of the merger reserve is considered
realised and becomes available for distribution.
27 Other reserves
Capital
reduction
reserve
$m
Capital
redemption
reserve
$m
Currency
translation
reserve
$m
Hedging
reserve
$m
Total
$m
At 1 January 2020 88.1 439.7 (551.3)
(9.7)
(33.2)Cash low hedges - - -
(8.0) (8.0)
Exchange movement on retranslation of foreign operations - -
92.9
-92.9
Exchange movement on disposal of foreign operations - - 17.3 - 17.3
At 31 December 2020 88.1 439.7 (441.1) (17.7)
69.0
Cash low hedges - - -
7.9 7.9
Exchange movement on retranslation of foreign operations - - (56.3) - (56.3)
Exchange movement on disposal of foreign operations - -
0.4
-0.4
At 31 December 2021 88.1 439.7
(497.0)
(9.8)
21.0
The capital reduction reserve was created subsequent to the Group’s IPO in 2002 and is a distributable reserve.
The capital redemption reserve was created following a share issue that formed part of a return of cash to shareholders in 2011.
This is not a distributable reserve.
The currency translation reserve relates to the retranslation of foreign currency net assets on consolidation. This was reset to zero
on transition to IFRS at 1 January 2004. The movement during the year relates to the retranslation of foreign operations, including
goodwill and intangible assets recognised on acquisition.
The hedging reserve relates to the accounting for derivative inancial instruments under IFRS 9. Fair value gains and losses in
respect of effective cash low hedges are recognised in the hedging reserve.
28 Non-controlling interests
2021
$m
2020
$m
At 1 January
2.8
5.5
Share of proit for the year
4.0
1.4
Dividends paid to non-controlling interests
(2.7)
(4.9)
Transactions with non-controlling interests
(0.8)
0.8
At 31 December 3.3
2.8
29 Cash generated from operations
Note
2021
$m
2020
$m
Reconciliation of loss before tax to cash generated from operations:
Loss before tax from continuing operations
(80.6)
(148.6)
Finance income
(3.3)
(13.4)Finance expense
116.2
129.1Operating proit/(loss) from continuing operations
32.3
(32.9)
Less share of post-tax proit from joint ventures
(31.5)
(33.6)0.8
(66.5)
Adjustments for:
Depreciation
10
38.934.9
Depreciation on right of use assets
11 101.9
125.4
Gain on disposal of leases
(1.0)
-(Gain)/loss on disposal of property plant and equipment
4
(10.0)
8.0
Impairment of property, plant and equipment
10
-4.0
Impairment of right of use assets
11
-2.0
Gain on disposal of businesses
30 -
(58.4)Gain on disposal of investment in joint ventures
30
(14.4)
(0.7)
Amortisation of intangible assets
9
225.5189.9
Share based charges
22
24.322.1
Decrease in provisions
20 (75.6)
(45.4)Dividends from joint ventures
12 26.3
29.6
Exceptional items – non-cash impact
1 126.2
205.1Changes in working capital
(excluding effect of acquisition and divestment of subsidiaries)
Decrease in inventories
0.1
0.9
(Increase)/decrease in receivables
(70.1)
504.2
Decrease in payables
(326.1)
(627.1)
Exchange movements
2.9
(17.6)Cash generated from operations 13.9
346.2
Analysis of net debt
2021
At 1 January
2021
$m
Cash
low
$m
Other
$m
Exchange
movements
$m
At 31
December
2021
$m
Short term borrowings
(315.3) 33.5 -
(0.1)
(281.9)Long term borrowings
(1,296.5) (329.3)
12.1
(1,614.1)(0.4)
(1,611.8) (295.8)
12.1
(1,896.0)(0.5)
Cash and cash equivalents 585.0 (5.0) 503.0
(77.0)
-Restricted cash 12.5 (12.5) - - -
Net debt excluding leases (1,014.3) (385.3) (1,393.0)
12.1
(5.5)Leases (541.4) 167.6 (80.2) 4.2
(449.8)
Net debt including leases (1,555.7) (217.7) (68.1) (1.3) (1,842.8)
John Wood Group PLC
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200
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
29 Cash generated from operations
(continued)
2020
At 1 January
2020
$m
Cash
low
$m
Other
$m
Exchange
movements
$m
At 31 December
2020
$m
Short term borrowings
(1,752.7) 1,438.4 -
(1.0)
(315.3)Long term borrowings
(1,573.2) (1,296.5)
277.5
(1.1)0.3
(3,325.9) 1,715.9 (1,611.8)
0.3
(2.1)Cash and cash equivalents 1,847.0 (1,289.6) -
27.6
585.0Cash included in assets held for sale (see note 30) - -
54.9 (54.9)
-Restricted cash - 12.5 - - 12.5
Net debt excluding leases (1,424.0) 383.9 (1,014.3)
0.3
25.5Leases (583.3) 188.4 (137.2)
(9.3)
(541.4)Net debt including leases (2,007.3) 572.3 (136.9) 16.2 (1,555.7)
Other movements of $68.1m (2020: $136.9m) relate to lease additions of $70.5m (2020: $124.5m), interest expense related to lease
liabilities of $20.3m (2020: $30.1m), offset by disposals of $10.6m (2020: $17.4m). The non-cash movement in the lease liability of
$80.2m (2020: $137.2m) was offset by the movement in unamortised bank fees of $12.1m (2020: $0.3m).
30 Acquisitions and divestments
Contingent consideration payments of $nil (2020: $21.0m) were made during the year in respect of acquisitions made in prior
periods. Total deferred and contingent consideration outstanding at 31 December 2021 amounted to $nil (2020: $nil). See note 19.
Divestments
During 2021, the Group disposed of its joint venture interest in Sulzer Wood Limited. The assets and liabilities disposed of are set
out in the table below:
2021
$m
Investment 4.5
Net assets disposed 4.5
Post-acquisition translation reserve
(0.4)
Cash received 19.3
Gain on disposal (see note 5) 14.4
The cash inlow in respect of these disposals is analysed below.
$m
Gross proceeds received 19.3
Disposal costs paid -
Cash inlow 19.3
31 Employees and directors
Employee beneits expense
2021
$m
2020
$m
Wages and salaries
2,827.5
3,020.0
Social security costs
211.7
231.6Pension costs – deined beneit schemes (note 32)
3.7
1.1
Pension costs – deined contribution schemes (note 32)
104.6
122.9Share based charges (note 22)
22.1
24.33,169.6
3,399.9
Average monthly number of employees (including executive directors)
2021
No.
2020
No.
By geographical area:
UK
5,491
6,240US
10,926
13,400
Rest of the World
19,062
19,808
35,479
39,448
The average number of employees excludes contractors and employees of joint venture companies.
Key management compensation
2021
$m
2020
$m
Salaries and short-term employee beneits
10.3
5.8
Amounts receivable under long-term incentive schemes
0.2
-Social security costs
1.1
0.6
Post-employment beneits
0.2
0.2
Share based charges
3.6
4.9
15.4
11.5
Key management compensation represents the charge to the income statement in respect of the remuneration of the Group board
and Group Executive Leadership Team (‘ELT’) members. At 31 December 2021, key management held 0.1% of the voting rights of
the company.
Directors
2021
$m
2020
$m
Aggregate emoluments
3.3
2.5Aggregate amounts receivable under long-term incentive schemes
0.1
-Aggregate gains made on the exercise of share options
0.2
0.1
Share based charges
1.4
1.85.0
4.4
At 31 December 2021, one director (2020: one) had retirement beneits accruing under a deined contribution pension plan and no
directors (2020: none) had beneits accruing under a deined beneit pension scheme. Further details of directors’ emoluments are
provided in the Directors’ Remuneration Report.
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203
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Annual Report and Accounts 2021
202
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
32 Retirement beneit schemes
The Group operates a number of deined beneit pension schemes which are largely closed to future accrual. The assets of the
deined beneits schemes are held separately from those of the Group, being invested with independent investment companies
in trustee administered funds. The trustees of the pension schemes are required by law to act in the best interests of the scheme
participants and are responsible for setting certain policies (such as investment, contribution and indexation policies) for the
schemes.
At 31 December 2021, the largest schemes by gross obligation are 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’).
The scheme valuations are based on the membership data contained within the triennial valuation of Wood Pension Plan as
at 31 March 2020, and the valuation of the Foster Wheeler Inc SEPP/PPCE as at 1 January 2020. The scheme valuations have
been updated by the schemes’ actuaries for the requirement to assess the present value of the liabilities of the schemes as at 31
December 2021. The assets of the schemes are stated at their aggregate market value as at 31 December 2021.
Management have considered the requirements of IFRIC 14, ‘The Limit on a Deined Beneit Asset, Minimum Funding Requirements
and their Interaction’ and consider it is appropriate to recognise the IAS 19 surplus in the Wood Pension Plan. The rules governing
these schemes provide an unconditional right to a refund assuming the gradual settlement of the scheme’s liabilities over time until
all members have left the schemes.
Scheme membership at the date of the most recent scheme census was as follows:
2021
Wood
Pension
Plan
2021
FW Inc
SEPP
2021
FW Inc
PPCE
2020
Wood
Pension
Plan
2020
FW Inc
SEPP
2020
FW Inc
PPCE
Active members 45
494
48
38
494
56Deferred members
8,313
8,313453 653
497
681Pensioner members
10,149 2,305
857
10,149
2,342 843
Active members includes deferred members still employed but not actively contributing to the scheme.
The principal assumptions made by the actuaries at the balance sheet date were:
2021
Wood
Pension
Plan
%
2021
FW Inc
SEPP
%
2021
FW Inc
PPCE
%
2020
Wood
Pension
Plan
%
2020
FW Inc
SEPP
%
2020
FW Inc
PPCE
%
Discount rate
1.8 2.6 2.6
1.42.1 2.1
Rate of increase in pensions in payment and deferred pensions
3.1
N/A N/A
2.7
N/A N/A
Rate of retail price index inlation
3.3
N/A N/A
2.9
N/A N/A
Rate of consumer price index inlation
2.8
N/A N/A
2.4
N/A N/A
The mortality assumptions used to determine pension liabilities in the main schemes at 31 December 2021 were as follows –
Scheme Mortality assumption
Wood Pension Plan Scheme speciic table with CMI 2020 (Sk =7.5) projections and a long-term rate of
improvement of 1.25% pa
FW Inc SEPP and FW Inc PPCE
Pri-2012 Employee and Annuitant tables for males and females with generational projection
using Scale MP-2021 with no collar adjustments
The mortality tables use data appropriate to each of the Group’s schemes adjusted to allow for expected future improvements in
mortality using the latest projections.
Assumptions regarding future mortality are based on published statistics and the latest available mortality tables. The CMI’s latest
mortality projections model, ‘CMI 2020’, published in March 2021, does not place any weight on Covid-19 pandemic mortality data
and so continues to assume mortality rates improve in the short to medium term. The Group, in conjunction with the schemes’
actuaries, continues to monitor the impact of the pandemic on these assumptions and has reserved any adjustment for future
reporting periods when appropriate pandemic experience can be observed. Any potential future adjustment is likely to relect
mortality rates being elevated due to the adverse impact of the pandemic and will reduce the deined beneit obligation.
32 Retirement beneit schemes
(continued)
For the schemes referred to above the assumed life expectancies are shown in the following table:
2021
Wood
Pension
Plan
2021
FW Inc
SEPP
2021
FW Inc
PPCE
2020
Wood
Pension
Plan
2020
FW Inc
SEPP
2020
FW Inc
PPCE
Life expectancy at age 65 of male aged 45 21.9
24.1
22.0 22.0
24.1
21.9Life expectancy at age 65 of male aged 65
22.8 20.5 20.5
22.7
20.4 20.4
Life expectancy at age 65 of female aged 45
25.5 23.9 23.9
25.5 23.8 23.8
Life expectancy at age 65 of female aged 65 22.4
24.0
22.5 22.5
24.0
22.4The amounts recognised in the income statement are as follows:
2021
$m
2020
$m
Current service cost
3.7
1.1
Past service (credit)/cost
(4.8)
4.1
Total (income)/expense included within operating proit (1.1)
5.2
Interest cost
69.0
86.1Interest income on scheme assets
(69.2)
(89.9)
Total included within inance income (0.2)
(3.8)
The amounts recognised in the balance sheet are determined as follows:
2021
$m
2020
$m
Present value of funded obligations
(4,626.6)
(4,779.9)
Fair value of scheme assets
4,811.5
4,844.3Net surplus
184.9
64.4
Changes in the present value of the deined beneit liability are as follows:
2021
$m
2020
$m
Present value of funded obligations at 1 January
4,779.9
4,233.7Current service cost
3.7
1.1
Past service (credit)/cost
(4.8)
4.1
Interest cost
69.0
86.1Contributions
-
-Re-measurements:
- actuarial (gains)/losses arising from changes in inancial assumptions
(73.0)
504.1
- actuarial losses arising from changes in demographic assumptions
35.7
29.1
- actuarial losses/(gains) arising from changes in experience
53.6
(16.9)Beneits paid
(201.6)
(209.2)Exchange movements
(35.9)
147.8
Present value of funded obligations at 31 December 4,626.6
4,779.9
John Wood Group PLC
Annual Report and Accounts 2021
205
John Wood Group PLC
Annual Report and Accounts 2021
204
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
32 Retirement beneit schemes
(continued)
Changes in the fair value of scheme assets are as follows:
2021
$m
2020
$m
Fair value of scheme assets at 1 January
4,844.3
4,474.7
Interest income on scheme assets
69.2
89.9
Contributions
50.1
15.2Beneits paid
(201.6)
(209.2)Re-measurement gains on scheme assets
99.6
337.6Expenses paid
(9.4)
(10.0)
Exchange movements
(40.7)
146.1
Fair value of scheme assets at 31 December 4,811.5
4,844.3
Analysis of the movement in the balance sheet surplus:
2021
$m
2020
$m
Surplus at 1 January
64.4
241.0Current service cost
(3.7)
(1.1)Past service credit/(cost)
4.8
(4.1)
Finance income
0.2
3.8Contributions
50.1
15.2Re-measurement gains/(losses) recognised in the year
83.3
(178.7)Expenses paid
(9.4)
(10.0)
Exchange movements
(4.8)
(1.7)Surplus at 31 December
184.9
64.4
The net surplus at 31 December is presented in the Group balance sheet as follows:
2021
$m
2020
$m
Wood Pension Plan
259.6
188.8
Retirement beneit scheme surplus 259.6
188.8
Foster Wheeler Inc SEPP/PPCE
(43.1)
(83.1)
All other schemes
(31.6)
(41.3)Retirement beneit scheme deicit (74.7)
(124.4)
Net surplus
184.9
64.4
32 Retirement beneit schemes
(continued)
For the principal schemes the deined beneit obligation can be allocated to the plan participants as follows:
2021
Wood
Pension
Plan
%
2021
FW Inc
SEPP
%
2021
FW Inc
PPCE
%
2020
AFW
Pension
Plan
%
2020
FW Inc
SEPP
%
2020
FW Inc
PPCE
%
Active members 4.6
6.4 4.6 2.3
6.32.7
Deferred members
45.0
22.1
17.643.5 20.2 20.2
Pensioner members 75.2
48.6 73.3
50.280.1
77.1
The weighted average duration of the deined beneit obligation is as follows:
2021
Wood
Pension
Plan
years
2021
FW Inc
SEPP
years
2021
FW Inc
PPCE
years
2020
AFW
Pension
Plan
years
2020
FW Inc
SEPP
years
2020
FW Inc
PPCE
years
Duration of deined beneit obligation
17.0
18.09.5
9.1
9.6 9.8
The major categories of scheme assets as a percentage of total scheme assets are as follows:
2021
Wood
Pension
Plan
%
2021
FW Inc
SEPP
%
2021
FW Inc
PPCE
%
2020
AFW
Pension
Plan
%
2020
FW Inc
SEPP
%
2020
FW Inc
PPCE
%
2021
Quoted
on active
market
%
2020
Quoted
on active
market
%
Equities
10.7
14.554.4
59.7
60.0 60.0
97.4
100.0Property - -
2.6 - -
5.8-
-Bonds (including gilts)
84.8 44.6 39.3
77.0
40.0 40.0
99..9
99.8
Cash - -
2.8
2.31.0 1.0
100.0
100.0
Other -
(0.9)
- -
0.4
--
-100.0 100.0 100.0
100.0 100.0 100.0
n /a
n/a
As at 31 December 2021, 98.0% (2020: 94.1%) of total scheme assets in the principal schemes have quoted prices in active markets.
The Group seeks to fund its pension plans to ensure that all beneits can be paid as and when they fall due. It has agreed schedules
of contributions with the UK plans’ trustees and the amounts payable are dependent on the funding level of the respective plans.
The US plans are funded to ensure that statutory obligations are met and contributions are generally payable to at least minimum
funding requirements.
The Coronavirus Aid, Relief and Economic Security (CARES) Act and the American Rescue Plan Act of 2021 (ARPA) has provided
the Group with funding relief on US pension schemes through changes in the assumptions used to determine the ongoing Required
Minimum Contributions. This relief has eliminated $10.3m of 2021 cash contributions and is expected to eliminate $13.6m of 2022
contributions based on US Treasury guidance.
No changes to future contribution levels have been agreed for the Wood Pension Plan.
Total contributions expected to be paid during the inancial year ending 31 December 2022 amount to $43.4m (2020: $45.2m for
the inancial year ending 31 December 2021).
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207
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206
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
32 Retirement beneit schemes
(continued)
Scheme risks
The retirement beneit schemes are exposed to a number of risks, the most signiicant of which are –
Volatility
The deined beneit obligation is measured with reference to corporate bond yields and if scheme assets underperform relative to
this yield, this will create a deicit, all other things being equal. The scheme investments are well diversiied such that the failure of a
single investment would not have a material impact on the overall level of assets.
Changes in bond yields
A decrease in corporate bond yields will increase the deined beneit obligation. This would however be offset to some extent by a
corresponding increase in the value of the scheme’s bond asset holdings.
Inlation risk
The majority of beneits in deferment and in payment are linked to price inlation so higher actual inlation and higher assumed
inlation will increase the deined beneit obligation.
Life expectancy
The deined beneit obligation is generally made up of beneits payable for life and so increases to members’ life expectancies will
increase the deined beneit obligation, all other things being equal.
Sensitivity of the retirement beneit obligation
The impact of changes to the key assumptions on the retirement beneit 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 deined beneit obligation to signiicant actuarial
assumptions the same method has been applied as when calculating the pension obligation recognised in the Group balance sheet.
Approximate increase/(decrease) on scheme liabilities
Wood
Pension
Plan
2021
$m
Wood
Pension
Plan
2020
$m
FW Inc
SEPP
2021
$m
FW Inc
SEPP
2020
$m
FW Inc
PPCE
2021
$m
FW Inc
PPCE
2020
$m
Discount rate
Plus 0.1%
(68.4)
(73.2)(1.0)
(1.0)
(2.2)(1.8)
Minus 0.1%
70.2
75.21.0
1.0
2.21.9
Inlation
Plus 0.1%
38.5
44.6N/A
N/A
N/A
N/AMinus 0.1%
(38.3)
(44.5)
N/A
N/A
N/A
N/ALife expectancy
Plus 1 year
196.4
194.2
4.34.6
8.9
10.0
Minus 1 year
(192.2)
(190.7)
(4.2)
(4.5)
(8.9)
(9.9)
The sensitivity analysis covering the impact of increases in pensions is included in the inlation sensitivity in the above table.
Deined contribution plans
Pension costs for deined contribution plans were as follows:
2021
$m
2020
$m
Deined contribution plans
104.6
122.9There were no material contributions outstanding at 31 December 2021 in respect of deined contribution plans.
The Group operates a SERP pension arrangement in the US for certain employees. During the year, the Group made contributions
of $0.1m (2020: $0.3m) to the arrangement. Contributions are invested in a portfolio of US funds and the fair value of the funds at
the balance sheet date are recognised by the Group in other investments. Investments held by the Group at 31 December amounted
to $75.9m (2020: $79.8m) and will be used to pay beneits when employees retire. The corresponding liability is recorded in other
non-current liabilities.
33 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 notiied 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, which we believe to be without legal or factual merit,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
Reineria de Cartagena, S.A (“Reicar”) between 2009 and 2016. 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 inancial impact.
Investigations
Following the settlement of the various regulatory investigations described in Note 20, 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, these
consequences and likelihood cannot be reliably estimated, and therefore no provision has made in respect of them in the inancial
statements.
Employment claims
In October 2021 the Group received assessments from HMRC into the historical application of employer’s National Insurance
Contributions to workers on the UK Continental Shelf. 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 $31m.
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 indemniications 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 quantiiable. We do not
expect indemnities or retained obligations for which a provision has not been established to have a material impact on the Group’s
inancial position, results of operations or cash lows.
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 outlow 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.
John Wood Group PLC
Annual Report and Accounts 2021
209
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Annual Report and Accounts 2021
208
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
34 Capital and other inancial commitments
2021
$m
2020
$m
Contracts placed for future capital expenditure not provided in the inancial statements
119.9
112.6The capital expenditure above relates to property plant and equipment and software costs.
35 Related party transactions
The following transactions were carried out with the Group’s joint ventures. These transactions comprise sales and purchases of
goods and services and funding provided in the ordinary course of business. The receivables include loans to joint venture companies.
2021
$m
2020
$m
Sale of goods and services to joint ventures
21.4
37.5
Purchase of goods and services from joint ventures
3.5
1.8Receivables from joint ventures
13.1
18.0
Payables to joint ventures
0.4
1.2
Compensation of key management personnel includes salaries, non-cash beneits and contributions to post retirement beneits
schemes disclosed in note 31.
The Group operates a number of deined beneit pension arrangements and seeks to fund these arrangements to ensure that all
beneits 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
32 sets out details of the Group’s pension obligations under these arrangements.
36 Post balance sheet events
The Board concluded in January 2022 that a sale of the built environment business is the best option to deliver value for our
shareholders. Given the decision was made after the year end, this is a non-adjusting post balance sheet event and so was not
held for sale at the balance sheet date. Once completed, the sale will strengthen the balance sheet by reducing net debt. It is not
possible to estimate the impact on net assets and proit before tax at the point of approval of these inancial statements.
37 Subsidiaries, joint ventures and other related undertakings
The Group’s subsidiary and joint venture undertakings at 31 December 2021 are listed below. All subsidiaries are fully consolidated in
the inancial statements. Ownership interests noted in the table relect holdings of ordinary shares.
Subsidiaries
Company Name
Registered Address
Ownership
Interest %
Algeria
SARL Wood Group Algeria
Regus Algeria, Tour Nord,, Centre Commercial et Administratif de Bab
Ezzouar,, Quartier d’affaires de Bab Ezzouar, Algeria Properties
100
Wood Group Somias SPA PO Box 67, Elmalaha Road (Route des Salines), Elbouni, Annaba, Algeria 55
Angola
Production Services Network Angola Limitada RuaKima Kienda, Ediicio SGEP, 2nd Floor, Apartment 16, Boavista
District, Ingombota, Luanda, Angola
49*
Wood Group Kianda Limitada No 201, Rua Engenheiro Armindo de Andrade,Bairro Miramar,
Simbizanga, Luanda, Angola
41*
Argentina
Foster Wheeler E&C Argentina S.A.
Paraguay 1866, Buenos Aires, Argentina
100
ISI Mustang (Argentina) S.A. Pedro Molina 714, Provincia de Mendoza, Ciudad de Mendoza, Argentina 100
Wood Solar Argentina S.A.U. Tucuman 1 Floor 4, Buenos Aires, Argentina 100
Wood Wind Argentina S.A.U.
Tucuman 1 Floor 4, Buenos Aires, Argentina 100
Australia
Amec Foster Wheeler Australia Pty Ltd Level 7, 197 St Georges Terrace, Perth, WA, 6000, Australia 100
Wood Australia Architecture Pty Ltd
Level 7, 197 St Georges Terrace, Perth, WA, 6000, Australia 100
Aus-Ops Pty Ltd Level 1, 240 St Georges Terrace, Perth, WA 6000, Australia 100
Innoield Services Pty Ltd Level 1, 240 St Georges Terrace, Perth, WA 6000, Australia 100
RIDER HUNT INTERNATIONAL (AUSTRALIA) PTY LTD Level 3, 171 Collins Street, Melbourne, VIC 3000, Australia 100
SVT Holdings Pty Ltd Level 1, 240 St Georges Terrace, Perth, WA 6000, Australia 100
Wood Australia Pty Ltd Level 3, 171 Collins Street ,Melbourne, VIC, 3000, Australia 100
Wood Field Services Pty Ltd Level 3, 171 Collins Street ,Melbourne, VIC, 3000, Australia 100
Wood Group Australia PTY Ltd Level 1, 240 St Georges Terrace, Perth, WA 6000, Australia 100
Wood Group Kenny Australia Pty Ltd Level 1, 240 St Georges Terrace, Perth, WA 6000, Australia 100
Azerbaijan
AMEC Limited Liability Company 37 Khojali Street, Baku, AZ1025, Azerbaijan 100
Wood Group PSN Azerbaijan LLC Khojali Avenue,Building 37, Khatal District, Baku, AZ1025, Azerbaijan 100
Bermuda
Foster Wheeler Ltd.
Clarendon House, 2 Church Street, Hamilton, HM-11, Bermuda 100
FW Management Operations, Ltd. Clarendon House, 2 Church Street, Hamilton HM CX, Bermuda 100
Brazil
Amec Foster Wheeler America Latina, Ltda. Centro Empresarial Ribeirao Ofice Tower, Av. Braz Olaia Acosta, 727 -
18 andar - Sl. 1810, Cep. 14026-404 - Jd. California, Ribeirao Preto, Sao
Paulo, Brazil
100
Amec Foster Wheeler Brasil S.A. Avenida das Americas, n 3.434, Bloco 2, salas 307 e 308, Centro
Empresarial Mario Henrique Simonsen, Barra da Tijuca, CEP 22.640-102,
Brazil
100
AMEC Petroleo e Gas Ltda. Avenida das Americas, n 3.434, Bloco 2, salas 307 e 308, Centro
Empresarial Mario Henrique Simonsen, Barra da Tijuca, CEP 22.640-102,
Brazil
100
AMEC Projetos e Consultoria Ltda Rua Professor Moraes No. 476, Loja 5, Sobreloja, Bairro Funcionarios, Belo
Horizonte, Minas Gerais, 30150-370, Brazil
100
FW Industrial Power Brazil Ltda Alameda Santos, 1293, Room 63, Cerqueira César, Sao Paulo, 01419-002,
Brazil
100
Santos Barbosa Tecnica Comercio e Servicos Ltda. Estrada Sao Jose do Mutum, 301 - Imboassica, Cidade de Macae, Rio de
Janeiro, CEP 27973-030, Brazil
100
Wood Group Engineering and Production Facilities
Brasil Ltda.
Rua Ministro Salgado Filho,119, Cavaleiros, Cidade de Macae,CEP 27920-
210, Estado do Rio de Janeiro
100
Wood Group Kenny do Brasil Servicos de Engenharia
Ltda.
Rua Sete de Setembro, 54 - 4 andares, Centro, Rio de Janeiro - RJ, CEP
20050-009, Brazil
100
Brunei Darussalam
Amec Foster Wheeler (B) SDN BHD Unit No.s 406A-410A, Wisma Jaya, Jalan Pemancha, Bandar Seri
Begawan BS8811, Brunei Darussalam
100
Bulgaria
AMEC Minproc Bulgaria EOOD 7th Floor, 9-11 Maria Louisa Blvd, Vazrazhdane District, Soia 1301,
Bulgaria
100
Cameroon
Amec Foster Wheeler Cameroun SARL Cap Limboh, Limbe, BP1280, Cameroon 100
John Wood Group PLC
Annual Report and Accounts 2021
211
John Wood Group PLC
Annual Report and Accounts 2021
210
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
Canada
2292127 Alberta Ltd.
1900, 520 - 3rd Ave. S.W., Calgary, AB, T2P 0R3, Canada 100
Amec Foster Wheeler Canada Ltd. Borden Ladner Gervais LLP, Centennial Place, East Tower, 1900, 520 - 3rd
Ave. S.W., Calgary, AB, T2P 0R3, Canada
100
Rider Hunt International (Alberta) Inc. 900 AMEC Place, 801-6th Avenue S.W., Calgary, AB, T2P 3W3, Canada 100
Wood Architectural Services Ltd. 133 Crosbie Road, St. John’s, NL, A1B 1H3, Canada 0**
Wood Canada Limited 1900, 520 - 3rd Avenue SW, Calgary, AB, T2P 0R3, Canada 100
Wood Geomatics Limited 900 AMEC Place, 801-6th Avenue S.W., Calgary, AB, T2P 3W3, Canada
49*
Wood Group Asset Integrity Solutions, Inc. 1900, 520 - 3rd Avenue SW, Calgary, AB, T2P 0R3, Canada 100
Wood Group Canada, Inc. Borden Ladner Gervais LLP, Centennial Place, East Tower, 1900, 520 - 3rd
Ave. S.W., Calgary, AB, T2P 0R3, Canada
100
Wood Solar Canada Ltd. 1900, 520 - 3rd Ave. S.W., Calgary, AB, T2P 0R3, Canada 100
Wood Wind Canada Ltd. 1900, 520 - 3rd Ave. S.W., Calgary, AB, T2P 0R3, Canada 100
Cayman Islands
FW Chile Holdings Ltd. Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive,
PO Box 2681, George Town, KY1-1111
100
Wood Group O&M International, Ltd. Sterling Trust (Cayman) Limited, Whitehall House, 238 North Church
Street, George Town, KY1-1102, Cayman Islands
100
Chile
AMEC CADE Ingeniería y Desarrollo De Proyectos
Limitada
Av. Larraín 5862, Piso 11, La Reina, Santiago 100
Amec Foster Wheeler International Ingenieria y
Construcción Limitada
Avenida Presidente Riesco 5335, Piso 8 Las Condes 100
Amec Foster Wheeler Talcahuano, Operaciónes y
Mantenciones Limitada
Camino A Ramuntcho 3230, Sector 4 Esquinas, Talcahuano, Chile 100
ISI Mustang Chile SpA Calle Providencia 337, off. 7, Comuna de Providencia, Santiago, Chile 100
China
Amec Foster Wheeler Engineering & Consulting
(Shanghai) Co., Ltd
Room 204, Building 1, No. 1287, Shangcheng Road, Pudong New District,
Shanghai
100
Liaoning Province Pharmaceutical Planning and
Designing Institution Co. Ltd.
3rd Floor, Gate 4, 153-10 Chuangxin Road, Hunnan District, Shenyang,
Liaoning Province, China
100
Shenyang Dongyu Youan Pharmaceutical Technology
Co. Ltd.
Gate 2, 8# Wulihe Street, Heping District, Shenyang, Liaoning Province,
China
76
Colombia
Wood Engineering & Consultancy Colombia S.A.S. Carrera 11 A No. 96-51 5th loor, Bogota D.C., Colombia 100
Cyprus
AMEC Overseas (Cyprus) Limited 1, Lampousas Street, 1095 Nicosia, Cyprus 100
WGPS International Limited Elenion Building, 2nd Floor, 5 Themistocles Street, CY-1066
Nicosia,CY-1310 Nicosia, PO Box 25549, Cyprus
100
Wood Group Angola Limited Elenion Building, 2nd Floor, 5 Themistocles Street, CY-1066
Nicosia,CY-1310 Nicosia, PO Box 25549, Cyprus
100
Wood Group Equatorial Guinea Limited Elenion Building, 2nd Floor, 5 Themistocles Street, CY-1066
Nicosia,CY-1310 Nicosia, PO Box 25549, Cyprus
100
Democratic Republic of Congo
MDM Engineering SPRL 32 Avenue 3Z, Commune de Kasuku, Ville de Kindu, Democratic Republic
of Congo
100
Egypt
Foster Wheeler Petroleum Services S.A.E. Al-Amerya General Free Zone, Alexandria, Egypt 100
Equatorial Guinea
Baker Energy International Equatorial Guinea S.A. Bioko, Island Region, Malabo 65
Hexagon Sociedad Anonima con Consejo de
Administracion
c/o Solege, Calle Kenia S/N, Malabo, Equatorial Guinea 65
France
Amec Foster Wheeler France S.A. 14, Place de la Coupole, Charenton-le-Pont, France, 94220 100
Wood Group Engineering Services (France) SAS 6Pl de la Madeleine, 75008, Paris, France 100
Wood Group France SAS 108 rue de Longchamp 75116 Paris 100
Gabon
Production Services Network Gabon SARL 1.149, Republic Boulevard, CEDAM Building, 6th Floor, Bali - Douala,
Douala, PO Box 3586, Cameroon
100
Germany
Bauunternehmung Kittelberger GmbH i.L. Liebigstr. 1-3, Kaiserslautern, 67661, Germany 100
KIG Immobilien Beteiligungsgesellschaft mbH Hammstrasse 6, 04129 Leipzig, Germany 100
KIG Immobiliengesellschaft mbH & Co. KG Hammstrasse 6, 04129 Leipzig, Germany 100
Wood E&IS GmbH Weserstrasse 4, Frankfurt am Main, 60329, Germany 100
Ghana
Amec Foster Wheeler Operations Ghana Limited House Number 4, Momotse Avenue, Behind All Saints Anglican Church,
Adabraka, PO Box GP 1632, Accra, Greater Accra, Ghana
100
Wood & BBS Ghana Ltd No 4 Momotsa Avenue, Behind All Saints Anglican Church, Adabraka,
Accra, Ghana
80
Wood Group Ghana Limited 20 Jones Nelson Road, Adabraka, Accra, Ghana
49*
Greece
Amec Foster Wheeler Hellas Engineering and
Construction Societe Anonyme
15 Meandrou Street, Athens, 115 28, Greece 100
Guatemala
AMEC Guatemala Engineering and Consulting,
Sociedad Anonima
Ciudad Guatemala, Guatemala 100
Guernsey
AMEC Operations Limited 22 Havilland Street, St Peter Port, GY1 2QB, Guernsey 100
Garlan Insurance Limited PO Box 33, Maison Trinity, Trinity Square, St Peter Port, GY1 4AT,
Guernsey
100
Wood Group Offshore Services Limited PO Box 119 Martello Court, Admiral Park, St Peter Port, Guernsey, GY1
3HB, Guernsey
100
Wood USA Holdings Limited 22 Havilland Street, St Peter Port, GY1 2QB, Guernsey 100
Hong Kong
AMEC Asia Paciic Limited 3806, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
99
SgurrEnergy Hong Kong Limited 26/F Beautiful Group Tower, 77 Connaught Road Central, Hong Kong 100
India
Ingenious Process Solutions Private Limited 307, Atlanta Estate, 3rd Floor, Hanuman Tekdil Road Vitbhatti, Off. W.E.
Highway, Goregaon (East) Mumbai MH 400063
100
Mustang Engineering India Private Limited R9, F -3 RD W: B, P-214, B- Wing, Laxmikant Apartment,Sitaram Keer
Marg, Mahim, Mumbai, 400016, India
100
Wood India Engineering & Projects Private Limited 6th Floor, Zenith Building, Ascendas IT Park, CSIR Road, Taramani,
Chennai 600 113, India
100
Wood Group Kenny India Private Limited 15th Floor Tower-B, Building No. 5, DLF Cyber City, ,HR, Phase III
Gurgaon, 122002, India
100
Wood Group PSN India Private Limited 5th Floor, Zenith Building, Ascendas IT Park, CSIR Road, Taramani,
Chennai, 600113, India
100
Indonesia
PT AGRA Monenco
c/o 2020 Winston Park Drive, Suite 700, Oakville, ON, L6H 6X7, Canada 100
PT Amec Foster Wheeler Indonesia Perkantoran Pulo mas Blok VII No. 2, Jl Perintis Kemerdekaan, Pulo
Gadung, Jakarta, Timur, Indonesia
55
PT Australian Skills Training
Green Town Warehouse No. 2, Bengkong-Batam-Indonesia, Indonesia 95
PT Foster Wheeler O&G Indonesia Perkantoran Pulo mas Blok VII No.2, Jl. Perintis Kemerdekaan, Pulo
Gadung, Jakarta Timur 13260, Indonesia
90
PT Harding Lawson Indonesia c/o 2020 Winston Park Drive, Suite 700, Oakville, ON, L6H 6X7, Canada 100
PT Simons International Indonesia c/o 2020 Winston Park Drive, Suite 7000, Oakville, Ontario, Canada 100
PT Wood Group Indonesia Gedung Perkantoran Prudential Centre, Kota Kasablanka, Lantai 22, Unit
A, J1, Cassablanca Kav, 88 Kel. Menteng Dalam, Kec.Tebet, Kota Adm,
Jarkarta Selantan, DKI Jarkarta, Malaysia
90
Iran
Foster Wheeler Adibi Engineering
9th Floor Aluminumm Building, Avenue Shah, Tehran 45
Wood Group Iran - Qeshm Company (pjs) No 2564, Hafez Street, Toola Industrial Park,Qeshm Island, Annaba, Iran
97
Iraq
Ghabet El Iraq for General Contracting and
Engineering Services, Engineering Consultancy (LLC)
Suite 24, Building 106,St 19, Sec 213, Al-Kindi St, Al-Haritheeya Qts,
Baghdad, Iraq
100
Touchstone General Contracting, Engineering
Consultancy and Project Management LLC
Flat no. 23A, 3rd Floor, near Kahramana Square Anbar Building, District
no. 903, Hay Al Karada, Baghdad, Iraq
100
Wood Group, LLC Shoresh, Hadid and Khashab St., Kurdistan, Erbil, Iraq 100
Ireland
Wood Group Kenny Ireland Limited Second Floor, Blocks 4 and 5, Galway Technology Park, Parkmore, Galway,
Ireland
100
Italy
Geo Rinnovabile S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
Greendream1 S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
Greendream2 S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
HWF S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
Hybrid Energy S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
Tre Rinnovabili S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
Wood Italiana S.r.l. Via S. Caboto 15, Corsico, 20094, Italy 100
Wood Sardegna S.r.l. Via Sebastiano Caboto 15, 20094- Corsico, Milan, 20094, Italy 100
Wood Solare Italia S.r.l. Via S. Caboto 15, Corsico, Milan, 20094, Italy 100
John Wood Group PLC
Annual Report and Accounts 2021
213
John Wood Group PLC
Annual Report and Accounts 2021
212
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
Jamaica
Monenco Jamaica Limited
c/o 2020 Winston Park Drive, Suite 700, Oakville, ON, L6H 6X7, Canada 100
Jersey
GTS Power Solutions Limited 28 Esplanade, St Helier, JE2 3QA, Jersey 100
RHI Talent UK Limited 28 Esplanade, St Helier, JE2 3QA, Jersey 100
Wood Group Engineering Services (Middle East)
Limited
28 Esplanade, St Helier, JE2 3QA, Jersey 100
Wood Group Production Facilities Limited 28 Esplanade, St Helier, JE2 3QA, Jersey 100
Kazakhstan
AMEC Limited Liability Partnership 46 Satpayev St., Atyrau City, Atyrau Oblast, 060011, Kazakhstan 100
Foster Wheeler Kazakhstan LLP app. 27, h. 64, Bostandykskiy district, Abaya Ave., Almaty City,
Kazakhstan
100
QED International (Kazakhstan) Limited Liability
Partnership
46 Satpayev St., Atyrau City, Atyrau Oblast, 060011, Kazakhstan 100
Wood Group Kazakhstan LLP Satpayev str. 46, Atyrau, 060011, Kazakhstan 100
Kuwait
AMEC Kuwait Project Management and Contracting
Company W.L.L.
2nd Floor, Al Mutawa Building, Ahmed Al Jaber Street, Sharq, Kuwait City
49*
Liberia
Amec Foster Wheeler Liberia Inc King Plaza, 2nd-4th Floors, Broad Street, Monrovia 10, Liberia 100
Luxembourg
Financial Services S.à r.l. 15, Boulevard Friedrich Wilhelm Raiffeisen, L-2411, Luxembourg 100
FW Investment Holdings S.à r.l. 15, Boulevard Friedrich Wilhelm Raiffeisen, L-2411, Luxembourg 100
Malaysia
Amec Foster Wheeler OPE Sdn. Bhd. Suite 1005, 10th Floor, Wisma Hamzah-Kwong Hing, No. 1, Leboh
Ampang, Kuala Lumpur, 50100, Malaysia
100
BMA Engineering SDN. BHD. Unit C-12-4, Level 12, Block C, Megan Avenue II, Wilayah
Persekutuan,Wilayah Persekutuan, Kuala Lumpur, 50450, Malaysia
100
Foster Wheeler (Malaysia) Sdn. Bhd. Suite 1005, 10th Floor, Wisma Hamzah-Kwong Hing, No. 1, Leboh
Ampang, Kuala Lumpur, 50100, Malaysia
100
Foster Wheeler E&C (Malaysia) Sdn. Bhd. Suite 1005, 10th Floor, Wisma Hamzah-Kwong Hing, No. 1, Leboh
Ampang, Kuala Lumpur, 50100, Malaysia
70
Rider Hunt International (Malaysia) Sdn Bhd Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara,
Damansara Heights, Kuala Lumpur, 50490, Malaysia
100
Wood Group Engineering Sdn. Bhd Level 7, Menara Milenium,Jalan Damanlela, Pusat Bandar Damansara,
Damansara Heights,Wilayah Persekutuan,Wilayah Persekutuan, Kuala
Lumpur, 50490, Malaysia
0*
Wood Group Kenny Sdn Bhd c/o Securities Services (Holdings) Sdn Bhd, level 7, Menara Milenium,
Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, ,Kuala
Lumpur, Damansara Town Centre, Damansa, 50490, Malaysia
25*
Wood Group Mustang (M) Sdn. Bhd. Level 7, Menara Milenium,Jalan Damanlela, Pusat Bandar Damansara,
Damansara Heights,Wilayah Persekutuan,Wilayah Persekutuan, Kuala
Lumpur, 50490, Malaysia
100
Mauritius
MDM Engineering Investments Ltd 1st Floor, Felix House, 24 Dr Joseph Street, Port Louis, Mauritius 100
MDM Engineering Projects Ltd 1st Floor, Felix House, 24 Dr Joseph Street, Port Louis, Mauritius 100
P.E. Consultants, Inc. c/o First Island Trust Company Ltd, Suite 308, St. James Court, St. Denis
Street, Port Louis, Mauritius
100
QED International Ltd c/o Ocorian Corporate Services (Mauritius) Limited, 6th Floor, Tower A, 1
CyberCity, Ebene, 72201, Mauritius
100
Mexico
AGRA Ambiental S.A. de C.V. c/o 2020 Winston Park Drive, Suite 700, Oakville, ON, L6H 6X7, Canada 100
Amec Foster Wheeler Energia Mexico S. de R.L. de C.V. Av. Vasconcelos 453, Colonia del Valle 66220 Nuevo Leon, Monterrey
(Estados Unidos de México), Mexico
100
Amec Foster Wheeler Mexico, S.A. de C.V. David Alfaro Siqueiros No.104, Piso 2, Colonia Valle Oriente, San Pedro
Garza Garcia, Nuevo Leon, C.P. 66269, Mexico
100
AYMEC de Mexico S.A. de C.V.
453 Planta Alta Del Valle, San Pedro Garza Garcia, Nuevo Leon 66220, Mexico
100
CEC Controls Automatizacion S. de R.L. de C.V. Libramiento Carr. Silao-León #201, Esq. Prolongación Bailleres, Col.
Progreso Silao, Guanajuato, CP. 36135, Mexico
100
Foster Wheeler Constructors de Mexico S. de R.L. de C.V.
699 15th Street, 6th Avenue, Agua Prieta, Sonora, Mexico 80
Global Mining Projects and Engineering, S.A. de C.V. Calle Coronado 124, Zona Centro, Chihuahau, Chihuahau, 31000, Mexico 100
Harding Lawson de Mexico S.A. de C.V. Ediicio Omega, Campos Eliseos 345, loors 2, 3 & 11, Chapultepec
Polanco 11560 Mexico, D.F.
100
ISI Mustang Servicios de Ingenieria de Mexico, S de R.L.
De C .V.
HOMERO 1804 PISO 11,COL. LOS MORALES - DELEGACION MIGUEL
HIDALGO, Distrito Federal, Mexico City, C.P. 11540, Mexico
100
Wood Group de Mexico S.A. de C.V. Insurgentes Sur #619 piso 10, Colonia Napoles, Municipio Benito Juarez,
between Calle Vermont and Calle Yosemite, Mexico City, 03810, Mexico
100
Wood Group Management Services de Mexico, S.A. de
C.V.
Blvd. Manuel Avila Camacho 40 - 1801, Lomas de Cahpultepec, Delgacion
Miguel Hidalgo, Mexico, D.F. 11000
100
Mongolia
AMEC LLC Mongol TV Tower-1005, Chinggis Avenue, Sukhbaatar District, 1st khoroo,
Ulaanbaatar, Mongolia
100
Mozambique
Amec Foster Wheeler Mozambique Limitada Mocambique, Maputo Cidade, Distrito Urbano 1, Bairro Sommerschield II,
Av. Julius Nyerere, nº 3412, Maputo, Mozambique
100
Wood Group Mozambique, Limitada 73 Rua Jose Sidumo, Bairro da Polana, Maputo, Mozambique 100
Netherlands
AMEC GRD SA B.V. Meander 251, Arnhem, 6825 MC, Netherlands 100
AMEC Holland B.V. EDGE Amsterdam West, Basisweg 10, 1043 AP, Amsterdam, Netherlands 100
AMEC Investments B.V. EDGE Amsterdam West, Basisweg 10, 1043 AP, Amsterdam, Netherlands 100
Foster Wheeler Continental B.V. Naritaweg 165, 1043 BW Amsterdam, Netherlands 100
Foster Wheeler Europe B.V. Naritaweg 165, 1043 BW Amsterdam, Netherlands 100
John Wood Group B.V. C/O Centralis Netherlands BV, Zuidplein 126, WTC, Toren H 15e,
Amsterdam, 1077XV, Netherlands
100
John Wood Group Holdings BV C/O Centralis Netherlands BV, Zuidplein 126, WTC, Toren H 15e,
Amsterdam, 1077XV, Netherlands
100
New Zealand
M&O Paciic Limited 26 Manadon Street, Spotswood, New Plymouth, 4310, New Zealand 100
Nigeria
AMEC Contractors (W/A) Limited 13A AJ Marinho Drive, Victoria Island, Lagos, Nigeria 100
AMEC King Wilkinson (Nigeria) Limited No 3, Hospital Road, PO Box 9289, Lagos, Nigeria 100
AMEC Offshore (Nigeria) Limited 18th Floor, Western House, 8/10 Broad street, Lagos, Nigeria 75
Foster Wheeler (Nigeria) Limited 1 Murtala Muhammed Drive, (Formerly Bank Road), Ikoyi, Lagos, Nigeria 100
Foster Wheeler Environmental Company Nigeria
Limited
c/o Nwokedi & Co., 21 Ajasa Street, Onikan, Nigeria
87
JWG Nigeria Limited 13 Sumbo Jibowu Street, Ikoyi, Lagos, Nigeria 100
Overseas Technical Services Nigeria Limited No 13 Sumbo Jibowu Street, Ikoyi, Lagos, Nigeria 93
Norway
Wood Group Norway AS Fokserodveien 12, Sandejord, 3241, Norway 100
Oman
Amec Foster Wheeler Engineering Consultancy LLC PO Box 1469, Postal Code 133, Al-Khuwair, Sultanate of Oman 60
Wood LLC Bldg No. 89, Way No. 6605, Al Oman Street, Ghala Industrial Area, P.O.
Box 293, Al Khuwair, PC 133, Oman
70
Panama
MACTEC Engineering and Consulting, Corp. Brisas del Golf, Street 17, House 4-E Panama City, Panama 0**
Papua New Guinea
Wood Engineering PNG Ltd Deloitte Touche Tohmatsu, Level 9, Deloitte Haus, Macgregor Street,
Section 8, Allotment 19, Port Moresby, National Capital District, Papua
New Guinea
100
Wood Group PNG Limited Dentons PNG, Level 5, Bsp Haus, Harbour City, Port Moreseby,Papau
New Guinea, National Capital District, Papua New Guinea
100
Peru
Wood Ingenieria y Consultoria Peru S.A. Calle Las Begonias 441, Piso 8, San Isidro, Lima, 27, Peru 100
Wood Group Peru S.A.C. Av. de la Floresta 407, 5th Floor, San Borja, Lima, Peru 100
Philippines
Foster Wheeler (Philippines) Corporation U-7A, 7/F PDCP Bank Centre,V.A. Ruino St. Corner L.P. Leviste St.,
Salcedo Village, Makati City, PH, 1227
100
Production Services Network Holdings Corp. 585 ME National Road HW, Barangay Alangilan, Batangas City,
Batangas, Philippines
100
PSN Production Services Network Philippines Corp 12th Floor, Net One Center,26th Street Corner, 3rd Avenue, Crescent Park
West,Taguig, Metro Manilla, Bonifacio Global City, 1634, Philippines
100
Poland
Amec Foster Wheeler Consulting Poland Sp. z o.o. ul. Chmielna 132/134, Warsaw, 00-805, Poland 100
Portugal
Amec Foster Wheeler (Portugal) Lda Avenida Barbosa du Bocage 113-4, Lisboa, 1050-031, Portugal 100
Puerto Rico
Wood Puerto Rico, P.S.C. Metro Ofice Park #7, Street 1, Suite 204, Guaynabo, Guaynabo, PR, PR
00968, Puerto Rico
0**
Qatar
Production Services Network Qatar LLC PO Box 2515, Doha, Qatar
49*
John Wood Group PLC
Annual Report and Accounts 2021
215
John Wood Group PLC
Annual Report and Accounts 2021
214
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
Romania
AMEC Operations S.R.L Rooms 1 and 2, 2nd Floor, No. 59 Strada Grigore Alexandrescu, Sector 1,
Bucharest 010623, Romania
100
CEC Controls Company S.R.L. Bulevardul Tudor Vladimirescu No. 22, Bldg. Greengate Ofice, 5th Floor,
Room 516, Campus 02, District 5, Bucharest, Romania
100
Russia
OOO Amec Foster Wheeler
Ofice E-100, Park Place, 113/1, Leninsky Prospekt, 117198, Moscow,
Russian Federation 113/1, Leninsky Prospekt, 117198, Moscow, Russian
Federation
100
Production Services Network Eurasia LLC 2-6 Floors,88 Amurskaya, Yuzhno-Sakhalinsk, 693020, Russian Federation 50*
Production Services Network Sakhalin LLC 2-6 Floors,88 Amurskaya, Yuzhno-Sakhalinsk, 693020, Russian Federation 50*
Sakhalin Technical Services Network LLC Suite 417, Kommunistichesy Prospekt 32, Yuzhno-Sakhalinsk, Sakhalin,
Russian Federation
40*
Saudi Arabia
Amec Foster Wheeler Energy and Partners Engineering
Company
Majd Business Center, Tower B, P.O. Box 30920, King Faisal Road, Al-
Khobar, 31952, Saudi Arabia
75
Mustang and Faisal Jamil Al-Hejailan Consulting
Engineering Company
PO Box 9175, Almalaz, Salahuddin Alayoubi Street, Riyadh, 11413, Saudi
Arabia
70
Mustang Saudi Arabia Co. Ltd. King Fahad Road, Rakah, Po Box 8145, Al-Khobar, 34225, Saudi Arabia 100
Wood Group ESP Saudi Arabia Limited PO Box 1280, Al-Khobar 51
Singapore
Amec Foster Wheeler Asia Paciic Pte. Ltd. One Marina Boulevard #28-00, Singapore, 018989, Singapore 100
AMEC Global Resources Pte Limited 991E Alexandra Road, #01 - 25, 119973, Singapore 100
Foster Wheeler Eastern Private Limited 1 Marina Boulevard, #28-00, Singapore 018989 100
OPE O&G Asia Paciic Pte. Ltd. 1 Marina Boulevard, #28-00, One Marina Boulevard, 018989, Singapore 100
Rider Hunt International (Singapore) Pte Limited 24 Rafles Place, #24-03 Clifford Centre, Singapore, 048621 100
Simons Paciic Services Pte Ltd. 8 Marina Boulevard #05-02, Marina Bay Financial Centre, Singapore,
018981, Singapore
100
Wood Group International Services Pte. Ltd. 991E Alexandra Road, #01 - 25, 119973, Singapore 100
Slovakia
The Automated Technology Group (Slovakia) s.r.o. c/o, Kinstellar s.r.o., Hviezdoslavovo nám 13, Bratislava, 811 02, Slovakia 100
South Africa
Amec Foster Wheeler Properties (Pty) Limited Waterfall Corporate Campus, Building 6, 74 Waterfall Drive Waterval
City, Gauteng, 2090, South Africa
100
AMEC Minproc (Proprietary) Limited 2 Eglin Road, Sunninghill, 2157, South Africa 100
Mossel Bay Energy IPP (proprietary) Limited (RF) 2nd Road Halfway House, Midrand, South Africa 90
Rider Hunt International South Africa (Pty) Ltd Building No. 2, Silver Stream Business Park, No. 10 Muswell Road South,
Bryanston, South Africa
83
Wood BEE Holdings (Proprietary) Ltd Waterfall Corporate Campus, Building 6, 74 Waterfall Drive Waterval
City, Gauteng, 2090, South Africa
58
Wood Mining South Africa (Pty) Ltd Zeelie Ofice Park, 381 Ontdekkers Road, Floida Park Ext 3, Roodepoort,
1709, South Africa
100
Wood South Africa (PTY) Ltd Waterfall Corporate Campus, Building 6, 74 Waterfall Drive Waterval
City, Gauteng, 2090, South Africa
70
South Korea
AMEC Korea Limited KG Tower 5F, 92 Tongil-ro, Jung-gu, Seoul 04517, Korea 100
Spain
Amec Foster Wheeler Energia, S.L.U. Calle Gabriel Garcia Marquez, no 2, Parque Empresarial Madrid, Las
Rozas, 28232 Las Rozas, Madrid, Spain
100
Wood Iberia S.L.U. Calle Gabriel Garcia Marquez, no 2, Parque Empresarial Madrid - Las
Rozas, 28230 Las Rozas, Madrid, Spain
100
Switzerland
A-FW International Investments GmbH c/o Intertrust Services (Schweiz) AG, Zählerweg 6, Zug, 6300,
Switzerland
100
Wood Engineering AG
Lohweg 6, 4054 Basel, Switzerland 100
Tanzania
MDM Projects-Tanzania Limited Plot No. 483, Garden Road, Mikocheni Ward, Kinondoni District, Dar es
Salaam, 14112, Tanzania, the United Republic of
100
Thailand
Amec Foster Wheeler Holding (Thailand) Limited 1st Floor Talaythong Tower, 53 Moo 9, Sukhumvit Road, Thungsukla,
Sriracha, Chonburi, 20230, Thailand
100
Foster Wheeler (Thailand) Limited 53 Talaythong Tower, 1st Floor, Moo 9, Sukhumvit Road, Tambol
Tungsukhla, Amphur Sriracha, Chonburi, 20230, Thailand
100
SIE Siam Limited 91/17 Soi Wattananivet 4, Suthisarnvinijchai Road, Khwaeng Samsennok,
Khet Huaykwang, Bangkok Metropolis, Thailand
100
Simons International Engineering Ltd. 91/17 Soi Wattananivet 4, Suthisarnvinijchai Road, Khwaeng Samsennok,
Khet Huaykwang, Bangkok Metropolis, Thailand
100
Trinidad and Tobago
Wood Group Trinidad & Tobago Limited 18 Scott Bushe Street, Port of Spain, Trinidad and Tobago 100
Turkey
Amec Foster Wheeler Bimas Birlesik Insaat ve
Muhendislik A.S.
Kucukbakkalkoy Mah, Çardak Sok, No.1A Plaza, 34750 Atasehir, Istanbul,
Turkey
100
Uganda
Wood Group PSN Uganda Limited KAA House, Plot 41,Nakasero Road, PO Box 9566, Kampala, Uganda 100
Ukraine
Wood Ukraine LLC Room 398, Building 26, Obolonskyi Avenue, Kyiv City, 04205, Ukraine 100
United Arab Emirates
Production Services Network Emirates LLC Unit 1301-CI Tower, Level 13, Al Bateen Street, Khalidiya, Abu Dhabi, PO
Box 105828
49*
PSN Overseas Holding Company Limited The MAZE Tower, 15th Floor, Sheikh Zayed Road, PO Box 9275, Dubai,
United Arab Emirates
100
United Kingdom
AFW Finance 2 Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC (F.C.G.) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC (MH1992) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC (MHL) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC (WSL) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC BKW Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Bravo Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Building Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Capital Projects Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Civil Engineering Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler (Holdings) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler Earth and Environmental (UK)
Limited
Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler Energy Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler Finance Asia Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler Finance Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler Group Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler International Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Amec Foster Wheeler Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Investments Europe Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Kazakhstan Holdings Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Offshore Developments Limited Ground Floor, 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland 100
AMEC Offshore Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Process and Energy Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Project Investments Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Services Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Trustees Limited
Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC USA Holdings Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
AMEC Wind Developments Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Automated Technology Group Holdings Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
East Mediterranean Energy Services Limited c/o Ledingham Chalmers LLP, 3rd Floor, 68-70 George Street, Edinburgh,
EH2 2LR, United Kingdom
100
Foster Wheeler (G.B.) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Foster Wheeler (London) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Foster Wheeler (Process Plants) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Foster Wheeler E&C Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Foster Wheeler Environmental (UK) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Foster Wheeler Europe
Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Foster Wheeler UK Investments Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland 100
Foster Wheeler World Services Limited
Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
FW Investments Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
HFA Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Integrated Maintenance Services Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
James Scott Limited Ground Floor, 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland 100
John Wood Group Holdings Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland 100
JWG Investments Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
JWGUSA Holdings Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Kelwat Investments Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Metal and Pipeline Endurance Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Mustang Engineering Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Press Construction Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
John Wood Group PLC
Annual Report and Accounts 2021
217
John Wood Group PLC
Annual Report and Accounts 2021
216
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
Process Plants Suppliers Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Production Services Network (UK) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Production Services Network Bangladesh Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
PSJ Fabrications Ltd Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
PSN (Angola) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
PSN (Philippines) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
PSN Asia Limited
15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
PSN Overseas Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
QED International (UK) Limited Ground Floor, 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland 100
RHI QS UK Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Rider Hunt International Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Sandiway Solutions (No 3) Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
SgurrEnergy Limited St Vincent Plaza, 319 St Vincent Street, Glasgow, G2 5LP, Scotland,
United Kingdom
100
The Automated Technology Group Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
WGD028 Limited Ground Floor, 15 Justice Mill Lane, Aberdeen, AB11 6EQ, United Kingdom 100
WGPSN (Holdings) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
WGPSN Eurasia Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 50
Wood (Indonesia) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood and Company Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Environment & Infrastructure Solutions UK
Limited
Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Group Algeria Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Algiers Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Annaba Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Arzew Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Engineering & Operations Support
Limited
15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Engineering (North Sea) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Hassi Messaoud Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Holdings (International) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Intetech Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Group Investments Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Kenny Corporate Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Kenny Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Group Kenny UK Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Group Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Power Investments Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group Production Services UK Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group UK Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 100
Wood Group/OTS Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood International Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Nuclear Holdings Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Pensions Trustee Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood Transmission and Distribution Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
Wood UK Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England 100
United States
4900 Singleton, L.P. 400 North St. Paul, Dallas, TX, 75201 100
AMEC Architectural, Inc.
511 Congress Street, Ste. 200, Portland, ME, 04101, United States 100
AMEC Construction Management, Inc. United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
100
AMEC E&E, P.C. 600 N 2nd Street, Suite 401, Harrisburg, PA, 17101-1071, United States 0**
AMEC Engineering and Consulting of Michigan, Inc. 46850 Magellan, Suite 190, Novi, MI, 48377, United States 100
Amec Foster Wheeler Arabia Ltd. 3411 Silverside Road Tatnall Building #104, Wilmington, New Castle
County, DE, 19810, United States
100
Amec Foster Wheeler Environmental Equipment
Company, Inc.
Corporation Trust Company, Corporation Trust Center, 1209 Orange
Street, Wilmington, New Castle, DE, 19801
100
Amec Foster Wheeler Industrial Power Company, Inc. 3411 Silverside Road Tatnall Building #104, Wilmington, New Castle
County, DE, 19810, United States
100
Amec Foster Wheeler Kamtech, Inc. 1979 Lakeside Parkway, Suite 400, Tucker, GA, 30084, United States 100
Amec Foster Wheeler Martinez, Inc. c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801
100
Amec Foster Wheeler North America Corp. United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
Amec Foster Wheeler Power Systems, Inc. c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801
100
Amec Foster Wheeler USA Corporation United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
AMEC Holdings, Inc. United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
100
AMEC Industrial Programs, LLC 1105 Lakewood Parkway, Suite 300, Alpharetta, GA, 30009, United
States
100
AMEC North Carolina, Inc. 225, Hillsborough Street, Raleigh, NC, 27603, United States 100
AMEC Oil & Gas World Services, Inc. 1209, Orange Street, Wilmington, DE, 19801, United States 100
Barsotti’s Inc. Perryville Corporate Park, 53 Frontage Road, PO Box 9000, Hampton,
NJ, 08827-90000
100
BMA Solutions Inc. United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
C E C Controls Company, Inc. United Agent Group Inc., 28175 Haggerty RoadD, Novi, MI, 48377, United
States
100
Cape Software, Inc. United Agent Group, 2425 W Loop South #200, Houston, TX, 77027,
United States
100
Equipment Consultants, Inc. Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801 100
Foster Wheeler Asia Limited
3411 Silverside Road Tatnall Building #104, Wilmington, New Castle
County, DE, 19810, United States
100
Foster Wheeler Energy Corporation c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801
100
Foster Wheeler Environmental Corporation 5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Foster Wheeler Inc.
United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
Foster Wheeler Intercontinental Corporation 3411 Silverside Road Tatnall Building #104, Wilmington, New Castle
County, DE, 19810, United States
100
Foster Wheeler International LLC United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
100
Foster Wheeler LLC
United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
Foster Wheeler Realty Services, Inc. c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801
100
Ingenious Inc. United Agent Group, 2425 W Loop South #200, Houston, TX, 77027,
United States
100
ISI Group, L.L.C. United Agent Group, 2425 W Loop South #200, Houston, TX, 77027,
United States
100
JWGUSA Holdings, Inc. United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
Kelchner, Inc. United Agent Group Inc., 119 E. Court Street, Cincinnati, OH, 45202,
United States
100
MACTEC E&C International, Inc. 1105 Lakewood Parkway, Suite 300, Alpharetta, GA, 30009, United
States
100
MACTEC Engineering & Geology, P.C. 7 Southside Drive, Suite 201, Clifton Park, NY, 12065, United States 0**
MACTEC Environmental Consultants, Inc. 1105 Lakewood Parkway, Suite 300, Alpharetta, GA, 30009, United
States
100
Martinez Cogen Limited Partnership Perryville Corporate Park, 53 Frontage Road, PO Box 9000, Hampton,
NJ, 08827-9000
99
Mustang International, Inc. 5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
NDT Systems, Inc. United Agent Group, 2425 W Loop South #200, Houston, TX, 77027,
United States
100
Process Consultants, Inc. United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
100
RHI Talent USA Inc. United Agent Group Inc., 8275 South Eastern Av., #200, Las Vegas, NV,
89123, United States
100
Rider Hunt International (USA) Inc. United Agent Group, 2425 W Loop South #200, Houston, TX, 77027,
United States
100
Swaggart Brothers, Inc. United Agent Group Inc., 5708 S.E. 136th Avenue, #2, Portland, OR, 97236,
United States
100
Swaggart Logging & Excavation LLC United Agent Group Inc., 5708 S.E. 136th Avenue, #2, Portland, OR, 97236,
United States
100
Thelco Co. c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801
100
Wood Design, LLC 1075 Big Shanty Rd NW, Ste. 100, Kennesaw, GA, 30144, United States 0**
Wood Environment & Infrastructure Solutions, Inc. 1105 Lakewood Parkway, Suite 300, Alpharetta, GA, 30009, United
States
100
John Wood Group PLC
Annual Report and Accounts 2021
219
John Wood Group PLC
Annual Report and Accounts 2021
218
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
Wood Group Alaska, LLC United Agent Group Inc., 3411 Silverside Road, Tatnall Bldg. #104,
Wilmington, DE, 19810, United States
100
Wood Group PSN, Inc. United Agent Group Inc., 8275 South Eastern Av., #200, Las Vegas, NV,
89123, United States
100
Wood Group Support Services, Inc. United Agent Group Inc., 8275 South Eastern Av., #200, Las Vegas, NV,
89123, United States
100
Wood Group US Holdings, Inc. 3411 Silverside Road Tatnall Building #104, Wilmington, New Castle
County, DE, 19810, United States
100
Wood Group US International, Inc. United Agent Group Inc., 8275 South Eastern Av., #200, Las Vegas, NV,
89123, United States
100
Wood Group USA, Inc. 5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Wood Massachusetts, Inc. Suite 700, 155 Federal Street, Boston, MA, 02110, United States 100
Wood Programs, Inc. 2475 Northwinds Parkway, #200-260, Alpharetta, GA, 30009, United
States
100
Uzbekistan
Wood Energy Solutions LLC Sulton Darvoza Business Center, 38/1 Shakhrisabz Street, Tashkent,
100060, Uzbekistan
100
Vanuatu
O.T.S. Finance and Management Limited Law Partners House, Rue Pasteur, Port Vila, Vanuatu 100
Overseas Technical Service International Limited Law Partners House, Rue Pasteur, Port Vila, Vanuatu 100
Venezuela
Amec Foster Wheeler Venezuela, C.A. Avenida Francisco de Miranda, Torre Cavendes, Piso 9, Oic 903, Caracas,
Venezuela
100
*Companies consolidated for accounting purposes as subsidiaries on the basis of control. There is no material impact on the
inancial statements of the judgements applied in assessing the basis of control for these entities.
** The Group does not have a direct shareholding in these entities but considers them to be under group control.
Joint Ventures
Company Name
Registered Address
Ownership
Interest %
Australia
Clough AMEC Pty Ltd1 ‘Alluvion Building’, Level 9, 58 Mounts Bay Road, Perth, WA, 6000,
Australia
50
Azerbaijan
Socar-Foster Wheeler Engineering LLC
88A Zardaby Avenue,Baku, Azerbaijan
35
Canada
ABV Consultants Ltd1 Suite 2300, Bentall 5, 550 Burrard Street, Vancouver, BC, V6C 2B5,
Canada
50
AMEC Black & McDonald Limited1 60 Cutler Avenue, Dartmouth, NS, B3B 0J6, Canada 50
ODL Canada Limited 689 Water Street, Newfoundland, St. John’s, NL, A1E 1B5, Canada 50
Teshmont Consultants Inc. 1190 Waverley Street, Winnipeg, MB, R3T 0P4, Canada 50
Vista Mustang JV
Suite B12, 6020 2nd Street S. E., Calgary, AB, T2H 2L8, Canada 50
Chile
CEJV Ingeniería y Construcción Limitada Av. Isidora Goyenechea 2800, Floor 32, Las Condes, Santiago, 7550647,
Chile
50
Consorcio AMEC CADE / PSI Consultores Limitada Av. Jose Domingo, Canas No 2640, Nunoa, Santiago, 7750164, Chile 50
Consorcio Consultor Cade Zañartu Limitada Seminario 714, Ñuñoa, Santiago de Chile 50
Consorcio Consultor Systra / Cade Idepe / Geoconsult
Limitada
Av. Jose Domingo, Canas No 2640, Nunoa, Santiago, 7750164, Chile 40
Consorcio de Ingenieria Geoconsult Cade Idepe Limitada Av. Jose Domingo, Canas No 2640, Nunoa, Santiago, 7750164, Chile 50
Consorcio de Ingeniería Systra Cade Limitada Av. Jose Domingo, Canas No 2640, Nunoa, Santiago, 7750164, Chile 50
Consorcio de Ingenieria Transporte Systra Cade Idepe
Consultores Limitada
Jose Domingo Cañas 2640, Ñuñoa, Santiago Chile 50
Construcciòn e Ingenierìa Chile FI Limitada Avenida Andrés Bello 2711, Piso 22 - Comuna Las Condens, Santiago,
Chile
50
Construcciòn e Ingenieria FIM Chile,Limitada Avenida Santa Maria 2810, Comuna de Providencia, Santiago, Chile 33
China
Wood Zone Co., Ltd No. 143 Jinyi Road, Jinshan District, Shanghai, 200540, China 50
Cyprus
Wood Group - CCC Limited Elenion Building, 2nd Floor, 5 Themistocles Street, CY-1066
Nicosia,CY-1310 Nicosia, PO Box 25549, Cyprus
50
Kazakhstan
WOOD KSS JSC
Satpayev str. 46, Atyrau, 060011, Kazakhstan 50
Mexico
AFWA DUBA Salina Cruz, S. de R.L. de C.V. Carlos Salazar, #2333, Colonia Obrera, Monterrey, Nuevo Leon, Mexico 50
Grupo Industrial de Ingenieria Ecologica III HLA & Iconsa
S.A. de C.V.
Ediicio Omega, Campos Eliseos 345, loors 2, 3 & 11, Chapultepec
Polanco 11560 Mexico, D.F.
51
Mustang Diavaz, S.A.P.I. de C.V. Av. Revolucion 468, Col. San Pedro de los Pinos Mexico, D.F., 03800,
Mexico
50
Northam Conip Consorcio, S.A. de C.V. David Alfaro Siqueiros 104 piso 2, Col. Valle Oriente, San Pedro Garza
Garcia, Nuevo Leon, CP. 66269, Mexico
50
Netherlands
Wood Group Azerbaijan B.V. C/O Centralis Netherlands BV, Zuidplein 126, WTC, Toren H 15e,
Amsterdam, 1077XV, Netherlands
51
New Zealand
Wood Beca Limited Ground Floor, Beca House, 21 Pitt Street, Auckland, 1010, New Zealand 50
Oman
AMEC Al Turki LLC
c/o Al Alawi, Mansoor Jamal & Co., Barristers & Legal Consultants,
Muscat International Centre, Mezzanine Floor, Muttrah Business
District, P.O. Box 686 Ruwi, Oman
35
Qatar
Wood Black Cat LLC 5th Floor Al Aqaria Tower, Building No. 34, Museum Street, Old Salata
Area, Street 970, Zone 18, P.O Box No. 24523 Doha, Qatar
49
Saudi Arabia
AMEC BKW Arabia Limited1 Al Rushaid Petroleum Investment Co. Building, Prince Hamoud Street,
PO Box 31685 – Al Khobar 31952, Saudi Arabia
50
Spain
Insolux Monenco Medio Ambiente S.A. Calle Juan Bravo, 3-C, Madrid, 28006, Spain
49
Trinidad and Tobago
Massy Wood Group Ltd. 4th Floor, 6A Queens Park West, Victoria Avenue, Port of Spain, Trinidad
and Tobago
50
United Arab Emirates
Foster Wheeler Kentz Energy Services DMCC PO Box 26593, Unit 3601, Tiffany Tower, Cluster W, Jumeirah Lakes
Towers, Dubai, United Arab Emirates
50
John Wood Group PLC
Annual Report and Accounts 2021
221
John Wood Group PLC
Annual Report and Accounts 2021
220
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
United Kingdom
ACM Health Solutions Limited Booths Park, Chelford Road, Knutsford, Cheshire, WA16 8QZ, England,
United Kingdom
33
Ethos Energy Group Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 51
Lewis Wind Power Holdings Limited EDF Energy, GSO Business Park, East Kilbride, G74 5PG, Scotland 50
RWG (Repair & Overhauls) Limited 15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom 50
South Kensington Developments Limited Portland House, Bickenhill Lane, Solihull, Birmingham, B37 7BQ,
England, United Kingdom
50
Stornoway Wind Farm Limited EDF Energy, GSO Business Park, East Kilbride, G74 5PG, Scotland 50
United States
Flour AMEC II, LLC 100 Fluor Daniel Drive, Greenville, SC, 29607-2770, United States 45
Entities are consolidated as joint operations on the basis of control.
In addition to the subsidiaries listed above, the Group has a number of overseas branches.
Details of the direct subsidiaries of John Wood Group PLC are provided in note 1 to the parent company inancial statements.
The Group will be exempting the following companies from an audit in 2021 under Section 479A of the Companies Act 2006. All of
these companies are fully consolidated in the Group Financial Statements.
AFW Finance 2 Limited (Registered number 09861575)
AME Building Limited (Registered number 165287)
AMEC (F.C.G) Limited (Registered number 148585)
AMEC (MH1992) Limited (Registered number 222870)
AMEC (MHL) Limited (Registered number 713103)
AMEC (WSL) Limited Registered number 514311)
AMEC BKW Limited (Registered number 169831)
AMEC Bravo Limited (Registered number 6206015)
AMEC Capital Projects Limited (Registered number 2804109)
AMEC Civil Engineering Limited (Registered number 1265199)
Amec Foster Wheeler (Holdings) Limited (Registered number 00163609)
Amec Foster Wheeler Earth and Environmental (UK) Limited (Registered number 4987981)
Amec Foster Wheeler Energy Limited (Registered number 1361134)
Amec Foster Wheeler Finance Asia Limited (Registered number 6205760)
Amec Foster Wheeler Finance Limited (Registered number 1332332)
Amec Foster Wheeler Group Limited (Registered number 4612748)
Amec Foster Wheeler International Limited (Registered number 3203966)
AMEC Investments Europe Limited (Registered number 3704533)
Amec Kazakhstan Holdings Limited (Registered number 4530056)
AMEC Offshore Developments Limited (Registered number SC137017)
AMEC Offshore Limited (Registered number 1054207)
AMEC Process and Energy Limited Registered number 2028340)
AMEC Project Investments Limited (Registered number 2619408)
AMEC Services Limited (Registered number 2804093)
AMEC Trustees Limited (Registered number 2830098)
Amec USA Holdings Limited (Registered number 4041261)
Amec Wind Developments Limited (Registered number 8781332)
Automated Technology Group Holdings Limited (Registered number 07871655)
East Mediterranean Energy Services Limited (Registered number SC505318)
Foster Wheeler (G.B.) Limited (Registered number 745470)
Foster Wheeler (London) Limited (Registered number 887857)
Foster Wheeler (Process Plants) Limited (Registered number 1184855)
Foster Wheeler E&C Limited (Registered number 2247293)
Foster Wheeler Environmental (UK) Limited (Registered number 1657494)
Foster Wheeler Europe (Registered number 04127813)
Foster Wheeler UK Investments Limited Registered number SC649888)
Foster Wheeler World Services Limited (Registered number 1439353)
FW Investments Limited (Registered number 6933416)
HFA Limited (Registered number SC129298)
Integrated Maintenance Services Limited (Registered number 3665766)
James Scott Limited (Registered number SC35281)
John Wood Group Holdings Limited (Registered number SC642609)
JWG Investments Limited (Registered number SC484872)
JWGUSA Holdings Limited (Registered number SC178512)
John Wood Group PLC
Annual Report and Accounts 2021
223
John Wood Group PLC
Annual Report and Accounts 2021
222
Strategic report Governance
Financial statements
Notes to the inancial statements continued
Financial statements
Kelwat Investments Limited (Registered number SC203212)
Metal and Pipeline Endurance Limited (Registered number 534109)
Mustang Engineering Limited (Registered number SC273548)
Press Construction Limited (Registered number 471400)
Process Plants Suppliers Limited (Registered number 957881)
Production Services Network (UK) Limited (Registered number SC293004)
Production Services Network Bangladesh Limited (Registered number 02214332)
PSJ Fabrications Ltd (Registered number 01205595)
PSN (Angola) Limited (Register number SC311500)
PSN (Philippines) Limited (Registered number SC345547)
PSN Asia Limited (Registered number SC317111)
PSN Overseas Limited (Registered number SC319469)
QED International (UK) Limited (Registered number SC106477)
RHI QS UK Limited (Registered number 12522586)
Rider Hunt International Limited (Register number 02305615)
Sandiway Solutions (No 3) Limited (Registered number 5318249)
SgurrEnergy Limited (Registered number SC245814)
The Automated Technology Group Limited (Registered number 03109235)
WGD028 Limited (Registered number SC136216)
WGPSN (Holdings) Limited (Registered number SC288570)
WGPSN Eurasia Limited (Registered number SC470501)
Wood (Indonesia) Limited (Registered number SC693591)
Wood and Company Limited (Registered number 01580678)
Wood Environment & Infrastructure Solutions UK Limited (Registered number 02190074)
Wood Group Algeria Limited (Registered number SC299843)
Wood Group Algiers Limited (Registered number SC299845)
Wood Group Annaba Limited (Registered number SC299848)
Wood Group Arzew Limited (Registered number SC299850)
Wood Group Engineering (North Sea) Limited (Registered number SC030715)
Wood Group Engineering and Operations Support Limited (Registered number SC159149)
Wood Group Hassi Messaoud Limited (Registered number SC299851)
Wood Group Holdings (International) Limited Register number SC169712)
Wood Group Intetech Limited (Registered number 02575585)
Wood Group Investments Limited (Registered number SC301983)
Wood Group Kenny Corporate Limited (Registered number SC147353)
Wood Group Kenny Limited (Registered number 1398385)
Wood Group Kenny UK Limited (Registered number 2331383)
Wood Group Power Investments Limited (Registered number SC454342)
Wood Group Production Services UK Limited (Registered number SC278252)
Wood Group/OTS Limited (Registered number 1579234)
Wood International Limited (Registered number 10517856)
Wood Limited (Registered number 9861563)
Wood Nuclear Holdings Limited (Registered number 03725076)
Wood Pensions Trustee Limited (Registered number 1889899)
Wood Transmission and Distribution Limited (Registered number 11829648)
Wood UK Limited (Registered number 3863449)
Company inancial statements
Company inancial statements
Company balance sheet
226
Statement of changes in equity
227
Notes to the Company inancial
statements
228
Five year summary
235
Information for shareholders
236
John Wood Group PLC
Annual Report and Accounts 2021
225
John Wood Group PLC
Annual Report and Accounts 2021
224
Strategic report Governance
Financial statements
Statement of changes in equity
For the year ended 31 December 2021
Company balance sheet
As at 31 December 2021
Financial statements
Note
2021
$m
2020
$m
Non-current assets
Investments
1 4,370.4
4,348.3Long term receivables
2 2,573.3
2,582.1
6,943.7
6,930.4
Current assets
Trade and other receivables
4 1,424.9
678.3
Income tax receivable
9.1
8.2
Cash and cash equivalents
5
1.0
79.7
1,435.0
766.2
Current liabilities
Borrowings
6 230.3
201.0Trade and other payables
7 1,904.8
1,788.42,135.1
1,989.4
Net current liabilities (700.1)
(1,223.2)
Non-current liabilities
Borrowings
6 1,514.1
1,096.5
Other non-current liabilities
8 1,128.7
1,018.3
2,642.8
2,114.8
Net assets 3,600.8
3,592.4
Equity
Share capital
10 41.3
41.1
Share premium
11 63.9
63.9
Retained earnings
12 416.6
408.4Merger reserve
13 2,540.8
2,540.8Other reserves
14 538.2
538.2Total equity 3,600.8
3,592.4
As permitted by Section 408 (3) of the Companies Act 2006, no proit and loss account of the Company is presented. The loss for
the inancial year of the Company was $16.0m (2020: $13.8m).
The inancial statements on pages 226 to 234 were approved by the board of directors on 19 April 2022, and signed on its behalf by:
Robin Watson, Director David Kemp, Director
Share capital
$m
Share
premium
$m
Retained
earnings
$m
Merger
reserve
$m
Other
reserves
$m
Total
equity
$m
At 1 January 2020 401.0 2,540.8 538.2 3,584.8
40.9
63.9Loss for the year
- - (13.8) - - (13.8)
Total comprehensive loss for the year
- - (13.8) - - (13.8)
Transactions with owners:
Credit relating to share based charges - - 24.3 - - 24.3
Shares allocated to employee share trusts (0.2) - - -
0.2
-Foreign exchange movements on employee share trusts - - -
(2.9)
-(2.9)
At 31 December 2020 408.4 2,540.8 538.2 3,592.4
41.1
63.9Loss for the year
- - -
(16.0)
-(16.0)
Total comprehensive loss for the year
- - (16.0) - - (16.0)
Transactions with owners:
Credit relating to share based charges - - -
22.1
-22.1
Shares allocated to employee share trusts (0.2) - - -
0.2
-Purchase of company shares by employee share trust for
the share incentive plan (SIP) - - 1.5 - - 1.5
Foreign exchange movements on employee share trusts - - -
0.8
-0.8
At 31 December 2021 41.3 63.9 416.6 2,540.8 538.2 3,600.8
John Wood Group PLC
Annual Report and Accounts 2021
227
John Wood Group PLC
Annual Report and Accounts 2021
226
Strategic report Governance
Financial statements
Notes to the Company inancial statements
For the year ended 31 December 2021
Financial statements
General information
John Wood Group PLC is a public limited company,
incorporated and domiciled in the United Kingdom and listed on
the London Stock Exchange. The Company’s registered address
is 15 Justice Mill Lane, Aberdeen AB11 6EQ.
Summary of signiicant accounting policies
The principal accounting policies, which have been applied in the
preparation of the Company inancial statements, are set out
below. These policies have been consistently applied to all the
years presented.
Basis of preparation
These inancial statements were prepared in accordance
with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”).
In preparing these inancial statements, the Company applies
the recognition, measurement and disclosure requirements
of international accounting standards in conformity with
the requirements of the Companies Act 2006 but makes
amendments where necessary in order to comply with
Companies Act 2006 and has set out below where advantage
of the FRS 101 disclosure exemptions has been taken.
The Company is a qualifying entity for the purposes of FRS 101.
The application of FRS 101 has enabled the Company to
take advantage of certain disclosure exemptions that would
have been required had the Company adopted International
Financial Reporting Standards in full. The only such exemptions
that the directors consider to be signiicant are:
• no detailed disclosures in relation to inancial instruments;
• no cash low statement;
• no disclosure of related party transactions with wholly owned
subsidiaries;
• no statement regarding the potential impact of forthcoming
changes in inancial reporting standards;
• no disclosure of “key management compensation” for key
management other than the directors; and
• no disclosures relating to the Company’s policy on capital
management.
Where required, equivalent disclosures are given in the
consolidated inancial statements of John Wood Group PLC.
The inancial statements are presented in US dollars and
all values are rounded to the nearest $0.1m except where
otherwise indicated.
The inancial position of the Company is shown in the balance
sheet on page 226. Note 9 includes the Company’s objectives,
policies and processes for managing its inancial risks, details
of its inancial instruments and hedging activities, and its
exposures to interest rate risk and liquidity risk. The Company
adopts the going concern basis of accounting in preparing these
inancial statements.
In accordance with Section 408(3) of the Companies Act
(2006), the Company is exempt from the requirement to
present its own income statement. The amount of the proit for
the year is disclosed in the statement of changes in equity.
Foreign currencies
Transactions in foreign currencies are translated at the
exchange rates ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated at the exchange rates ruling at the balance sheet
dates or at a contractual rate, if applicable, and any exchange
differences are taken to the income statement.
The directors consider it appropriate to record sterling
denominated equity share capital and share premium in the
inancial statements of John Wood Group PLC at the exchange
rate ruling on the date it was raised.
Financial instruments
The accounting policy for inancial instruments is consistent
with the Group accounting policy as presented in the notes to
the Group inancial statements. The Company’s inancial risk
management policy is consistent with the Group’s inancial risk
management policy outlined in note 19 to the Group inancial
statements.
Employee share trusts
The Company is deemed to have control of the assets, liabilities,
income and costs of its employee share trusts. They have
therefore been included in the inancial statements of the
Company. The cost of shares held by the employee share trusts
is deducted from equity.
Share based charges
The Company has a number of share schemes as detailed
in the Group accounting policies and note 22 to the Group
inancial statements. Details relating to the calculation of share
based charges are provided in note 22 to the Group inancial
statements. In respect of the Company, the charge is shown as
an increase in the Company’s investments, as the employees to
which the charge relates are employed by subsidiary companies.
Dividends
Dividends to the Group’s shareholders are recognised as a
liability in the period in which the dividends are approved
by shareholders. Dividend income is credited to the income
statement when the dividend has been approved by the board
of directors of the subsidiary company making the payment.
Trade receivables
Trade receivables are recognised initially at fair value less an
allowance for any amounts estimated to be uncollectable. An
estimate for doubtful debts is made when there is objective
evidence that the collection of the debt is no longer probable.
Interest-bearing loans and borrowings
All interest-bearing loans and borrowings are initially recognised
at the fair value of the consideration received less directly
attributable transaction costs. Borrowing costs are expensed
through the income statement.
De-recognition of inancial assets and liabilities
A inancial asset is derecognised where the rights to receive
cash lows from the asset have expired. A inancial liability
is derecognised when the obligation under the liability is
discharged, cancelled or expires.
Going concern
At 31 December 2021, the Company had net current liabilities
of $700.1m. The Company has control over the timing of
repayment of current liabilities due to Group undertakings
amounting to $1,884.5m. As a result of this, and the matters
included in the consolidated inancial statements on going
concern, the directors are conident that the Company will
have suficient funds to continue to meet its liabilities as they
fall due for at least 12 months from the date of approval of the
inancial statements and therefore have prepared the inancial
statements on a going concern basis.
Reporting currency
The Company’s transactions are primarily US dollar
denominated and the functional currency is the US dollar.
The following sterling to US dollar exchange rates have been
used in the preparation of these inancial statements:
2021
2020
Average rate £1=$
1.3757
1.2844Closing rate £1=$
1.3545
1.3669Investments in subsidiaries
Investments are measured initially at cost, including transaction
costs. Investments in the Company balance sheet are presented
at cost less any provision for impairment.
Impairment of assets
At each balance sheet date, the Company reviews the carrying
amounts of its investments to assess whether there is an
indication that those assets may be impaired. If any such
indication exists, the Company makes an estimate of the
asset’s recoverable amount. An asset’s recoverable amount is
the higher of its fair value less costs to sell and its value in use.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset
is reduced to its recoverable amount. An impairment loss is
recognised immediately in the income statement.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, to the extent that the increased carrying
amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for
the asset in prior periods. A reversal of an impairment loss is
recognised immediately in the income statement.
The Company recognises loss allowances for Expected
Credit Losses (‘ECLs’) on loans and receivables measured at
an amount equal to lifetime ECLs. ECLs are a probability-
weighted estimate of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e. the difference
between the cash lows due to the entity in accordance with
the contract and the cash lows that the Company expects to
receive). ECLs are discounted at the effective interest rate of
the inancial asset.
At each reporting date, the Company assesses whether
inancial assets carried at amortised cost are credit-impaired. A
inancial asset is ‘credit-impaired’ when one or more events that
have a detrimental impact on the estimated future cash lows
of the inancial asset have occurred. Evidence that a inancial
asset is credit-impaired include a customer being in signiicant
inancial dificulty or a breach of contract such as a default.
The gross carrying amount of a inancial asset is written off
when the Company has no reasonable expectation of recovering
a inancial asset in its entirety or a portion thereof.
Taxation
The tax expense in the income statement represents the
sum of taxes currently payable and deferred taxes. The tax
currently payable is based on taxable proit for the year and the
Company’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance
sheet date. Taxable proit differs from proit as reported in
the income statement because it excludes items of income or
expense that are taxable or deductible in other periods and it
further excludes items that are never taxable or deductible.
Deferred tax is provided using the liability method on temporary
differences at the balance sheet date between the tax bases
of assets and liabilities and their carrying amounts for inancial
reporting purposes. Deferred tax liabilities are recognised for all
taxable temporary differences.
Deferred tax assets are recognised only to the extent that it is
probable that a taxable proit will be available against which
the deductible temporary differences, carried forward tax
credits or tax losses can be utilised. Deferred tax assets and
liabilities are measured on an undiscounted basis at the tax
rates that are expected to apply when the asset is realised or
the liability is settled, based on tax rates and tax laws enacted
or substantively enacted at the balance sheet date. Deferred
tax assets and liabilities are offset, only if a legally enforceable
right exists to set off current tax assets against current tax
liabilities, the deferred taxes relate to the same taxation
authority and that authority permits the Company to make a
single net payment.
Tax is charged or credited directly to equity if it relates to
items that are credited or charged to equity. Otherwise, tax is
recognised in the income statement.
Judgements and key sources of estimation or
uncertainty
The preparation of inancial statements requires management
to make judgements, estimates and assumptions that affect
the amounts reported for assets and liabilities as at the
balance sheet date and the amounts reported for revenues and
expenses during the year. However, the nature of estimation
means that actual outcomes could differ from those estimates.
Estimates and assumptions
The key assumptions concerning the future and other key
sources of estimation uncertainty at the balance sheet date,
that have a signiicant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
inancial year are discussed below.
Impairment of investments and receivables from Group
companies (estimate)
The Company assesses whether there are any indicators
of impairment of investments or receivables from Group
companies at each reporting date. Investments and receivables
from Group companies are tested for impairment when
there are indicators that the carrying amounts may not be
recoverable. Details of impairments of investments recorded
during the year and the carrying value of investments are
contained in note 1.
John Wood Group PLC
Annual Report and Accounts 2021
229
John Wood Group PLC
Annual Report and Accounts 2021
228
Strategic report Governance
Financial statements
Notes to the Company inancial statements continued
Financial statements
1 Investments
2021
$m
2020
$m
Cost
At 1 January
4,348.3
4,871.6
Additions
22.1
824.3Disposals
-
(1,347.6)At 31 December 4,370.4
4,348.3
Impairment
At 1 January
-
1,347.6
Disposals
-
(1,347.6)At 31 December -
-
Net book value
At 31 December 4,370.4
4,348.3
During the year, the Company contributed $22.1m of share based charges against John Wood Group Holdings Ltd.
The directors believe that the carrying value of the investments is supported by their underlying net assets. The directors have
performed an impairment review of the carrying value of the investments and no indicators were identiied.
The Company’s direct subsidiaries at 31 December 2021 are listed below. Ownership interests relect holdings of ordinary shares.
Details of other related undertakings are provided in note 37 to the Group inancial statements.
Name of subsidiary Country of incorporation or registration Registered address
John Wood Group Holdings Limited UK 15 Justice Mill Lane, Aberdeen
The Company owns 100% of all of the subsidiaries listed above.
2 Long term receivables
2021
$m
2020
$m
Loans to Group undertakings
2,573.3
2,582.1The long-term loan receivable at 31 December 2021 includes the promissory note of $2,565.2m (2020: $2,565.2m), which related to
the transfer of the Company’s investment in Amec Foster Wheeler Limited to John Wood Group Holdings Limited in exchange for a
promissory note during 2019.
3 Deferred tax
2021
$m
2020
$m
At 1 January
-
7.9
Charge to income statement
-
(7.9)
At 31 December
-
-4 Trade and other receivables
2021
$m
2020
$m
Loans to Group undertakings
1,367.3
603.0
Trade receivables – Group undertakings
52.2
68.4Other receivables
3.9
6.3Prepayments and accrued income
1.5
0.6
1,424.9
678.3
Interest on loans to Group undertakings is charged at market rates. At 31 December 2021, $45.7m (2020: $45.7m) of the amounts
owed by Group companies were impaired. These amounts relate to balances due from Group companies from whom there is no
expectation of payment.
The ageing of these amounts is as follows:
2021
$m
2020
$m
Over 3 months
45.7
45.7The movement on the provision for impairment is as follows:
2021
$m
2020
$m
At 1 January
45.7
45.3
Provided during the year
-
0.4
At 31 December
45.7
45.7
The Company had no outstanding balances that were past due but not impaired at either 31 December 2021 or 31 December 2020.
The other classes within receivables do not contain impaired assets.
John Wood Group PLC
Annual Report and Accounts 2021
231
John Wood Group PLC
Annual Report and Accounts 2021
230
Strategic report Governance
Financial statements
Notes to the Company inancial statements continued
Financial statements
5 Cash and cash equivalents
2021
$m
2020
$m
Cash and cash equivalents
1.0
79.7
6 Borrowings
2021
$m
2020
$m
Borrowings repayable on demand
Bank overdrafts
195.3
124.0Senior loan notes
35.0
77.0
230.3
201.0
Non-current borrowings
Bank loans
745.8
293.0
Senior loan notes
768.3
803.51,514.1
1,096.5
The bank overdrafts relate to the Group’s cash pooling arrangements and are largely denominated in US dollars and pounds
sterling. At 31 December 2021 interest on US dollar overdrafts was payable at 1.45% (2020: 0.28%) and on sterling overdrafts at
1.40% (2020: 1.25%).
Bank loans are unsecured and bear interest based on LIBOR rates. At 31 December 2021, bank loans included $600.0m of US dollar
loans and $164.9m of Euro loans. Interest was payable at 1.8% (2020: 1.1%) on the US dollar loans and 1.1% (2020: n/a) on the Euro
loans. Bank loans are stated net of unamortised fees totalling $19.1m (2020: $7.0m).
In July 2021, the Company entered into a $600.0m loan agreement with lenders supported by UK Export Finance (“UKEF”). The
ive-year facility is effective from July 2021 and extends the maturity proile of the Group’s debt facilities.
The Company has $803.3m (2020: $880.5m) of unsecured senior notes in the US private placement market maturing between
2022 and 2031 at an average ixed rate of 4.21% (2020: 4.13%). These notes are largely US dollar denominated. $318.0m (2020:
$573.5m) of the notes are repayable after more than 5 years.
7 Trade and other payables
2021
$m
2020
$m
Loans from Group undertakings
1,884.5
1,769.8Other creditors
3.7
5.8Accruals
16.6
12.81,904.8
1,788.4
Interest on loans from Group undertakings is payable at market rates.
8 Other non-current liabilities
2021
$m
2020
$m
Amounts due to Group undertakings
1,128.7
1,018.3
The amounts due to Group undertakings are inter-company loans with varying maturities greater than 1 year. Interest on these
loans is charged at market rates.
9 Financial instruments
Financial risk factors
The Company’s activities give rise to a variety of inancial risks: market risk (including foreign exchange risk and cash low interest
rate risk), credit risk and liquidity risk. The Company’s overall risk management strategy is to hedge exposures wherever practicable
in order to minimise any potential adverse impact on the Company’s inancial performance.
Risk management is carried out by the Group Treasury department in line with the Group’s Treasury policies which are approved
by the Board of Directors. Group Treasury identify, evaluate and where appropriate, hedge inancial risks. The Group Treasury
policies cover speciic areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative inancial instruments and
investment of excess cash.
(a) Market risk
(i) Foreign exchange risk
The Company is exposed to foreign exchange risk arising from various currencies. Where possible the Company’s policy is to
eliminate all signiicant currency exposures at the time of the transaction by using inancial instruments such as forward currency
contracts. Changes in the forward contract fair values are recorded in the income statement.
(ii) Interest rate risk
The Company inances its operations through a mixture of retained proits and debt. The Company borrows in the desired
currencies at a mixture of ixed and loating rates of interest and then uses interest rate swaps as cash low hedges to generate
the desired interest proile and to manage the Company’s exposure to interest rate luctuations. At 31 December 2021, 42% (2020:
81%) of the Company’s borrowings were at ixed rates after taking account of interest rate swaps.
The Company is also exposed to interest rate risk on cash held on deposit. The Company’s policy is to maximise the return on cash
deposits whilst ensuring that cash is deposited with a inancial institution with a credit rating of at least BBB+.
(iii) Price risk
The Company is not exposed to any signiicant price risk in relation to its inancial instruments.
(b) Credit risk
The Company’s credit risk primarily relates to its inter-company loans and inter-company receivables. Management believe that no
further risk provision is required in excess of the current provision for impairment.
The Company also has credit risk in relation to cash balances or cash held on deposit. The Company’s policy is to deposit cash at
institutions with a credit rating of at least BBB+.
(c) Liquidity risk
With regard to liquidity, the Company’s policy is to ensure continuity of funding. At 31 December 2021, 87% (2020: 85%) of the
Company’s borrowings (including bank overdrafts) were due to mature in more than one year. Based on the current outlook the
Company has suficient funding in place to meet its future obligations.
(d) Capital risk
The Company’s capital risk is determined by that of the Group. See note 19 to the Group inancial statements.
10 Share capital
2021
$m
2020
$m
Issued and fully paid
691,839,369 (2020: 688,339,369) ordinary shares of 42/7 p each
41.3
41.1
The additional information required in relation to share capital is given in note 23 to the Group inancial statements.
11 Share premium
2021
$m
2020
$m
At 1 January and 31 December 63.9
63.9
The shares allocated to the trust during the year were issued at par value, 42/7 pence (2020: 42/7 pence) and consequently there
was no credit to the share premium account.
John Wood Group PLC
Annual Report and Accounts 2021
233
John Wood Group PLC
Annual Report and Accounts 2021
232
Strategic report Governance
Financial statements
Five year summary (unaudited)
Financial statements
Notes to the Company inancial statements continued
12 Retained earnings
Retained earnings are stated after deducting the investment in own shares held by employee share trusts. Investments in own
shares represents the cost of 14,358,014 (2020: 15,006,961) of the Company’s ordinary shares totalling $111.9m (2020: $112.8m).
The Company’s loss for the inancial year was $16.0m (2020: $13.8m).
The Company does not have any employees other than the directors of the Company. Details of the directors’ remuneration are
provided in the Directors’ Remuneration Report in the Group inancial statements. The loss for the inancial year is stated after
charging audit fees of $63,700 (2020: $52,000). Details of dividends paid and proposed are provided in note 7 to the Group
inancial statements. Further details of share based charges are provided in note 22 to the Group inancial statements.
13 Merger reserve
2021
$m
2020
$m
At 1 January and 31 December 2,540.8
2,540.8
In October 2017, 294,510,217 new shares were issued in relation to the acquisition of Amec Foster Wheeler Limited and $2,790.8m
was credited to the merger reserve. The merger reserve was initially considered unrealised on the basis it was represented by
the investment in Amec Foster Wheeler Limited and did not meet the deinition of qualifying consideration under Tech 02/17BL
Guidance on realised and distributable proits under the Companies Act 2006.
In November 2019, the Company sold its investment in Amec Foster Wheeler Limited to John Wood Group Holdings Limited for
$2,815.2m in exchange for a promissory note. To the extent that the promissory note is settled by qualifying consideration, the
related portion of the merger reserve is considered realised and becomes available for distribution.
14 Other reserves
Capital
reduction
reserve
$m
Capital
redemption
reserve
$m
Hedging
reserve
$m
Total
$m
At 1 January 2020, 31 December 2020 and
31 December 2021 88.1 439.7
10.4
538.2No movements in other reserves have occurred during 2020 or 2021.
The capital reduction reserve was created following the Initial Public Offering in 2002 and is a distributable reserve. The capital
redemption reserve was created in 2011 as part of a return of cash to shareholders and is not a distributable reserve.
15 Financial commitments and contingent liabilities
Where the Company enters into inancial guarantee contracts in respect of its subsidiary companies, the Company considers
these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract
as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the
guarantee.
$100.0m of the Group’s bank borrowings drawn down by an indirect subsidiary undertaking are guaranteed by the Company.
At 31 December 2021, the Company had contingent liabilities in respect of outstanding guarantees for performance bonds and
contracting arrangements given on behalf of its subsidiaries amounting to $733.1m (2020: $810.0m).
2021
$m
2020
$m
2019
$m
2018
$m
2017
$m
Revenue 6,426.0 7,564.3 9,890.4
10,014.4
5,394.4Adjusted EBITDA 553.9 630.4 855.4 693.8 423.1
Depreciation (including joint ventures) (148.9)
(180.0) (182.0)
(51.5)(63.9)
Amortisation (including joint ventures) (191.7) (227.7) (243.7) (248.8) (141.3)
Non-recurring items (including joint ventures) (165.7) (247.3) (107.6) (191.3) (184.5)
Net inance expense (including joint ventures) (116.5) (119.2) (160.6) (119.9) (52.9)
(Loss)/proit before taxation (including joint ventures) (68.9) (143.8) 161.5
69.9
(7.1)Taxation (including joint ventures) (66.6) (84.3) (88.7) (77.5) (22.9)
(Loss)/proit for the year
(135.5) (228.1) 72.8 (7.6)
(30.0)
Equity attributable to owners of the parent
4,082.0 4,170.0
4,418.8 4,590.8 4,960.3
Net debt excluding leases 1,393.0 1,014.3 1,424.0 1,513.2 1,596.1
Net debt/adjusted EBITDA 3.3
2.1
2.22.0
2.4
Gearing ratio 32.1% 33.0% 32.2%
34.1%
24.3%Interest cover 4.5 5.5 5.6 6.2
8.0
Diluted earnings per share (cents) (20.6) (34.1) 10.5 (1.3)
(7.4)
Adjusted diluted earnings per share (cents) 17.5 23.2
46.0
46.642.9
Dividend per share (cents) - - 35.3 35.0 34.3
Dividend cover - - 1.3 1.3 1.3
John Wood Group PLC
Annual Report and Accounts 2021
235
John Wood Group PLC
Annual Report and Accounts 2021
234
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Information for shareholders
Oficers and advisers
Secretary and Registered Ofice Registrars
M McIntyre Equiniti Limited
John Wood Group PLC Aspect House
15 Justice Mill Lane Spencer Road
Aberdeen Lancing
AB11 6EQ West Sussex
BN99 6DA
Stockbrokers Independent Auditors
JPMorgan Cazenove Limited KPMG LLP
Morgan Stanley Chartered Accountants and Statutory Auditors
1 Marischal Square
Broad Street
Aberdeen
AB10 1DD
Company Solicitors
Slaughter and May
Financial calendar
Results announced
20 April 2022
Annual General Meeting
22 June 2022
The Group’s Investor Relations website can be accessed at:
woodplc.com
John Wood Group PLC
Annual Report and Accounts 2021
236