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John Wood Group PLC
Annual Report and Accounts 2022
Design
the
future.
View our report online:
woodplc.com/ar22
Contents
Our performance
Revenue (pre-exceptional items)
1
Adjusted EBITDA
2
$385m
(2021: $404m)
Net debt excluding leases
4
$393m
(2021: $1,393m)
$5,442m
(2021: $5,238m)
3.9%
Order book
3
$6,016m
(2021: 6,047)
(0.5)%
(4.7)%
(71.8)%
Free cash flow
5
$(730)m
(2021: $(398)m)
Operating profit/(loss)
$(568)m
(2021: $(62)m)
(83.4)%
Strategic report
Highlights
01
At a glance
02
Chair’s statement
04
Chief Executive review
06
Our markets
10
Our strategy
12
Our business model
14
Key performance indicators
18
Segmental review
22
Financial review
26
Stakeholder engagement
38
Our principal decisions
44
Sustainability
48
Principal risks and uncertainties
80
Governance
Letter from the Chair of the Board
88
Directors’ report
92
Board of Directors
102
Corporate governance
104
Safety & Sustainability Committee
113
Nomination Committee
115
Audit, Risk & Ethics Committee
118
Remuneration Committee
122
Chair’s Letter
125
Workforce reward
128
Remuneration Policy
131
Executive directors’ remuneration
140
Chair of the Board and
non-executive directors
153
Group financial statements
Independent auditor’s report
156
Consolidated income statement
166
Consolidated statement of
comprehensive income/expense
167
Consolidated balance sheet
168
Consolidated statement
of changes in equity
169
Consolidated cash flow statement
170
Notes to the financial statements
172
Company financial statements
Company balance sheet
248
Statement of changes in equity
249
Notes to the Company financial
statements
250
Five year summary
257
Information for shareholders
258
NA
A global leader
in consulting and
engineering across
energy and materials.
To find out more visit:
woodplc.com/sustainability
1.
Revenue includes an exceptional item in FY22 of $(8.0) million (FY21 $(25.4) million) related to contract losses in respect of the closure of the Power and
Industrials EPC business. In FY21 the exceptional item 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. Given the immaterial size of the exceptional item, we refer to revenue throughout the
Report as the $5,442 million pre-exceptional figure.
2.
A reconciliation of adjusted EBITDA to operating loss is shown in note 1 to the
financial statements. A reconciliation o
f adjusted EBIT to operating loss is shown
in the financial review.
3.
Order book comprises revenue that is supported by a signed contract or written purchase order for work secured under a single contract award or frame agreements.
Work under multi-year agreements is recognised in order book according to anticipated activity supported by purchase orders, customer plans or management
estimates. Where contracts have optional extension periods, only the confirmed term is included. Order book disclosure is aligned with the IFRS definition o
f 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.
4.
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 30 to the
financial statements.
We refer to net debt excluding leases throughout this report as net debt.
5.
Free cash flow is defined as all cash flows be
fore acquisitions, disposals and dividends. It includes all mandatory payments the Group makes such as interest
and tax, and all exceptional cash flows. It excludes the impacts o
f IFRS 16 (Leases) accounting. A reconciliation of free cash
flow to our statutory cash flow
statement is shown on page 32.
All figures above are based on continuing operations
Highlights
•
Sale of Built Environment Consulting
has restored our financial strength
– balance sheet reset
•
This is a new Wood
– new leadership,
refreshing our culture, more disciplined
and selective
•
We have addressed our legacy issues
–
strong balance sheet and defined schedule
of cash out
flows
•
Our markets provide attractive
opportunities for growth
– and we can
win share
•
A global leader in our markets
–
outstanding talent, long term relationships
with clients who view us as partners
•
Enabler of net zero
– around 20% of our
revenue today is from sustainable solutions
•
Adjusted EBITDA
margins to be flat in the
nearer term, partly as we reinvest in the
business to secure growth. In the medium term,
we see opportunity for margin improvement
•
Adjusted EBITDA
to grow at mid to high
single digit CAGR over the medium term,
with momentum building over time as our
strategy delivers
• The strong underlying cash flows o
f our
business combined with the reducing
legacy liabilities, will result in a return to
positive free cash
flow
(after exceptionals)
from FY24 onwards
Transformed
the Group.
Well-
positioned
for growth.
Delivering
financial
returns.
To find out more visit:
woodplc.com/investors
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
01
Governance
Financial statements
At a glance
Energy
Oil & Gas | Hydrogen
Carbon Capture
Energy security:
Delivering safe, reliable and
affordable energy
Energy transition:
Enabling a low carbon energy future
35k+
People
60+
Countries
100+
Years of history
Two end markets:
Materials
Minerals | Chemicals
Life Sciences
Raw materials demand:
Sustainably deliver key energy
transition minerals and chemicals
Life sciences growth:
Advanced, scalable manufacturing
post-pandemic
A global leader
in consulting and
engineering across
energy and materials.
Group revenue
$5,442
m
End markets
64%
29%
7%
Materials 29%
Other 7%
Energy 64%
Our vision
Deliver solutions that
transform the world.
Our mission
Remarkable people, trusted by clients to
design, build and advance the world.
Geographic split
Listen up
Lift others up
Stand up
Team up
Speak up
Don’t give up
Our behaviours
To find out more visit:
woodplc.com/company/our-business
Our values
Everything we do is with an unwavering
commitment to what we believe in and
how we behave:
Care
Working safely, with
integrity, respecting
and valuing each other
and our communities
Commitment
Consistently delivering
to all our stakeholders
Courage
Pushing the
boundaries to create
smarter, more
sustainable solutions
See more in Our markets section on page 10
25%
17%
Europe 25%
Americas 38%
Middle East
& Africa 17%
Asia Pacific 17%
RoW 3%
38%
3%
17%
To find out more visit:
woodplc.com/values
John Wood Group PLC
Annual Report and Accounts 2022
02
Consulting
Projects
Operations
A focused, premium consultancy
adding value throughout our
client’s investment lifecycle.
• Technical consulting
• Digital advisory and
implementation
Delivering solutions for complex,
high-value capital investments.
• Advise: concept, Pre-FEED
• Design: FEED, long-lead
procurement
• Deliver: PMC, EPCm, Detailed
design, Start-up
• Operate: upgrades and
expansions
Essential services that keep the
world’s most critical industries
performing.
• Modifications
• Operations
• Maintenance
• Asset management
Revenue
$625
m
Adjusted EBITDA
$73
m
End markets
Materials 17%
Other 19%
Energy 64%
64%
17%
19%
Revenue
$2,211
m
Adjusted EBITDA
$169
m
End markets
Materials 55%
Other 1%
Energy 44%
Revenue
$2,407m
Adjusted EBITDA
$148
m
End markets
Materials 10%
Other 2%
Energy 88%
44%
55%
1%
88%
10%
2%
People
3,941
People
13,918
People
15,787
% of revenue
% of revenue
% of revenue
11%
41%
44%
We operate across three business units:
See more in Our business model section on
page 14
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
03
Governance
Financial statements
A transformative
year for the Group
“In 2022, following an extensive consultation with our key
stakeholders, we refreshed our strategy with a focus to
deliver profitable growth. I am confident that under Ken’s
leadership and with a new, high performing leadership
team, we will deliver results for our investors, clients and
employees as we enter 2023.”
Chair’s statement
A new chapter for Wood
2022 was a transformative year for
Wood. The sale of the Built Environment
Consulting business reset our balance
sheet and we addressed many of our
legacy issues.
We ended the year with our new
executive management team setting
out our strategy at a capital markets
day, highlighting how Wood is a global
leader in its markets and is now set
up for success – for focused growth
across energy and materials, and for a
return to delivering financial returns
for
our shareholders.
Restored financial flexibility and
addressed legacy issues
The sale of Built Environment Consulting
completed in September 2022 for an
enterprise value of $1.8 billion. This sale
transformed the Group’s balance sheet,
with our net debt (excluding leases)
moving from $1.8 billion at June 2022
to $0.4 billion at December 2022.
We addressed many of our legacy
issues in the year, including settling the
Enterprise litigation claim. The final
payment for our SFO settlement is due
in early 2024, the Aegis Poland contract
is physically complete and moving to
its commercial settlement phase, and
we have limited lump sum turnkey work
remaining across our business. So, while
these legacy issues remain for a short
time still, we are nearing the end of
their impact on the Group. Crucially, we
now have the balance sheet to address
the defined schedule o
f cash out
flows
relating to these liabilities.
Roy A Franklin
Chair
John Wood Group PLC
Annual Report and Accounts 2022
04
A new leadership team
In April 2022, Robin Watson advised the
Board of his intention to retire as Chief
Executive. Following an extensive search
process that included internal and external
candidates, Ken Gilmartin was appointed
CEO on 1 July 2022. Ken joined Wood in
August 2021 as our COO and brought with
him a wealth of knowledge and experience
from a varied career, most recently as a
member of Jacob’s senior executive team.
We have a new leadership team in
place, with Jennifer Richmond joining
as Executive President, Strategy and
Development from Jacobs and the
leaders of all three business units
changing in the year.
Setting a new strategy
Led by Ken and his team, the Company
developed a new strategy during the
year, leading to a capital markets day in
November 2022.
We are acutely aware that we have
not delivered value for our shareholders
over the last few years. As part of
the development of our strategy, we
commissioned an external perception
study involving our investors as well
as potential shareholders and equity
analysts. This was conducted in July 2022
and interviewed 13 top shareholders,
representing c.37% of our share capital.
The Board appreciated the constructive
comments from participants and the
feedback was used in considering strategy,
capital allocation and communication.
Our market-led strategy, with a real focus
on selectivity, will deliver returns for our
shareholders including adjusted EBITDA
growth of mid to high single digit CAGR
over the medium term. Most importantly,
the operating cash flows o
f our business,
combined with the reducing legacy
liabilities, will result in a return to positive
free cash
flow
from 2024 onwards.
Performance in 2022
We returned to revenue growth, with
growth in Consulting and Operations
over the year and growth in Projects in
the second half. Our adjusted EBITDA
profitability was lower than 2021. This
reflected progress in Projects o
ffset by
anticipated lower margins in Consulting
and Operations, including our exit
from Russia and the normalisation of
profitability in Operations
following a few
years of high contract close out bene
fits.
Our cash performance primarily re
flects
the financial impact o
f addressing legacy
issues and our decision to normalise
working capital. The return to positive
free cash
flow in 2024 remains our
absolute focus.
Access to minerals like lithium and copper will
have a critical role to play in delivering a net zero
future – they’re central to the growth we need
in electric vehicles, low-carbon fleets, battery
storage and solar panels.
Wood has an outstanding track record in delivering some of the
world’s largest minerals processing projects. The calibre of our team
was evident in some of the work we secured last year and some of
the projects we delivered across the globe. 
As an example, we were appointed by Enter Engineering to deliver the
FEED and detailed design on the world’s largest copper concentrator
plant in Uzbekistan. Our scope also includes technical assistance during
the procurement, construction, commissioning, and start-up stages. 
Similarly, in Australia we completed work on one of the largest
lithium processing projects in the world. Initially appointed in
2019 to provide engineering, procurement and construction
management (EPCm) services, the team performed excellently
including a first-class sa
fety performance with over 11 million hours
worked without a lost time injury.
Providing minerals
for net zero
Capital allocation
Our capital allocation policy is centred on
maintaining a prudent leverage over the
medium term of around 0.5 to 1.5 times
net debt (excluding leases) to adjusted
EBITDA (pre-leases) leverage range.
This allows us to invest in our business
while funding the rundown of our legacy
liabilities. Beyond this, and as the Group
starts to generate free cash
flow
from
2024, we will consider how to deliver
value for our shareholders from dividends,
share buybacks or attractive acquisitions.
Looking ahead
Wood is a much stronger company than
a year ago. We have moved on from our
past and have a clear path ahead of us
to return to sustainable free cash
flow.
The work that Wood does and the people
that we have are critical to the needs of
our clients and society, and I am excited
for the role Wood has to play.
On behalf of the Board and the Company,
I thank you for your continued support.
Roy A Franklin
Chair
World leaders in lithium,
gold, potash and copper
projects.
11 million
hours worked on major mining project
without any lost time injury
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
05
Governance
Financial statements
Chief Executive review
2022 was a year where we
transformed Wood. We reset the
business, strengthened our balance
sheet, addressed legacy issues and
appointed new leadership. We concluded
the year by setting out our strategy at
a capital markets day, highlighting how
we will deliver value consistently through
focused growth across our energy and
materials end markets, and drive a
return to delivering free cash
flow.
Financial performance: delivered
results in line with expectations
Return to revenue growth
Our performance in 2022 was in line
with the expectations we set mid-way
through the year. Revenue of $5.4 billion
was 8% higher at constant currency
1
.
This reflects good growth in Consulting
and Operations and an improving trend
in Projects, with a return to growth in
the second half.
Profitability in line with
expectations
Our adjusted EBITDA in 2022 was $385
million, flat at constant
foreign exchange
rates and at the upper end of the
guidance range we gave in our January
trading update. Our adjusted EBITDA
margin
2
was 7.1%, lower than the 7.7% in
2021, partly reflecting a normalisation o
f
margins in Operations, which benefited
from contract close out bene
fits in
previous years, along with a lower
margin in Consulting. The margin in our
Projects business was higher in the year
as we shifted the business to a service-
led model and saw improved overall
project performance
Our adjusted EBIT was $174 million
and our adjusted diluted EPS was
down 67% to 5.7c. This reflects the
lower profitability, high interest costs
in the year and the disposal of Built
Environment Consulting.
Our statutory loss for the year was $352
million and includes the impairment of
goodwill and intangibles. Basic EPS was
a loss of 52.4c per share, re
flecting this
statutory loss.
Cash performance re
flects our reset
Free cash outflow
for the year was
$730 million and reflects a significant
working capital outflow, partly reflecting
our decision to exit lump sum turnkey
(“LSTK”) and larger EPC activity, as well
as our decision to normalise payables at
period ends. In addition to these working
capital impacts, we also had large
exceptional cash outflows arising
from
legacy issues, including the settlement
of the Enterprise litigation claim for
$115 million in the year.
Balance sheet now in a strong
position
Our net debt excluding leases at
December 2022 was $393 million, with
a net debt (excluding leases)/adjusted
EBITDA of 1.3 times. This re
flects a
significant improvement on last year
(3.3 times) given the impact of the sale
of Built Environment Consulting. Through
the sale, we reset our balance sheet
and this allowed us to address legacy
issues and provide a firmer
footing
for future growth.
Results in
line with
expectations
John Wood Group PLC
Annual Report and Accounts 2022
06
Our approach to capital allocation
Our capital allocation policy starts with
having a strong balance sheet. We will
look to manage our target leverage
over the medium term within a range
of around 0.5 to 1.5 times net debt
(excluding leases) to adjusted EBITDA
(pre-IFRS 16). This allows us to invest in
our business, people and systems and
fund the rundown of our legacy liabilities.
Beyond this, we will consider how best
to create value for our shareholders
from dividends, share buybacks or
attractive acquisitions.
A new chapter for Wood: we
transformed the Group in 2022
Wood is built on strong foundations,
from our outstanding technical
expertise and people, to our long-term
client relationships. However, we have
not delivered for our shareholders
in recent years. While part of that
underperformance re
flects the
challenging market backdrop of lower
customer investment and the Covid
pandemic, it was also driven by company-
specific issues including insu
f
ficient
discipline in project selection, high levels
of restructuring and a series of legacy
issues arising from the acquisition of
Amec Foster Wheeler in 2017.
We tackled these issues head-on in
2022 and launched a new chapter for
the Group with the transformative
sale of Built Environment Consulting,
reset of our balance sheet and launch
of our pro
fitable growth strategy.
As we look ahead, we have instilled a
structure and discipline into the business
which will mitigate against future
issues and allow us to grow from these
strong foundations.
Sale of Built Environment
Consulting transformed the Group
We completed the sale of Built
Environment Consulting in September
2022 for an enterprise value of $1.81
billion, representing an attractive EV
multiple of 16 times (including expected
standalone costs). The net proceeds of
around $1.7 billion, after the remaining
tax due is paid in 2023, transformed
the Group’s balance sheet, funded the
settlement of the Enterprise litigation
and restored our financial flexibility.
We have addressed legacy issues
• We are no longer pursuing LSTK
activity or major lump sum EPC
activity, with remaining contracts due
to complete in 2023
• Our Aegis Poland contract is physically
complete with commercial settlement
remaining
• The final payment
for our SFO
settlement is due in early 2024
• Our onerous leases come to an end
in 2024
• We settled the Enterprise litigation
Our strengthened balance sheet will
allow us to address the defined schedule
of cash out
flows relating to these legacy
liabilities, as well as our asbestos liability,
and allow the Group to return to positive
free cash
flow in 2024.
A new leadership team in place
We have a new leadership team, with
seven of nine members of our Executive
Leadership Team appointed to their
roles in 2022 and 2023. Our wider senior
leadership team has also undergone
change, and we have added key hires
throughout 2022 to strengthen our
commercial offering, including recruiting
leading subject-matter experts.
Our refreshed strategy:
profitable growth
We launched our new strategy in
November 2022 following extensive
consultation with our employees,
clients and investors.
Our strategic pillars
Our strategy is delivered across three
pillars:
•
Profitable growth
– we will focus
on priority markets and geographies
where we can lead, with an absolute
focus on driving operating cash
flow, and building a high quality,
low risk pipeline with a focus on
cost reimbursable work.
• Inspired culture
– we will drive
improved employee engagement and
reduced levels of voluntary turnover,
while maintaining our focus on safety,
and we aim to maintain a top quartile
ESG rating amongst peers. We
commit to driving greater diversity
in our business, including a target of
women comprising 40% of leadership
roles before 2030.
• Performance excellence
– with a focus
on strong leadership, commercial
governance and ef
ficient ways o
f
working. We will increase the use
of our Global Excellence Centres to
differentiate our offer to clients and
drive improved margin. We will ensure
our core digital solutions become
embedded in client delivery, and we
expect the proportion of revenue
coming from sustainable solutions
to grow each year.
Our attractive markets
The energy and materials markets
offer signi
ficant growth opportunities
for Wood. We are now taking a more
focused approach to growth, targeting
specific priority markets within energy
and materials that best match our
competitive strengths. This narrower
focus will help ensure we can grow
both profitably and sustainably.
We are focused on:
• Large markets with solid growth –
Oil & Gas and Chemicals
• Small markets today with substantial
growth potential – Hydrogen and
Carbon Capture
• Large markets where we can
significantly grow our share –
Minerals and Life Sciences
“Our strategy is
already delivering. We
started 2023 with good
momentum – with order
book for delivery in 2023
up 10%, headcount up 8%
and financial guidance
for 2023 in line with our
medium-term financial
targets – we now look
to the future with
confidence as a much
stronger company.”
Ken Gilmartin
Chief Executive
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
07
Governance
Financial statements
Chief Executive review
continued
Our medium-term financial targets
3
Our strategy will deliver returns for our
shareholders and at our Capital Markets
Day we set out new financial targets:
• Adjusted EBITDA margins to be flat in
the nearer term, partly as we reinvest
in the business to secure growth. In the
medium term, we see opportunity for
margin improvement
• Adjusted EBITDA to grow at mid
to high single digit CAGR over the
medium term, with momentum
building over time as our strategy
delivers
• The strong underlying cash flows o
f our
business combined with the reducing
legacy liabilities, will result in a return
to positive free cash
flow (a
fter
exceptionals) from FY24 onwards
We expect to expand our margin in the
medium term, supported by:
• Improved pricing expectations across
our markets, reflecting the selectivity
of work undertaken and the signi
ficant
demand for our services
• The continued shift to our services-led
model
• Addressing the small number of
underperforming businesses in our
portfolio
We continue to target costs savings in
two key areas to support our targets:
• As outlined at our Capital Markets
Day, continued rationalisation of our
property portfolio as our leases expire
and reflecting post-Covid working
patterns. We anticipate annualised
savings of $15 million to $20 million by
the end of 2025, with bene
fits accruing
from 2024. EBIT will bene
fit by $10
million to $15 million per year
• IT cost savings of $10 million to $15
million from licence rationalisation and
other ef
ficiency measures, with material
benefit accruing
from 2024 onwards
Our management team are committed
to delivery of these targets. The Board
has agreed LTIP targets for 2023-2025
consistent with our medium-term
targets. These targets are weighted:
• 60% to EBITDA targets, with a
threshold of 450 million and a
maximum level at $525 million in 2025
• 30% to total shareholder return
relative to our peer group
• 10% to ESG metrics relating to carbon
emission reductions and leadership
gender diversity
In addition, as at 31 December 2022, and as
set out in note 33 of our accounts, our main
UK defined benefit scheme (WPP) was
119% funded and had a signi
ficant surplus
of $432 million on an IAS 19 basis, and is
currently expected to be around 105%
funded with a surplus of around £100
million ($130 million) on the more prudent
Technical Provisions basis at 31 March 2023,
consistent with the assumptions used at
the last triennial actuarial valuation.
The Group is currently working closely
with the Trustee to agree a preferred
direction regarding the future of the plan.
Options being assessed include moving
to a buy-in insured basis and eventual
buy-out with a third party as soon as is
reasonably practical, or to continue to
run the WPP on for a limited number of
years which could potentially generate
further surplus. Any potential further
surplus that might arise from running
the scheme on could benefit both the
Group and pension members, ensuring
that appropriate safeguards for both the
funding position and members’ interests
are taken into account at all times.
Delivering on our profitable
growth strategy
Right business model now in place
with focus on cost reimbursable work
We have de-risked our contract pipeline
by minimising the LSTK activity and major
lump sum EPC activity, and today we
are predominately a cost reimbursable
services business. Across the Group, the
proportion of our revenue that came from
cost reimbursable work is around 80%
(and around 85% of our order book). Only
around 4% of revenue in FY22 came from
LSTK contracts, with the remainder being
fixed price services work.
Executive Leadership Team pictured at 2022 Leadership Conference
John Wood Group PLC
Annual Report and Accounts 2022
08
Well-positioned for growth
In addition to our order book of
around $6 billion, we have a pipeline
of opportunities many times larger in
magnitude. In line with our focused and
selective strategy, this pipeline is now
aligned with our focus markets.
At December 2022, over 90% of our
pipeline related to our six focus markets
(Oil & Gas, Chemicals, Hydrogen, Carbon
Capture, Minerals and Life Sciences),
compared to 73% a year ago. The
difference mainly relates to the removal
of EPC opportunities across renewables,
in line with our new risk appetite and
strategy to focus on the complex work
where we add the most value for
our clients.
Encouragingly, we have a higher pipeline
in nearly all our markets compared to a
year ago, including a more than doubling
of opportunities across hydrogen and
carbon capture.
Progress on our people strategy
Our headcount at December 2022 was
35,573 people, up 8% on last year with
significant increases in Consulting and
Projects. This is an increasingly important
metric with our shift to a services-led
business model.
We are pleased that in the latter parts of
2022 we saw significant improvements
in both employee engagement and
employee net promoter score. We have
also grown our Global Execution Centres
significantly, with more than 3,000 skilled
employees now in India and Colombia.
Progress on sustainability
Wood is an enabler of net zero, providing
solutions across decarbonisation,
energy transition, and materials for
a net zero world. In addition, our life
sciences solutions are aligned to the
UN Sustainable Development goal of
ensuring good health and well-being.
Around 20% of our revenue today is from
sustainable solutions
4
, with around 30%
of revenue in Projects, around 25% of
revenue in Consulting, and around 10%
in Operations from such solutions. This
strict measure does not include much of
the decarbonisation activity we perform
today for our clients, particularly in our
Operations business with work such as
reducing methane emissions and flaring.
We have seen strong growth in our
pipeline for sustainable solutions in the
year, including across hydrogen and
carbon capture work.
Our progress on ESG matters is reflected
in our MSCI AA rating, awarded for
the 8th consecutive year, and the
maintenance of our top quartile ranking
against peers.
In 2022, we made further progress
on many of our other key ESG
goals including:
• Reducing scope 1 & 2 carbon emissions
by 65% compared to our target of a
40% reduction from our 2019 baseline
• Embedding fair working practices
through incorporating ‘Building
Responsibly’ principles into our supply
chain pre-qualification stages and
supplier code of conduct
Optimising our portfolio
We are currently evaluating our portfolio
and have identified underper
forming
businesses that do not fit with our
focused strategy, generate negative
margin and represent around 4% of
revenue. We are considering options in
respect of these businesses.
In addition to this, the sale of our
offshore labour supply operations in Gulf
of Mexico completed in March 2023 for
cash consideration of $17 million. This
reflects a proactive step in
focusing the
Group’s portfolio on our focus markets
and solutions.
Winning work across markets
Our order book at 31 December 2022
was $6 billion, broadly flat on the
position a year ago but up by 4% at
constant currency rates. The order book
for delivery in the year ahead was up
10% on a year ago and positions us well
for 2023, albeit with a more volatile
macroeconomic backdrop to win the
remaining work for 2023.
Significant contract wins across
Energy
in the year included:
• 10-year engineering & project support
agreement with Chevron that forms
a global strategic partnership across
offshore and onshore assets
• Major contract extension with Equinor
for operation on the Norwegian
Continental Shelf to 2026
• 5-year multi-region engineering
services contract renewal with bp
• 3-year operations and maintenance
contract renewal with Shell in the UK
North Sea
• Appointed delivery partner for
Centrica Storage in the UK for key
gas storage assets
• Contract for the FEED design to
deliver a large-scale green hydrogen
production facility in Norway
Significant contract wins in the year in
Materials
included:
• 2-year EPCm contract with Solvay to
deliver a new polyvinylidene fluoride
(PVDF) site in France
• 4-year EPCm contract with INEOS
worth over $100 million for an
ethane cracker
• Contracts with Enter Engineering in
Uzbekistan worth over $200 million –
engineering and procurement services for
a gas to chemical complex, and FEED and
detailed design for a mineral processing
Outlook
3
While mindful of the uncertain economic
outlook, our expectations for 2023
remain unchanged.
We expect our performance in FY23 to be
line with our medium-term targets:
• Adjusted EBITDA margins to be flat in
the nearer term, partly as we reinvest
in the business to secure growth. In
the medium term, we continue to see
opportunity for margin improvement
• Adjusted EBITDA to grow at mid to
high single digit CAGR over the medium
term, with momentum building over
time as our strategy delivers
• As is typical for our business,
performance will be weighted to the
second half of the year
We expect a material improvement
in cash flow in FY23 with a significant
improvement in operating cash flow,
reflecting a much-improved working
capital performance. As previously
guided, we expect significantly lower
exceptional cash flows in FY23 o
f around
$135 million. This, plus the remaining tax
payable on the sale of Built Environment
Consulting of around $60 million,
partially offset by disposal proceeds of
around $25 million, will lead to higher net
debt in FY23.
The exceptional cash outflows in FY23
are weighted to the first hal
f of the year,
and the tax payable on the sale of Built
Environment will be paid in the first hal
f
of the year.
The improved operating cash flow
performance of the Group, along with a
continued reduction in exceptional cash
outflows, will enable a return to positive
free cash
flow (a
fter exceptionals) in FY24.
Footnotes
1. Refer to note 7 in the
financial review
2. Refer to note 8 in the
financial review
3. Certain of the statements in this section and
repeated elsewhere in this Annual Report are
classed as profit
forecasts for the purposes of
the City Code on Takeovers and Mergers (as set
out in the announcement made by Wood on 28
March 2023).
4. Refer to note 9 in the
financial review
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
09
Governance
Financial statements
Our markets
Energy
Oil & Gas
1
Trends:
Supportive policies | Transition to net zero | Technology advancement
c.$230
bn
2025 total addressable market
in core geographies
1
Materials
Our focus:
Large markets where we will significantly grow our share.
Minerals
– Delivering energy security
Life Sciences
– Rising global demand
Large markets with solid growth.
Oil & Gas
– Delivering energy security
Chemicals
– Rising global demand
Small markets with substantial growth.
Hydrogen
– Enabling energy transition
Carbon Capture
– Enabling energy transition
Our focus is on onshore and offshore production, gas processing
and pipelines where our clients continue to invest in new and
ageing assets to improve ef
ficiency and/or reduce emissions.
We are leaders in energy – ensuring energy
security today and delivering the transition
to a net zero future.
We are leaders in materials processing and
production, applying circular economy practices
to deliver critical materials sustainably and
responsibly as we strive for net zero.
Minerals
Trends:
Supportive policies | Transition to net zero | Technology advancement
Our focus is primarily on minerals for net zero and the clean
energy transition for example, copper, nickel and lithium.
The growth in clean mineral processing is expected to increase
six-fold by 2040 to meet net-zero targets.
Hydrogen
Trends:
Energy security | Transition to net zero | High commodity prices
Our focus is on low carbon hydrogen as we believe it will be
an important part of the hydrogen mix by 2050. We expect
increased spend for new-build and retro
fit
facilities further
incentivised by the US Inflation Reduction Act.
Chemicals
1
Trends:
Rising consumer demand | Circular initiatives | Transition to net zero
Our focus is on prioritising complex integrated petrochemicals
facilities and selected specialty chemicals. Additionally, the
specialty chemicals market is growing quickly due to the focus
on eco-friendly products and advanced materials.
Supportive policies | Transition to net zero | Improving economics
Carbon Capture
Trends:
Our core focus is on oil and natural gas facilities and carbon
dioxide distribution and storage. We also see longer-term
emerging opportunities to apply our expertise to iron, steel,
cement and waste facilities.
Life Sciences
Trends:
Rising consumer demand | Re-shoring commitments | Ageing population
Our focus is on on-shoring trends, particularly in North America
where our strong engineering and major project delivery capability
coupled with digital solutions offers a differentiated approach.
John Wood Group PLC
Annual Report and Accounts 2022
10
Our key market drivers explained:
Energy security
Our clients focus on delivering safe,
reliable and affordable energy.
Footnotes:
1. Oil & Gas refers to upstream and midstream. Chemicals excludes re
fining
2. Addressable market sizes estimated using secondary sources
3. Market CAGR assumptions shown are nominal growth rates based on a range of global in
flation assumptions
from 0% to 2.5%
Energy transition
The global shift of the energy sector
from fossil based production and
consumption to renewable and low
carbon energy sources.
Net-zero agenda
The investment from our clients to
meet their net zero goals.
Energy
Materials
Oil & Gas
Market drivers
Energy security
Net zero agenda
High commodity
prices
Hydrogen
Market drivers
Energy
transition
Supportive
policy
Technology
advancement
Carbon
Capture
Market drivers
Net zero agenda
Improving
economics
Supportive
policy
Metals &
Minerals
Market drivers
Transition to net
zero
Supportive
policy
Technology
advancement
Chemicals
Market drivers
Consumer
demand
Circular
initiatives
Net zero agenda
Life
Sciences
Market drivers
Consumer
demand
On-shoring
commitments
Ageing
populations
Addressable
market (2025)
2
$124
bn
Market CAGR:
2022-2025
3
6%
Market CAGR:
2022-2030
3
2%
Addressable
market (2025)
2
$4
bn
Market CAGR:
2022-2025
3
67%
Market CAGR:
2022-2030
3
31%
Addressable
market (2025)
2
$4
bn
Market CAGR:
2022-2025
3
29%
Market CAGR:
2022-2030
3
15%
Addressable
market (2025)
2
$21
bn
Market CAGR:
2022-2025
3
7%
Market CAGR:
2022-2030
3
7%
Addressable
market (2025)
2
$50
bn
Market CAGR:
2022-2025
3
1%
Market CAGR:
2022-2030
3
2%
Addressable
market (2025)
2
$26
bn
Market CAGR:
2022-2025
3
6%
Market CAGR:
2022-2030
3
6%
Details on market growth:
Strategic report
Governance
Financial statements
John Wood Group PLC
Annual Report and Accounts 2022
11
Our strategy
Our selective and focused approach:
Market
attractiveness
Where we play:
We target large markets with strong
growth opportunities where we can
achieve good margins and where we
have strong client relationships to
accelerate growth.
Where we play:
We target markets and projects where
we can leverage our ability to win and
hold a leading position based on current
core capabilities as well as leveraging our
ability to scale talent, our competitive
offering and geographic footprint.
Where we play:
We target projects where we can make
sure that the contracting dynamics
within our chosen markets and type of
projects we work on meet our preferred
low risk profile and contracting model.
We will no longer pursue lump sum
turnkey projects and have exited large-
scale EPC projects.
Our ability
to win
Contracting
dynamics
Our focus
is our key
differentiator.
We focus on complex work in
markets and geographies where
we are most differentiated.
The markets we choose to operate
in are forecasted to spend c.$1tn
of capital over the next few years;
we anticipate our addressable
markets to spend around
$230bn
in 2025, see page 10.
John Wood Group PLC
Annual Report and Accounts 2022
12
Profitable
growth.
A higher grade business
Growth in priority markets and
geographies focusing on EBITDA and
solutions and portfolios aligned to
growth markets, a focus on sustainable
cash flow. And a balanced approach to
risk where we ensure an appropriate level
of contract and project risk.
Creating a great place to work
Investing in creating a great place to
work. This means prioritising employee
wellbeing, doing the right thing, putting
sustainability at the heart of our
business and empowering each other to
design the future.
Results focused and delivering
for clients
How we do business and deliver for
our clients and includes the ethical
standards we maintain, the innovation
we bring, the quality of our work and
the sustainability and reliability of our
solutions. This is about simplifying and
improving how we operate. It’s the things
we need to do to have a relentless focus
on exceeding client expectations and
always challenging the status quo.
Inspired
culture.
Performance
excellence.
Delivered across three pillars:
Adjusted EBITDA to grow at mid to high single digit CAGR over the medium term,
with momentum building over time as our strategy delivers
Our medium-term targets:
Adjusted EBITDA margins to be flat in
the nearer term, partly as we reinvest
in the business to secure growth. In the
medium term, we see opportunity for
margin improvement
The strong underlying cash flows o
f our
business combined with the reducing
legacy liabilities, will result in a return
to positive free cash
flow (a
fter
exceptionals) from FY24 onwards
2022 progress
• Significant improvements in employee
engagement score (+8 points)
• 32% female leadership
• AA MSCI rating for eighth
consecutive year
2022 progress
• Strengthened leadership team
• High quality pipeline reflects
focus
and selectivity
• Market-leading client NPS –
first among nine closest peers
• Growth in Global Execution Centres
(over 3,000 employees)
• Around 20% of revenue from
sustainable solutions based on
strict definition
2022 progress
• Results in line with expectations
• Revenue up 8%
1
• Headcount up 8%
• Cost reimbursable contract portfolio
• Legacy liabilities addressed
• Sale of Gulf of Mexico offshore labour
supply business
1.
At constant currency, see note 7 of the
financial review
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
13
Governance
Financial statements
Our business model
We are an
engineering and
consultancy business
providing solutions
to clients across
the lifecycle of
their projects.
Our
relationships
and resources
Outstanding
talent
Talented, flexible and
motivated workforce.
Financial
Cash generation allows
us to invest in the
business, people
and systems.
Our relationships
Decades-long trusted
client relationships with
the firms who invest in
critical infrastructure.
Robust governance
Robust risk governance
and operations
assurance policies
and processes.
Intellectual property
We have proprietary
software solutions.
We complete
complex work in
critical industries.
We contribute to
unlocking solutions
to the world’s most
critical challenges.
Our
purpose
We create value by delivering differentiated
consultancy and engineering solutions across
the energy and materials markets.
What
we do
Read more in our CFO’s
review on page 26
Our integrated offering
1. Advise:
• Feasibility studies
• Concept design
• Pre-FEED
• Strategy planning
2. Design:
• FEED
• Detailed design
• Owner’s engineer
3. Deliver:
• PMC
• EPCm
• Commissioning
4. Operate:
• Maintenance
• Modifications
• Brownfield
engineering
• Asset
management
• Asset
optimisation
5. Repurpose:
• Life extension
• Asset
repositioning
• Decommissioning
Our contracting structure
How we contract with clients is critical to their
success and ours. In 2022 c.80% of revenue from cost
reimbursable contracts whereby the costs to deliver
the work are charged directly to the clients.
2
.
D
e
s
i
g
n
3
.
D
e
l
i
v
e
r
1
.
A
d
v
i
s
e
5
.
R
e
p
u
r
p
o
s
e
4
.
O
p
e
r
a
t
e
This can range from the very outset of a project when
clients are looking to test the feasibility of their plans,
all the way through to the detailed design, the detailed
engineering, the project delivery and then into the
long-term operation and optimisation of assets to
maximise the value they deliver.
Working
together to
bring solutions.
Read more on page 60
Read more in our risks
section on page 104
John Wood Group PLC
Annual Report and Accounts 2022
14
Our competitive
advantage
Read more on page 22
Consulting
• Technical and digital advisory business
• Trusted adviser to clients’ toughest challenges
• Deep domain expertise coupled with operational
technology capabilities
Projects
• Delivering solutions for high value capital investment
• Balanced portfolio across energy and materials
built on strong long term client partnerships
well positioned for pro
fitable growth in energy,
chemicals, minerals and life sciences
Operations
• Leader in energy operations, delivering highly
skilled, integrated technical solutions across critical
infrastructure
• Long term client partnerships
• Deep expertise in energy security, decarbonisation
and sustainable energy transition
Read more on page 23
Read more on page 24
World class subject matter
expertise
With our global execution centres,
we utilise a shared resource base
with leading subject matter
experts across our markets.
Ability to leverage
Our global footprint and
expertise across the asset lifecycle
allows us to offer highly-skilled,
technically-integrated solutions
for critical industries.
Highly valued by our clients
We rank higher than the market
average in NPS
1
and first amongst
our closest peers.
Global scale and footprint
We have a geographically optimum
footprint within key regions and our
operating model allows us to scale
up or down in response to market
opportunities.
Differentiating with
decarbonisation and digital
Our two cross cutting drivers of
decarbonisation and digital are
critical to our clients’ ambitions.
The value
we generate
The remainder of the work we did was
fixed price services where we
charge a fixed
fee to deliver the work. Included in this, around 4% of
work was lump sum turnkey (LSTK) whereby Wood takes on delivery
risk. We will not pursue LTSK projects and have exited largescale EPC
projects, as discussed in the CEO statement on page 06.
Footnotes:
1. Net Promoter Score (NPS) is a customer
loyalty and satisfaction measurement taken
from asking customers how likely they are to
recommend your product or service to others
on a scale of 0-10
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
15
Governance
Financial statements
Our business model
continued
For our people
• Rewarding careers and employee retention
• A workplace where different backgrounds, experience
and expertise are welcomed and celebrated
For the environment
• Gross carbon reduction
• Enabling our clients to decarbonise and transition away from fossil fuels
Read about how we engage with our stakeholders on pages 38
For investors and lenders
• Growth and cash generation
• Targeting total shareholder returns
For our clients
• Best-in-class delivery, consistently
• Leading technical services and smarter, more sustainable solutions
• Track record on industry-leading projects
• NPS 20% higher than market average and key competitors
For communities
• Significant contribution to local employment and
communities
• Employee matched funding & community support
For suppliers
• A responsible partner
The value we generate
Sustainable solutions
The majority of the work we do across our businesses reduces the carbon intensity of our clients’ assets.
20%
2022 revenue from sustainable solutions
Read more in sustainability
on page 48
Read more on page 66
Read more on page 60
John Wood Group PLC
Annual Report and Accounts 2022
16
Delivering safe,
reliable and
affordable energy
Over the last 12 months, the
war in Ukraine has brought the
issue of energy security into
much sharper focus.
While climate concerns
mean there remains a need
to accelerate the pace of the
energy transition, retaining
secure access to reliable and
affordable energy is critical
to improving quality of life in
communities across the globe.
At Wood, we work with many of the
world’s largest energy companies and
have an outstanding track record of
delivering large, complex greenfield oil
and gas developments and maximising
production from existing
fields.
A great example of our work in this area
was a new contract that we secured in
2022 with Chevron.
We entered into a 10-year global
master services agreement (MSA)
for engineering and project related
services across all of Chevron’s business
units covering both offshore and
onshore assets within the upstream,
midstream and downstream markets.
With this contract, we formed a global
strategic relationship with Chevron
which will enable us to drive predictable
outcomes for project delivery worldwide.
As part of this focus, we are also working
closely with Chevron’s digital enablement
specialists to embed smarter ways of
working across the globe and helping
to lower their carbon footprint across
their portfolio.
10 year
global master services agreement (MSA)
30+ year
relationship with Chevron
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
17
Governance
Financial statements
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.
Financial:
Adjusted earnings before interest,
tax, depreciation and amortisation.
A reconciliation of adjusted EBITDA
is shown in note 1 to the financial
statements.
2022 performance:
Adjusted EBITDA was 5% lower than
last year, on a continuing group basis,
and included a $17 million impact from
currency movements. Excluding this,
adjusted EBITDA was broadly flat on
last year.
Target:
To grow at mid to high single digit
CAGR, momentum building as our
strategy delivers.
Adjusted EBITDA
1
$m
2021
554
2018
2019
694
855
630
2020
Free cash flow is defined as all cash
flows be
fore acquisitions, disposals
and dividends. It includes all mandatory
payments the Group makes such as
interest and tax, and all exceptional
cash flows. It excludes the impacts
of IFRS 16 (Leases) accounting.
A reconciliation of free cash
flow to our
statutory cash flow is shown on page 32
of the
financial review.
2022 performance:
Free cash flow o
f $(730) million includes
a working capital outflow o
f $367
million and exceptional cash costs of
$319 million, including the scheduled
SFO settlement payment and costs
associated with previously provided for
loss-making contracts, principally Aegis.
Target:
Free cash flow positive in 2024.
Free cash flow
£m
2021
(398)
2018
326
193
2019
(46)
2020
Key performance indicators
For more information on our
financial
performance see pages 26 to 35
Measuring our performance
2022
385
2022
(730)
Adjusted EBITDA as a percentage
of revenue.
2022 performance:
Adjusted EBITDA margin of 7.1%
compared to 7.7% last year, on a
continuing group basis. This includes
the impact of the previously guided
lower margin in Operations, and a lower
margin in Consulting that partly reflects
the impact from exiting work in Russia.
Target:
Adjusted EBITDA margins to be flat in
the nearer term, partly as we reinvest
in the business to secure growth. In the
medium term, we see opportunity for
margin improvement.
Adjusted EBITDA
1
margin
%
2021
8.6
2018
6.9
8.6
2019
8.3
2020
2022
7.1
1.
The prior year figures in the chart have not been
restated to reflect discontinued operations.
John Wood Group PLC
Annual Report and Accounts 2022
18
Linking our KPIs to our strategy
These are the three strategic pillars of our focus to meet the needs of three important stakeholder groups –
our employees, our clients and our shareholders.
Total recordable
incident rate (TRIR)
per 200,000 work hours
We continued to monitor performance
using traditional safety metrics in order
to compare data with previous years.
Total recordable incident rate is the
total of lost time incidents, restricted
work cases and medical treatment
cases per 200,000 exposure hours.
Performance is based on a rolling
12-month frequency rate and is inclusive
of contractors working under Wood’s
management system.
2022 performance:
In total there were 115 recordable
incidents across the business. This
represents a 6% reduction in the
number of injuries compared with 2021.
Overall, our 2022 TRIR performance
marginally improved to 0.17, compared
to 0.18 in 2021.
LTIR measures lost time incidents per
200,000 exposure hours and is inclusive
of contractors working under Woods
management system.
2022 performance:
In total there were 18 Lost Time Incident
cases across the business. This represents
three more than the previous year. As a
result, our LTIR marginally increased to
0.03 from 0.02.
Safety:
For more information on our safety
performance see page 74
2021
0.18
2018
0.18
0.18
2019
0.17
2020
2021
0.02
2018
0.04
0.04
2019
0.04
2020
Order book is presented as an indicator
of the visibility of future revenue,
showing the orders the Group has to
deliver in future periods. 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.
It does not include Wood’s proportional
share of JV order book.
2022 performance:
Flat on last year and up 4% at
constant currency, on a continuing
group basis. Strong order book growth
in Projects and small growth in
Consulting. Expected lower order book
in Operations reflecting phasing o
f
large contract awards.
Target:
To grow our order book each year.
Order book
1
$m
2021
7,748
2018
8,524
7,898
2019
6,524
2020
Lost time incident
rate (LTIR)
per 200,000 work hours
Measure of sustainable solutions as a
proportion of total revenue. Sustainable
solutions consists of activities related
to decarbonisation activity, renewable
energy, hydrogen, carbon capture &
storage, power & electrification, Battery
storage, LNG. In the case of mixed
scopes including a decarbonisation
element, these are only included in
decarbonisation if 75% or more of the
scope relates to that element.
2022 performance:
In 2022, around 20% of revenue came
from sustainable solutions. This is the
first year we have measured this metric.
Target:
To grow our revenue from sustainable
solutions.
Revenue from
sustainable solutions
%
2021
NA
2018
NA
NA
2019
NA
2020
2022
6,016
2022
20
2022
0.17
2022
0.03
Performance excellence
Profitable growth
Inspired culture
In 2022 our target was to have zero
incidents that resulted in fatality,
life threatening or life altering injury
or illness.
2022 performance:
Two incidents classified as SIF Actual
occurred resulting in significant injuries.
The first occurred in our Operations
Americas business when an operator
was struck in the abdomen by a
thermowell fitting he was tightening.
The second occurred in our Projects
business in the United Kingdom where
a linesman fell from height.
Serious Injury & Fatality
(SIF)
Strategic report
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Annual Report and Accounts 2022
19
Governance
Financial statements
Key performance indicators
continued
Measuring our sustainability performance
Our goal is to be leaders in
our field in environmental,
social and governance (ESG)
matters and sustainability.
Our sustainability programme seeks
to address the matters that are most
important to both our business and
our key stakeholders. We measure our
performance against our sustainability
journey through a set of targets
that were established in 2020 and
are aligned to the UN Sustainable
Development Goals.
Our focus in 2022 has been on
collaboration and education across our
entire organisation to gain momentum
against our sustainability goals across
our entire organisation. This collaboration
has enabled the development of a
Sustainability Code of Practice (SCoP)
to provide our operational teams with
practical steps to contribute to the
achievement of our targets.
A key priority for 2023 will be to establish
revised baselines for a number of our
targets to reflect the impact o
f the sale
of our Built Environment business in
September 2022.
Our aim: To work fairly,
transparently and ethically through
the trusted partnerships we create
Our goals:
100% of Wood labour suppliers sign up
and comply with the Building Responsibly
Principles by 2025
100% of our suppliers have Building
Responsibly Principles embedded into
their supply chains by 2030
Why is it important?
As we continue to deliver responsibly and
successfully on projects across the globe,
we commit to caring for our people by
championing and protecting their welfare.
Extending the principles of Building
Responsibly to our supply chain partners
will ensure we create ethical partnerships
that help to reduce our exposure to
potential human rights violations.
2022 progress:
We made significant progress towards
our worker welfare targets in 2022.
In particular:
• Our Supply Chain Code of Conduct
was updated to require compliance
with the Building Responsibly principles
by all new suppliers
• We have reviewed our supply chain of
over 10,000 suppliers to identify those
supplying labour. We are now engaging
with those 88 labour suppliers
to provide training and to ensure
that they commit to the Building
Responsibly principles
• Completion of the revision of supplier
governance rules and pre-qualification
and monitoring process
• As part of the exercise to embed the
Building Responsibly principles, our
Supply Chain Code of Conduct was
also updated to require our suppliers
to mandate compliance with our code
of conduct throughout their own
supply chain
Embedding fair working
practices through our
business partnerships
Our aim: To be trusted to solve the
challenges of our changing climate
and developing populations
Our goal:
Consistently ranked in the Top Quartile
ESG investment ratings within our sector
group by 2025
Why is it important?
ESG ratings are a measure of our
governance of risks related to matters
such as climate change, human rights and
corruption. Achieving top quartile ESG
ratings increases confidence in Wood’s
investment proposition, supporting our
growth now and in the future.
2022 progress:
Awarded “AA Leader” rating from
MSCI in 2022 for an eighth consecutive
year, within the top 25% for Energy,
Equipment and Services.
We are committed to maintaining our
strong ESG ratings and in 2022 have
focused on continuous improvement
in disclosures of our exposure to, and
governance of, ESG risks. A key part of this
was the launch of the sustainability hub on
our website, drawing together information
on our approach to sustainability including
strategy, governance, policies and key data.
Delivering our
purpose
Our goal:
Doubling client support aligned to the
energy transition and more sustainable
infrastructure by 2030
Why is it important?
With capabilities to deliver sustainable
services from planning and design to
the re-purposing of assets, our work to
increase the pace of energy transition
and decarbonisation will help deliver the
solutions needed for a sustainable future.
2022 progress:
During 2022 we continued to win new
projects supporting energy transition,
and decarbonisation including:
• Supplying solar power to decarbonise an
onshore oil & gas operation for Chevron
• Delivering Europe’s lowest carbon
ethane cracker
• Providing pre-FEED for carbon capture
at an oil refinery
John Wood Group PLC
Annual Report and Accounts 2022
20
Our aim: To lift up the communities
around us using our energy and
expertise to improve lives
Our goal:
To contribute $10 million to our Global
Cause by giving our time, energy,
resources and funding by 2030
Why is it important?
We recognise our responsibility to
support and empower the people and
places we impact. Giving back, through
our energy, expertise and funding creates
possibilities that enable the growth and
sustainability of the communities we
live and work, in whilst also increasing
workforce engagement.
2022 progress:
To date, we have reached 15% of our
target and contributed $1,528,230
towards our 2030 target. This includes
seed funding awards, employee matched
funding, direct
financial and resource
donations and volunteering time. In 2023
we will continue to focus on improving
reporting through our Group-wide
sustainability action tracker to increase
visibility of Global Cause activity across
the Group.
Positively impacting
on the communities
we operate in
Our aim: To recognise, welcome
and celebrate diversity of thought,
experience and background to find
our boldest solutions and nurture
our talent
Our goal:
To improve gender balance with
40% female representation in senior
leadership roles by 2030
Why is it important?
Greater balance across our leadership
enables better diversity in our decision
making resulting greater engagement
and improved retention in our workforce,
more innovation and better financial
results.
2022 progress:
We are focused on creating more
innovative, creative and inclusive teams
by embracing and celebrating the
value each person brings to Wood. We
recognise the rich diversity of experience,
expertise, backgrounds and beliefs
brought to our business through our
people and, whilst we champion our
aspirational goal to target 40% female
representation in senior leadership roles
by 2030, Wood remains committed to
recruiting and promoting individuals with
the required skills and experience for each
role, irrespective of their characteristics.
In 2022, we had 32% female leaders in
our organisation, a reduction from 33%
in 2021. The sale of our Built Environment
consulting business resulted in a
reduction in female leaders, despite the
roll-out of functional and business unit
plans to increase inclusion and diversity.
In 2023 we will renew our focus on
developing female P&L leaders across
Wood. We will also continue our focus
on gender balance for our Early Careers
population, following 48% of our intake
being female in 2022.
In addition, in support of our
commitment to being a diverse, inclusive,
and equal opportunities employer and
promoting an environment that is free
from all forms of bias, we introduced
voluntary ethnicity pay gap reporting in
2022 in Australia, the UK and US.
Developing an inclusive
& diverse workforce
Our goal:
To ensure all Wood of
fices are single use
plastic (SUP) free by 2025.
Why is it important?
The impact of SUPs on the environment and
the role we all play to make more responsible
choices to reduce waste is well recognised.
Our people are keen to play their part in
the action to reverse the impact of SUPs.
2022 progress:
We commenced a process to assess SUP
consumption in our of
fices to attribute a
rating according to plastic usage.
By the end of 2022, 25% of our of
fices
had been assessed. Currently, 7% are
SUP free and 11% are substantially SUP
free. Progress to date has been impacted
by of
fice closures and hybrid working as
a result of the pandemic. Our focus is
to ensure all of
fices owned or leased by
Wood have an elimination plan in place in
order to achieve our target by 2025.
Our aim: To take responsibility for the
impact of the work we do and how
we deliver it on the planet we share
Our goal:
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 CO2e in 2019
Why is it important?
A brighter tomorrow will be a reality for
future generations with a lower carbon
pledge. We believe we have an important
role to play and our approach, aligned to
recognised global standards on emissions
reduction, seeks to deliver absolute
reductions in our carbon emissions
that will help the world to meet 2050
net-zero ambitions.
2022 progress:
Our scope 1 & 2 emissions were 60,611
tonnes CO2e. This is a reduction of 20%
from 2021, largely due to the disposal of
the Martinez power plant in late 2021,
eliminating the associated operational
electricity usage, and completion of
certain energy intensive projects. Overall,
our emissions have reduced by 65%
compared to our 2019 baseline.
We made further progress in the purchase
of renewable energy across the business,
with around 55% of our electricity now
sourced from certi
fied renewable energy
sources. Building on our experience of the
Covid-19 pandemic, we also made good
progress in the consolidation of our real
estate portfolio, increasing the employee
density of our of
fices.
Managing our
environmental impact
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
21
Governance
Financial statements
Our Consulting business provides technical consulting, digital
consulting, and energy asset and technology solutions. It also
provides a range of decarbonisation solutions that sit across
Consulting and opens opportunities across Wood’s other
business units.
Revenue of $625 million was 4% higher than last year, and 13%
higher on a constant currency basis, with strong growth in our
solutions across both energy security and energy transition.
Adjusted EBITDA of $73 million was 5% lower than last year
but 5% higher on a constant currency basis. The adjusted
EBITDA margin declined from 12.9% to 11.7% due to a weaker
performance in Applied Intelligence, the impact of exiting
high-margin work in Russia and some employee cost pressures
across our business.
The order book at 31 December 2022 was $476 million, down 3%
on last year but up 3% at constant currency. This reflects good
growth across oil and gas and energy transition solutions. At 31
December 2022, revenue in our order book for delivery in 2023
was $361 million, down 9% on last year, reflecting a change in
mix in energy consulting compared to a year ago.
Operational review
Growth in the year was led by our solutions across energy
security and transition. Encouragingly, we continue to see
significant increases in demand
for our consulting offering across
hydrogen, carbon capture and other decarbonisation activities.
Key contract wins in the year across Consulting included:
• Technology upgrade of a hydrogen steam methane reformer
in Equatorial Guinea
• FEED award to modernise controls systems for two key gas
plants in the UK
• Feasibility study for chemicals derivative facility in Abu Dhabi
We saw an increase in work across hydrogen and carbon
capture in the year. Looking ahead, we expect demand for our
work across these areas to grow significantly, helped in part by
the Inflation Reduction Act in the USA.
Revenue from sustainable solutions for Consulting was around
$160 million in the year, representing around 25% of revenue.
Outlook for 2023
Following the sale of Built Environment Consulting, our
Consulting business has refocused. We expect revenue growth
for the year given the underlying demand for our services
and the growth in headcount. Performance is expected to be
weighted to the second half of the year.
Differentiators
• Deep domain expertise combined with technical knowledge
• Trusted partnerships with long-term global clients
• Ability to leverage integrated Wood offering
• Innovative carbon reduction solutions to help enable net zero
• Global footprint across our digital advisory business
• Industry-leading digitalisation solutions
• Leading systems integrator with technology agnostic solutions
Technical and digital
advisory business adding
value throughout our
clients’ investment lifecycle.
Azad Hessamodini
Executive President, Consulting
Consulting
Revenue (pre-exceptional items)
(2021: $599m)
4.4%
Adjusted EBITDA margin
11.7%
Order book
$476m
Markets:
% of Group revenue:
11%
64%
17%
Adjusted EBITDA
$73m
(2021: $77m)
5.2%
(2021: 12.9%)
1.2ppts
(2021: $491m)
3.1%
Segmental review
19%
Materials
Energy
Other
$625m
John Wood Group PLC
Annual Report and Accounts 2022
22
Craig Shanaghey
Executive President, Operations
Delivering solutions for
complex, high-value
capital investments.
Revenue (pre-exceptional items)
$2,211m
(2021: $2,340m)
5.5%
Adjusted EBITDA margin
7.6%
Order book
$2,081m
Markets:
% of Group revenue:
41%
44%
55%
Adjusted EBITDA
$169m
(2021: $168m)
0.6%
(2021: 7.2%)
0.4ppts
(2021: $1,807m)
15.2%
Our Projects business mainly provides complex engineering
design and project management across energy and materials
markets including oil and gas, chemicals, mining and minerals
and life sciences.
Revenue of $2,211 million was 6% lower than last year, and
down 2% on a constant currency basis. This included a decline
in the first hal
f of the year and a return to growth in the second
half of 4%, or 8% at constant currency. The return to growth
came from our services-led approach following our strategic
decision to move away from riskier LSTK work.
Adjusted EBITDA of $169 million was slightly higher than last
year and up 9% on a constant currency basis. The adjusted
EBITDA margin increased by 0.4 percentage points to 7.6%,
driven by improved project performance and the continued shift
to a services-led business model. In addition to these adjusted
results, around $25 million of contract losses were recognised as
exceptional items, see details in the Financial Review.
The order book at 31 December 2022 was $2,081 million, up 15%
on last year driven by growth across the majority of our end
markets, particularly oil & gas and chemicals. At 31 December
2022, revenue in our order book for delivery in 2023 was $1,606
million, up 22% on the position a year ago.
Operational review
Business growth in the year was balanced across energy and
materials markets, with a significant uptick in work in the
Middle East as customer investment increased in the region.
Key contracts wins in the year included:
• EPCm contract worth more than $100 million to deliver
Europe’s lowest carbon ethane cracker for INEOS
• FEED and detailed design contract from Enter Engineering to
deliver world’s largest copper concentrator
• EPCm contract with Evonik in Alabama to support the
production of sustainable animal feed
• Over $300 million of contract wins in the Middle East in the
second half of the year
In addition to returning to growth, we made good progress
in closing our challenging contracts in 2022 as we finalise
our move away from LSTK contracts, including moving to
completion on our renewables EPC contracts.
Revenue from sustainable solutions for Projects was around
$650 million in the year, representing around 30% of revenue.
Outlook for 2023
We expect strong revenue growth for the year given the
underlying demand for our services, the signi
ficant growth in
order book and the growth in headcount.
Differentiators
• Excellent track record of managing complexity
• World’s leading project delivery professionals with the ability
to scale through regional hubs of expertise
• Strategic, long-term client partnerships
• Engineering solutions to reduce carbon at the outset of every
project
• Cutting-edge digital strategies that deliver sustainable value
to clients
• Deep experience in optimising cost and schedule for clients
• Ability to leverage integrated Wood offering
Projects
1%
Materials
Energy
Other
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
23
Governance
Financial statements
Steve Nicol
Executive President, Operations
Essential services keeping
the world’s critical
industries performing.
Revenue (pre-exceptional items)
$2,407m
Adjusted EBITDA margin
6.1%
Order book
$3,295m
Markets:
% of Group revenue:
44%
Materials
Energy
88%
10%
Adjusted EBITDA
$148m
(2021: $2,098m)
14.7%
(2021: $172m)
13.9%
(2021: 8.2%)
2.1ppts
(2021: $3,630m)
9.2%
Operations
Our Operations business manages and optimises our
customers’ assets including decarbonisation, maintenance,
modifications, brownfield engineering, asset management
through to decommissioning.
Revenue of $2,407 million was 15% higher than last year, and
17% higher at constant currency, reflecting higher activity
levels across our business given the stronger market conditions
in conventional energy, especially in Europe and the Middle
East. Revenue growth was also helped by an increased level of
passthrough revenue.
Adjusted EBITDA of $148 million was 14% lower than last year,
and 11% lower at constant currency, and reflects the reduction in
margin from 8.2% to 6.1%. This lower margin was expected given
increased passthrough revenue and a lower level of contract
close-out benefits in the year compared to previous years.
The order book at 31 December 2022 was $3,295 million,
9% lower than last year. This reflects the phasing o
f large
multi-year awards. At 31 December 2022, revenue in our order
book for delivery in 2023 was $1,836 million, up 4% on the
position a year ago.
Operational review
Business growth in the year reflects higher activity levels across
our markets, most notably in Europe and the Middle East. Key
contracts wins in the year included:
• 3-year extension to our maintenance, modifications and
operations framework agreement with Equinor
• Contract extension with Basra Gas Company in Iraq,
including repurposing flare gas to reduce emissions
• Contract renewal for maintenance and operations solutions
to Florida Power & Light
Revenue from sustainable solutions for Operations was around
$230 million in the year, representing around 10% of revenue.
Outlook for 2023
We expect increased activity for the year given the underlying
demand for our services.
Differentiators
• Deep domain expertise combined with technical knowledge
• Trusted partnerships with long-term global clients
• Ability to leverage integrated Wood offering
• Innovative carbon reduction solutions to help enable net zero
• Global footprint across our digital advisory business
• Industry-leading digitalisation solutions
• Leading systems integrator with technology agnostic solutions
Segmental review
continued
Other
2%
John Wood Group PLC
Annual Report and Accounts 2022
24
Our Investment Services business unit manages a number of
legacy activities and liabilities, and includes our Turbines joint
ventures. The most notable areas are activities in industrial
power and heavy civil engineering. In addition to this, the
results of our Aegis Poland contract are reported within
Investment Services.
Revenue of $199 million was broadly
flat on last year and up 3%
at constant currency. Adjusted EBITDA of $69 million was 8%
higher than last year. This includes an improved performance
across our businesses.
The order book at 31 December 2022 was $164 million, up
significantly on last year. At 31 December 2022, revenue in our
order book for delivery in 2023 was $126 million, up 27% on the
position a year ago.
As is typical, performance in our Turbines joint ventures was
weighted to the second half of the year. We expect this
weighting to continue in FY23.
Investment Services
Central costs, not allocated to business units, decreased to
$74 million. The reduction partly reflects our cost reduction
programme. FY21 included a $11 million gain on sale of property.
Outlook for 2023
We expect central costs for FY23 to be higher than FY22 due to
inflationary pressure on salaries and costs.
Central Costs
Revenue (pre-exceptional items)
$199m
(2021: $201m)
0.9%
Adjusted EBITDA margin
34.7%
Order book
$164m
Adjusted EBITDA
$69m
(2021: $64m)
7.6%
(2021: 31.8%)
2.9ppts
(2021: $120m)
36.8%
Adjusted EBITDA
3
$(74)m
(2021: $(77)m)
3.8%
Delivering
advanced
facilities in
life sciences.
The importance of investing in the life
sciences industry was all too evident
during the Covid-19 pandemic.
Access to top-class R&D and manufacturing
production facilities enabled the world to develop
scalable solutions to combat the virus. Since then,
capital investment has continued to accelerate in
this space.
Wood has a long history of working with clients in the
life sciences sector. Last year, we were selected by
the Commonwealth Scientific & Industrial Research
Organisation (CSIRO), Australia’s national science
agency, to design new laboratory spaces as part
of the refurbishment of the Australian Centre for
Disease Preparedness (ACDP).
The ACDP is a specialist facility that supports
scientific research into highly in
fectious agents.
It includes advanced and safe laboratory facilities
for testing, diagnostics, research, development, and
production to help prevent and eradicate infectious
diseases. The refurbishment is expected to be
operational by 2027.
“We are proud of Wood’s technical
expertise in the specialised area of high
containment laboratories. Together
with our partners, we will work closely
with CSIRO to create smart solutions
for a world-class facility.”
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
25
Governance
Financial statements
Financial review
Results in line with
expectations.
“We expect our performance in FY23 to be line with our
medium-term targets – adjusted EBITDA margins to be
flat in the nearer term, partly as we reinvest in the business
to secure growth. In the medium term, we continue to
see opportunity for some margin improvement. Adjusted
EBITDA to grow at mid to high single digit CAGR over the
medium term, with momentum building over time as our
strategy delivers.”
David Kemp
CFO
John Wood Group PLC
Annual Report and Accounts 2022
26
Trading performance
Trading performance is presented on the basis used by
management to run the business with adjusted EBITDA
including the contribution from joint ventures. A reconciliation of
operating profit to adjusted EBITDA is included in note 1 to the
financial statements. A calculation o
f adjusted diluted EPS is
shown on page 31.
2022
$m
2021
(*restated)
$m
Continuing operations
Revenue (pre exceptionals)
5,442.2
5,237.7
Adjusted EBITDA
1
385.1
404.3
Adjusted EBITDA margin %
7.1%
7.7%
Depreciation (PPE)
(29.3)
(35.1)
Depreciation on right of use asset (IFRS 16)
(90.5)
(85.9)
Impairment of joint venture investments
and property, plant and equipment
(2.4)
(5.3)
Amortisation – software and system
development
(89.0)
(90.8)
Adjusted EBIT
173.9
187.2
Amortisation – intangible assets from
acquisitions
(64.4)
(78.3)
Tax and interest charges on joint ventures
(14.3)
(15.3)
Exceptional items
(121.2)
(155.7)
Impairment of goodwill and intangible
assets
(542.3)
–
Operating loss
(568.3)
(62.1)
Net finance expense
(109.8)
(92.2)
Interest charge on lease liability
(16.4)
(17.7)
Loss before taxation from continuing
operations
(694.5)
(172.0)
Tax charge
(10.9)
(41.5)
Loss for the year from continuing
operations
(705.4)
(213.5)
Profit
from discontinued operations, net of
tax
353.7
78.0
Loss for the period
(351.7)
(135.5)
Non-controlling interest
(4.6)
(4.0)
Loss attributable to owners of parent
(356.3)
(139.5)
Number of shares (basic)
680.4
675.6
Basic earnings per share (cents)
(52.4)
(20.6)
*
The comparative information has been restated due to a discontinued
operation outlined in note 7 of the
financial statements.
In the table above depreciation and amortisation include the
contribution from joint ventures.
Revenue for 2022 includes an exceptional item of $(8.0) million
(2021: $(25.4) million) related to contract losses in respect
of the closure of the Power and Industrials EPC business. In
2021, the exceptional item 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.
During the year, Adjusted EBITDA reduced by $19.2 million
to $385.1 million primarily due to adverse movements in FX
rates. Operating loss of $568.3 million (2021: $62.1 million) has
increased due to the large impairment charge recorded against
goodwill and intangible assets. The $353.7 million profit
from
discontinued operations, net of tax includes the gain of disposal
of $514.5 million. The
final proceeds
from the Built Environment
Consulting business will be finalised during the first hal
f of 2023
upon agreement of the completion balance sheet between the
Group and WSP.
The review of our trading performance is contained within the
Chief Executive Review on pages 6 to 9.
Reconciliation of Adjusted EBIT to Adjusted diluted EPS
2022
$m
2021
(*restated)
$m
Adjusted EBIT
173.9
187.2
Tax and interest charges on joint ventures
(14.3)
(15.3)
Adjusted net finance expense
(103.9)
(85.9)
Interest charge on lease liability
(16.4)
(17.7)
Adjusted profit be
fore tax
39.3
68.3
Adjusted tax charge
(59.2)
(49.9)
Adjusted profit
from discontinued operations,
net of tax
63.3
103.9
Adjusted profit
for the period
43.4
122.3
Non-controlling interest
(4.6)
(4.0)
Adjusted earnings
38.8
118.3
Number of shares (m) – diluted
680.4
675.6
Adjusted diluted EPS (cents)
2
5.7
17.5
See notes on page 35
Reconciliation to GAAP measures
2022
$m
2021
$m
Loss before tax from continuing operations
(694.5)
(172.0)
Impairment of goodwill and intangible assets
542.3
–
Exceptional items
121.2
155.7
Exceptional items – net finance expense
5.9
6.3
Amortisation -intangible assets from
acquisitions
64.4
78.3
Adjusted profit be
fore tax
39.3
68.3
Taxation
10.9
41.5
Tax in relation to acquisition amortisation
11.9
17.5
Tax on exceptional items
36.4
(9.1)
Adjusted tax charge
59.2
49.9
Profit
from discontinued operations, net of tax
353.7
78.0
Discontinued operations, gain on disposal
(297.1)
–
Discontinued items, exceptional items
6.7
4.0
Amortisation on acquired intangibles, net of
tax
–
21.9
Adjusted profit
from discontinued operations,
net of tax
63.3
103.9
The reconciliation from Adjusted EBIT of $173.9 million (2021:
$187.2 million) to Adjusted earnings of $38.8 million (2021:
$118.3 million) has been provided to show a clear reconciliation
to Adjusted diluted EPS, which is a key performance measure
of the Group. The reconciliation to GAAP measures highlights
that the adjusted measures remove exceptional items,
including impairment charges against goodwill and intangible
assets, the exceptional items on discontinued operations
and the associated tax charges on the basis that these are
disclosed separately due to their size and nature to enable a
full understanding of the Group’s performance. Please refer to
commentary on exceptional items and associated tax charges
on pages 28 to 29. In addition, amortisation on intangible
assets from acquisitions and the associated tax credit has been
excluded in order to provide a comparison to other groups.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
27
Governance
Financial statements
Financial review
continued
Amortisation, depreciation and other impairments for
continuing operations
Total amortisation for 2022 was $153.4 million (2021: $191.7
million), of which $153.4 million (2021: $169.1 million) relates to
the continuing Group. The total amortisation charge includes
$63.5 million for Amec Foster Wheeler (“AFW”) (2021: $75.3
million) and $0.9 million (2021: $3.0 million) of amortisation
relating to intangible assets arising from prior year acquisitions.
Amortisation in respect of software and development costs
was $89.0 million (2021: $90.8 million) and this largely relates
to engineering software and ERP system development. Included
in the amortisation charge for the year is $1.5 million (2021: $1.8
million) in respect of joint ventures.
The total depreciation charge in 2022 for the continuing group
amounted to $119.8 million (2021: $121.0 million) and includes
depreciation on right of use assets of $90.5 million (2021: $85.9
million). Included in the depreciation charge for the year is $12.3
million (2021: $12.1 million) in respect of joint ventures.
Other impairments for 2022 were $2.4 million (2021: $5.3
million) mainly related to impairments recorded against joint
venture investments.
Net finance expense and debt
2022
$m
2021
$m
Interest on bank borrowings
47.2
32.8
Interest on US Private Placement debt
40.3
35.9
Discounting relating to asbestos, deferred
consideration and other liabilities
6.8
6.4
Other interest, fees and charges
22.4
20.4
Total finance expense excluding joint
ventures and interest charge on lease
liability
116.7
95.5
Finance income relating to defined benefit
pension schemes
(2.4)
(0.2)
Other finance income
(4.5)
(3.1)
Net finance expense
109.8
92.2
Interest charge on lease liability
16.4
17.7
Net finance charges in respect o
f joint
ventures
4.4
3.6
Net finance expense including joint ventures
and interest charge on lease liability
130.6
113.5
Interest on bank borrowings of $47.2 million (2021: $32.8 million)
primarily relates to interest charged on borrowings under the
$1.2 billion Revolving Credit Facility (‘RCF’) which matures in
October 2026 and the United Kingdom Export Facility (‘UKEF’)
term loan which matures in July 2026. The original $600 million
term loan was partially repaid following the disposal of the
Built Environment Consulting business, with two separate
repayments of $200 million in September and December 2022.
The increase in the interest expense is driven by higher levels of
debt in the first hal
f of 2022 compared with 2021 and higher
interest rates. The interest rate increase is due to a combination
of higher margin because net debt to adjusted EBITDA
exceeded 3.5 times and higher floating interest rates.
The interest charge on US Private Placement debt increased
by $4.4 million to $40.3 million primarily due to the covenant
waiver which led to an additional charge of $7.7 million. As part
of the Built Environment Consulting business sales process,
the Group agreed lender consent for the sale and a temporary
amendment of the net debt to Adjusted EBITDA covenant to
4.5 times in June and December 2022 measurement dates.
The increased interest caused by higher margin was offset due
to the total repayment of around $450 million to the USPP
noteholders, which was comprised of the early settlement
of notes following the disposal of the Built Environment
Consulting business in 2022 and the $35 million tranche which
fell due in July 2022. The Group had $352.0 million (2021: $803.3
million) of unsecured loan notes outstanding at 31 December
2022, maturing between 2024 and 2031.
Other interest, fees and charges amount to $22.4 million (2021:
$20.4 million) and principally relates to the amortisation of
bank facility costs of $10.5 million (2021: $7.4 million) and
interest on bank overdrafts.
In total, the Group had undrawn facilities of $1,265.4 million as
at 31 December 2022, of which $1,157.9 million related to the
revolving credit facility.
The Group recognised interest costs in relation to lease liabilities
of $16.4 million (2021: $17.7 million) which relates to the
unwinding of discount on the lease liability.
The unwinding of discount on the asbestos provision is $5.9
million (2021: $6.3 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 1.3 times (2021: 3.3
times) against our covenants of 3.5 times. This is calculated pre-
IFRS 16 as our covenants are calculated on a frozen GAAP basis,
see note 4 on page 35.
Interest cover (see note 5 on page 35) was 4.1 times (2021: 4.5
times) against our covenant of 3.5 times.
Exceptional items
2022
$m
2021
$m
Aegis contract loss (revenue)
–
25.4
Aegis contract loss (cost of sales)
–
73.9
Power and Industrial EPC losses (revenue)
8.0
–
Power and Industrial EPC losses (cost of sales)
17.0
–
Impairment charge
542.3
–
Gain on divestment of business
–
(14.4)
Redundancy, restructuring and integration
costs
30.1
73.9
Enterprise settlement
35.6
–
Investigation support costs and provisions
(4.2)
–
Asbestos yield curve, costs and charges
21.5
(3.1)
Russia exit costs and charges
13.2
–
Exceptional items included in continuing
operations, before interest and tax
663.5
155.7
Unwinding of discount on asbestos provision
5.9
6.3
Tax charge/(credit) in relation to exceptional
items
5.2
(1.2)
Impact of change in UK rate on prior year
exceptional deferred tax
–
10.3
Recognition of deferred tax assets due to UK
pension actuarial movements
(41.6)
–
Continuing exceptional items, net of interest
and tax
633.0
171.1
Exceptional items are those significant items which are
separately disclosed by virtue of their size or incidence to enable
a full understanding of the Group’s
financial per
formance.
John Wood Group PLC
Annual Report and Accounts 2022
28
Power and Industrial EPC losses
The Power and Industrial EPC losses relates to events in 2022
which resulted in a further write down of
fixed price contracts in
the Power and Industrial EPC business, following the strategic
decision to exit this market during 2021. By virtue of its size and
nature of these projects being within a sector that the Group
no longer operates, this was recorded as an exceptional charge
through revenue and cost of sales. The negative revenue of $8.0
million represents the impact of a reduction in total value of the
contract, is in relation to revenue recognised in prior years and is
unchanged from the half year.
Aegis contract loss
The Aegis contract loss in 2021 of $99.3 million re
flected an
estimate of the full contract loss at that time.
Impairment charge of goodwill and intangible assets
The impairment charge recognised against goodwill and
intangible assets amounts to $542.3 million and is recorded
within exceptional items by virtue of its size. The impairment
charge was triggered by the disposal of the Built Environment
Consulting business, increases in discount rates and lower
expectations of pro
fitability during the
forecast period.
The disposal of the Built Environment Consulting business and
increasing discount rates increased the risk of an impairment
charge being recognised at the year end, as outlined in the
Group’s interim condensed financial statements. The discount
rate increased by 1.35% since the half year which was largely
driven by increases to risk free rates and higher market volatility.
Included within the impairment charge of $542.3 million were
impairments of $44.9 million and $4.2 million taken against the
brand and customer relationships which were recognised on the
acquisition of AFW. The Group performed an assessment over
the brand asset recognised on acquisition of AFW. The carrying
value of the brand was tested by considering its value in use, as
it was determined that there is no readily available market to
sell the brand as a standalone asset.
Redundancy, restructuring and integration costs
During the year to 31 December 2022, $30.1 million was incurred
in relation to redundancy and restructuring activities. During
2022 the Group has continued to progress various initiatives
which support the improved ef
ficiency and enhancement o
f
underlying group profitability in the medium to longer term.
Included within the $30.1 million were costs of around $11.0
million in developing the new strategy which is expected
to further enhance pro
fitability and cash generation in the
medium to long term.
Gain on sale of divestment of business
The gain in 2021 of $14.4 million relates to the disposal of the
Group’s interest in Sulzer Wood Limited.
Enterprise settlement
The Enterprise claim was concluded in November 2022, with
the amount settled being in excess of the amount provided
for. Overall, the amount paid to Enterprise was higher than
our underlying legal assessment of the merits of the case, but
further drawn-out litigation was likely to be costly and carried a
risk that a court awarded a figure higher than the amount paid.
The charge in the year was classed as an exceptional item both
by its nature, a historic litigation settlement and by size.
Investigation support costs and provisions
The regulatory investigations were all closed out during the
first hal
f of 2021 and the agreed settlements were materially
in line with the provision made at 31 December 2020. The $4.2
million credit relates to the release of some provisions made
for additional legal and other costs which were ultimately not
needed. Certain amounts due to the SFO and COFPS have
been deferred in line with agreed payment schedules and the
disclosures in the financial statements reflect this.
Asbestos
All asbestos costs have been treated as exceptional on the
basis that movements in the provision are non-trading and can
be large and driven by market conditions which are out with
the Group’s control. Excluding these amounts from the trading
results improves the understandability of the underlying trading
performance of the Group.
The $21.5 million charge (2021: credit $3.1 million) principally
comprises a $52.8 million charge in the period and was a
result of an updated actuarial review which updated the best
estimate for recent claims experience and latest projections.
This is offset by a credit of $31.3 million in 2022, which
comprises of a $35.6 million yield curve credit as a result of
higher discount rates (2021: $5.6 million) and $4.3 million (2021:
$2.5 million) of costs in relation to managing the claims. The 30-
year US Treasury rate has increased to 3.97%, from 1.90% at the
end of December 2021, and led to the income statement credit.
$5.9 million of interest costs which relate to the unwinding
of discount on the asbestos provision are also shown as
exceptional (2021: $6.3 million).
Russia exit costs and charges
The Group has incurred costs of $7 million in relation to the exit
of its business in Russia as a result of Government sanctions.
The exceptional cost recognised during 2022 relates to early
contract exits and associated losses, the closure of an of
fice
and other legal costs. In addition, the Group has impaired cash
balances held within Russia by $6.2 million. The Group has
confidence in being able to utilise the remaining balance o
f $5
million, disclosed as restricted cash in note 16 to the financial
statements, to meet these exit costs.
Tax
An exceptional tax credit of $36.4 million (2021: charge $9.1
million) has been recorded in continuing operations during the
period. It consists of a $5.2 million tax charge on exceptional
items (2021: $1.2 million credit) and an exceptional credit of
$41.6 million recognised due to the actuarial gain in relation
to the UK defined benefit pension scheme. As de
ferred tax
liabilities support the recognition of deferred tax assets, the
additional $41.6 million of deferred tax assets have been
recognised through exceptional items based on its size. In
2021, a $10.3 million tax charge was recognised relating to the
change of the UK tax rate impacting on deferred tax balances
created in prior years through exceptional items.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
29
Governance
Financial statements
Taxation
The effective tax rate on pro
fit be
fore tax, exceptional items and amortisation and including Wood’s share of joint venture pro
fit on
a proportionally consolidated basis is set out below, together with a reconciliation to the tax charge in the income statement.
2022
$m
2021
$m
Loss from continuing operations before tax
(694.5)
(172.0)
Profit
from discontinued operations, net of tax and before exceptional items
63.3
82.0
Tax charge in relation to joint ventures (note 13)
9.9
11.7
Amortisation (note 10)
151.9
189.9
Exceptional items (continuing operations)
669.4
162.0
Tax charge in relation to discontinued operations (note 7)
7.9
13.4
Profit be
fore tax, exceptional items and amortisation
207.9
287.0
Effective tax rate on total operations (excluding tax on exceptional items and amortisation)
36.84%
26.38%
Tax charge (excluding tax on exceptional items and amortisation)
76.6
75.7
Tax charge in relation to joint ventures
(9.9)
(11.7)
Tax charge in relation to exceptional items (continuing operations)
5.2
9.1
Recognition of deferred tax assets due to UK pension actuarial movements
(41.6)
–
Tax credit in relation to amortisation
(11.5)
(18.2)
Tax charge on discontinued operations
(7.9)
(13.4)
Tax charge from continuing operations per the income statement
10.9
41.5
The effective tax rate re
flects the rate o
f tax applicable in the jurisdictions in which the Group operates and is adjusted for
permanent differences between accounting and taxable pro
fit and the recognition o
f deferred tax assets. Key adjustments
impacting on the rate in 2022 are withholding taxes suffered on which full double tax relief is not available, the impact of the US
Base Erosion and Anti Abuse Tax less the release of uncertain tax provisions re
flecting the positive outcomes in relation to specific
risks.
We anticipate that the tax rate will be 34% to 36% going forward re
flecting the tax rates o
f the countries the Group operates
in along with the withholding taxes in excess of double tax relief. There are factors that would impact on this on an annual basis
such as actuarial movements on the UK pension scheme impacting on deferred tax asset recognition and changes in uncertain tax
provisions.
In addition to the effective tax rate, the total tax charge in the income statement re
flects the impact o
f exceptional items and
amortisation which by their nature tend to be expenses that are more likely to be not deductible than those incurred in ongoing
trading profits. The income statement tax charge excludes tax in relation to joint ventures.
Financial review
continued
John Wood Group PLC
Annual Report and Accounts 2022
30
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 pro
fit 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.
2022
2021
Continuing
operations
$m
Discontinued
operations
$m
Total
$m
Continuing
operations
(restated)
$m
Discontinued
operations
(restated)
$m
Total
(restated)
$m
(Losses)/earnings attributable to equity shareholders
(basic pre-exceptional)
(77.0)
63.3
(13.7)
(46.4)
82.0
35.6
Exceptional items, net of tax
(633.0)
290.4
(342.6)
(171.1)
(4.0)
(175.1)
(Losses)/earnings attributable to equity shareholders (basic)
(710.0)
353.7
(356.3)
(217.5)
78.0
(139.5)
Number of shares (basic)
680.4
680.4
680.4
675.6
675.6
675.6
Number of shares (diluted)
680.4
680.4
680.4
675.6
675.6
675.6
Basic earnings per share (cents)
(104.4)
52.0
(52.4)
(32.2)
11.6
(20.6)
Diluted earnings per share (cents)
(104.4)
52.0
(52.4)
(32.2)
11.6
(20.6)
(Losses)/earnings attributable to equity shareholders
(diluted)
(710.0)
353.7
(356.3)
(217.5)
78.0
(139.5)
Exceptional items, net of tax
633.0
(290.4)
342.6
171.1
4.0
175.1
Amortisation of intangibles on acquisition, net of tax
52.5
–
52.5
60.8
21.9
82.7
Earnings/(losses) attributable to equity shareholders
(adjusted diluted)
(24.5)
63.3
38.8
14.4
103.9
118.3
Earnings/(losses) attributable to equity shareholders
(adjusted basic)
(24.5)
63.3
38.8
14.4
103.9
118.3
Number of shares (diluted)
680.4
680.4
680.4
675.6
675.6
675.6
Number of shares (basic)
680.4
680.4
680.4
675.6
675.6
675.6
Adjusted diluted (cents)
(3.6)
9.3
5.7
2.1
15.4
17.5
Adjusted basic (cents)
(3.6)
9.3
5.7
2.1
15.4
17.5
Basic loss per share for the year was a 52.4 cents per share (2021: 20.6 cents). The increase in loss per share is largely driven by
an impairment charge on goodwill and intangible assets of $542.3 million partly offset by a post-tax gain on sale of discontinued
operation of $297.1 million. Further details of this impairment charge and discontinued operation are explained within notes 10 and
7 of the
financial statements.
Dividend
The Group’s capital allocation policy was announced at the Capital Markets Day. The Board is committed to maintaining a strong
balance sheet, with medium term target leverage range of around 0.5x to 1.5x, while investing in systems and software and
addressing legacy issues. Beyond this, the Board will consider how best to create value for our shareholders from dividends, share
buybacks or attractive acquisitions.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
31
Governance
Financial statements
Financial review
continued
Cash flow and net debt
The cash flow
for the year is set out below and includes both continuing and discontinued operations:
Excluding
leases
2022
$m
Impact
of leases
2022
$m
Total
2022
$m
Excluding
leases
2021
$m
Impact
of leases
2021
$m
Total
2021
$m
Adjusted EBITDA
337.0
121.0
458.0
418.5
135.4
553.9
Less JV EBITDA
(50.8)
(7.7)
(58.5)
(54.0)
(6.7)
(60.7)
JV Dividends
30.1
–
30.1
26.3
–
26.3
Adjusted decrease in provisions (note 6)
(43.7)
–
(43.7)
(75.6)
–
(75.6)
Other
28.1
–
28.1
10.7
3.3
14.0
Adjusted cash flow generated
from operations pre
working capital
300.7
113.3
414.0
325.9
132.0
457.9
Increase in receivables
(97.5)
–
(97.5)
(70.1)
–
(70.1)
Adjusted decrease in payables (note 6)
(267.6)
–
(267.6)
(235.9)
–
(235.9)
(Increase)/decrease in inventory
(1.6)
–
(1.6)
0.1
–
0.1
Adjusted working capital movements
(366.7)
–
(366.7)
(305.9)
–
(305.9)
Adjusted cash (outflow)/ generated
from operations (note
6)
(66.0)
113.3
47.3
20.0
132.0
152.0
Purchase of property, plant and equipment
(27.6)
–
(27.6)
(22.4)
–
(22.4)
Proceeds from sale of property, plant and equipment
7.1
–
7.1
22.1
–
22.1
Purchase of intangible assets
(109.2)
–
(109.2)
(92.5)
–
(92.5)
Interest received
4.5
–
4.5
3.1
–
3.1
Interest paid
(98.1)
–
(98.1)
(87.5)
–
(87.5)
Adjusted tax paid
(81.9)
–
(81.9)
(73.5)
–
(73.5)
Other
(39.6)
(6.3)
(45.9)
(8.2)
14.6
6.4
Non-cash movement in leases
–
(14.7)
(14.7)
–
(76.0)
(76.0)
Free cash flow (excluding exceptionals)
(410.8)
92.3
(318.5)
(238.9)
70.6
(168.3)
Cash exceptionals
(318.8)
14.6
(304.2)
(159.1)
21.0
(138.1)
Free cash flow
(729.6)
106.9
(622.7)
(398.0)
91.6
(306.4)
Divestments
1,729.4
–
1,729.4
19.3
–
19.3
Decrease/(increase) in net debt
999.8
106.9
1,106.7
(378.7)
91.6
(287.1)
Opening net debt
(1,393.0)
(449.8)
(1,842.8)
(1,014.3)
(541.4)
(1,555.7)
Closing net debt
(393.2)
(342.9)
(736.1)
(1,393.0)
(449.8)
(1,842.8)
Closing net debt at 31 December 2022 including leases was $736.1 million (2021: $1,842.8 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 2022 was $342.9 million (2021: $449.8 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 2022 was $393.2 million (2021: $1,393.0 million). The reduction in net debt
excluding leases of $999.8 million is mainly due to the proceeds from the divestment of the Built Environment Consulting business
offset by higher cash exceptionals and a higher adjusted cash out
flow
from operations, due to a large working capital out
flow.
The monthly average net debt excluding leases in 2022 was $1,489.1 million (2021: $1,680.0 million). The cash balance and undrawn
portion of the Group’s committed banking facilities can
fluctuate throughout the year, and the net debt at December is significantly
lower than the 2022 average net debt due to the receipt of the disposal proceeds in September 2022. 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.
Cash generated from operations pre-working capital decreased by $43.9 million to $414.0 million primarily as a result of the
reduction in EBITDA. The movement in provisions in 2022 includes utilisations of the provision of around $40m and the net non-cash
credit to EBITDA and is caused by releases to EBITDA exceeding the EBITDA charge of new provisions recognised. The release in
2022 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.
John Wood Group PLC
Annual Report and Accounts 2022
32
There was a working capital outflow o
f $366.7 million (2021:
$305.9 million). There was an improvement in activity levels in
the final quarter o
f 2022 compared with 2021, and days sales
outstanding (“DSO”) has remained broadly similar, leading
to a higher trade receivables and gross amounts due from
customers, resulting in an outflow during 2022.
The outflow in the year due to payables o
f $267.6 million is
higher than 2021. The large outflow in 2022 was due to quicker
payments to suppliers, which led to a large reduction in the
year end payables balance. The normalisation of payables
was sign-posted as a use of the Built Environment Consulting
business proceeds.
The Group uses a receivables financing
facility of $200.0
million. The amount utilised at 31 December 2022 was $200.0
million (2021: $200.0 million). The facility is non-recourse to the
Group and so is not included in our net debt.
Cash exceptionals have increased by $166.1 million to $304.2
million in 2022 and mainly relates to the settlement of known
legal claims and asbestos payments, including the Enterprise
settlement of $115 million, the investigation payments of
around $38 million in respect of the investigation which was
provided for in 2020 and asbestos payments of around $40
million. The remaining cash exceptional mainly relates to the
legacy Aegis contract of $48 million and restructuring costs of
around $35 million, which include the costs of developing the
new strategy.
The free cash out
flow o
f $622.7 million (2021: $306.4 million)
has increased by $316.3 million, largely due to the $166.1 million
and $104.7 million adverse movements in cash exceptionals and
cash flow
from operations respectively. The remaining adverse
movement of $45.5 million in free cash
flow is due to:
• Other outflows increased by $52.3 million to $45.9 million
and principally comprise of foreign exchange movements of
$25.4 million in net debt excluding leases (2021: $5.5 million)
and movements on prepaid debt fees and accrued interest
charges totalling $21.1 million (2021: inflow o
f $12.1 million).
• Proceeds from sale on property, plant and equipment
decreased by $15.0 million to $7.1 million due to the one-off
sale and lease back of a property in 2021 and an increase of
$16.7 million related to the purchase of intangible assets,
including software and investment in ERP improvements
throughout the Group.
• There was an increase in tax payments during 2022 of $8.4
million due to the settlement of uncertain tax provisions
(“UTPs”), which had been provided for in previous periods.
• Net interest paid in the period increased to $93.6 million
(2021: $84.4 million) and is due to higher prevailing interest
rates and net debt during the period.
• There was an offsetting reduction in lease liabilities of $61.3
million due to disposals of the lease liability following the sale
of the Built Environment Consulting business.
Net cash from divestments of $1,729.4 million relates to the
disposal of our Built Environment Consulting business in
September, and includes taxes paid of $22 million on the disposal.
Cash conversion, calculated as cash generated from operations
as a percentage of adjusted EBITDA (less JV EBITDA) reduced
to 11.8% (2021: 30.8%) primarily due to large working capital
outflow during 2022.
Sources and uses of cash
The decrease in adjusted cash generated from operations from
$152.0 million in 2021 to $47.3 million in 2022 reflects the lower
EBITDA in the year and large working capital outflows.
There are a number of risks associated with net cash
flow
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
influence 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 of our debt facilities;
• Capital expenditure through investments in systems and
software;
• Maintain financial strength to deal with legacy issues;
• Potential returns to our shareholders; and
• Potential acquisitions.
Summary balance sheet
2022
$m
2021
$m
Goodwill and intangible assets
4,309.1
6,075.3
Right of use assets
276.0
356.1
Other non-current assets
918.0
790.6
Trade and other receivables
1,545.0
1,791.3
Trade and other payables
(1,687.6)
(1,998.6)
Net debt excluding leases
(393.2)
(1,393.0)
Lease liabilities
(342.9)
(449.8)
Provisions
(459.7)
(635.2)
Other net liabilities
(435.2)
(451.4)
Net assets
3,729.5
4,085.3
Net current liabilities
(235.0)
(367.9)
At 31 December 2022, the Group had net current liabilities of
$235.0 million (2021: $367.9 million).
Goodwill and intangible assets include $2,523.5 million
(2021: $4,228.7 million) of goodwill and intangibles relating
to the acquisition of Amec Foster Wheeler. The balance
has decreased due to the disposal of the Built Environment
Consulting business leading to a reduction in carrying amount
of $995.6 million; an impairment charge of $542.3 million, and
amortisation of $64.4 million.
Right of use assets and lease liabilities amount to $276.0 million
(2021: $356.1 million) and $342.9 million (2021: $449.8 million)
respectively.
The reduction in trade and other receivables is primarily due
to the disposal of the Built Environment Consulting business
which was partially offset by increased activity levels in the
final quarter o
f the year compared with the same period in
2021. 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 $311.0 million
since December 2021 and this is mainly due to quicker payments
to suppliers, which led to a large reduction in the year end
payables balance, and the disposal of the Built Environment
Consulting business.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
33
Governance
Financial statements
Financial review
continued
Provisions
Total provisions as at 31 December 2022 were $459.7 million
(2021: $635.2 million) and comprise of asbestos liabilities of
$311.4 million (2021: $342.1 million), litigation related provisions
of $12.8 million (2021: $93.3 million), project related provisions
of $63.3 million (2021: $112.2 million), insurance provisions of
$46.2 million (2021: $55.2 million) and property provisions of
$26.0 million (2021: $32.4 million).
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 2022, the Group has
net asbestos related liabilities including current liabilities and
insurance recovery assets of $335.4 million (2021: $349.1 million).
The Group expects to have net cash outflows o
f around $38
million as a result of asbestos liability indemnity and defence
payments in excess of insurance proceeds during 2023. 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.
Litigation related provisions reduced from $93.3 million to
$12.8 million in 2022, largely as a result of the settlement the
Enterprise case in November 2022.
Full details of provisions are provided in note 21 to the Group
financial statements.
Pensions
The Group operates a number of de
fined benefit pension
schemes in the UK and US, alongside a number of de
fined
contribution plans. At 31 December 2022, the UK defined
benefit pension plan had a surplus o
f $432.4 million (2021:
$259.6 million) and other schemes had deficits totalling $73.2
million (2021: $74.7 million).
The Group has total pension scheme assets of $2,892.2 million
(2021: $4,811.5 million) and pension scheme obligations of
$2,533.0 million (2021: $4,626.6 million) and is therefore 114%
(2021: 104%) 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 in
flation, discount rate and
member longevity. The assumptions at 31 December 2022
showed an increase in the discount rate which results in
lower scheme liabilities and higher RPI inflation rates, thereby
increasing the surplus compared to 2021. Full details of pension
assets and liabilities are provided in note 33 to the Group
financial statements.
In addition, our main UK defined benefit scheme (WPP) was
119% funded based on its signi
ficant surplus o
f $432 million on
an IAS 19 basis, and is currently expected to be around 105%
funded with a surplus of around £100 million ($130 million) on
the more prudent Technical Provisions basis at 31 March 2023,
consistent with the assumptions used at the last triennial
actuarial valuation. The Group is currently working closely with
the Trustee to agree a preferred direction regarding the future
of the plan. Options being assessed include moving to a buy-in
insured basis and eventual buy-out with a third party as soon
as is reasonably practical, or to continue to run the WPP on
for a limited number of years which could potentially generate
further surplus.
Any potential further surplus that might arise from running
the scheme on could benefit both the Group and pension
members, ensuring that appropriate safeguards for both
the funding position and members’ interests are taken into
account at all times.
Contingent liabilities
Details of the Group’s contingent liabilities are set out in note
34 to the financial statements.
Divestments
During 2022 the Group disposed of the Built Environment
Consulting business for $1,729.4 million, which includes the
impact of taxes paid on the disposal. The
final proceeds
from
the Built Environment Consulting business will be finalised
during the first hal
f of 2023 upon agreement of the completion
balance sheet between the Group and WSP.
John Wood Group PLC
Annual Report and Accounts 2022
34
Notes
1. A reconciliation of operating 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.
2022
$m
2021
$m
Operating loss per income statement
(568.3)
(62.1)
Share of joint venture
finance expense and tax
(note 13)
14.3
15.3
Exceptional items (note 5)
663.5
155.7
Amortisation (including joint ventures)
153.4
169.1
Depreciation (including joint ventures)
29.3
35.1
Depreciation of right of use assets
90.5
85.9
Impairment of PP&E and right of use assets
2.4
5.3
Adjusted EBITDA (continuing operations)
385.1
404.3
Discontinued operation
Operating profit (discontinued)
66.2
94.4
Exceptional items (note 5)
6.7
4.0
Amortisation (including joint ventures)
–
22.6
Depreciation (including joint ventures)
–
4.0
Depreciation of right of use assets
–
23.9
Impairment of PP&E and right of use assets
–
0.7
Adjusted EBITDA (discontinued operation)
72.9
149.6
Total Group Adjusted EBITDA
458.0
553.9
2. Adjusted diluted earnings per share (“AEPS”) is calculated by dividing earnings
attributable to owners before exceptional items and amortisation relating to
acquisitions, net of tax, by the weighted average number of ordinary shares in
issue during the period, excluding shares held by the Group’s employee share
ownership trusts. In 2022, 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
2022.
4. Net Debt to Adjusted EBITDA cover on a covenant and reported basis is
presented in the table below:
2022
$m
2021
$m
Net debt excluding lease liabilities (reported
basis) (note 30)
393.2
1,393.0
Covenant adjustments
16.2
13.5
Net debt (covenant basis)
409.4
1,406.5
Adjusted EBITDA (covenant basis)
315.1
448.0
Net debt to Adjusted EBITDA (covenant basis)
– times
1.30
3.14
Adjusted EBITDA (reported basis)
294.4
418.5
Net debt to Adjusted EBITDA (reported basis)
– times
1.34
3.33
Adjusted EBITDA (covenant basis) excludes Adjusted EBITDA from the
discontinued operation and the impact of leases. The covenant adjustment
to net debt relates to finance leases which are adjusted
for in line with the
funding agreements. 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:
2022
$m
2021
$m
Net finance expense
109.8
92.6
Covenant adjustments
(4.8)
(6.7)
Non-recurring net finance expense
(37.5)
–
Net finance expense (covenant basis)
67.5
85.9
Adjusted EBITA (covenant basis)
273.6
408.6
Interest cover (covenant basis) – times
4.1
4.8
Net finance expense
109.8
92.6
Non-recurring net finance expense
(37.5)
–
Recurring net finance expense
72.3
92.6
Adjusted EBITDA (reported basis)
294.4
418.5
Interest cover (reported basis) – times
4.1
4.5
6. Reconciliation to GAAP measures between consolidated cash flow
statement and cash flow and net debt reconciliation
2022
$m
2021
$m
Decrease in provisions
(123.1)
(75.6)
Prior year cash exceptionals
79.4
–
Adjusted movement in provisions
(43.7)
(75.6)
Decrease in payables
(398.9)
(326.1)
Prior year cash exceptionals
131.3
90.2
Adjusted decrease in payables
(267.6)
(235.9)
Tax paid
(103.9)
(73.5)
Tax paid on disposal of business
22.0
–
Adjusted tax paid
(81.9)
(73.5)
Disposal of businesses (net of cash disposed)
1,751.4
19.3
Tax paid on disposal of business
(22.0)
–
Divestments
1,729.4
19.3
Adjusted cash generated from operations
47.3
152.0
Cash exceptionals
(304.2)
(138.1)
Cash (outflow)/generated
from operations
(256.9)
13.9
Purchase of property, plant and equipment
(27.6)
(22.4)
Proceeds from sale of property, plant and equipment
7.1
22.1
Purchase of intangible assets
(109.2)
(92.5)
Interest received
4.5
3.1
Interest paid
(98.1)
(87.5)
Adjusted tax paid
(81.9)
(73.5)
Other
(45.9)
6.4
Non-cash movement in leases
(14.7)
(76.0)
Impact of leases
(106.9)
(91.6)
Free cash flow
(729.6)
(398.0)
Decreases in provisions and payables, cash generated from operations
and tax paid have been adjusted to show exceptional items separately, in
order to present significant items separately
from the rest of the cash
flow
either by virtue of size or nature and re
flects how the Group evaluates cash
performance of the business.
7. Constant currency references. Growth rates shown at constant currency are
calculated by comparing FY22 to FY21 restated at FY22 currency rates. This
additional disclosure is made to help users better understand the growth of
our businesses.
8. Adjusted EBITDA Margin. Adjusted EBITDA margin is adjusted EBITDA shown
as a percentage of revenue. This measure is used by management to measure
the performance of businesses, and is one of our medium term targets.
9. Revenue from sustainable solutions. Estimated share of FY22 revenue
as defined by Wood. This figure is re
ferred to across this document.
Sustainable solutions consist of activities related to: renewable energy,
hydrogen, carbon capture & storage, electrification and electricity
transmission & distribution, LNG, waste to energy, sustainable fuels
& feedstocks and recycling, processing of energy transition minerals,
life sciences, and decarbonisation in oil & gas, re
fining & chemicals,
minerals processing and other industrial processes. In the case of mixed
scopes including a decarbonisation element, these are only included in
decarbonisation if 75% or more of the scope relates to that element, in
which case the total revenue is recorded in decarbonisation.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
35
Governance
Financial statements
John Wood Group PLC
Annual Report and Accounts 2022
36
Leading the way
on carbon capture
and storage
Many prominent industry
groups including the
International Energy Agency
(IEA) and the UK’s Climate
Change Committee concur
that there’s no viable path to
net zero without scaling up
carbon capture and storage
(CCS) technology.
Wood has an outstanding track record in
CCS having completed over 175 studies
on projects all across the globe. With
new policies coming into play to support
further investment, CCS will be a growth
market for the company over the next
three-year strategy cycle.
A great example of Wood’s expertise
in this space is a contract the company
secured with the Pathways Alliance in
Canada to provide engineering services
for a signi
ficant CCS transportation
system involving six of the country’s
largest oil sands producers.
Wood has been involved in the project
from an early phase having carried out
initial studies including pre-FEED work to
inform the next stage of engineering for
the transportation pipeline system.
The new scope involves the engineering
and design of an approximately
400-kilometre main transportation line
and laterals linking oil sands facilities in
Fort McMurray, Christina Lake and Cold
Lake regions with a subsurface carbon
sequestration hub near Cold Lake.
The distribution system, along with the
required metering and booster stations
will gather and transport up to 40 Mt/
year of carbon dioxide from more than
20 oil sands facilities by 2050. The project
is expected to reduce emissions by over
10 million tonnes a year by 2030, about
half of the Alliance’s 22 million tonne goal
by the end of this decade.
The Pathways Alliance includes
Canada Natural, Cenovus,
ConocoPhillips, Imperial Oil, MEG Energy
and Suncor. Collectively, they operate
around 95% of Canada’s oil sands
production and the group is working,
with the support of the Canadian and
Alberta governments, to achieve the goal
of net zero greenhouse gas emissions
from oil sands production by 2050.
175 studies
completed across globe
400km
CO2 transportation pipeline
10m tonnes
annual reduction in CO2
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
37
Governance
Financial statements
The Board recognises that the medium-
and long-term sustainability of the
Company is linked to 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.
Employees
Our remarkable people are trusted by clients to design, build
and advance the world. It’s our people who find innovative
solutions for our clients; it’s our people who are unlocking
solutions to some of our world’s most critical challenges;
and, ultimately, it’s our people who will differentiate us
in a complex, competitive market. Our Inspired Culture
strategic pillar is about making Wood a great place to work;
prioritising employee wellbeing, doing the right thing, putting
sustainability at the heart of our business, and empowering
each other – enabling us to perform with passion and purpose
to design the future. It is our people who are key to Wood’s
success, and our people strategy is centred on four main
themes: attract; develop; engage; retain & sustain. Details of
our strategy in action in 2022 can be found on page 60.
How we engage
We discuss our workforce engagement activities on page 62.
Areas of engagement and outcomes
The Board and ELT hosted five Listening Group Network (LGN)
calls during the year. This network, open to all Wood employees,
provides the opportunity for updates from leadership on topics
of the employees’ choice as well as ensuring their voices and
feedback are heard by members of the Board and ELT, with
subsequent actions identified and implemented. These calls
remain a fantastic opportunity for members of the Board to
gain greater insight into the prevailing culture across Wood
and consider any improvement actions.
Employee townhalls
Ken Gilmartin, CEO, implemented global townhall meetings,
hosted by the ELT. Open to every employee, these meetings
provide an opportunity to understand key updates from
across Wood. In October, the ELT congratulated winners
of the Inspire Awards, updated on Wood’s
financial
performance, and provided a summary of key work activities
within the business units. The December call provided an
overview of the strategy, and associated re
flections
from
the Capital Markets Day, along with a look back to key
achievements in 2022, and a future focus to 2023.
Employee engagement surveys
Following the full global employee engagement survey in
October 2021, focus groups were held in Q1 2022 which
gave the Board and leaders 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.
Remuneration Committee members participated in
specific reward
focus groups and provided summary
updates back to the wider Board. As a result of feedback,
a restricted stock plan was implemented for key leaders
across Wood in 2022; in 2023 a simplified bonus plan will
be introduced; and in 2024 we hope to be able to introduce
a tax ef
ficient employee share plan in the US, subject
to shareholder approval at the AGM. With regards to
employee development, feedback has led to reinvestment
in our performance management approach utilising
technology, and the implementation of “My Path”, bringing
all our employee learning offerings into one site to enable
employees to easily find technical and non-technical content
and connect with subject matter experts from across Wood.
More information describing the matters raised and
outcomes of engagement can be found on page 62
Stakeholder engagement
Effective
engagement with
our stakeholders
John Wood Group PLC
Annual Report and Accounts 2022
38
Board engagement with leaders and high potential employees
The Board holds lunches and dinners with members of the wider
leadership team, beyond ELT level, as well as with high potential
employees, wherever possible. 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. A particular highlight in 2022 was two
informal gatherings in Houston, involving local leaders, those
attending a leadership development programme, and those
identified on succession plans. Board members enjoyed meeting
with and learning from all those in attendance.
Investors and lenders
It is important that our investors have confidence in the
Company, how it is managed and in its strategic objectives, to
ensure that we have a stable, long-term shareholder base.
Our investors are concerned about strategy, operational and
financial per
formance, capital allocation, our sustainability
strategy and compliance with laws and regulations.
By providing updates on our strategy and performance we can
aid investor understanding, and through regular interaction
we 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 Of
ficer, Chie
f Financial Of
ficer and the Investor
Relations team. Our main engagement activities include:
• Publication and presentation of
financial results
• Capital Markets Days
• Investor briefings and presentations
• Investor roadshows around financial results
• Investor meetings throughout the year
• Obtaining feedback from investors regularly, both directly and
through brokers
• Meetings with the Chair of the Board
• Meetings with Chairs of the Committees of the Board
A mixture of formal and informal meetings and presentations
are held with our lenders. Key topics include financial
performance, strategy and risk management. Presentations are
given to our banks and US Private Placement Investors after
the half year and full year results are announced to update
them on financial per
formance and give them the opportunity
to ask further questions.
Areas of engagement and outcomes
In addition to routine engagement on financial per
formance,
strategy delivery and governance, we undertook engagement
on certain specific matters in 2022 as outlined below.
Investor Perception Survey
2022 saw a period of signi
ficant change
for the Company and
the Board concluded it would be prudent to gauge the standing
of Wood and its stakeholders’ expectations by engaging an
external party to conduct an Investor Perception Study in
order to gain feedback on a con
fidential basis. The study was
carried out during July 2022 with engagement with 13 investors
representing c.37% of share capital and two sell-side analysts.
Feedback was sought in areas such as: strategy; business;
financial position; board and management; ESG; and valuation.
The Board appreciated the constructive comments from
participants. The feedback from this study was used by the
Company in considering strategy, capital allocation and
communication.
Capital Markets Day
A Capital Markets Day event was held in London during
November 2022 which saw the launch of our new strategy to
the investor community.
As part of this event, we set out our three-year strategic plan
together with the exciting opportunities in front of us across
the energy and materials markets. We also provided an update
on our FY22 trading performance and set out our medium-term
financial targets. We provided clarity on our strategic direction
and how our focus on execution and delivering on our three
strategy pillars of Inspired Culture, Performance Excellence and
Profitable Growth will build a more
focused and sustainable
business for shareholders.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
39
Governance
Financial statements
Clients
Growing our business and capturing a larger share of our
clients’ spend starts with really understanding our clients.
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.
Our clients require an innovative and flexible partner who can
innovate with sustainable solutions, so helping them to achieve
their own sustainability targets.
How we engage
One of the keys to our success is building strong, successful
client relationships to help us understand our clients better
and then differentiate ourselves to win more work, at higher
margins. Client engagements are managed through our
structured Client Management Framework by dedicated
account managers who are focused on developing and growing
our relationships with all our clients with specific account
planning and objectives as well as established growth targets.
Consistent with our overall Client Management Framework, all
business units also have their own service line/sector account
management programmes.
Senior leadership meetings, annual sponsor meetings and
other key connections with clients were conducted in 2022 both
virtually and in person, where it was possible to do so safely.
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
• Utilising client feedback to support business growth and drive
continuous improvement in our delivery
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, future client activity,
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.
Wood engages with clients as a digital partner to deliver
consistency across all projects. We leverage our strong
partnership networks with Honeywell, Microsoft, AVEVA,
Hexagon, Aspentec, Bentley and Cognite to provide a wide
range of intelligent solutions and digital enablement spanning
full asset lifecycle, working to optimise asset performance.
Wood is co-developing our digital twin offering with some of
our key clients across the world and as a strategic partner,
we utilise our domain expertise to build a true digital asset
designed and developed with the end-user in mind. We are
working with Microsoft on a solution to create the de facto
global industry standard for emissions monitoring and
developing a digital twin solution for renewable energy to
enhance asset ef
ficiency and optimise yields while minimising
total expenditure.
Stakeholder engagement
continued
Community
Building strong and lasting relationships, we seek to remain a
trusted partner in our shared communities. Contributing to the
social fabric of the locations we live, work and impact helps to
deliver sustainable value against a common goal and ambition
to improve lives.
Guided by our values, our commitment to understand, engage
and evolve as a community partner is embedded in the culture
we seek to inspire.
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 2022, as Team Wood we contributed $1,782,402 to good
causes in our communities, through collective donations of time,
money and resource.
We continued to celebrate employee fundraising through
our employee matched funding scheme, supporting over 60
charitable or not profit organisations closest to the hearts o
f
our employees.
Demonstrating support for our Global Cause, currently
education as chosen by our employees, we achieved just over
15% of our goal to raise $10 million by 2030. This includes the
outcome of our annual global challenge each year. In 2022,
we donated over $240,000 towards a further 18 employee
driven initiatives. The global challenge has supported over 90
employee chosen organisations to date, seeking to break down
the barriers to education and deliver quality education for all.
Through our strategic focus, we have developed a range of
partnerships with organisations around the globe, including:
• 4-year partnership with The Prince’s Trust supporting
disadvantaged young people in the UK
• Supporting indigenous students in Canada with a three-year
bursary scheme in partnership with the charity Indspire
• Promoting STEM careers among young girls in America as
part of our ongoing support for the non-pro
fit organisation
Society of Women Engineers Detroit
• Tackling inequality and the basic right to education in Africa
through the charity The Bouncing Ball Trust (TBBT)
Further details on the outcome of community
activities are on page 66
John Wood Group PLC
Annual Report and Accounts 2022
40
Environment
During 2022 the Intergovernmental Panel on Climate Change
published alarming findings concerning the erosion o
f the
planet’s ecosystems due to the impact of rapid climate change.
It sounded an alarm which humanity in every community in
every part of the world must heed. We understand we have a
role to play in adapting the world to a new future, decarbonising
a secure energy future and nurturing an environment that
can support life on earth. Failure is not an option; our next
generation is relying on us to be those change makers. This
is not a journey we take on our own engagement and co-
ordinated action is key, in what we do and how we do it.
How we engage
Wood has a complex network of different stakeholders
spanning continents, intergovernmental to local
neighbourhoods where we work. Our engagement strategies
and methods reflect our stakeholder universe enabling Wood
to open opportunities, differentiate the Company and manage
risk giving confidence to our many stakeholders o
f our ability
to manage, mitigate and eliminate risk. Engagement is built
into our business management system including environmental
management systems. Our processes include:
• Relationship management – including direct engagement e.g.
clients, regulators, neighbours
• Partnerships and collaborations – often utilise for innovation
development
• Participation in forums, conferences – listening, sharing and
trading ideas
• Exhibitions – showcasing environmental technology and
innovation
• Social media – sharing content via podcasts, papers through
webinars and social media
• Disclosure platforms – including Carbon Disclosure Project
and EcoVadis
Areas of engagement and outcomes
During 2022, we continued to engage our stakeholders on a
broad range of issues including decarbonisation, the wider
energy transition agenda and energy security. Below are a
number of examples of our engagement and outcomes across
the year spanning global to local issues:
• Partner with C-Capture to demonstrate feasibility of
next generation, low-cost carbon capture solutions in
hard-to-decarbonise industries (read more here:
woodplc.com/C-Capture
)
• Collaborating with CuanTec Ltd., a Scottish circular economy
business, to develop cutting-edge separation facilities
to process shellfish waste extracting chitin, a naturally
occurring, 100% compostable biopolymer with a wide range
of applications in the pharmaceutical, cosmetics and food
industries (read more here:
woodplc.com/cuantec
)
• Wood participated in the Energy Chamber of Trinidad
and Tobago’s Energy Conference speaking on the energy
transition and drivers for business strategy
• We participated in the annual voluntary CDP questionnaire.
The CDP is an independent, not-for-pro
fit 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
• As part of our environmental management, we continue
to hold regulatory engagement across the business, from
commenting on draft environmental legislation to tactical
discussions on projects such as Wood’s engagement with the
US Environmental Protection Agency on the management
clean-up of historic contaminated land
• Wood participation at ADIPEC gave a great platform to
discuss various elements of the decarbonisation innovation
with clients and peers, we also used podcasts to carry the
engagements to a wider audience
Further information on our environmental approach,
performance and ongoing strategy is contained in our annual
Sustainability Hub which is available at:
woodplc.com/company/sustainability
Read more on our approach to environmental
management on page 50
Read more on our sustainability targets on pages 20 and 21
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
41
Governance
Financial statements
Stakeholder engagement
continued
Suppliers
As we continue to deliver our new strategy, one of our key pillars
– Inspired Culture – is something we want to help share with
our wider supply chain. 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.
It’s important that our suppliers share our vision and adopt
similar goals in relation to our Sustainability and ESG targets.
Our Supply Chain Code of Conduct (SC CoC) is our main
document which conveys our expectations and includes areas
like HSSES, Ethics & Legal and Human Rights & Labour
Standards. As part of our onboarding process, we request that
all our suppliers have read, understood and will work in line with
the requirements in our SC CoC.
How we engage
Relationships with suppliers are developed at all levels
within the organisation through daily business activities
and regular meetings.
Wood undertakes Supplier Relationship Management (SRM)
with key vendors at an enterprise level developed through a
Category Management tiering structure to strengthen the joint
benefits o
f a strong relationship for ultimate delivery to our end
client, with a focus on expanding this towards a broader base
across our supplier tiering.
Our Approved Supplier Register (ASR) ensures that all suppliers
utilised by Wood have achieved the minimum level of approval
appropriate for the nature of materials and services supplied.
This covers our key risk areas – HSSES, Quality, Ethics &
Compliance, Modern Slavery and Data Privacy. In addition, the
ASR demonstrates that the Company is actively managing its
suppliers and ensures compliance to industry best practice and
management system certification.
In 2022 we have developed our Supply Hub (located on our
website) which is a platform for our suppliers to learn more
about Wood. The hub contains key policies and documents,
reinforces our supplier expectations, and also contains
training modules. Training completion is tracked and helps us
demonstrate that we are aligned with our suppliers as well as
helping to increase knowledge and awareness on some of our
key focus areas. Content will continue to be updated and added
to over the coming months.
Wood also engages with suppliers to ensure key ESG and
Sustainability Scope 3 requirements are assessed, measured
and improved such as Modern Slavery, Carbon Reduction, Anti-
Bribery and Corruption and Building Responsibly Principles.
Areas of engagement and outcomes
Wood endeavours to build strong and lasting relationships with
our suppliers, with a clear vision of working together to ensure
Wood’s client deliverables are successfully achieved.
We review several KPIs/performance measures (e.g., Health,
Safety, Security & Environment & Sustainability (HSSES)
incidents, quality, delivery, spend, ESG and Sustainability) as
well as utilising due diligence to identify risks and work with
our suppliers to close any gaps to help us align to the Wood
strategy. The following initiatives have been delivered and
demonstrate how Wood works with our suppliers to enhance
Wood’s capability and delivery:
•
Category Management Capability
– A central repository
has been built to manage and govern all Wood contractual
relationships, strengthening our growing Category
Management capability through a tiered approach.
•
Modern Slavery
– New process, watchlist, due diligence
and escalation route established for working with suppliers
who take appropriate steps to eradicate slavery, human
traf
ficking and
forced labour in their operations and
respective supply chains.
•
Anti-Bribery and Corruption (ABAC)
– Supporting the
delivery of the Wood ABAC improvement plan to reduce risk
and ensure governance in place across supplier onboarding
and existing supplier base through due diligence. Wood only
works with suppliers who conduct their business in an ethical
and lawful manner, and who do not engage in any form of
bribery or corruption. We have developed a tiered approach
which allows us to focus on areas of higher risk, using the
Corruption Perception Index to target the level of due
diligence we carry out.
•
No PO No Payment
– Implementation of our ‘No PO, No Pay’
policy to ensure we work with our suppliers through signed
purchase order authorisation including agreed terms and
conditions. This helps us protect our suppliers, ensuring we
have appropriate controls in place and agreed terms and
conditions, avoiding any potential issues during or after
delivery of goods or services.
•
Carbon Reduction
– Deployment of external carbon training
to our tier 1 suppliers including the development of a Carbon
Reduction process and data questionnaire. This helps engage
our suppliers in one of our priority areas and helps us manage
our Scope 3 reporting requirements and ultimately deliver our
goal – reducing carbon emissions by 40% by 2030.
•
Supplier Financial Health
– Deployment of a process which
assesses the financial capability o
f suppliers. This allows us
to monitor our supply chain and ensure we adopt appropriate
payment terms or milestone payments.
•
Building Responsibly
– Deployment of a Building Responsibly
Principles (BRP) process and due diligence questionnaires
issued to labour provider suppliers to establish a protocol
to validate that the supplier has met these requirements.
BRP delivers a global standard on worker welfare, and we
have targeted our entire supply chain to ensure they have
similar standards in place by 2030. Creating training modules
helps our suppliers, particularly small & medium enterprises
understand why it’s important to Wood and suggests some
steps they can take to improve worker welfare.
•
ISO20400 Sustainable Procurement
– Creating a more
sustainable supply chain is a focus area for Wood. Late in
2022, we kicked off a gap analysis against the ISO 20:400
Sustainable Procurement Guideline. The outcome of this will
form an action plan which will help us embed sustainable
requirements through our Source to Contract and Purchase
to Pay processes. Our suppliers will be fundamental to
delivering these improvements and we will engage through
our SRM programme, our Supplier Hub and regular tendering
activities to ensure alignment and support are in place for
this objective.
•
Real Estate Services
– Wood has undertaken a strong global
focus on Portfolio Rationalisation and Sustainable Workplace
initiatives. Utilising our increased remote working following
Board approval of the Flexible Working Policy and through the
Workplace Design and Sustainability Standard, the portfolio
has been reduced by 2.2 million square feet. This is down from 7
million square feet in December 2021 to 4.8 million square feet in
December 2022 which increasingly offsets our carbon footprint.
These figures demonstrate to our supply base our drive towards
achieving our carbon neutral targets that both Wood and our
suppliers recognise a shared importance to achieve.
John Wood Group PLC
Annual Report and Accounts 2022
42
Retirement 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; and for pensioners, or
those with deferred pensions, we provide ongoing support and
administration either through our in-house administration team,
as in the UK, or via dedicated external vendors.
In the UK, the Trustee of the pension plan is responsible for
engagement with members. In the US and Canada, the
Benefits Committee is responsible
for engagement with
members through the centralised benefits team. In Australia,
the Policy Committee sets the engagement strategy with help
from its advisers.
How we engage
In the UK, US, Canada and Australia 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 Trustees are responsible for
detailed communications with their members and collaborates
with the Company to ensure communications are appropriate
and relevant. During 2022 the UK pensions administration team
undertook additional engagement activities with members
including the roll-out of the enhanced retirement website
and implementing a new app to provide greater access to
information and pension fund access. The annual survey to all
defined contribution members was carried out, with
feedback
used to inform Trustee decisions. As a result, a signposted
drawdown option was implemented in June giving members
more flexibility over how and when they receive their pension
(members keep their pension savings invested when reaching
retirement and ‘drawdown’ funds to their pension pot as and
when required).
Our 401k Committees meet quarterly in the US and Canada
to ful
fil all fiduciary requirements and we proactively engage
with employees along all phases of their retirement journey. In
2022 we continued to leverage our dedicated portals, such as
Yammer, Wood News, and a virtual benefit
fair platform, to
direct employees to education and resources on a variety of
financial wellness topic.
The Company is responsible for engaging with the 401k
Committees and UK Trustees on Company matters which may
impact the retirement plans e.g. financial per
formance, ESG
reporting requirements and structural changes.
The Australian Policy Committee meets annually and is
comprised of members, management, and advisers. It provides
an opportunity to ensure member views are listened to and
matters such as performance, fees, insurance claims, and any
developments in the fund that may need highlighting can be
discussed with the advisers.
Areas of engagement and outcomes
Issues raised by the Trustee and Committees are carefully
considered by the ELT and referred to the Board as appropriate.
This ensures better understanding and alignment of Company
and Trustee/Committee objectives. The Trustee and Committees
are proactively updated by Wood on Company performance.
During 2022 members of management and the Chair received
communications from UK based pensioners, who are former
Foster Wheeler Pension Plan members, who have formed
a group called FosPen. These pensioners are from a group
of approximately 2,000 pensioners who do not receive a
contractual annual pension increase on an element of their
pension, and therefore the impact of in
flation is eroding their
benefit more significantly. In addition to direct communications
to Wood, FosPen asked its members to write to their MP
highlighting their case, and Wood received circa 25 letters from
various MPs asking them to respond to the points being made
by these pensioners.
Key messages provided to MPs in response were:
• Pensioners are being treated in accordance with the design
of this element of the Plan, which does not require pension
increases to be applied to pension accrued pre-5 April 1997,
as detailed in the Trust deed and Rules.
• The Trustees and Company will look at their complete
long-term funding plan and understand how guaranteed
and discretionary pension increases fit within it and make
decisions accordingly.
In terms of the overall funding of the Plan, Wood made a £8
million contribution to the Plan in 2021 and 2022 to help achieve
the Trustee’s technical provisions funding goal of gilts plus 0.5%.
In addition to this, as part of the 2020 valuation, Wood and
the Trustees agreed to additional funding triggers, designed to
ensure that existing benefits are secure. In June and December
2021, and June 2022, one of these triggers was activated and a
further £36 million was paid to the Plan by Wood.
The current funding position of the Plan, on a technical
provisions basis was 102% (at 30 September 2022); on a gilts
flat basis the
funding was 93.2%. In 2023 the Plan will be
subject to the tri-annual evaluation process, which is a further
opportunity for the Trustees and Company to consider whether
to apply discretion to any pensions accrued pre-5 April 1997 as
part of the endgame considerations.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
43
Governance
Financial statements
Actions supported by the Board
The strategic actions supported by the Board to generate value
for stakeholders were:
• appointment of a committee of non-executive directors
to oversee the investigation, including a comprehensive
investigation into concerns raised internally
• discussion with brokers and advisors concerning governance
issues arising from the delay to publication of results
• a review of various aspects of governance and the control
environment and identifying any improvements, taking
account of the views of the auditors as well as the executive
and non-executive directors
Outcomes
By implementing these strategic actions, the Company
achieved the following outcomes:
• publication of our 2022 results within the timeframes and
deadlines required by the Financial Conduct Authority
• utilised “hindsight” learnings from the investigation
• realignment of the Board sub-committee structures
Sale of Built Environment Consulting
Built Environment Consulting, the part of the consulting
business facing the built environment end market, provided
consulting and engineering solutions that addressed
environmental risks, increased climate resilience, helped to
build more sustainable infrastructure and improved mobility. It
operated across government, transportation, water, industrial,
energy and mining markets and had a track record of attractive
growth and resilient performance.
For details of how we establish and de
fine our key
stakeholders groups see pages 38 to 43
The Board considers principal decisions to be those decisions that are strategically
important, with significant 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 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.
Delay to publication of 2021 Annual Report
and Accounts
In February 2022 following a review of the carrying value of
contracts as part of its year-end processes, an exceptional
charge of c. $100 million was expected in respect of the
legacy Amec Foster Wheeler project, Aegis Poland, to reflect
management’s latest estimate of the expected loss at
completion.
This legacy project involved the construction of various buildings
to house the Aegis Ashore anti-missile defence facility for the
United States Army Corps of Engineers. The original contract for
this project was signed in 2016 and is a fixed price EPC contract.
The Board concluded that in order to finalise the Company’s
reported results and to conclude the year-end audit process
with the Company’s auditor, an external investigation and
review should be undertaken, principally in relation to the
historical carrying value of the Aegis Poland project contract.
This work supplemented an internal review initiated following
concerns raised internally in relation to that project. The
Board concluded that the additional investigation and review
necessitated a delay to the announcement of Wood’s full year
2021 results, previously scheduled for 8 March 2022. The full year
2021 results were announced on 20 April 2022.
In taking this decision the Board focused on the expectations of
investors, lenders and wider stakeholders and had regard to the
interests of:
• investors and lenders and their expectation of complete and
fair
financial reporting and
for the Company to safeguard
their interests
• employees, keeping them informed of signi
ficant financial
events affecting the business
• suppliers and clients and their assumption that the Company
has sound financial management
Our principal decisions
John Wood Group PLC
Annual Report and Accounts 2022
44
Appointment of Chief Executive Of
ficer
In April 2022 Robin Watson advised the Board of his intention
to retire as Chief Executive Of
ficer. Robin joined the business
in 2010 and was appointed to the Board in 2013 as CEO of
Wood’s PSN division. He was appointed Chief Executive Of
ficer
in 2016. The sale of the Built Environment Consulting business
marked the start of the next strategic phase for Wood and
Robin considered it an appropriate time to retire as Chief
Executive Of
ficer.
The Company has a well-established succession plan which
considers internal high potential employees as well as external
candidates. This plan is regularly refreshed and informed the
process to search for and appoint a new CEO resulting in an
extensive selection process that considered both internal and
external candidates. In June 2022 it was announced that Ken
Gilmartin, who was then the Chief Operating Of
ficer o
f the
Company, would be appointed as Chief Executive Of
ficer with
effective from 1 July 2022.
In taking this decision the Board was focused on delivering value
for all of Wood’s stakeholders and had regard to the interests of
the Company as a whole, ensuring the successful candidate had
the necessary industry experience and strategic and leadership
skills. The Board also had regard to the interests of:
• employees, clients and suppliers, and ensuring the Company
is well managed, minimising disruption and uncertainty
• lenders and their expectation of an appointee with suf
ficient
knowledge and understanding of the markets and the drive
to lead the development of Wood’s future strategy
• investors by maintaining their confidence through a period
of change
In November 2021, the Board initiated a strategic review of
Built Environment Consulting. The review considered a range
of options to best unlock the value for stakeholders, which the
Board considered was not reflected in the Company’s market
capitalisation. While Built Environment Consulting has leading
positions in sustainable infrastructure markets, it had limited
synergy opportunities with Wood’s Projects and Operations
business units and with the Group as a whole.
After detailed consideration of the options, in January 2022 the
Board announced that it had concluded that a full sale process
for Built Environment Consulting was the best option to deliver
long-term value for stakeholders and would strengthen the
balance sheet. A comprehensive and competitive sales process
was conducted, which included discussions with a large number
of potential buyers and in June 2022 the Board announced it
had agreed a sale to WSP Global Inc. for an enterprise value of
$1.81 billion.
In taking this decision the Board was focused on delivering value
for all of Wood’s stakeholders and had regard to the interests of:
• investors – ensuring the financial flexibility o
f the Group and
receiving an attractive valuation for part of the Group
• employees and their expectation the purchaser was
committed to investing in the business and its infrastructure
and the sale was in the best interests of the business
• lenders through strengthening our balance sheet
Strategic actions supported by the Board
The strategic actions supported by the Board to generate value
for stakeholders were:
• a comprehensive and competitive sales process resulting in
a valuation appropriately reflecting the long-term strategic
value of Built Environment Consulting
• selection of a purchaser demonstrating a culture of
innovation, integrity and inclusion
• agreeing lender consent for the sale
• considering the plan for the use of proceeds and interrelation
with the development of the continuing Group strategy
Outcomes
By implementing these strategic actions, the Company
achieved a reduction in the Group’s net debt strengthening our
balance sheet and providing financial flexibility.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
45
Governance
Financial statements
Our principal decisions
continued
Strategic actions supported by the Board
The strategic actions supported by the Board to generate value
for stakeholders were:
• a clear understanding of the current and future requirements
of Wood
• examination of the succession plan and diverse pipeline of
potential candidates leading to a comprehensive internal and
external search for suitable candidates
• scrutiny of the candidates identi
fied against the CEO
Success Profile
• ensuring timely communication to stakeholders throughout
the business
• a period during which Robin would contribute in an advisory
role to support Ken to achieve smooth transition
Outcomes
By implementing these strategic actions, the Company
achieved, or aims to achieve, the following outcomes:
• a Chief Executive Of
ficer with the combination o
f skills
and experience to lead the business through its next
strategic phase
• leadership with clarity, structure and focus, and a strong
client-centric mindset
• an orderly transition with a constructive and
professional handover
• maintenance of the strong long-term relationship with
our lenders
• maintaining investor, supplier, employee and client confidence
in the management of the Company and its
financial structure
Strategy review
The Board recognised the sale of the Built Environment
Consulting business would necessitate a “go forward” strategy
review, building on our vision and values. The review defined
and clarified the Company’s purpose and strategic
framework
with an emphasis on energy security, energy transition and
resourcing net zero. The Board received regular updates of the
review as a standing agenda item during the year, allowing
them to debate and align the path forward.
In taking this decision the Board was focused on re-positioning
the Group following the Built Environment Consulting business
sale, thereby delivering value for all of Wood’s stakeholders and
had regard to the interests of:
• employees, so they were aware of the Company’s purpose
and direction
• investors, to return to delivering shareholder value
• lenders, by demonstrating the Company has a sound business
and financial strategy
•
society and their expectation for companies to have a plan with
regard to climate change and global sustainable development
• clients and suppliers, supporting their needs during a period
of change
Strategic actions supported by the Board
The strategic actions supported by the Board to generate value
for stakeholders were:
• setting the terms of reference for the strategic review,
focusing on end market orientation and design to drive
sustainable growth
• reviewing the Group five-year
forecast
• engaging an external consultant to provide independent
assessment and validation of assumptions relied upon
during the review and to signpost any gaps in the proposed
strategy and any changes to the business model which may
be required
• establishing the foundations for success: high-performance
culture, performance excellence, and pro
fitable growth
• communication of the new strategy to the markets at the
November 2022 Capital Markets Day
• a clear narrative on the use of sales proceeds
Outcomes
By implementing these strategic actions, the Company
achieved the following outcomes:
• a cohesive strategy with proactive actions
• a re-invigorated three-year strategic plan focused on the
energy and materials end markets, enabling the unlocking of
value, a financial reset and enhanced investment
• applying the proceeds from the Built Environment Consulting
business sale in order to best position the Company for future
investment and growth: strengthening our balance sheet and
addressing legacy liabilities
• empowering our business leaders to develop and execute the
revised strategy and ensuring they are held accountable
• addressing risks to successful implementation, including
attraction and retention of talent
Future financing
The Board recognised the Company would need a new forward-
looking finance strategy subsequent to the sale o
f the Built
Environment Consulting business and potential future
financing
structures were reviewed throughout the year. Following
presentations and discussions, the Board determined that the
key considerations for a future
financing strategy should include:
• maintaining liquidity
• minimising future interest charges
• maintaining a diversity of funding
• reviewing and maintaining banking relationships including
bonding availability and receivables facilities
In reaching this decision the Board was focused on refreshing
the Group finance strategy
following the Built Environment
Consulting business sale in order to position the Company for
future investment and growth and had regard to the interests of:
• lenders, by establishing a sound, forward looking strategy to
strengthen our balance sheet
• investors and shareholders, investment and growth to enable
resumption of shareholder returns
• clients and suppliers, supporting their confidence in sound
financial management
• employees, liquidity to support ongoing business
John Wood Group PLC
Annual Report and Accounts 2022
46
Strategic actions supported by the Board
The strategic actions supported by the Board to generate value
for stakeholders were:
• evaluating all the potential options available, including
prevailing debt markets, risk, interest charges and diversity
of funding
• reviewing liquidity requirements/refinancing options to
provide a liquidity buffer
• engaging with the UK Government backed Transition Export
Development Guarantee Facilities (UKEF) with regard to
renegotiating UKEF Climate Transition Plan
Outcomes:
By implementing these strategic actions, the Company
achieved the following outcomes:
• a re-invigorated, forward looking
finance strategy to promote
future investment and growth and shareholder returns
• excess cash to be deposited with a range of counterparties
• repay revolving credit facility borrowing while maintaining the
full facility
• repayment of other credit facilities to reduce interest costs
• agreeing a revised Climate Transition Plan with UKEF
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
47
Governance
Financial statements
Sustainability
Creating a better tomorrow
Planet
Our three aims to preserve the environment and
contribute to environmental sustainability:
• Fight climate change by decarbonising our
own and our clients’ carbon footprint
• Protect and preserve the natural environment
and promote biodiversity
• Reduce resource consumption and promote
the benefits o
f a circular economy
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
99
Engagement with:
Employees
38, 62-64, 94-95
Clients
40, 94
Investors & Lenders
39, 94, 108
Pensions
43
Community
40, 66-69
Suppliers
42, 94
Environment
41, 50-59
Principal decisions
44–47
Non-financial
information disclosures
The information required to be contained
in the non-financial 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
50-59
Employees
60-65
Human rights
65
Social matters
66-69
Anti-corruption & anti-bribery
70-72
In 2022, 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 af
filiates (“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.
To read more about Wood’s current materiality assessment, approach and goals visit:
woodplc.com/sustainability/materiality
Wood is committed to ensuring sustainability is embedded in
our strategy and purpose and is at the heart of all key business
decision making.
We strive for an entire organisation engaged in maintaining and strengthening Wood’s
position as a sustainable organisation, attaining ambitious sustainability goals as well
as helping to deliver the sustainability solutions that the world needs.
As a member of the United Nations Global Compact (UNGC), our sustainability
strategy is founded on the UNGC’s 10 principles. It focuses on contributing to the UN
Sustainable Development goals through three pillars of social, environmental and
economic impact; more simply referred to as people, planet and pro
fit. Within those
three pillars, our strategy focuses on the issues that are most material to our business
and our three key stakeholder groups consisting of employees, clients and investors.
Our periodic materiality assessments inform the direction of our sustainability
strategy over a three-year period, or where there is significant change in the business,
to ensure that our sustainability approach continues to evolve with our business and
stakeholder expectations focus. Our current approach is centred around nine key
objectives identified through our materiality assessment:
People
Our three aims to improve lives and contribute
to social sustainability:
• Ensure the safety, security, health and
wellbeing of our people
• Protect, respect and enhance human rights,
equality and inclusion
• Contribute to our local communities, actively
supporting decent work and opportunity for all
Profit
Our three aims to deliver sustainable growth
and contribute to economic sustainability:
• Ensuring we remain ethical in all that we do
by promoting fairness and transparency in
business practice and performance disclosure
• Deliver sustainable innovation and solutions
through partnership and ingenuity
• Partner with our supply chain to deliver
sustainable growth and development
John Wood Group PLC
Annual Report and Accounts 2022
48
Task Force on Climate-related Financial Disclosures (TCFD)
We are reporting our compliance reporting with the Task Force on Climate-related Financial Disclosures (TCFD) framework for
the second year, building on our prior year disclosures. Given the size and scale of our disclosures, and to provide comprehensive
information to our stakeholders in a clear, concise and more accessible format, we have elected to produce a standalone TCFD
Report for 2022 on our website:
woodplc.com/sustainability/data-and-reporting
Our disclosures are consistent with the TCFD Recommendations and Recommended Disclosures. We are fully compliant with nine
of the 11 recommended disclosures. Below is a summary of the status of our compliance, together with page references to the
2022 TCFD report where the relevant disclosures can be found. In addition, where relevant we provide the expected time horizon to
achieve full compliance for any disclosure that we require more time to implement.
Status
Page
Governance
Describe the board’s oversight of climate-related risks and opportunities
Compliant
03
Describe management’s role in assessing and managing climate-related risks and opportunities
Compliant
03
Strategy
Describe the climate-related risks and opportunities the organisation has identified over the short,
medium and long term
Compliant
04-05
Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and
financial planning
Compliant
06-07
Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios,
including a 2°C or lower scenario
1
Partially
compliant
04
Risk management
Describe the organisation’s processes for identifying and assessing climate-related risks
Compliant
08-09
Describe the organisation’s processes for managing climate-related risks
Compliant
08-09
Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the
organisation’s overall risk management
Compliant
08-09
Metrics and targets
Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its
strategy and risk management process
2
Partially
compliant
10-11
Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks
Compliant
10-11
Describe the targets used by the organisation to manage climate-related risks and opportunities and performance
against targets
Compliant
10-11
Our Sustainability Hub
Wood’s sustainability hub on our website is designed to connect our stakeholders
to key information on the issues material to the long-term success of our
business. It is regularly updated, providing timely insight into our sustainability
approach, goals and management of ESG risks.
All information related to our sustainability programme, including our
most current Sustainability Report is available on our website:
woodplc.com/sustainability
Footnotes:
1. Although qualitative scenario planning has previously been undertaken, to ensure full compliance we intend to refresh our scenario planning in 2023 taking into
account climate-related scenarios, specifically including a 2°C or lower scenario and setting out our key assumptions. Our re
freshed 2023-2025 strategy rolled
out in late 2022 will form the foundation of our scenario planning
2. Consideration around establishing internal carbon prices will follow the completion of the re-baselining of our scope 1 & 2 emissions to re
flect the impact o
f the
sale of our Built Environment Consulting business. This re-baselining exercise will be undertaken during 2023. Following the roll-out of our revised strategy in
late 2022 an exercise is underway to define our metric
for measuring client support aligned to the energy transition which is expected to be completed in 2023
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
49
Governance
Financial statements
The environmental challenges that the world is facing today, including the impacts
of climate change, are as important as ever and at Wood we are committed to
responding to those challenges in what we do and how we do it.
We recognise our responsibility to the
environment and our stakeholders
and seek to eliminate or mitigate
environmental risks as well as taking
steps to improve our environmental
performance. We also took steps
to refine our strategy
focusing on
growing sustainable materials and
decarbonisation revenues through
supporting clients with their
sustainability journeys.
Our approach
We set a consistent environmental
standard and maintain competence on
environmental management to ensure
we continue to protect the environment
around us, retain our licence to operate,
and deliver a sustainable business.
Strong and consistent environmental
management is not only essential to
protect our business, but also the people
and places where we operate. Our
HSSES policy sets out our commitment
to the environment and is 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 that our processes are effective
and driving continuous improvement in
our environmental performance. Our
14001:2015 certification is externally
verified by Lloyds Register and covers
approximately 30% of our business by
headcount. Those areas not covered by
our certification must comply with Wood’s
minimum environmental standards,
which although not certified, 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 impacts,
commitments and performance,
considering environmental best practice,
regulatory requirements, environmental
incident investigations and learning. Our
combined HSSES assurance assessment
tool GTRAC is designed to assess
compliance with the standards and aid
continuous improvement.
Compliance with the standards is mandatory wherever we have operational control,
thus creating a consistent approach to environmental management.
As part of our management system improvement project we undertook a complete
review of our environmental standards and procedures. Although we had set clear
standards, different procedures to meet them had been developed across our diverse
business. The review was undertaken to ensure greater consistency in our approach
throughout the business and to remove inconsistencies that had arisen from the
multiple procedures. Consolidation was achieved through extensive consultation and
participation through ‘learning teams’, with experts in the field and our work
force
providing feedback and offering a level of scrutiny across the documents. This
enabled us to develop Group-wide consistent ways to manage our environmental
risks ensuring our ability to share resources, training and digital systems within the
Environmental Management System. This allows us to deploy smarter tools to help
protect the planet we share.
Our environmental standards are split into two sections; managing environmental
risks and reducing our impact on the environment. Each section is then further sub-
divided into key elements.
Managing our environmental risks
Managing our environmental risks appropriately ensures the business can retain its
social licence to operate and preserve our reputation as a business that operates
responsibly.
Environmental
management
Ecology & heritage
Emergency
preparedness
Environmental
aspects and impacts
Environmental conside-
rations in design phase
Permissions
and licences
Spill prevention
& response
Environmental assessment and management
of contaminated site
Reducing our impact on the environment
We care about the legacy we leave behind as a result of our operations and strive
to eliminate or reduce any negative environmental impacts likely to result from
our operations.
Environment
Carbon management
Waste management
Water and ef
fluent
management
Nuisance management
Pollution prevention
Energy management
In late September 2022, Wood completed the sale of its Built Environment
Consulting business. It should be noted that the reporting boundaries for the
metrics presented in this section include data from that business up to the
point of its disposal.
John Wood Group PLC
Annual Report and Accounts 2022
50
Sustainability
continued
Managing our risks
Environmental performance
Wood uses environmental data centrally,
including incidents, audits and regulatory
interactions to monitor performance.
Incidents are reported within our in-house
incident management and analysis tool
(Corporate Analysis Incident Reporting
System) and observations through our
corporate observation reporting system,
Harm Elimination and Recognition
Tracker (HEART). To ensure environmental
management is addressed at the highest
level within the organisation quarterly
reports are provided to senior leadership
and the Board. Any incidents deemed as
having high level potential consequences
are notified to the management team
through a first alert process and subject
to an in-depth investigation. All significant
incidents are robustly investigated, and
corrective and preventative actions
plans are established dependant on the
identified root causes.
93 environmental incidents were reported
in 2022, all rated as having a low actual
impact and all but four were recorded
as having a medium potential impact.
Our environmental frequency rate in
2022 was in line with the prior year
reflecting a consistent level o
f focus on
environmental management. Wood had
zero environmental prosecutions in 2022.
Consistent with 2021, the most common
cause of environmental incidents
reported was due to failure of operating
equipment or machinery (40%) with
hydraulic oil being the most common
cause of contamination. We have seen
an increase in hose failures in 2022 in
some parts of the business driven by
an increase in site activity. During the
Covid-19 pandemic in 2020 and 2021,
Wood scaled down its operations at sites
to enact social distancing rules. Since
the easing of these rules site activity has
increased resulting in a corresponding
increase in hydraulic hose failure incidents.
These areas will be a focus of 2023, where
we will be providing additional training in
spill management, prevention and control
to our frontline personnel.
Number of environmental incidents
Environmental incident frequency rate
per 200,000 work hours
2018
171
123
2019
71
98
2020
2021
2018
0.20
0.14
2019
0.10
2020
0.14
2021
93
2022
0.14
2022
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
51
Governance
Financial statements
Plastic elimination
We are committed to eliminating
single use plastics (SUP) from all our
of
fices by 2025. We launched our plastic
elimination strategy in 2020 which
provides a roadmap on how we will
achieve our goal.
In 2021, 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 baseline. The key
spend categories and overall spend for
SUP was identified; however, this data
lacked clarity and the team were unable
to present the footprint as a weight
or spend per unit item. Following the
complexities encountered, an alternative
method of benchmarking the Company’s
SUP usage across our of
fices was
adopted using our SUP Data Collection
Tool to help assess each Wood owned or
leased of
fice location.
We have aligned our definition o
f single
use plastic using guidance from the
European Union Directive 2019/904 for
the reduction of the impact of certain
plastic products on the environment.
Upon completion of the SUP assessment,
each site location is assigned a ‘star
rating’ to reflect its SUP status as per
the below criteria.
• Gold – Direct and Indirect (Contractual
Control) purchases eliminated
• Silver – Direct or Indirect (Contractual
Control) purchases eliminated
• Bronze – Location assessed only. No
action yet taken
• No star – Location not yet assessed
By presenting SUP elimination by
location in this way, it provides a simple
and tangible method to report progress
to senior management.
We are rolling out the alternative
benchmarking process and we know
we are making positive strides
towards the goal, having already
achieved SUP-free status in a
number of our of
fices. However,
challenges remain in many locations
particularly around procurement
of sustainable alternatives. To
address these challenges together,
a ‘plastic alternative database’
has been launched providing
replacement products options and
local sustainable suppliers for those
of
fices that are finding challenges in
sourcing sustainable alternatives.
Work has also been undertaken to
improve the governance, with the
plastic elimination methodology
being incorporated within the global
Waste Management Standard.
Inclusion of this within our Business
Management System will ensure that
the business is fully advised on the
requirement and method on how we
aim to reach our goal.
Our plastic working group continues
to be the driving force behind how we
are delivering our goal by achieving
the following activities in 2022:
• Successful migration to the new
benchmarking method;
• Deployment of a digitised platform
for assurance action tracking,
giving greater visibility of progress
across the business and;
• Development and implementation
of a SUP Guidance Bundle,
assisting our personnel on their
plastic elimination journey.
As we move into 2023, the
plastic working group will focus
on completing all benchmarking
assessments across our portfolio and
move onto the next phase of location
specific elimination plans. Reducing
waste is vital to conserve the world’s
resources but this also allows us
to reduce our carbon and material
footprint by using less.
Reducing our impact
In line with our HSSES policy we are committed to continuous improvement of
our environmental management performance. We look at ways of mitigating our
environmental impact and use of resources across our operations. By doing this we
contribute to the protection of our shared environment and ecosystems.
Providing a solution to re-use
end-of-life plastic waste
OMV, the international, integrated
oil, gas and chemicals company
headquartered in Vienna, and Wood,
signed a Memorandum of Understanding
(MoU) to enter into a mutually
exclusive collaboration agreement for
the commercial licensing of OMV’s
proprietary ReOil® technology.
ReOil® is a patented chemical recycling
technology developed by OMV, which
converts end-of-life plastic waste into
pyrolysis oil, a valuable resource. These
end-of-life plastics are not suitable to
be mechanically recycled and would
otherwise be landfilled or sent to
waste incineration. OMV and Wood
intend to bring the ReOil® technology
to the market together and explore the
potential to integrate some of Wood’s
other complementary technologies. The
companies will do so by establishing a
joint ‘technology and engineering delivery
team’, which will support clients through
the whole process of adopting and
successfully implementing the technology
at their sites – ReOil® licences will be
provided with full asset lifecycle support.
This collaboration with OMV is providing
a solution that addresses a tangible
need facing industrial sectors today.
This technology allows end-of-life
plastic waste to be re-used and is a
great example of how circular economy
principles can help to create value and
deliver a more sustainable future. Wood is
delighted to work with OMV in supporting
the licensing of this technology.
25%
of
fices completed SUP assessment
7%
of
fices plastic
free
John Wood Group PLC
Annual Report and Accounts 2022
52
Sustainability
continued
Protecting our biodiversity
Biodiversity loss is moving up the
sustainability agenda; from a periphery
issue to being a far more material issue
for businesses and at Wood we recognise
this. Although Wood does not currently
have a defined biodiversity goal, our 2022
materiality assessment highlighted the
growing importance of it to our business
and stakeholders and as such it is an
area we continue to monitor.
Wood’s Environmental Standards set the
minimum requirements for our business
in areas we deem to have environmental
responsibility. We mandate all our
operational assets to meet Group-wide
minimum requirements that include our
approach to:
• Habitat Protection
• Environmental Studies
• Protected/Sensitive Environments
• Invasive Species
• Mitigation Plans
Our project sites are required to
include land and biodiversity aspects
and impacts, as part of environmental
assessments in compliance with our
mandatory standards. To support
implementation, Wood’s Environmental
Standards Self-Assessment Tool is
designed to aid compliance with the
Group-wide standards, assessing
against a maturity scale designed
to drive continuous improvement.
We are beginning to explore how we
can more meaningfully measure and
address biodiversity issues and how
we can counter biodiversity loss across
our operations.
Carbon reduction
Global temperatures have risen 1.1°C and
are heading towards 1.5°C, according
to the UN’s climate scientists, the
Intergovernmental Panel on Climate
Change (IPCC). The science shows clearly
that the window for action on climate is
closing rapidly and we remain focused on
managing the impacts of our business
through our carbon reduction strategy.
To measure our progress and to ensure
accountability, in 2020 our Board
endorsed the carbon reduction target of
reducing our global scope 1 & 2 emissions
by 40% by 2030, on our journey to net
zero. Our target is developed in line
with the requirements detailed by the
Science Based Target initiative (SBTi)
which aligns corporate targets to the
goals of the Paris Agreement, limiting
temperature rise to well below 2°C and
1.5°C scenarios.
Oversight for performance is provided by
the Board and ELT who receive updates
on our carbon reduction progress on a
regular basis to ensure we remain on
course towards our goal.
Whilst we report both location and
market-based emissions, progress
towards our reduction targets are
tracked against market-based emissions.
This approach was employed to establish
our 2019 baseline of 173,585 tonnes CO2e
and reflects a key element o
f our carbon
reduction strategy which is to transition
to procuring electricity solely from
renewable sources.
To ensure the accuracy of our carbon
data it is externally verified by Carbon
Intelligence, an independent third-
party climate change consultant, in line
with the requirements of ISO 14064-3.
Wood’s carbon emissions inventory is
based on actual data (except for certain
scope 3 categories where actual data is
currently not available) which generates
significant amounts o
f data points
covering our global operations. Our
emissions target does not rely on the use
of offsets; we are focusing on driving
absolute reductions through behavioural
change and supporting a transition to
low-carbon energy generation.
Our Climate Change Focus Team,
made up of key stakeholders from our
operations and functions, continues to
be the driver behind delivering the action
plans that underpin our carbon reduction
strategy for achieving our target. During
2022, these action plans were focused on
two key areas:
• Renewable energy procurement
• Energy ef
ficiency in our real
estate portfolio
Renewable energy procurement
Through the actions of the Climate
Change Focus Team, we have continued
to make good progress in this area;
having completed the ‘easy wins’ in
2021 we have continued to increase
renewable energy procurement in 2022.
As shown in the chart below, 55% of
our electricity procurement is now from
certified renewable sources, compared to
45% in the prior year. We know there is
further headroom to improve this
figure;
throughout 2023 we will be exploring
further global options for renewable
energy procurement.
Energy ef
ficiency
Last year, as part of a restructure of
our Real Estate Services team a new
role of Director Global Workplace
and Sustainability was created, the
core objective of the role is to embed
sustainable practices throughout
our global real estate portfolio. This
includes a primary focus on energy
ef
ficiency and GHG emissions reduction.
Further changes saw the Real Estate
management portfolio divided into three
geographic regions (Americas, Europe
and Asia Pacific/Middle East/A
frica).
This organisation structure is intended
to drive greater control and visibility over
the portfolio including cost to deliver our
energy ef
ficiency objectives.
In 2022, we have taken steps to drive
energy ef
ficiency by rationalising the size
of our real estate portfolio and increasing
workplace density, which in turn has
reduced carbon emissions associated
with the operation of our buildings.
Of our total scope 1 and 2 emissions
reduction in 2022, the rationalisation
in our real estate portfolio accounted
for approximately 8%. To promote the
procurement of more ef
ficient
facilities
we have developed a Global Workplace
Design and Sustainability Guide and
Energy Management Standard which is
guiding our selection.
We also gained greater control of how
we manage our portfolio by expanding
our external facilities management
contract to include 29 locations
throughout the world. This has ensured
that we apply enhanced energy ef
ficiency
best practices, from initial design to the
occupied workplace, throughout the
property lifecycle.
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 significant and during
high energy prices can lead to savings.
The actions undertaken so far have been
relatively low cost, and in many cases are
cost neutral.
2019
0
100
%
2020
2021
6
5
45
2022
55
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
53
Governance
Financial statements
Carbon performance
Total global greenhouse gas (GHG) emissions for Wood for the period 01 October 2021 to 30 September 2022:
60,611
tonnes of CO2e
A total split of emissions is shown in the table below.
Global GHG emissions and energy use data for period 1 October 2021 to 30 September 2022
2021-22
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
Wood UK
Emissions
Wood
Global
Emissions
Activities for which the Company own
or control including combustion of fuel &
operation of facilities (Scope 1)/tCO2e
2,969
38,049
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)/tCO2e
12,467
38,504
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)/tCO2e
387
22,562
3,927
28,962
16,480
51,424
22,105
95,501
Total gross Scope 1 & Scope 2 emissions
(location-based/tCO2e
15,436
76,553
20,649
91,933
21,913
111,458
38,280
179,587
Total gross Scope 1 & Scope 2 emissions
(market-based/tCO2e
3,356
60,611
7,672
75,629
20,269
109,043
32,279
173,585
Energy consumption used to calculate
above emissions (MWh)
73,200
289,639
91,315
345,537
95,356
408,158
109,862
582,771
Company’s chosen intensity ratio: tCO2e
(gross Scope 1 + 2) (location-based) /
$100,000 revenue
2.11
1.21
2.70
1.42
2.37
1.48
3.31
1.82
Company’s chosen intensity ratio: tCO2e
(gross Scope 1 + 2) (market-based) /
$100,000 revenue
0.46
0.96
1.00
1.17
2.20
1.44
2.79
1.76
Total Scope 3 emissions/tCO2e
n/a
2,251,056
n/a
1,524,919
–
–
–
–
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.
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. 2021 conversion
factors have been utilised throughout the 2022 reporting period.
Wood’s chosen intensity ratio is calculated based on revenue as revenue represents a key measure of our economic output and business success and is a metric
that has a high degree of accuracy. The alternative measure would be headcount; however, this was not selected due to the potential for issues in boundary
setting and variability, particulary around the impact of contractors and sub-contractors.
John Wood Group PLC
Annual Report and Accounts 2022
54
Sustainability
continued
Awareness of global
environmental issues
In order to deliver our environmental commitments effectively,
it is vital that our employees understand why we care about the
environment and why it is important to our business.
Environmental responsibility
At Wood, we believe it is vital that our employees understand
our approach to environmental responsibility and their role
in making informed decisions in their day-to-day activities.
Naturally, risks to the environment – such as pollution incidents
– or from the environment – such as
flooding – may occur
at any stage of our operations. The activities, management
structures and permitting involved at each stage demand
different approaches. As a result, we have developed an
in-house online environmental training package to build
competency within our environmental advisors, our leaders,
HSSES community and general workforce to ensure that
everyone understands where the risks and opportunities arise
from each environmental aspect.
During development, extensive consultation across the
business was undertaken enabling us to tailor the training
content, objectives and set the expectation of this training
course. The training was developed in consultation with various
stakeholders in the business and is designed to be interactive
and to provide real case studies. It is designed for deployment
using phones, tablets or computers which provides flexibility
in delivery of the course. This training equips employees with
a broad environmental awareness, shares best practices,
stresses the importance of environmental management. It also
highlights the applicable legal requirements and Wood’s revised
Environmental Management standards. It is designed to inform
our people about our environmental performance against our
goals and most of all, motivates our employees to address the
environmental challenges we are now facing.
The training will be rolled out across the business in 2023.
We believe this is an important step to continually develop
workforce capability which is fundamental to protecting the
environment across our portfolio.
There has been a 20% reduction in absolute scope 1 and 2
emissions (market-based) in 2022. This reduction includes
the impact of actions undertaken in line with our carbon
reduction strategy such as increasing energy ef
ficiency in our
real estate portfolio but is primarily driven by:
• the sale of the Martinez power plant in California that had
significant scope 1 & 2 emissions and accounted
for all our
scope 3 downstream and leased assets
• the impact of reduced activity, particularly in our Projects
business unit
During 2022 we have largely transitioned into a post
pandemic normal with all global of
fices reopening and
employees encouraged to return to the of
fice with ability
to choose flexible and/or hybrid working where in-country
legislation and client terms allow. In the future trends in
our emissions data will be driven by the carbon reduction
strategy as opposed to the effects of the pandemic. To
date we have achieved a 65% reduction from our 2019
baseline, compared to our goal of 40% reduction in scope 1
and 2 emissions by 2030. This reduction has been achieved
without the use of carbon offsets. However, as we move
into a growth phase this reduction in scope 1 emissions will
potentially reverse to a certain extent as greater activity at
project site level and direct fuel use in travel will increase.
Our carbon data is collated and managed within a carbon
management software, provided by Sphera. Conducting
internal verification checks has continued to advance our
data accuracy and we now have established improved data
processes including more in-depth verification and validation
processes, which includes a bi-annual data check. These
internal processes are in addition to the independent, third-
party verification o
f our carbon data.
We recognise that scope 3 forms the largest part of our
total emissions. Last year we commenced reporting of scope
3 to provide greater transparency over the drivers of these
emissions. This has allowed us to initiate foundations during
2022 that will, in the future, help us to address our scope
3 footprint. As part of these foundations, we conducted
in-house online climate change training was provided to our
Supply Chain teams and our Tier 1 Suppliers in 2022. The
course was designed to inform and build awareness on the
need for climate action and where they can play their part.
To date, 45% of our Supply Chain colleagues and 82% of our
Tier 1 Suppliers have completed the course.
As noted above, the data associated with the Built
Environment Consulting business is included in the results
for 2022 carbon year. The sale of the business represents
a significant change to Wood’s carbon emissions profile
and, following guidelines set down in the GHG Protocol,
has necessitated an exercise to re-baseline Wood’s carbon
footprint which will be completed in early 2023.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
55
Governance
Financial statements
Partnering with students to promote
responsible consumption
As part of Wood’s 10-year partnership with social mobility
charity, Career Ready, four school pupils joined our team in
Aberdeen for four weeks to experience life at Wood. During
their internship, the pupils led a Plastic Free July initiative to
collect litter near our Sir Ian Wood House of
fice.
Our Global Sustainability Manager said: “Our partnership with
Career Ready and the Plastic Free July litter pick project led by
the interns bring Wood’s commitment to the United Nations
Sustainable Development Goals to life.
“With education being our chosen Global Cause, our combined
focus across Team Wood is to promote learning opportunities
that will ensure inclusive and equitable quality education for
all. And managing our consumption of natural resources and
the influence we have on our clients to promote responsible
consumption is a key part of our strategy to reduce our impact
on the environment.
“I’m really impressed with how the students tackled the project
and the difference which all the volunteers have made to that
area is fantastic. In total they collected more than 40 bags of
rubbish which have now been disposed of by the City Council.”
Supporting global awareness campaigns
In 2022, we used environmental awareness days as a platform
to encourage action and educate our employees on the critical
environmental challenges that we are facing. We held our
annual Sustainability Week at the end of September 2022 with
the theme ‘Let’s talk about Sustainability’ seeking to drive
conversation. A suite of ‘Sustainability Moments’, aligned to the
key elements of our sustainability strategy were rolled out to
initiate discussions on key topics material to our business. The
Sustainability Moments were discussed during team meetings
throughout the week, where teams identified local actions to
support sustainability and inspire others in their locations. We
hope that the campaign motto ‘Let’s talk about Sustainability’
will continue to get people talking and drive local sustainability
efforts across the business.
In response to the global focus and challenge on single use
plastics, Wood joined the annual global movement ‘Plastic Free
July’ and participated in a ‘31-day plastic free challenge’. This was
an opportunity to inspire our people to consider their everyday
plastic usage, sharing options, simple tips and quick ways to
make a difference to plastic consumption every day as well in
the workplace in July. Changing behaviours takes time, effort
and consistency and this campaign confirmed that a section o
f
our employees are eager to learn and understand how they can
support plastic reduction. However, this remains a challenge
especially post-pandemic which created unforeseen setbacks
and challenges in the transition away from single use plastics.
We can better achieve a transformative impact when
working together, having the right conversations and
sharing best practices on environmental matters across our
global business. We have seen increased engagement in our
sustainability programme across the business this year, with
our ‘Sustainability Action Wall’ showcasing success stories from
individuals and team efforts. In addition, our ‘Sustainability
Action Tracker’ is our global mechanism to share and report
local environmental action, driving ongoing momentum in our
approach to sustainability.
Further information on our environmental
performance and ongoing strategy is
contained in our annual Sustainability
Report which is available at:
woodplc.com/company/sustainability
John Wood Group PLC
Annual Report and Accounts 2022
56
Sustainability
continued
Our approach to tackling climate change
risks and opportunities
To show our ongoing commitment to the global efforts to tackle
climate change, we participate in the annual voluntarily Carbon
Disclosure Project (CDP) questionnaire. CDP disclosure allows
investors and cities to better understand risk, capitalise on
opportunities and make investment decisions that drive action
toward a more sustainable 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.
In 2022, we submitted our fi
fth submission to CDP Climate
Change as Wood, building upon a long history of participation
in the scheme, retaining a disclosure score of ‘B’ for the third
consecutive year.
Climate change represents both a risk and an opportunity for
Wood. Throughout 2022, climate-related matters including the
energy transition and the adaptation towards low-carbon and
climate resilient infrastructure were key drivers in our strategic
direction during the year. Following the sale in September
2022 of our Built Environment Consulting business that was
aligned to built environment markets for the development of
sustainable infrastructure, we refreshed our strategy for the
2023-2025 cycle. Our revised strategy is aligned to two broad
end markets of Energy and Materials, which are driven by trends
in energy transition, energy security, sustainable materials,
circular economy and decarbonisation. As such, climate-related
matters remain a key driver of opportunities for Wood.
Our process to identify, assess and respond to climate-related
risks and opportunities is through our enterprise-wide risk
management process for managing principal and emerging
risks. 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.
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
Further information on CDP and
access to our annual response is
available at:
www.cdp.net/en/scores
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
57
Governance
Financial statements
We consider the major impacts of climate-related issues to be
on our strategy aligned to addressing the energy transition, and
therefore feeds into our Strategic Agility principal risk. They are
also reflected in our ESG Strategy & Per
formance principal risk
which considers the risks related to the effectiveness of our
ESG strategy to address, amongst others, our environmental
responsibilities including climate change. Our Project Execution
principal risk considers any material climate-related impacts
that affect our ability to successfully execute projects safely,
to the expected quality, on time and within budget. Localised
events arising from physical climate-related risks such as those
from abnormal temperatures and weather are re
flected in
project risk registers, which map back to the Project Execution
principal risk at a business group and business unit level,
depending on the materiality.
The Board has overall accountability for Wood’s climate-related
risks and through its oversight for the overarching business
strategy, the Board considers climate-related opportunities
as well as climate-related impacts on the sustainability of the
business model.
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 meet Paris
Agreement targets and have continued to assess the risks and
opportunities throughout our strategic cycle to 2022. As a result
of these assessments, we identi
fied a comprehensive list o
f risks
and opportunities in our climate change risk register. From this
list, we identified the climate-related risks and opportunities
that are likely to have the most significant potential e
ffects on
our business, strategy and financial planning:
Read more on the climate-related aspects of our governance, strategy,
risk management and metrics & targets in our 2022 TCFD report:
woodplc.com/tcfd
Risks
• Undertaking high carbon projects that are inconsistent with
Wood’s positioning of pivoting to support clients in their
pursuit of net-zero and decarbonisation.
• Energy transition and decarbonisation markets do not
generate suf
ficient revenues required to meet targets and/
or Wood does not have the ability to attract or retain the
appropriately skilled workforce.
• Failure to meet carbon targets through lack of engagement,
investment and/or accountability, resulting in Wood being
unable to effect behavioural change.
• Increasing carbon management costs, including
administrative costs of compliance with current and
emerging carbon-related reporting and regulation and
increasing carbon taxation.
• Changing precipitation and increasing extreme variability in
weather (severe storms, heat, fires) as a result o
f climate
change resulting in disruption to operations and increased
insurance costs or reduced access to insurance.
Opportunities
• Increased client scope for energy transition and
decarbonisation services. The current global aim of attaining
a maximum of 1.5ºC of warming requires investment in
energy transition and ef
ficiency and this provides Wood with
opportunities to deliver growth in these areas and diversify
our client portfolio.
• 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 the Group 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.
We have established a number of targets to measure our
climate-related opportunities and ensure accountability for our
climate-related impacts. These targets form part of our wider
sustainability strategy and are aligned to the UN Sustainable
Development Goals.
In line with our strategy aligned to energy transition and
decarbonisation and the climate-related impacts reflected in
our Strategic Agility principal risk, our key metric for measuring
climate-related opportunities is the revenue derived from our
solutions that help to mitigate the impacts of climate change
such as renewable energy, alternative fuels and decarbonising
existing energy assets and operations. Our target is to double
client support aligned to the energy transition, in revenue terms,
by 2030.
As demonstrated by our principal risk of ESG Strategy &
Performance, we also recognise that our approach to climate-
related matters forms a key part of our ESG investment ratings
and as such we utilise those ratings as another measure of our
performance and have set a target to be consistently ranked in
the top quartile within our sector by 2025.
To measure our performance in reducing our own climate
impacts we have established two targets. Firstly, to reduce
scope 1 and 2 carbon emissions by 40% (compared to 2019) by
2030. Secondly, to reduce consumption of single use plastics by
ensuring all Wood of
fices are single use plastic
free by 2025.
John Wood Group PLC
Annual Report and Accounts 2022
58
Sustainability
continued
Enabling a low-
carbon energy future.
The energy systems of the future will include low-carbon
solutions including hydrogen, renewables and biofuels.
At Wood, we have identified hydrogen as one o
f our priority growth markets.
We already hold a strong track record in this area – as an example, our
proprietary steam methane reformer (SMR) technology has been installed
in over 10% of the total hydrogen plant base across the globe.
Within the hydrogen market, we see growing opportunities across the globe
– a good example is the work we secured last year with Total Eren to provide
conceptual engineering for their H2 Magallanes project, a large-scale green
hydrogen production facility in Southern Chile.
Our scope includes the development of a complete off-grid integrated energy
complex to produce ammonia from green hydrogen – avoiding up to 5 million
tonnes of CO₂ annually. The engineering package also includes up to 10GW of
installed wind capacity, 8GW of electrolysis capacity, a desalination plant, an
ammonia (NH3) plant, power transmission and backup, and port facilities to
transport the green ammonia to national and international markets.
With some of the best solar and wind resources in the world, Chile is among
the most promising countries to develop competitive green hydrogen to
develop competitive green hydrogen with a target of producing 25GW by 2030.
Decarbonisation solutions
for energy and industry
Delivering a lower-carbon
future will not only require
accelerated investment
in clean energy solutions,
but also exponential levels
of emissions reduction in
carbon-intensive sectors.
Decarbonisation is a complex process,
but the journey starts with getting
a baseline understanding of carbon
performance and then developing a
detailed roadmap that outlines the best
solutions to drive down emissions based
on a balance of technical, commercial
and practical drivers.
At Wood, we have world-leading
expertise in decarbonisation solutions
and are actively applying this on a wide
range of client projects across the globe.
We see opportunities to reduce emissions
in several areas: through the substitution
of more sustainable fuels and feedstocks,
by capturing carbon, either pre-or post-
combustion, by optimising assets and
plants to run more ef
ficiently and by
reducing emissions leakage.
The breadth of work we are delivering
in this space reflects the size o
f the
opportunity – in Norway, we continue
to work with Equinor to modify some
of their existing assets so they can be
powered using offshore wind.
In the US, we are integrating solar-
powered renewable energy to support
operations on a shale project in the
Permian, and we are currently working
with a leading energy client on early
phase work that could increase global
carbon capture and storage (CCS)
capacity by 25%.
As well as the decarbonisation specific
projects we deliver, in practice a lot of the
work we do every day for clients includes
an element of reducing the carbon
intensity of operations whilst maintaining
uptime. Or put simply, maximum energy
with minimum emissions.
5m tonnes
of CO2 avoided annually
10GW
of wind
8GW
electrolysis capacity
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John Wood Group PLC
Annual Report and Accounts 2022
59
Governance
Financial statements
Attract
Wood is a people business; our people are
at the heart of all we do and all we aspire
to achieve. Our commitment to creating
an inspiring culture and performance
excellence is a strong employee value
proposition which helps create clear
career path opportunities for our people.
This compelling proposition, focusing
on the lived experience of our people,
enables our best-in-class resourcing
teams to attract the best candidates as
they can visualize being a contributor to
Wood’s Inspired Culture.
In 2022 Wood successfully grew
headcount through external recruitment
and internal promotion aligned to the
growth needs of the business; however,
our overall headcount is down due to
sale of the built environment business.
Our resourcing teams understand the
importance to Wood and our customers
of ful
filling requirements e
f
ficiently and
achieved their target of 35 days’ average
time to offer. Our Wood brand and
Employee Value Proposition is strong for
attraction of the skilled talent we seek.
Our focus on internal redeployment and
development provides consistency and
skills predictability for our projects. In
2023, we are launching a new “internal
marketplace” platform to maxmise the
movement of people internally ensuring
we have the right skills at the right time
ready to deliver to our customers
Our hiring diversity and inclusivity
strategies ensure we focus on hiring
locally wherever possible, promoting
nationalisation in the communities we
serve and enhancing our rich culture. We
remain committed to being a diverse,
inclusive, and equal opportunities
employer promoting an environment that
is free from all forms of bias. 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. Our people
policies and practices, aligned to creating
an Inspired Culture, ensure our values
are maintained and promote a healthy,
caring culture in all our locations.
We provide competitive, fair and
transparent terms, conditions,
compensation, and benefits to all our
workforce globally. In the UK, we were
proud to be an accredited
Real Living
Wage
employer in November 2021,
supporting Aberdeen in its ambition
to become a Real Living Wage city.
The accreditation process ensures
all contracted workers (third-party
employees of service providers e.g.,
security of
ficers, canteen sta
ff and
cleaners), are also paid the Real Living
Wage. Following the announcement of
the 10.1% real living wage increase in
September, we will apply this early to
our employees impacted, well ahead
of the May 2023 deadline. We are also
encouraging our third-party suppliers
to take the same approach to early
adoption ahead of the winter period.
In partnership with The Living Wage
Foundation, we intend to implement the
Living Hours Standard
in 2023 for Wood
employees and seek to understand more
about accreditation for our vendors.
Our leaders are provided with
incentive
plans
designed to support our growth
aspirations and delivery of our strategy,
aligned to stakeholders’ experience. The
wider workforce is invited to participate
in the
employee share plan
, which is now
offered in 18 countries, providing the
opportunity for our people to share in the
growth of Wood.
Employee spot bonuses
offer the opportunity to recognize
fantastic achievements, with more than
657 employees recognised during the
year.
We recognise the need to continue to
invest in and retain graduate talent
as our future workforce of the future
aligned to our strategy and operating
model. In 2022 we recruited 664 early
career employees, and to support
their transition from education to the
workplace we delivered a global induction
program covering modules on Company
strategy, culture and structure, wellbeing,
career management and understanding
self and others. In 2023 they will move
onto a 2-year development program
to further enhance skills recognised by
the World Economic Forum ‘Jobs Reset
Summit’ as being critical for future
workers. This will ensure our graduates
have the skills and behaviours required to
thrive and develop a long and prosperous
career at Wood.
People
People are at the heart
of everything we do. Our
remarkable people are
trusted by clients to design,
build and advance the world.
It’s our people who find innovative
solutions for our clients; it’s our people
who are unlocking solutions to some
of our world’s most critical challenges;
and, ultimately, it’s our people that will
differentiate us in a complex, competitive
market. Our Inspired Culture strategic
pillar is about making Wood a great
place to work; prioritising employee
wellbeing, doing the right thing, putting
sustainability at the heart of our
business, and empowering each other –
enabling us to perform with passion and
purpose to design the future. It is our
people who are key to Wood’s success
and our people strategy is centred
around four key themes:
John Wood Group PLC
Annual Report and Accounts 2022
60
Sustainability
continued
• Our strategic ambition is to deliver
predictable outcomes, every project,
every time, ensuring consistent
superior value for our clients. The
curiosity to learn, explore and
continuously improve is how we will
get there, which is where the
Project
Management Academy
(PMA) comes
into play. Wood’s project managers
are fundamentally responsible for
the performance and outcome of
the projects we execute across the
globe. Offering a consistent training
platform for project managers in our
current market and global environment
is essential to achieving exceptional
execution in our delivery and realising
Wood’s strategy of performance
excellence. The Academy is globally
deployed to all project managers and
project controllers, with a variety of
courses offered every month via live or
eLearning platforms with an average
of 400+ colleagues participating
in each course, and over 10,600
attendees in 2022. Courses covering
PM fundamentals, Delivery Excellence,
Start Up Practices, Risk Management,
Governance & Assurance, Quality
Management, Leadership in Technical
Safety were delivered during the year.
• Our
mentoring app
continues to gain
followers, with 407 mentors and 564
mentees now registered, resulting in
over 230 matches. The app enables
widespread access to mentoring for
our employees and works by providing
mentees with a list of suggested
mentors based on their profiles.
Mentees review the profiles o
f the
suggested mentors and send a request
for mentoring directly through the app.
• We are reinvesting in our
performance
management
approach and creating
a forum for leaders and teams
to engage on people and career
opportunities with career development
being a key focus. This approach
will encourage a greater number of
conversations during the year, leading
to enhanced engagement, feedback
and development.
• During 2022 we provided over
5,000 developmental opportunities
involving changes to role and grade
for our people, with a further
1,600 developmental roles with
no grade change.
• Business units have implemented a
substantial number of positive internal
role moves and promotions in 2022 at
leadership level because of effective
succession planning.
• To support our broader ESG focus, we
provided carbon training to over 90 of
our Tier 1 suppliers and 450 internal
supply chain colleagues; more than
300 colleagues and circa 50% of our
labour suppliers completed human
rights training; and 272 of our team
completed sustainability training.
• As detailed in the Ethics and
Compliance section of the report, we
have carried out significant training
for
thousands of our employees, including
over 4,000 of those based at site.
• To support the mental health of our
people we developed awareness
training for managers, delivered
through e-learning, and hosted live
training sessions for employees at site.
The employee engagement survey
results, as detailed later in this report,
highlight the positive impact our focus
on development has for our people. In
2023 we will continue to focus on the
development of our teams by bringing
all our learning into one site, “My Path”,
which will enable employees to easily
find technical and non-technical content
and connect with subject matter experts
from across Wood.
Develop
Development at Wood is a partnership
between the employee and their line
manager. We enable our people to
take the lead in driving their career and
support them to reach their full potential,
be it now or in the future. Individuals
are encouraged to take a blended
approach to learning, where much of
their development takes place on-the-
job. We provide tools and resources
to assist employees in understanding
potential roles for them at Wood and
what can be done to achieve progression.
Learning is typically split 70% on the
job; 20% interaction with others; and
10% formal learning. A vital element of
the ability of an organisation to learn is
through the social aspect of it. During
the pandemic Wood rightly placed
an emphasis on virtual learning, but
in 2022, where relevant, we began to
bring leaders and employees together in
collaborative spaces so that relationships
and networks could be strengthened, and
higher levels of collaboration encouraged
through the learning experience.
Key highlights from 2022:
•
290 professional skills training
sessions delivered to over 14,000
learners across the globe, with
the most popular ones relating to
emotional intelligence, creative
thinking & problem solving, and
career development.
• Following on from the 2021 launch
of our ‘
Stepping into Leadership
Program
’, focusing on leadership skills
for those employees who have recently
moved or are about to move into their
first leadership role, more than 1,000
of our colleagues have now bene
fited
from participating in this program.
• Our ‘
Leadership Excellence Program
’
supporting those at the next tier in
our leadership structure, identified
as high potential, includes strategic
thinking, change agility, digital
leadership, and how to become
an inspirational leader. In 2022 we
developed an advanced module to
support the 150 colleagues who have
already completed the program.
• ‘
Leading Beyond
’, a program for our
most senior leaders, supporting them
to inspire others, be inclusive and
engaging, unlock growth enablers,
transform culture, and accelerate
operational excellence in everything
we do, has now had over 75 attendees,
with the aim of all cohorts being
completed in 2023.
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Annual Report and Accounts 2022
61
Governance
Financial statements
Engage
In 2022 we have continued to build on
our engagement framework, launched in
2021 in response to employee feedback,
to ensure our people have a consistent
experience in their connections with
Wood and its leaders. This minimum
engagement standard ensures we are
continuously connecting with our people
and listening to the heart of our business,
and that everyone knows the role they
play in creating an inspired culture.
Two employee engagement
pulse surveys
Following the full global
employee
engagement survey
in October 2021,
focus groups were held in Q1 to 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. Remuneration Committee
members participated in specific reward
focus groups and provided summary
updates back to the wider Board. Two
pulse surveys were carried out held in
May and November, focused on two key
engagement questions:
• How likely is it that you would
recommend Wood as a place to work?
• How likely is it that you would stay with
Wood if you were offered the same job
at another organisation?
Approximately 47% of our global
population chose to respond to both
surveys, with over 70% of professional
& technical colleagues participating; we
continue to find ways through technology
to enhance participation from our
site employees. Results continue to be
shared with the Board to enable them
to continue to measure and monitor the
effectiveness of our culture; challenge
management on where improvements
need to be made; and formulate topics
for discussion and deeper feedback with
the wider workforce via our Listening
Group Networks (LGN). Our employee net
promoter score has continued to improve
significantly, with key
feedback being:
• Wood has great people and is a great
place to work. People really appreciate
and value their work colleagues.
• Our new leadership and strategy are
increasing belief and energy towards a
positive future for the organisation
• The hybrid working model, and
the approach Wood has shown in
encouraging people back to the of
fice
have been positively received
• There are great opportunities to
develop in role and speak up. Wood
invests in development leading to
increased loyalty and commitment
from people
During 2023 we will conduct another
pulse survey, with a full survey expected
at the end of the year.
We continue to celebrate success
In the fourth year of our Inspire awards,
which recognise outstanding employee
contribution across our business, we took
the opportunity to refresh the categories
and received over 3,500 nominations
from all over our global business. Judging
panels, comprised of a diverse group of 23
judges, selected winners in the categories
of: Engagement Champion; Excellence
in Sustainability & Ethics; Exceptional
Customer Service; Exceptional Team
Performance; Impactful Innovation; and
Raising the Shield.
Global townhall meetings
Ken Gilmartin, CEO, implemented
global townhall meetings
, hosted by
the Executive Leadership Team (ELT).
Open to every employee, these meetings
provide an opportunity to understand key
updates from across Wood. In October,
the ELT congratulated winners of the
Inspire Awards, updated on Wood’s
financial per
formance, and provided a
summary of key work activities within
the business units. The December call
provided an overview of the strategy, and
associated reflections
from the Capital
Markets Day, along with a look back to
key achievements in 2022, and a future
focus to 2023.
John Wood Group PLC
Annual Report and Accounts 2022
62
Sustainability
continued
Listening Group Network
The Board and ELT hosted five
LGN
calls.
Open to all employees, the LGN provides
the opportunity for updates from
leadership on topics of their choice, as
well as ensuring their voices and feedback
are heard by members of the Board and
ELT, with subsequent actions identified
and implemented. These calls remain a
fantastic opportunity for members of
the Board to gain greater insight into
the prevailing culture across Wood and
consider any improvement actions. Topics
included trading updates; feedback on
returning to the of
fice; our response to
the crisis in Ukraine; how we connect
our people to our strategy; mental
health awareness; and Inspire Awards
celebration. Before and during the calls
there is the opportunity for our people to
ask questions, with responses provided
either in the moment, or after the call.
Leaders Connect
Leaders Connect
calls and SharePoint
sites have also been established during
the year, offering leaders the opportunity
for more in-depth discussions on key
topics such as retention, safety,
financial
results, and strategy development.
In November 170 leaders from around
the world met in Houston for a
Leadership Conference
to learn more
about our new strategy from the ELT
and understand their part in delivering it;
this was further enhanced by additional
leaders joining remotely.
Visiting our people
Thanks to the continued easing of travel
restrictions following the pandemic, the
ELT have visited many of our people
across the world, taking time to listen to
their feedback, share the new strategy,
and enjoy fellowship.
Shadow Leadership Team
In the EMEA region of the Operations
business unit, a
Shadow Leadership
Team
was implemented in Q1 to provide
a representative perspective of the
business to ensure decision making
and strategic direction is reflective o
f
the views of our broader organisation,
in addition to providing opportunities
for on-the-job training and career
development for our teams. This has
been highly effective, providing greater
engagement and bringing employee voice
and diversity of thought to the forefront.
As a result of this success, all business
units will be implementing this initiative
in 2023. As a result of this success, all
business units will be implementing this
initiative in 2023.
Benefits and retirement plans
Engagement with employees about
insured benefits and retirement plans,
has led to the introduction of more
sustainable products such as electric
vehicle purchase plans and access
to alternative drawdown retirement
options in the UK, and improved
retirement plans in Australia.
Bonus plan
Supported by Board members, listening
to participant feedback on the annual
bonus and long-term incentive plans
resulted in the implementation of
restricted stock units in 2022, and a
simplified bonus plan
for 2023.
Ethical culture survey
Our legal, ethics and compliance team
implemented an ethical culture survey
to employees in US and Canada and
conducted live learning sessions every
month on topics such as conflicts o
f
interest, gifts & hospitality and Speak Up
culture, to support our culture of creating
an environment where our employees
feel empowered to speak up and do the
right thing.
Engaging with site employees
Engagement with those employees
based at site remains a focus, with Apps
and WhatsApp groups being developed
to aid this, along with the more
traditional methods such as site calls
and visits, newsletters, notice boards,
townhalls and safety meetings.
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63
Governance
Financial statements
Retain & sustain
Wood operates in a fast moving and
evolving global talent market, impacted
by high demand and so in turn retention
risks and attraction challenges, and
high inflation. Employee retention and
remaining an employer of choice is a key
priority to ensure we have a talented,
agile, and motivated workforce to deliver
our strategic objectives and support
improved performance for our clients.
We also know that we need to continue
to reduce inequalities, support all our
people, and take steps to shield our
lowest paid workers from the impacts
of the rising cost of living during this
challenging time, and have implemented
a number of actions which are detailed
in the Workforce reward section of the
remuneration report on page 128.
During the year the ELT met weekly to
review actions implemented to drive
improved employee engagement,
resulting in a stronger net promoter
score, lower levels of voluntary turnover
and create a greater sense of ownership.
All these factors will support improved
performance both for our clients and in
how we run our business.
Our people told us they wanted
more career progression, so we have
implemented a variety of tools including:
• Regular
career
“
check-ins
” between
employees and their line managers
• Sharing of
career stories
from around
the business
• Developing clear
career paths
to
actively support the development
required to move from one role to the
next within the project engineering and
project management space
• Creating a single point of contact
for all technical and non-technical
learning,
My Path
. This is designed
to connect people so they can learn
from and grow with one another; and
connect employees to learning content
and our internal career marketplace,
so they can see what opportunities are
available across Wood
Mental Wellness strategy
The health of our team is critical, so we
continue to focus on 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 everyone, continues
to be embedded across the organisation
and is aligned with six strategic themes:
leadership, positive culture, prevention,
early intervention, support, and mental
health crisis management. We remain
committed to applying the best available
mental health approaches to benefit
our Wood community, and now have
over 300 trained wellbeing champions
across the enterprise. We regularly
review and redesign our inclusive benefits
programs to focus on the importance
of wellbeing and ensure supporting
materials and apps are user friendly. Our
wellbeing portal, “Living Well at Wood”
provides focused tools and resources to
support colleagues and their families
to make small positive changes to their
everyday lives in the areas of physical,
emotional, financial, social, career and
environmental wellbeing.
Inspired Culture
Our Inspired Culture strategic pillar aims
to create the best working environment
and establish a culture where employees
are highly engaged, respected, feel
supported, and where differences are
valued. Our diversity and inclusion
platforms celebrate the diversity we
bring together, with our employee
networks being a place where employees
can connect, learn, share views, tell us
what we are doing well and recommend
improvements to make Wood an even
better place to work. Key network
activities in 2022 are detailed below:
Wellbeing Network:
Focusing on
recruiting and supporting mental
wellbeing champions across the
organisation and providing a space
for employees to come together to
learn, share and collaborate on mental
wellbeing dates, events, and general
awareness. In 2022, the first co-
chairs were recruited, and discussions
broadened to include menopause,
workplace risk and more. The network
has now trained over 300 mental health
trained wellbeing champions and seeks
to expand this in 2023.
Armed Forces Network (AFN):
Sponsored by Jennifer Richmond,
Executive President, Strategy and
Development, the network has more
than 190 members in Australia,
Scandinavia, the UK, and US. With a
strong set of objectives, the network
seeks to support veterans, reservists,
and family members, as well as involving
allies and supporters.
Plans for 2023 include increased
communications of the network and
collaboration with other employee
networks and skills.
Developing Professional Network (DPN)
:
This community provides a platform for
employees to learn more about Wood,
their colleagues and themselves. The
network promotes the development and
connectivity of tomorrow’s leaders, while
positively contributing to community
programs and Wood’s culture. DPN
is supported by Jim Shaughnessy,
President, Conventional Energy Projects,
and has launched local chapters in
Asia, Europe, with Middle East and US
during the year and now has over 700
employees on the Yammer page.
Equal Footing Network:
Sponsored
by Mike Collins, Executive President of
Business Sustainability & Assurance, this
network has been shining a spotlight
in the areas of perimenopause and
menopause; transgender and non-binary
inclusion; and working parents.
Race and Ethnicity Network (WREN):
WREN continues to be fast-growing
and is proud to have more than 650
colleagues participating. It 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 continued to embed a reverse
mentoring program, 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
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 finalist
for ALLY Energy’s “Trailblazing Energy
Superhero” award.
STEAM (science, technology, engineering,
arts, and maths) and Education
Network:
This network seeks to inspire
future generations and in 2023, will
expand its geographical footprint and
collaborate with the DPN.
Pride:
Sponsored by our CEO, Ken
Gilmartin, this network celebrates and
supports the voices, culture, and rights
of the LGBTQ community. It seeks to
create an environment where people can
live proudly as themselves by listening,
learning, and speaking out against any
inequality among us.
John Wood Group PLC
Annual Report and Accounts 2022
64
Sustainability
continued
Diversity and inclusion
We commit to driving greater diversity
in our business, including 40% females
in leadership roles by 2030. This is
important as we know that more
diverse and inclusive workplaces
outperform the competition.
The Board continues to maintain an
ongoing focus on diversity and inclusion
matters, particularly with regards to
the impact on Wood’s culture, and to
ensure diverse talent is identified
for
succession and appointed into positions
of leadership. On 31 December 2022, we
had 32% female leaders, down from 33%
in 2021. Unfortunately, the sale of the
Built Environment business resulted in a
reduction in female leaders, so in 2023
we will renew our focus on developing
female P&L leaders across Wood. We
will also continue our focus on gender
balance for our Early Careers population,
with 48% of our intake being female in
2022. The FTSE Women Leaders Review
report, measuring female leadership
representation in the FTSE 350 for
Board, ELT, and direct reports, published
in February 2023, showed that Wood has
improved, with 44.4% of our Board and
27.3% of the ELT and their direct reports
represented by women. At 31 December
2022, we had the following gender
diversity across Wood.
Gender pay gap
The 2022 UK gender pay gap, covering
five entities and 5,488 employees shows
that the overall Wood pay gap reduced
to 26.0% from 26.1%, whilst the mean
bonus gap increased from 38.2% to
44.2%, however the median bonus gap
has fallen by c.34% to 32.5%. During
the same time female representation
has remained the same across our UK
business at 23%. The increase in the
bonus gap is driven by the fact that the
bonus paid to managerial and leadership
levels in 2022, for the 2021 performance
year, of which females make up a higher
percentage, was not paid until May
2022, and is therefore not included in the
analysis; this was due to a delay in the
announcement of the Company
financial
results. Bonus payments made included
in the analysis were predominantly for
offshore and site employees, who were
all male, and are driven by our clients and
collective agreements. For the limited
number of our onshore, of
fice-based
employee population paid a bonus,
11% were female and 9.3% 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. Full
details can be found on the Government
website, categorized by industry sector,
as determined by the Of
fice o
f National
Statistics (ONS), or on the Company
website. As detailed in the Workforce
reward section, Wood remains proud
of being accredited as a Real Living
Wage employer in the UK, and although
we value the impact gender pay gap
reporting has had on society, we remain
focused on pay equity, with equal pay
for equal jobs.
Human rights
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 traf
ficking in our business and
across our supply chain and upholding
the Universal Declaration of Human
Rights (UDHR); see more information
www.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.
*inclusive of the executive directors
**inclusive of three levels of leadership below ELT
Gender split at 31 December 2022
Leadership Team**
Overall
Male
Female
Key:
Board
ELT*
80%
20%
56%
44%
71%
29%
68%
32%
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John Wood Group PLC
Annual Report and Accounts 2022
65
Governance
Financial statements
The relationships we
create hold the key to
supporting a sustainable
society and economy for
people, planet and business
to thrive. Building strong
and lasting relationships
with our community
neighbours, demonstrates
our commitment to the
communities we share, and
our contribution to the social
fabric of the locations where
we live, work and impact.
Our commitment to understand, engage
and evolve as a community partner
seeks to demonstrate our values and the
culture we continue to build at Wood.
Contributions to communities
Illustrating Wood’s contribution to
the communities we share, our total
charitable donations summary has
evolved from improved internal reporting
of time, resource and money to help
quantify our impact and inspire further
contribution year on year.
Our approach
Our community investment programme
aims to encourage and support our
employees to show up in the communities
we are a part of. Aligned to our approach
to sustainability, we believe everyone has
a role to play in creating a stronger future
for all, and in the community space we
recognise that our role extends beyond
our philanthropic donations.
Wood’s global community investment
programme consists of three strategic
pillars of support: matching our employee
fundraising efforts, strategically uniting
our business around a single global cause
and volunteering our time.
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 SDG4
and Quality Education,
our Global Cause unites
our people around a
single cause.
Employee
matched
funding
Our
Global
Cause
Volunteering
Community
Total charitable donations*
$m
Progress towards our goal
to contribute
$10 million to our Global Cause by giving
our time, energy, resources and funding
by 2030.
2019
1.14
1.63
2020
1.38
1.78
2021
2022
Global cause donations to date*
$1.53
m
*Includes direct monetary donations, the value
of resources donated and the monetised value
of volunteering time. Global cause donations
relate to purely educational causes as Wood’s
current global cause.
15% of 2030 target achieved
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
Review >
• The effectiveness of
plans and community
perception
• How we review
and respond to
community incidents
• How we benchmark
our performance,
monitor and evaluate
Read more about our community
investment programme in our latest
Sustainability Report available at:
woodplc.com/sustainability
John Wood Group PLC
Annual Report and Accounts 2022
66
Sustainability
continued
Governance and strategy
Managing Wood’s community investment
strategy, our Community Investment
Committee 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.
As part of our sustainability strategy,
Wood has committed to giving our time,
resources and funding to contribute
$10 million to our Global Cause by 2030,
from a 2020 baseline.
Supporting a culture aligned to our values,
our community outreach has enabled
our people to reconnect following the
Covid-19 pandemic on the issues material
to our communities and demonstrate the
good our strategy can deliver. In 2022,
our Community Investment Committee
efforts focused on:
• Strengthening our governance with
the publication of a global community
investment policy to support existing
governance on our central community
fund activity and provide overarching
guidance on our approach to community
investment to the wider Wood.
• Ongoing development of business
unit strategic plans in support of our
community investment strategy and
global cause goal
• Increasing communications to
inspire employee engagement and
raise awareness of Wood’s global
sustainability action tracker to improve
reporting across the Group
Employee matched
funding
We believe supporting employee efforts
to take action in their communities and
fundraise for causes close to their hearts
should be recognised and celebrated.
Wood’s employee matched funding
programme allows us to do just that,
with 100% of the amounts raised by
employees being matched by Wood,
up to a specified limit. In 2022, we were
pleased to see an increase in employee
fundraising efforts and applications
for support, as our employees utilised
community investment activities as a
way to reconnect.
88
matched funding applications
$218,150
raised as a combination of employee and
Wood funding, supporting 85 charitable
organisations
Cycling for Multiple Sclerosis in
Perth and Houston
Racing to the finish line in support o
f
those living with multiple sclerosis (MS)
and other neurological conditions, our
teams in Western Australia and North
America have shown decades-long
commitment, supported by Wood’s
employee matched funding programme.
For 24 years, Wood has participated in
Bike MS Texas MS 150, one of the largest
cycling events in North America, to raise
funds for the MS Society. In 2022, an 80+
strong team pedalled roughly 180 miles
over two days, raising $76,000, including
a $12,000 matched contribution.
For the fi
fth year in a row, Wood
supported our people to participate in
the MSWA Ocean Ride in Perth, Western
Australia, to help make a difference
to people living with MS and other
neurological conditions. Eighty-five team
members participated in the ride and
put in an amazing fundraising effort to
raise $18,842, with an additional $12,000
match from Wood’s community fund.
These in-person events help to strengthen
team bonds and are a true demonstration
of our continued commitment to the
charities we work with.
Supporting the crisis
in Ukraine
As the conflict in Ukraine continues, our
people have responded in incredible ways
to help civilians caught in the middle.
Millions of people have
fled Ukraine
bringing only what they can carry and
relying on the kindness of strangers to
help them through this unbelievably
dif
ficult and heart-breaking time.
In addition to supporting employee
fundraising efforts, Wood’s central
Community Investment Committee
wished to recognise the number of
employees donating personally to the
crisis in Ukraine, offering a donation of
£10,000 to a chosen charity, from a list
of organisations already suggested by
employees. Through an all employee vote
on our internal engagement channel
Yammer, our donation went to the Global
Giving Ukraine Crisis Relief Fund which
supports humanitarian assistance in
impacted communities in Ukraine and
surrounding regions.
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John Wood Group PLC
Annual Report and Accounts 2022
67
Governance
Financial statements
Global Cause
Wood’s Global Cause unites our
business behind a single cause, aligned
to our support for the UN Sustainable
Development Goals (UN SDGs), and
demonstrates the power of collective
action. Supporting a cause as opposed to
a single charity enables greater flexible
for employees to demonstrate action
locally, in the context of the people and
places we impact.
Chosen by our employees, Wood’s
current global cause remains education
in support of UN SDG4 and quality
education. Our goal to raise $10million
for our global cause by 2030 will be
subject to periodic validation of our
chosen cause by our employee base,
to ensure we remain aligned to the
issues most relevant to our people and
sustainability strategy.
Driving action on our global cause,
Wood’s annual ‘Global Cause Challenge’
celebrated its fourth successful year
of community fund support in 2022
and our ongoing focus on education.
Open to all employees, since launching in
2019, the challenge has supported over
93 employee led initiatives, with more
than $970,000 in funding support,
across nine countries.
Empowering Students on
Engineering Day
Giving our time to inspire the engineers
of tomorrow, Houston members of
our Developing Professionals Network
hosted a team of female students
from the Houston Independent School
District (HISD) Resilient Outstanding
Sisters Exemplifying Success (ROSES)
mentoring programme for an
Engineering Day in Wood’s Houston
Campus CoLab facility.
Welcomed by members of Wood’s
Executive Leadership Team, Team
Wood encouraged the students to be
inquisitive through rotating around a
series of STEM activities introducing
them to engineering concepts and
applications, like structural integrity,
vibration, virtual reality and wind energy.
From demonstrating structural integrity
in a hands-on exercise, to virtual reality
simulations of an industrial environment
and demonstrated how turbines
convert wind energy into power, the
day concluded with a lunch-and-learn
presentation where leaders shared their
personal stories of discovering their
passion for engineering and overcoming
challenges they have faced as women
in the industry.
Wood committed funding of $15,000
to the ROSES mentoring programme in
2022, through our annual global cause
challenge, supporting employee led
initiatives that seek to ensure quality
education for all in support of our
current global cause.
$15,000
funding awarded
It’s a wrap for the Million
Makers Challenge
Supporting Wood’s four- year
partnership with The Prince’s Trust,
two groups of Wood graduates
from across the UK came together
to take part in a six-month
entrepreneurial challenge to raise
money for the Trust to support
disadvantaged young people in the
UK, to improve their prospects of
future employment.
Set as a dragons’ den style
fundraiser, The Million Makers
Challenge saw teams of employees
compete to turn up to £1,500
of seed funding into £10,000 or
more for the charity. Through a
series of events and fundraisers,
the inspirational teams raised an
incredible £30,504; Winning the
award of ‘Dream Team’, as well as
an ‘Outstanding Individual’ award
for one of our team members at
a prestigious awards ceremony
in London, our contribution was
included in the staggering £1.75
million raised through the year
for The Prince’s Trust.
$37,811
raised by Wood graduates
John Wood Group PLC
Annual Report and Accounts 2022
68
Sustainability
continued
Summer interns lead plastic
pick up
As part of Wood’s 10-year partnership
with social mobility charity, Career
Ready, four school pupils joined our team
in Aberdeen for four weeks to experience
life at Wood. During their internship, the
interns gained the opportunity to lead a
Plastic Free July initiative to collect litter
near our Sir Ian Wood House of
fice in
Aberdeen, UK.
Joined by local leadership, and some
willing volunteers from the of
fice, the
group cleared an area previously full of
rubbish. In addition to volunteering their
time, the interns interviewed leadership
on the day to gain their thoughts on
plastic waste and what sustainability
means to them.
Volunteering
Giving our time to supporting
community causes, our people
continue to demonstrate a passion
for volunteering and showing up in our
communities. After the impacts of the
pandemic, the opportunity to return
to in-person volunteering has enabled
employees to reconnect with each other
and our shared communities whilst
tackling a wide range of social and
environmental issues.
13,472
hours volunteered by our employees in 2022
Watch their short video:
woodplc.com/pickup
Giving girls access to
education in Iraq
Every child has the right to education
but sadly that is not always the case,
with political and social unrest in many
of the regions Wood operates. In many
countries, it is not unusual for girls to
be taken out of school early and to not
be aware of potential education or
career opportunities.
Supporting a local school for girls in
Iraq, through our #keepinggirlsinschool
initiative, our local Wood Iraqi female
engineers and P&O staff have volunteered
to support and educate these young girls
to look at their futures differently and
the opportunities available to them. This
is not only a cultural dilemma but one of
understanding and financial constraints
for many families.
Impacted by the pandemic over the last
two years, in 2022 the team resumed
school visits and in addition to their
volunteered time, also donated 39 laptops
as part of funding provided by Wood’s
annual global cause challenge. Wood’s
donation seeks to enable teachers to
better deliver lessons, as well as deliver
virtual opportunities for Team Wood to
more regularly connect with the school
between physical visits.
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Annual Report and Accounts 2022
69
Governance
Financial statements
Wood is committed to undertaking
an annual review of its E&C policies
and procedures to ensure they remain
effective, considering: (i) changes in
laws, regulations and guidance from
regulators; (ii) changes in Wood’s risk
exposure; and (iii) lessons learnt from
investigations or assurance activities.
Compliance with the Code and supporting
policies and procedures is mandatory
for all directors, of
ficers 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.
In recognition of the power of a
combined Legal and Ethics & Compliance
function, the two were merged into
a new function called Legal, Ethics
and Compliance (LEC). Previously
reporting to the Executive President –
Health, Safety, Security, Environment
& Sustainability (HSSES), the Chief
Ethics & Compliance Of
ficer now reports
to the General Counsel and Company
Secretary. As a part of LEC, E&C
continues to prioritise strengthening
governance and carrying out key
priorities. Our key areas of focus in 2022
consisted of:
1. ABAC programme
2. Trade Compliance
3. Data protection programme
4. Improving training and communications
Our Code of Conduct is available at:
woodplc.com/ethics
Our commitment to sustaining
a visible, continually improving
ethical culture remained
strong throughout 2022.
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 re
flect
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. In August 2022,
the Board of Directors approved an
updated version of the Code, which
includes new leadership introductions
from Roy Franklin, Chair of the Board,
Ken Gilmartin, Chief Executive Of
ficer
and Martin McIntyre, General Counsel
and Company Secretary.
The Code of Conduct 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
• Conflicts o
f Interest (COI)
• Data Protection, including
Breach Response
• Ethics Investigations
• Ethics Reporting and Anti-Retaliation
• Gifts and Hospitality (G&H)
• Sanctions, Export Controls and
Anti-Boycotts
Anti-Bribery and Anti-
Corruption programme
Wood continued to operate under
the three-year deferred prosecutions
agreements with the Serious Fraud Of
fice
(SFO) in the UK and the Department of
Justice (DOJ), and the 18-month leniency
agreements with the Ministério Público
Federal (MPF), the Comptroller General’s
Of
fice (CGU) and the Solicitor General
(AGU) in Brazil.
Wood met its first reporting obligations
to the SFO and DOJ in June 2022, as
well as the interim and final reporting
requirements to the CGU. Subject to
formal acceptance by the CGU, Wood has
complied with the commitments required
by the Brazil leniency agreements.
Wood’s Anti-Bribery and Anti-Corruption
Programme (the “ABAC Programme”)
remains the vehicle by which we will meet
our commitments under the deferred
prosecution agreements. The ABAC
Programme has: (i) a clear purpose and
strategic goals; (ii) defined workstreams
aligned to the ABAC Programme
strategic goals; and (iii) appropriate
governance to ensure the necessary
visibility/support at leadership level and
resourcing across other functions and
business units. In recognition of the
importance of the ABAC Programme to
its Inspired Culture, Wood has committed
to increasing its ABAC maturity from a 3
(Defined) to a 4 (Advanced) by the end
of 2025, with an increase in maturity to
3.3 by the end of 2023.
To that end, in 2022, we developed an
E&C Blueprint articulating E&C’s purpose
and providing a corporate vision of the
culture the Company strives to foster.
We also dedicated significant resources
to due diligence and mitigating third
party risk, as further described below.
Third parties
Consistent with efforts over the past
several 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 Commercial
Intermediaries Policy was updated in
2022 and implemented through live
trainings and communications. Increased
governance and assurance continued
throughout 2022.
Our Supply Chain Code of Conduct
is available at:
woodplc.com/scm
Ethics & Compliance
John Wood Group PLC
Annual Report and Accounts 2022
70
Sustainability
continued
Management of other third party risk,
and in particular joint venture risk, is
a key focus of the ABAC Programme,
and significant progress has been made
in this area in 2022. A Joint Venture
Review Panel, including representatives
from Legal, E&C and Commercial, was
established to review incorporated
JV partners, agree the risk rating for
each JV partner and mandate action
as necessary to manage E&C risk
(which may include a recommendation
for termination of the relationship).
Additionally, for onboarding new
suppliers other than CIs, Wood has
developed an ABAC risk assessment
and due diligence process. Given Wood’s
wide geographic footprint, as well as
the variety of client types and services
offered, improvement of processes to
mitigate risks associated with clients and
projects remained in the inception phase
in 2022. This will continue to be an area
of focus over the next two years.
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 Of
ficer meets
regularly with the CEO and the Audit, Risk
& Ethics Committee (AREC) to provide
updates on the status of the programme.
Wood has designated key leaders as
Ethics Responsible Of
ficers (ROs) to
promote the Code and related ethics
and compliance policies and procedures,
as well as to support E&C initiatives. In
addition to attending the Business Ethics
Forum, throughout 2022 ROs supported:
the ABAC Programme working group
and provided steering committee
business representation; the remediation
programme in Brazil under the leniency
agreements with Brazilian agencies; the
Joint Venture Governance Programme;
E&C in building relationships within their
respective businesses; investigations;
and the use of Ethics Moments in team
meetings. Also, ROs provided feedback to
E&C on policy and processes and ensured
completion within their teams
of mandatory E&C training.
Wood strives to gauge ethical culture
by partnering with a third-party to
conduct an annual anonymous survey
of employees in speci
fic geographic
regions. In 2022, the survey was
distributed to over 5,500 employees in
the United States and Canada. E&C
shares high-level results with leadership
to help improve the culture and direct
future training, engagement and
communication efforts.
Ethics & Compliance training
and communications
Training has always been a key element
in promoting Wood’s culture and
ensuring employees understand how
to Do the Right Thing. Wood drives
Company values through a multi-layered
risk-based ethics and compliance
training and communications plan that
promotes accountability, leadership,
honesty and integrity in support of
creating sustainable growth and value.
To maximise effectiveness, Wood
develops its ethics and compliance
training and communications plan on
an annual basis. The plan incorporates
a variety of modalities, including live
webinars, computer-based training
and microlearning videos, as well as
communication channels, such as email
newsletters, internal social media and
a dedicated intranet page regularly
refreshed with updated resources. The
plan is reviewed by E&C leadership on
a monthly basis for accountability and
adaptability to shift priorities with
internal and external circumstances.
In 2022, mandatory computer-based
training on anti-bribery and anti-corruption
was assigned to nearly 400 individuals
in high-risk roles in countries with a
Transparency International Corruption
Perceptions Index of 40 or below. The
training module was customised with a
short video introduction from the Chief
Ethics and Compliance Of
ficer and real-
life Wood scenarios, making the content
more relatable to Wood employees. One
hundred percent completion was attained.
During the training period, leaders in
these high-risk countries were required to
deliver ABAC-related Ethics Moments to
their site-based employees, enabling key
ethics and compliance messages to reach
an additional 4,000 employees.
Managing cases
Wood values a culture of openness and
accountability where employees and
third-party business partners Speak Up
to seek guidance on ethical or compliance
issues and to report any known or
suspected unethical, illegal or suspicious
activity or concerns that the Code of
Conduct is not being followed.
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Governance
Financial statements
We encourage employees to use their
line manager as a first point o
f contact
to report concerns, with additional
“Speak Up” resources available, including
another manager, P&O 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, AREC
is provided a summary of the use of E&C
Speak Up resources, as well as an update
on initiatives to further promote the
“Speak Up” culture.
During 2022, E&C received a total of 136
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 24 allegations
that were substantiated after review
or investigation, two terminations of
employment for serious violations of
Company policy resulted.
Trade compliance
The Trade Compliance Counsel has
throughout the year advised the business
on an unprecedented array of sanctions
against Russia, many of which have
directly targeted Wood’s clients and
market sectors, often with little or no
notice. Working closely with Commercial
we have overseen the winding-up of all
40 of Wood’s contracts for work in Russia
– all achieved without infringing sanctions
and without provoking a single dispute.
A sanctions risk assessment performed
by a leading law firm has
found that
Wood’s risk profile is moderate and that
Wood has a good sanctions compliance
programme for dealing with the risks
faced. The report’s recommendations
will inform our sanctions improvement
programme for 2023-24.
Data privacy and protection
The data privacy team continued to
drive improvements in how Wood
manages personal data through the
data privacy and protection programme,
covering new law implementations,
training and communication campaigns,
incident response improvements and
project support.
Areas of focus included: engaging
with the business on compliance
with new data privacy laws in Saudi
Arabia, the United Arab Emirates, New
York, Thailand and Ontario, Canada;
and providing support on the use
of personal data in key large-scale
Company initiatives including the global
implementation of Oracle People and the
Compliance Excellence Partnership with
Ernst and Young LLP.
New policies and procedures have
also been developed, including the
Monitoring Standard, the Data Retention
Standard in collaboration with the
Data Governance Committee and
the Supplier Contracts Data Privacy
Of
fboarding procedure, in addition to
updates to existing privacy policies.
Privacy will continue to collaborate
with the Data Governance Committee
on data classification, retention and
storage within Wood to improve privacy
compliance and drive cost savings in use
of IT infrastructure.
Communications and training continue
to be important tools to achieve a
culture of privacy awareness and drive
appropriate behaviours within Wood. In
addition to its regular Focusfor15 training
sessions, the Privacy team developed and
delivered a number of speci
fic training
modules, including in collaboration with
Information Security, ran various data
protection campaigns, and continued
to engage over the Wood Yammer
network on privacy issues. This included
the notable success of a Yammer post
on data security with over 21,000 views,
demonstrating the reach of the Privacy
team into the organisation.
Wood uses One Trust for all vendor
assessments, records of processing
and data privacy impact assessments,
acting as Wood’s source of information
on personal data use globally. Privacy
continues to engage with the business
and functions to improve user
experience of One Trust assessments.
The appointment of a One Trust
system Privacy Lead has resulted in
the identification o
f ef
ficiencies and
improvements in our procedures.
Ernst and Young LLP conducted an
audit of the privacy programme over
Q3 and Q4 of 2022. The objective of
the audit was to assess the design
and effectiveness of Wood’s privacy
programme and supporting governance
framework in addressing key privacy
risks. The result of the audit was positive,
finding robust governance and processes
and commending Privacy’s use of
automation to create a streamlined and
ef
ficient impact assessment process.
The finding was ‘Some improvement
needed’, guiding the next steps in the
programme’s maturity, specifically (a)
the introduction of risk categorisation
of vendors with ongoing monitoring
of high-risk vendor’s compliance with
data protection obligations; (b) the
creation of a risk matrix to identify the
severity of data privacy incidents; and
(c) the introduction of a management
escalation process for non-compliance
with Wood’s mandatory data
privacy training, an important step in
demonstrating Wood’s commitment to
Data Protection. Privacy have developed
an action plan to work together with
IDT, Supply Chain and P&O to drive
improvements in these areas under our
programme maturity plan for 2023-24.
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 remained at a consistent level from
the previous year and they have been
handled in compliance with legislation.
John Wood Group PLC
Annual Report and Accounts 2022
72
Sustainability
continued
The fourth industrial
revolution (Industry 4.0) is
changing the way we live
and work and how we think
about planning and delivering
projects for clients.
Wood is a partner of choice for clients
on digital transformation projects. Our
solutions are underpinned by our domain
knowledge and leading industrial talent.
They span a range of areas including
automation and system integration,
digital twin, asset and integrity
management, optimising process design
and flow assurance, and so
ftware that
helps to support decarbonisation goals.
As the global population grows, so too does
the demand for key chemicals that are central
to many sectors including energy, transport
and agriculture.
Meeting rising demand is an imperative for the world but
these products must also be delivered in the most sustainable
means possible. At Wood, we are the market leader when it
comes to the design and delivery of integrated re
fining and
petrochemicals facilities.
A great example of our expertise in this space is our work
with INEOS where we were appointed on a four-year, $100m
reimbursable contract to deliver engineering, procurement,
and construction management (EPCm) services for Project One,
a new state-of-the-art petrochemicals complex in Belgium.
The project represents the next era of ethylene production,
a key component in most plastics. Through the combination
of technology and an innovative technical design, it will be the
most sustainable and energy-ef
ficient steam cracker in Europe.
Our scope is focused on the outside battery limit facilities for
the ethane cracker and follows the successful completion of
front-end engineering design for the facility.
Meeting
global demand
for chemicals
A great example of our digital
capabilities includes our work with bp
to reduce the maintenance backlog
across their North Sea assets. Through
advanced data analytics, we were able
to reduce backlog by 30,000 hours,
lowering the volume of mobilisations by
50%, reducing risk and creating value for
the client by freeing up people and cash.
Similarly, in the US, where methane-
linked penalties will be introduced
from 2024, there is a critical need
for accurate detection, analysis and
correction of asset leaks. We have
market-leading methane detection and
analysis technology and are currently
using it with our Hibernia client on their
operational assets.
30,000
hours backlog reduction
50%
lower volume of mobilisations
Creating value through
digital solutions
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
73
Governance
Financial statements
Health and safety
Our HSSES function continued to
manage the global pandemic during
2022 while maintaining a strong focus
on the key aspects of our health and
safety programme.
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 when
appropriate to do so.
Health, safety & security
Protecting people is our priority at Wood. Ensuring the health, safety and wellbeing of
our teams is vital and we are committed to our values which are the foundation of our
beliefs and the basis for our decision making. Our Health, Safety, Security, Environment &
Sustainability (HSSES) strategy is designed to help us on our journey towards excellence.
We plan for success, through understanding and managing our risks, continuous inspiring
leadership who engage with our teams and the systematic implementation of effective
HSSES systems and practices.
John Wood Group PLC
Annual Report and Accounts 2022
74
Sustainability
continued
Transitioning through
the Covid-19 pandemic
Despite an ever-evolving landscape in
relation to Covid-19 in 2022, our key
priority has remained the health, safety
and wellbeing of our employees. During
Q1 2022, the omicron variant had a
significant impact on Wood. Covid-19
related absences reached an all-time
high as a consequence of signi
ficant
community transmission across our
global footprint. However, the business
continued to adapt and follow the
best available advice ensuring that
appropriate measures were taken in our
of
fices and in the field environments.
Ongoing support and guidance to
employees focused on safety, health,
hygiene, homeworking and mental health
support during this time.
Measures implemented to protect
and support the workforce continued
to be regularly reviewed and updated
throughout the year in compliance with
changing local and national guidelines
and regulations as Wood increasingly
transitioned to working within the
of
fice environment again as conditions
continued to improve, evolve and change.
The Executive Leadership Team and
Board have received regular updates
on the global situation as well as the
progressive return to work measures.
Local of
fice teams have been set up to
support and engage with employees as
they have transitioned to this different
working environment. A key feature of
2022 has been reinvention of workspaces
to restore a sense of community as
well as allow more collaboration in
recognition of the impact that working
at home has had on employee mental
health. Using these spaces to support
local wellbeing initiatives such as ‘lunch
and learn’ sessions on a range of topics
has also encouraged the return to the
of
fice and helped minimise the risk
of isolation particularly felt by home
workers and recognised as a risk to
Wood’s workforce.
Throughout 2022 Wood has continued
to offer employees access to a range of
mental health support services. This has
included our global Employee Assistance
Programme whose usage has been
extended to family members. Our library
of self-help resources has also continued
to be expanded throughout the year.
In addition, a global wellbeing network
including the “We Care” group has been
created as a means of allowing colleagues
to interact and engage more easily.
The results of Peakon surveys
completed in 2021 were a significant
factor in ensuring the work design
factors identi
fied that impacted on
mental health and wellbeing were
suitably addressed in these documents.
In response, Wood has also started
providing awareness, prevention
and support training sessions to
line managers via e-learning and
live webinars.
Recruitment of additional Wellbeing
Champions within the business
continued in 2022 reaching a total of
327 across the globe. 2022 saw Wood
start to collaborate with other industry
organisations in support of mental
health with the CEO speaking at the
World’s Biggest Mental Health Check In.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
75
Governance
Financial statements
Sustainability
continued
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 three focus areas of our 2022
improvement plan were:
These focus areas are underpinned by
a yearly plan of actions aligned to our
global safety targets. Our improvement
plan focused on:
• The introduction and development of
a leadership masterclass programme
that encourages a culture of change;
one where leaders make conscious
choices to go above and beyond to
improve safety within Wood. The
leadership masterclass provides
executive leadership with a set of tools
to ensure a visible difference at site
level. Of signi
ficant
focus is the sharing
of lived experiences from past incidents.
• The Management System
Revitalisation (MSR) Project concluded,
releasing 145 enterprise Standards,
Procedures, Guidance documents and
Forms to the business. As the MSR
has been finalised,
focus has shifted to
the Embedment Project whereby the
business is utilising the digitised gap
analysis tool to conduct a full audit
of local management systems and
ensure consistency with the enterprise
management system.
• Digitalisation is a key enabler to
support Wood in being better at
predicting our project risk profile. Our
goal is to use technical solutions to
connect and leverage data enabling
our people to make smart safety a
reality. To achieve this, we invested in
modification o
f existing software and
systems and the development of new
industry leading tools. We continually
improve or replace many of our manual
activities with smart automation
and digitally connected solutions.
Work over 2022 resulted in a Wood
developed mobile application, available
for both iOS and Android.
• Immersing our Professional
Services Team (PST) model.
By implementing a shared services
model within the HSSES function
in 2021, the PST has supported our
stakeholders by delivering consistently
exceptional services.
Leadership Reset
• Realigning and reconnecting across
the business to signal change and to
build a trusted partner relationship
between the function and the
operational teams
Frontline Connection
• Setting up teams for successful
and safe outcomes and creating
active participation to ensure
resilient operations
Functional Support
• Providing high-quality
professional support to ensure
that Wood can deliver world-class
safety performance
John Wood Group PLC
Annual Report and Accounts 2022
76
Health and safety performance
We established both leading and
lagging safety targets at the
beginning of the year, aligned to our
2022 improvement plan:
• Zero Serious Injury & Fatality (SIF)
Actual Injury Incidents – incidents that
result in fatality, life threatening or life
altering injury or illness
• 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 115 recordable incidents across the
business. This represents a 6% reduction
in the number of injuries compared with
2021, which results in our 2022 TRIR
performance marginally improving to
0.17, compared to 0.18 in 2021.
The most common cause of injury (18%)
was contact with tools, equipment or
machinery, closely followed by slips, trips
and falls (17%).
Lost time incidence rate (LTIR)
Performance is based on a rolling
12-month incident rate and includes
contractors working under Wood’s
management system. In total there
were 18 lost time incident cases across
the business. This represents three more
injuries than the previous year. As a
result, our LTIR marginally increased to
0.03, from 0.02.
The most common work activity
undertaken at the time an LTI occurred
was maintenance, production operations
and using tools/operating equipment
and machinery. Similarly, to the collective
recordable incidents, risk management
issues were the most common root cause,
with inadequate hazard identification
and inadequate identification o
f controls
featuring most often. All LTI incidents
were investigated, and corrective and
preventative action plans established to
prevent reoccurrence.
SIF Incidents
Two incidents classified as SIF Actual
were recorded in 2022 resulting in
significant injury. The first occurred in our
Operations Americas business when an
operator was struck in the abdomen by a
thermowell fitting he was tightening. The
second occurred in our Projects business
in the United Kingdom, where a linesman
fell from height.
In 2023 Wood will formally roll out to
the business our new reporting metric,
Fatality and Permanent Impairment
(FPI), known previously as SIF, which is
being implemented in line with many
of our clients and contractors. The
International Association of Oil & Gas
Producers (IOGP) has set a course for
our industry to focus on preventing
life changing injuries and fatalities.
Identifying, investigating and analysing
FPI incidents demonstrates Wood’s
commitment to its values and reduces
the direct and indirect impact of these
types of incidents. It allows a deeper
dive into the causes to enable a better
understanding of what is required to
prevent reoccurrence.
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
Leadership engagements
2022
Target
Achieved
No. of leadership
engagements
2,589
3,289
The pandemic continued to impact our
leaders’ ability to undertake physical site
visits, particularly in the first part o
f the
year, however engagements continued
to be made utilising remote solutions
where necessary. The commitment from
our leaders resulted in the number of
engagements achieved exceeding those
planned for the year.
Our focus on meaningful engagement
with our workforce has continued
throughout 2022 to identify opportunities
to ensure an incident free environment
for Wood employees and contractors.
HEART
Our behaviour-based safety observation
programme HEART (Harm Elimination
and Recognition Tracker) system is well
established and enables our teams,
partners, clients and contractors
to proactively identify hazards and
effectively intervene when they
consider safety is being compromised.
The programme also encourages the
recognition of safe behaviours in an
effort to foster safe working practices.
HEART helps us engage our co-workers
at the of
fice, at the worksite and at
home to improve our safety standards.
To maximise engagement and make
HEART submissions easily recorded, there
are several methods our people can use
to submit their observations; via the
desktop system, by using a QR code or
by using the ShieldEd Mobile Application.
84,308 HEART observations were made
and recorded in 2022.
2021
0.17
2022
0.03
2022
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
77
Governance
Financial statements
Sustainability
continued
Focus on Security
Wood operates in a number of countries
with complex or challenging security
risk environments. Group Security have
a focus on improving the Company’s
resilience. They are responsible for
providing forward looking strategic risk
advice to leadership teams, the security
risk mitigation requirements for activities
where crime, terrorism or political
instability are a concern, as well as the
governance of the crisis, emergency
and business continuity management
framework. The team’s overarching
and unifying aim is to enable the
business to safely win and deliver work
all over the world.
With Wood’s crisis and incident
management teams having been
convened throughout the pandemic a
great number of lessons were learned
at each level. 2022 saw the function
focus on aiding the level beneath to
develop its emergency management
and business continuity capabilities. This
included follow-up to the 2021 release of
the Emergency Management Standard,
workshops on completing emergency
management plans and business
continuity plans, and desktop exercises
in a selection of geographies identi
fied
as more likely to experience events that
might warrant the enaction of such plans.
With travel restrictions easing, the team
was able to recommence visits to projects
and of
fices in less secure environments
around the world. Regional Security
Managers travelled to various locations
within their respective domains, including
Columbia, Iraq, Kazakhstan, Mexico,
Mozambique, Papua New Guinea, South
Africa and Trinidad & Tobago. There they
advised project managers on operational
security arrangements, changes to
security environments around our
projects, delivered briefings to sta
ff and
liaised with local leadership and business
development teams about upcoming bids.
The function continues to provide a
geopolitical advisory capacity across the
business, with all team members able to
provide guidance on global events and
their anticipated ramifications
for Wood
regionally and locally.
Look forward
2023 will see the function reorient to
align with the Company’s refreshed,
three-pillar strategy. Group Security will
support the drive for an inspired culture
through highlighting the considerable
care and attention that the Company
devotes to ensuring its employees’ and
contractors’ safety, not least through the
work of functions such as Group Security.
The function will support the focus on
performance excellence not only through
the delivery of its own highly specialised
capabilities, but also through continually
working to digitalise, simplify and re
fine
processes and systems to reduce the
burden of compliance on the businesses
that we support. Lastly, the team
will pursue the objective of pro
fitable
growth not only by continuing to enable
the business to win and deliver projects
wherever clients require, but also by
protecting margins through identifying
security costs at bid stage and ensuring
they are included in bids and fostering
competition amongst security services
providers so as to achieve cost reductions
where possible.
John Wood Group PLC
Annual Report and Accounts 2022
78
An outstanding
safety performance
An absolute commitment to
protecting the safety and
wellbeing of our people is
at the heart of the inspired
culture at Wood.
Our safety performance is strong, but
our work here never stops. We retain
our focus on reducing total recordable
incidents and on supporting the mental
health and wellbeing of colleagues
across the globe.
This commitment to safety is evident in
the work we are delivering for clients.
A great example is the team in Kuala
Lumpur, Malaysia working with Hess on
their Central Processing Platform (CPP).
The team recently achieved a remarkable
milestone of
five years without Lost Time
Injury (LTI).
The team has been supporting Hess’
new-build fixed and floating o
ffshore
facilities in the North Malay Basin
development area located approximately
150km northeast of Peninsular Malaysia.
The contract is being delivered by 150
full-time Wood employees based both
offshore and onshore across the Wood
and Hess of
fices in Kuala Lumpur.
Consistently excellent performance on
the contract has also led to a renewal of
our scope and opportunities to expand
our remit into design and build work.
Wood and Hess have a 15-year global
relationship and have worked together in
Asia-Pacific, A
frica and North America.
150
full-time employees
15-year
client relationship
5 years
without Lost Time Injury (LTI)
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
79
Governance
Financial statements
Risk management
Risk management is an integral part
of sound management practice and an
essential element of good corporate
governance. It improves decision making,
enhances strategic outcomes and
accountability whilst promoting a risk
aware culture within Wood.
The Board are 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
processes that management follows
The Board is assisted in this assessment
by the Audit, Risk and Ethics (ARE)
Committee (formerly known as the
Audit Committee) and the Safety
and Sustainability (S&S) Committee
(formerly known as the Safety,
Sustainability, Assurance and Business
Ethics Committee), who are delegated
responsibility for various aspects of risk,
internal control, and assurance.
Group risk management
framework
The Wood risk management framework
is designed to comply with the UK
Corporate Governance Code and align
with ISO 31000 principles.
The Group 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
A bottom up and top down approach
is followed to facilitate the risk
management process within the
organisation as laid out in the Group risk
management framework. Risk registers
are developed at an individual contract or
project level and captured in our project
risk management system (ProRisk).
These risks are then escalated into the
business grouping (BG) and captured
into the corporate risk management
system (BRisk) and rolled up into
business unit (BU) risk registers, which
are reviewed respectively by the BG and
BU Leadership Teams every quarter.
The BU risk registers are subsequently
reviewed as part of the BU Quarterly
Business Reviews which are chaired by
the CEO with attendance by the CFO,
the other members of the ELT and the
respective BU Leadership team members.
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 three times during the year
by the Group Risk Committee (GRC),
which is attended by the CEO, CFO,
and all other members of the Executive
Leadership Team (ELT) to ensure that
the material risks for the Group are
appropriately measured and managed.
The GRC is facilitated by the President
Group Audit & Risk and the Group
Risk VP. The overall focus of the GRC
meetings is to ensure that the principal
risks for Wood are identi
fied, agreed,
measured, and effectively controlled,
while monitoring emerging risks.
After the GRC meetings, the summary
of principal risks is formally reviewed and
challenged by the Board twice a year.
During 2022, our corporate risk
management system (BRisk) and project
risk management system (ProRisk) were
further developed and upgraded to
enhance governance and oversight of the
control environment for the principal risks.
The principal risks identified that
face the Group are set out in this section. During the year
the Board has carried out a robust assessment of these principal risks as well as emerging
risks and has monitored the Group’s risk management and internal control systems.
Principal risks and uncertainties
Contract/
project
Monthly project
governance risk
review
Business
groupings
Quarterly risk
review
Business units
Quarterly
risk review
Quarterly
business review
Quarterly BU
risk review
Risk Escalation
Group Risk
Committee
Biannual Group
risk & principal
risk review
Board
Biannual
principal risk
review
Group risk framework
Managing our risks
John Wood Group PLC
Annual Report and Accounts 2022
80
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, legal, ethics &
compliance, commercial, finance, tax &
treasury, IT, group audit & risk, 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.
Changes to the
principal risks in 2022
The impact of the Covid-19 pandemic on
our business reduced in the past year as
vaccines were rolled-out globally while
Wood, our clients and our supply chain
found new ways of working with this risk.
The risk of some level of disruption from
Covid-19 remains, which could disrupt
our workforce in speci
fic locations or our
global supply chain. At the 2022 half-
year, the GRC and the Board concurred
that the “Enduring impact of COVID-19”
was no longer a principal risk for Wood
but categorised as a business risk and
managed at the BU level.
Following a strategic review initiated in
2021, a sale process was commenced
for the Built Environment Consulting
business. The risks associated with the
sale and the post-sale impact on the
Group were assessed via a designated
working group, and the disposal was not
considered to be a standalone principal
risk for Wood.
Typically, the GRC would meet twice
during the year, but due to the sale of the
Built Environment Consulting business
and the new strategy due to be launched
at the Capital Markets Day, an extra GRC
was convened in September to discuss
the resultant changes to the risk profile.
On the completion of the sale of the
Built Environment Consulting business,
the Group’s leverage was significantly
reduced with the proceeds. As such,
the principal risk titled “Leverage
position” was closed out. The principal
risk was reassessed and articulated as
“Sustainable cash generation” as shown
in the principal risks table.
With the new strategy having been
launched through to 2025, the “Strategic
agility” risk was also modified to
“Strategic delivery” and this risk is now
centred around delivery of the strategy
through 2025.
ESG and sustainability
ESG and sustainability are transversal
risks that can be found across our
business, and over the last year, Wood’s
response to climate change obligations
and ESG matters has developed and
matured by aligning to the Company’s
revised strategy and the management
of ESG risk.
All ESG risks are maintained within
our corporate risk management system
and map back to our principal risk
of “ESG strategy and performance”
to ensure adequate oversight and
governance in identifying, managing,
and reporting such risks, mitigations,
and control effectiveness.
Climate change
During the GRC and Board risk sessions
in 2022, the various aspects of climate
change risk for Wood were reviewed as
an integral part of our risk management
framework. From 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 delivery” principal
risk. Certain aspects also impact “ESG
strategy and performance”.
At a more detailed level, climate change
risk will include localised events such as
abnormal temperatures and weather,
and will be reflected 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 climate change
related risks at the GRC, S&S Committee
and the Board ensures the content
of the related principal risks remains
focused on our perception of climate
change risk on the business. The Group
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.
Emerging risks
Wood’s risk management framework
includes a focus on identifying and
assessing potential emerging risks.
Emerging risks are identified throughout
the year via the BG, BU and functional
risk processes, 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 identified by Wood’s peer
group which helps to inform the mid-year
Board discussion on risk. At the half-year
and at the year-end, a series of interviews
were carried out by the President – Group
Audit & Risk and the Group Risk VP with
each of the non-executive directors
to understand their perception of the
principal and emerging risks. The outputs
of these interviews were then fed into
the half-year and year-end GRC and the
Board risk sessions.
Russia’s invasion of Ukraine was
identified and escalated in early March
2022 to the Board risk session. In
concurrence, a working group had been
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 Russia. Despite the withdrawal from
operations and the business impact from
sanctions and export control, there were
no concerns of material impact on Wood,
and therefore this was not considered to
be a principal risk.
We continue to monitor the impact
of in
flation to ensure that we can
proactively manage our operational
costs, margin and forecasts. This
emerging risk continues to have focused
attention from the ELT and Board but
is not considered to be a standalone
principal risk. Aspects of the risk are
considered under the “Contracting” and
“Project execution” principal risks.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
81
Governance
Financial statements
Principal risks and uncertainties
continued
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 independent assurance activity carried
out, and management’s assessment
of the effectiveness of the controls.
As part of this monitoring, the Board
ensures that corrective action is taken
where necessary.
To ensure that responsibilities for risk and
assurance are clear with the committee
structure, each principal risk and area
of risk is assigned to either the Board or
one of the Board committees. This was
revisited during the second quarter with
a meeting between relevant members
of the ELT, the President Group Audit
& Risk, and the Chair of the Board. The
revised Board committee structure
was put in place for the August Board
meeting along with revised Committee
charters. These responsibilities are
reflected in the principal risk table.
Accountability for managing risk is
embedded into our business as described
under the Group risk management
framework section. Each BU, BG,
and function has responsibility for
undertaking regular risk assessments,
monitoring risk, and requires senior
management to attest the control
effectiveness of their risks as part of
their ongoing accountabilities.
The Board’s assessment of the internal
control environment, as informed by
Group Audit & Risk, is effective, with
some areas where improvement is
needed. Particular area of focus are
smaller businesses which have not yet
been integrated to the Group’s common
ERP system and shared services model.
An improving and maturing control
environment for entities hosted in
the common ERP environment and
supported by the shared service centres
was noted in 2022.
Risk appetite
The Group’s risk appetite is defined
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 considered 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
fixed 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. This
process is being modified to reflect the
change to the Group’s risk appetite
with regard to lump sum turnkey and
large scale EPC projects. The process
for ongoing monitoring of
fixed price
and high-risk contracts continues to
include quarterly BU project governance
meetings attended by the CEO, CFO
and the BU Executive Presidents.
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 financial statements (the going
concern period), which includes financial
forecasts up to the end of 2024 to re
flect
severe, but plausible downside scenarios.
The directors have considered as part of
this assessment the impact of the events
that happened post balance sheet date
and up to the date of issue of these
financial statements.
The Built Environment Consulting
business disposal was completed in
September, leading to the receipt of
gross proceeds of $1,805.3m and has
led to a significant reduction in net debt
(excluding leases) to $393.2m at 31
December 2022 compared with $1,393m
at 31 December 2021. The proceeds have
principally been used to pay down the
Group’s debt facilities including a $400m
repayment of the $600m term loan and
$416.3m repayment of the US private
placement loan notes.
In order to satisfy themselves that they
have adequate resources for the going
concern assessment period, the directors
have reviewed the Group’s existing
debt levels, the forecast compliance
with debt covenants, and the Group’s
ability to generate cash from trading
activities. As of 31 December 2022, the
Group’s principal debt facilities comprise
a $1,200.0m revolving credit facility
maturing in October 2026; a $200.0m
term loan maturing in July 2026 and
$352.0m of US private placement debt
repayable in various tranches between
July 2024 and July 2031, with around
75% due in 2025 or later. At 31 December
2022, the Group had headroom of
$1,157.9m under its principal debt
facilities and a further $109.7m of other
undrawn borrowing facilities, and the
Group expect to have suf
ficient levels
of headroom in the severe but plausible
downside scenario modelled.
At 31 December 2022, the Group had
net current liabilities of $235.0m (2021:
$367.9 million).
Details of the status of internal controls
are included in the Audit, Risk & Ethics
Committee report on pages 118 to 121.
John Wood Group PLC
Annual Report and Accounts 2022
82
The directors have considered a range
of scenarios on the Group’s future
financial per
formance and cash
flows.
These scenarios reflect our outlook
for
the broad range of end markets that the
Group operates in, whilst also considering
the order book visibility and the restored
financial strength o
f the Group’s balance
sheet. The Group anticipates growth
in priority markets and geographies
including conventional energy, which
the directors have increased confidence
in due to the current market focus on
energy security. In addition, the process
and chemicals business has strong
growth drivers including decarbonisation
of facilities and population growth,
which facilitates increased demand for
chemicals products. The order book as
at December 2022 includes a high level
of revenue coverage for 2023 which is
also improved from prior years and in
conjunction with the strong market
drivers described above, gives the
directors improved confidence in the
underlying forecasts.
The directors have also considered severe,
but plausible downside scenarios which
reflect
further material reductions in
revenue of between 5% and 10% and
a 1% reduction in gross margin 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 which
could lead to deferrals or cancellations
of contracts by our clients. In each of
the scenarios modelled, the financial
covenants were passed with significant
facility headroom remaining available.
In the going concern forecast period, for
the June 2023 covenants, due to higher
interest rates and elevated levels of net
debt, in the 12 months prior, the interest
cover ratio reduced, but the covenants
are forecast to pass after adjusting
for the non-recurring interest which
arose on facilities repaid and cancelled
during 2022. These repayments were
made subsequent to the disposal of the
Built Environment Consulting business.
In addition, the directors considered
the impact of the removal of the
receivables financing
facility (which is
not committed) of $200m and adverse
movements in working capital as further
sensitivities. The Group still had suf
ficient
headroom to meet its liabilities as they
fall due with these additional sensitivities.
Consequently, the directors are confident
that the Group and company will have
suf
ficient
funds to continue to meet their
liabilities as they fall due for at least 12
months from the date of approval of the
financial statements and there
fore have
prepared the financial 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 2025
and modelled the impacts of the risks over
a five-year period to 31 December 2027.
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 2022, the Group’s
principal debt facilities comprise a
$1,200m revolving credit facility maturing
in October 2026, a $200.0m term loan
maturing in July 2026 and $352m of US
private placement debt repayable in
various tranches between July 2024 and
July 2031, with over 70% due in 2026 or
later. These are set out in note 18 to the
Group financial statements.
The committed long-term financing
together with factors such as the
Group’s asset light and flexible 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 financial 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
page 84, 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 fines 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
flexibility o
f 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 including bonuses, capex reduction
or further disposals.
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 2025.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
83
Governance
Financial statements
Strategic
Strategic delivery
Risk profile
Our ESG strategy and performance does not effectively
address our environmental, social and governance
responsibilities, including in relation to climate change and
regulatory obligations, leading 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 oversight covering compliance with the key
components of ESG
• Monitoring of compliance and reporting in line with the
UK Corporate Governance Code, covering governance
responsibilities, with oversight provided by the Audit, Risk and
Ethics Committee and the Board
• Integrated ESG risk management with company risk
management framework
• Safety & Sustainability Committee includes oversight of
sustainability aspects with additional review by the full Board
on an annual basis with Sustainability targets sanctioned by
the Board
• Sustainability targets agreed with the Board; strategies and
strategic plans in place for target achievement
• BUs developing bespoke operations sustainability plans
supporting target achievements, for their operations
• Safety performance is a long-standing component of
bonus schemes
Risk profile
Challenges in generating positive sustainable free cash
flow
leads to inability to support future investment in the business
and to be an attractive proposition for shareholders and
debt providers.
On the completion of the sale of the Built Environment
Consulting business, the Group’s leverage was significantly
reduced with the proceeds. As such, the principal risk titled
“Leverage position” was closed out. The principal risk was
reassessed and articulated as “Sustainable cash generation”
Mitigation, monitoring and assurance
• Monthly BU and ELT reviews of debt and cash performance
and Board reviews against budget/forecast
• Short-term cash flow
forecasting tool fully rolled out across
the business with monthly reviews
• Weekly monitoring of Group net debt
• Designated process for governance of capital expenditure
• Established processes for monitoring of working capital
including new Quarterly Business Reviews where accounts
receivable and days sales outstanding are monitored
• Targeted improvement in day sales outstanding
• Credit policy in place with monthly reporting process
• Monthly monitoring and reporting of aged debt including
any unbilled amounts
• Management of cash out
flows
from non-trading
financial liabilities
Risk profile
Lack of ability to deliver on the new strategy by effectively
addressing the external and internal risks associated with the
strategic plan to 2025.
Mitigation, monitoring and assurance
• Strategic review of our portfolio identi
fied priority markets
with external consultants and internal experts to refine our
focus
• Strategic risks associated with the strategy analysed and
appropriate mitigation actions put in place
• New strategy rolled out to 400 of the company leaders
at leadership conference and communicated externally at
capital markets day with medium-term targets
• Company level metrics/targets were set and cascaded into
the BUs with execution plans to achieve the strategy
• Quarterly Business Review (QBR) process was implemented
across the ELT to measure progress both from a business and
functional perspective against the targets within the strategy.
Analysis of principal risks
ESG strategy & performance
Sustainable cash generation
Principal risks and uncertainties
continued
B
V
A
V
S
John Wood Group PLC
Annual Report and Accounts 2022
84
Board assessment of change in risk from 2021:
No change
Decrease
Increase
New
Risk profile
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 financial per
formance.
Mitigation, monitoring and assurance
• Contracting policy and associated approvals process
• Tender governance process including Tender Review
Committee
• Quarterly Business Reviews of BUs & Top 10 Projects,
chaired by the CEO and attended by the Group CFO and BU
Executive Presidents, including focus on lump sum contracts
• 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
Risk profile
Problems in attracting, engaging and retaining critical staff
could lead to insuf
ficient capability and leadership to meet
our strategic objectives, and not being seen as an employer of
choice.
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 2022
to assess progress against the employee engagement
framework with follow-up focus groups andaction plans
developed to address key themes
• Focus from ELT on addressing speci
fic retention challenges
Commercial and Operations
Risk profile
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
• 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
• Quarterly Business Reviews of BUs & Top 10 Projects,
chaired by the CEO and attended by the Group CFO and BU
Executive Presidents
• Operational Excellence functions in each of the BUs
supporting consistent project delivery through focus on
common operating model, standardised delivery applications
and project management academy
Contracting
Project execution
Failure to retain and attract critical staff
Responsibility:
S
Safety & Sustainability
N
Nomination
R
Remuneration
A
Audit, Risk & Ethics
B
Board
Considered as part of viability assessment
V
B
B
V
B
V
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
85
Governance
Financial statements
Risk profile
Impact on the confidentiality, 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 Of
ficer (CISO)
• Mature Information Security Management Framework that
combines technical and process controls with a group-wide
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, Risk & Ethics Committee and the Board with an annual
review by the Audit, Risk & Ethics Committee
Technology
Cyber security
Principal risks and uncertainties
continued
Risk profile
Significant HSSE event (including a pandemic) leading to a
major incident resulting in multiple loss of life, signi
ficant harm
(including financial), 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
• Bespoke HSSES management system elements through the
deployment of The Shield
• Quarterly Business Review of BUs, chaired by the CEO and
attended by the Group CFO and BU Executive Presidents.
• Professional Shared Services Hub to ensure 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 Audit & Risk team remit expanded to include Technical,
Quality and HSSES scopes and assurance against standards
• Regular review of safety performance by ELT, Safety and
Sustainability Committee and the Board
• Revised Business Continuity and Emergency Response Plans
• Wellbeing resources supporting our employees
Health, Safety, Security &
Environment (HSSE)
Major incident
A
V
S
V
John Wood Group PLC
Annual Report and Accounts 2022
86
Risk profile
Regulatory investigation or proceedings resulting from non-
compliance with applicable legislation, which could lead to
consequences including financial exposure, penalties and
reputational damage.
Mitigation, monitoring and assurance
• Suite of Wood policies that mandate compliance with
applicable laws and policies
• Dedicated Ethics Responsible Of
ficers 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 the Audit, Risk & Ethics Committee
• Robust compliance programme including our Code of
Conduct and specific 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
Risk profile
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, fines and penalties.
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.
• Identification o
f lessons learned arising from litigation and
training in key areas
Compliance and Litigation
Major investigations
Major litigation
B
A
V
V
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
87
Governance
Financial statements
Successfully
navigating
change
“Our robust corporate governance framework has allowed
the Group to successfully navigate a year of signi
ficant
change whilst maintaining our strong culture and balancing
the competing needs of our stakeholders.”
Roy A Franklin
Chair
Dear Shareholder
I am pleased to present the corporate
governance report for 2022, which was
a year of signi
ficant change
for the
Group. We successfully navigated that
change whilst balancing the interests
of all stakeholders and maintaining an
effective culture. The Board continues to
provide strong challenge and support to
management whilst ensuring ongoing
engagement with our stakeholders
throughout the year and delivering on
its clear responsibility to promote the
long-term success of the Company.
The Board and its Committees have spent
time considering a number of important
strategic topics during the year:
Appointment of new CEO
Following Robin Watson’s announcement
of his decision to retire as Chief
Executive Of
ficer in April 2022, the
focus of the Nomination Committee
in 2022 was on the appointment of a
suitable candidate to replace Robin.
The Company has a well-established
succession plan which considers internal
high potential employees as well as
external candidates. This plan is regularly
refreshed and informed the process
to search for and appoint a new CEO
resulting in an extensive selection process
that considered both internal and
external candidates.
Letter from the Chair of the Board
John Wood Group PLC
Annual Report and Accounts 2022
88
In June 2022 it was announced that Ken
Gilmartin, the then Chief Operating
Of
ficer o
f the Company, would be
appointed as Chief Executive Of
ficer
with effect from 1 July 2022. Ken has
brought a wealth of industry experience
and excellent strategic and leadership
skills to Wood, and I am delighted that
he is our new Chief Executive Of
ficer.
The Board believes he is a great fit
for
Wood, with the combination of skills and
experience to lead the business through
its new strategic phase. On behalf of the
Board, I thank Robin Watson for his many
years of service to the company and wish
him all the best in his retirement.
Board changes
Thomas Botts resigned from the Board
in June 2022, after nine years of service.
The Nomination Committee decided that
a decision on a possible replacement
for Mr Botts would be deferred to
allow the Committee to consider the
position following the sale of the Built
Environment Consulting business.
Sale of Built Environment
Consulting business
The sale of the Built Environment
Consulting business to WSP completed
in September. This transaction marked
a new chapter for Group, the proceeds
of which have transformed our balance
sheet and restored financial flexibility to
the Group. The Board received regular
updates on the progress of the sales
process throughout the year. We provide
more details of how the Board provided
oversight and governance over all
aspects of the sale on pages 44 and 45.
Principal Decisions.
Future financing
The Board recognised the Company
would need a new finance strategy
subsequent to the sale of the Built
Environment Consulting business and
potential future
financing structures
were reviewed throughout the year.
Following presentations and discussions,
the Board determined that the key
considerations for a future
financing
strategy should include (i) maintaining
liquidity, (ii) minimising future interest
charges, (iii) maintaining a diversity
of funding, and (iv) reviewing and
maintaining banking relationships
including bonding availability and
receivables facilities. In reaching this
decision the Board was focused on
refreshing the Group
finance strategy
following the Built Environment
Consulting business sale in order
to position the Company for future
investment and growth.
Refreshed strategy
The sale of the Built Environment
Consulting business marked a significant
redefining to the business o
f the Group
and a natural point at which to review
our strategy. In November 2022 we
announced the Group’s refreshed
strategy at a Capital Markets Day. The
refreshed strategy is underpinned by
our three strategic pillars: creating an
inspired culture, delivering performance
excellence and achieving profitable
growth. These are the pillars of our focus
to meet the needs of three important
stakeholder groups – our employees,
our clients and our shareholders. The
strategic pillars provide a platform to
deliver solutions across two end markets:
Energy and Materials and realise our
vision of delivering sustainable solutions
that transform the world. The Board
played an integral role in the formulation
and delivery of the Group’s refreshed
strategy, including assessing our markets
and portfolio and identifying the very best
growth opportunities that will bring value
to our stakeholders. More details can be
found on page 46 Principle Decisions.
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 satis
fied.
The findings o
f the review were
regarded as positive, characterising
the Board as one that has successfully
navigated a very challenging period.
Several actions were recommended
including improvements to Board
meeting management, focus and
prioritisation and improving the quality
of Board reporting. The Board has
initiated activities to address these
areas including: establishing a working
group led by senior management that is
reviewing the form and content of Board
papers to ensure appropriate focus
and detail on key issues; ensuring Board
meeting agendas have an appropriate
balance to allow suf
ficient time
for the
Board to discuss key issues; and the form
and content of the CEO report will be
adjusted to provide greater clarity on the
key issues impacting the business.
Board Committee review
In early 2022 the Audit, Risk & Ethics
Committee reviewed the results of
an external investigation 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
earlier review that had been instigated
following concerns raised internally.
Following this review the Audit, Risk
& Ethics Committee 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 re
finement
to the Board in due course. As a result
of this review, from August 2022, (i)
the Audit Committee was renamed the
Audit, Risk & Ethics Committee and
the Charter was extended to include
management of the Group Ethics &
Compliance programme and oversight
of the newly combined Group Audit &
Risk team, encompassing internal audit
and Group operations audit and (ii)
the Safety, Sustainability, Assurance &
Business Ethics Committee was renamed
the Safety & Sustainability Committee
and the Charter was updated to reflect
the changes to the Audit Committee
Charter ensuring an ongoing high level
of oversight on safety issues whilst
also recognising the continued growing
importance of sustainability matters.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
89
Governance
Financial statements
Safety & Sustainability
In 2021, the Safety & Sustainability
Committee reviewed and endorsed
Wood’s Sustainability Targets. The
targets relate to Wood’s key material
sustainability development aspects
significant to our success and relevant
to our key stakeholders, linking Wood’s
journey into those of the UN Sustainable
Development Goals objectives.
Throughout 2022, the Committee
monitored and reviewed progress
towards the targets as well as providing
oversight to the materiality assessment
undertaken in 2022 to ensure that
Wood’s sustainability strategy continues
to align to the expectations of our key
stakeholder groups. In addition, the
Committee reviewed information relating
to benchmarking Wood’s sustainability
performance compared to peers. While
it was noted that Wood compares
favourably to its peers, this is an evolving
area and continuous improvement is
required to maintain this position.
Prior to August 2022, when the
Committee retained oversight of Ethics
and Compliance matters, the Committee
also monitored developments regarding
the imposition of sanctions on Russia
and their impact on Wood’s operations
in Russian territories or with Russian-
owned clients. The Committee
reviewed the controls in place to ensure
compliance with any sanctions and
provided oversight to Wood’s response
to the situation resulting in the Board’s
decision to exit Russia and withdraw
from operations in the country.
Audit, Risk & Ethics
The Audit, Risk & Ethics Committee
focused on the application of the Group’s
accounting policies and on the areas of
judgement and estimation in relation to
significant accounting and tax matters.
The primary areas of judgement and
estimation considered by the Committee
in relation to the 2022 financial
statements included review of signi
ficant
contracts, goodwill impairment reviews
and the sale of the Built Environment
Consulting business.
The Committee has been given the
responsibility to review the effectiveness
of the
financial and IT internal control
systems implemented by management.
This work was informed by regular
updates from the President Group Audit
& Risk and the results of detailed self
assessment processes undertaken across
the Group. The external auditors also
provides feedback on areas of
financial
or IT control which they wish to bring to
the Committee’s attention. The Board’s
assessment of the Group’s internal
financial and IT control environment,
as informed by Group Audit & Risk,
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.
As noted, the scope of the Committee
was expanded in August 2022 to include
Ethics and Compliance. In August and
November meetings the Chief Ethics and
Compliance Of
ficer and Group General
Counsel attended the meetings and gave
an update of the E&C programme, an
overview of major ongoing cases and at
the November meeting gave an update
on sanctions risk, which was heightened
following the situation in Russia. The
Committee also discussed the ‘Speak
Up’ report that promoted an open-door
culture and reviewed the nature and
frequency of reports.
Principal and emerging risks
As part of the overall process for
managing principal and emerging risks,
the principal risks are reviewed by the
Board twice per year and emerging risks
escalated to the Board as required.
This process includes cross-checking
against the principal and emerging risks
identified by Wood’s peer group which
helps to inform the Board’s mid-year
discussion on risk. In addition, at the half
year and year end, a series of one-to-
one interviews are carried out by the
President Group Audit & Risk and the
VP Risk with each of the non-executive
directors to understand their perception
of emerging risks.
Workforce engagement and
remuneration
In 2022, the Remuneration Committee
continued to engage with employees
globally, supported by the internal
reward team, participating in employee
focus groups and feedback networks to
ensure our people are engaged, safe, and
developed to reach their full potential. The
Remuneration Committee also discussed
and reviewed updates on the wider
workforce at every meeting, covering
topics such as pay equity, employee
share plans, cost-of-living response,
retention, ethnicity pay reporting,
benefits & retirement plans, and gender
diversity. The Remuneration Committee
continued to receive regular updates
from the Executive President of People
& Organisation (P&O) and President of
Reward & Mobility throughout the year on
wider workforce remuneration matters,
ensuring that broader reward practices
are understood and aligned when setting
executive remuneration.
Remuneration Policy
As part of the normal three-year cycle
the Board has approved some minor
updates to directors’ remuneration policy,
which will be put before the shareholders
for approval at our upcoming AGM.
I hope you enjoy the governance report
which provides further detail on activity
throughout 2022. I look forward to the
year ahead and continuing to implement
the highest standards of governance
as the Group executes and delivers
the new strategy.
Roy A Franklin
Chair
Letter from the Chair of the Board
continued
John Wood Group PLC
Annual Report and Accounts 2022
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Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
91
Governance
Financial statements
The directors submit their report together
with the audited financial statements o
f the
Group for the year ended 31 December 2022.
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 166.
Governance and the Board
Corporate governance statement
93
Application of Governance Code Principles
93
Corporate governance arrangements
106
Directors’ responsibilities under s172 of the Companies Act 2006
99
Statement of directors’ responsibilities
101
Other Statutory Disclosures
99
The names of the directors who were appointed during the year
104
Board of directors and biographies
102
Business review
Principal activities and business review
44
Future development of the business of the Company and its Subsidiaries
14
Financial Information
Fair, balanced and understandable
96
Going concern
172
Viability statement
83
Post balance sheet events
232
Financial instruments
251
Risk
Risk management and internal control
111
Principal risks and uncertainties
80
Monitoring climate change related risk
81
Health, safety, security, ethics & sustainability
48 to 79
Environment
Managing and reducing environmental impact
50
Greenhouse gas emissions and energy and carbon information
54
Employees
Employment policies
60 to 65
Policies on recruitment, training and career development of disabled persons
117
Investing in and rewarding the workforce
128
Diversity statement
117
Shares
Share capital structure
100
Substantial shareholders
108
Directors’ interests in ordinary shares
148
Directors’ interests in options over ordinary shares
149
Subsidiaries
Divestments
190
Subsidiaries, branches and joint ventures
233 to 246
Directors’ report
Going concern
In applying the going concern basis for
preparing the financial 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 financial statements.
Dividend
Due to the cash performance of the
Group, the Board gave priority to
maintaining a strong balance sheet and
decided not to declare a final dividend
for 2022. No dividends were therefore
paid to shareholders during 2022.
The Board recognises the importance
of dividends to shareholders and will
consider its approach to dividends
in 2023 and beyond alongside other
capital allocation options.
John Wood Group PLC
Annual Report and Accounts 2022
92
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 page 102).
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 suf
ficient time is allowed
for discussion. At each Board meeting suf
ficient 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. Board members are encouraged to attend all committee meetings, even if they are not a member of all
committees. Further information on the activities of the principal committees can be found on page 105. The Board continually
assesses the flexibility and sustainability o
f 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 the business model can be found on page 14.
Purposes, values and culture – Principle B
Our purpose, values and culture are set out in the Strategic Report on page 12 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, de
fining our values and strategy and monitoring and assessing culture,
for the bene
fit o
f 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 reflect the Board’s strategy, values, and desired culture.
Our values reflect 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. The Board is satisfied that the culture is operating e
ffectively.
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 suf
ficient 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 2022.
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. Proper control, accountability and
compliance with the Governance Code flows through the Group as a whole and the directors consider that the Group has
fully
complied with the provisions of the Governance Code throughout 2022.
The Board has applied the Governance Code Principles (A to R) as follows:
Corporate governance statement
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
93
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.
Further information on engagement with stakeholders and the Board’s application of s172 of the Companies Act 2006 can be
found on page 99.
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 global employee surveys and additional pulse surveys to gather the views of employees, and
the Listening Group Network (LGN), which involves employees from around the world enabling the employee voice to be heard
by the Board and Executive Leadership Team. The Board believes this is a more effective method of employee engagement and
representative of Wood’s global, diverse workforce.
Established mentoring relationships have continued during 2022 and, since its launch in 2021, the MentorConnect app has
resulted in over 900 mentor and mentee profiles being created across 31 countries and is considered a key tool in personal and
career development for our people.
We discuss our workforce engagement activities on page 62. Details of the impact of employee engagement on principal
decisions are set out on page 44.
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. During 2022, the Board
commissioned an investor perception survey having concluded that, during a period of signi
ficant change
for the Company, it
would be beneficial to gain
feedback, on a con
fidential basis, regarding the expectations o
f investors and wider stakeholders.
Further details of our engagement with shareholders is on page 108.
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.
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. Details of the Group’s engagement activities with clients
and suppliers during the year are provided on page 40.
Board leadership and Company purpose
John Wood Group PLC
Annual Report and Accounts 2022
94
Directors’ report
continued
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 Of
ficer are separately held and their responsibilities are well defined, set out in writing and
regularly reviewed by the Board.
Further details on the roles of the Chair, Chief Executive Of
ficer, Senior Independent Director, non-executive directors and the
Company Secretary are on page 105.
Independence – Principle G
The Board has reconfirmed that 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 conflicts o
f 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 suf
ficient time to the Company and also to assess any potential conflicts o
f interest.
Key activities of the Board – Principle I
The Board typically schedules a minimum of four in-person meetings and three video conference calls throughout the year.
During 2022 there was a return to in-person meetings and a total of 14 board meetings took place:
five in-person board
meetings (four held in the UK (Aberdeen and London/Reading) and one held in the US (Houston)) and nine board calls (all
held via video conference). The additional meetings related to signi
ficant matters dealt with in the course o
f the year including
matters relating to the Built Environment Consulting sale, and the refresh of the Group Strategy.
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 regularly scheduled in-person meetings:
• Review of Governance and reports from the Committees, and the Chief Executive Of
ficer review
• Updates from the business units and Group functions, including
finance updates.
Further details on Board activity during the year is on pages 109 to 110.
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 reflect 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 conflicts o
f 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 con
flict or potential conflict o
f interest. Further details are provided on page 70.
In 2022, the Board approved the Modern Slavery and Human Traf
ficking 2022 statement.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
95
Governance
Financial statements
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
benefits o
f diversity, including gender and ethnic diversity.
The Nomination Committee report on pages 115 to 117 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 page 102.
Annual Board evaluation – Principle L
An annual evaluation process is undertaken which considers the effectiveness of the Board and its Committees and the
performance of individual directors and the Chair. This review identi
fies areas
for improvement, informs training plans for the
directors and identifies areas o
f knowledge, expertise or diversity which should be considered in our succession plans.
Further details on Board evaluation during the year is on page 89.
Composition, succession and evaluation
Audit, risk and internal control
Financial reporting – Principle M
One of the Audit, Risk & Ethics Committee’s principal responsibilities is to review and report to the Board on the clarity and
accuracy of the Group’s
financial statements, including the Annual Report and interim statement. When conducting its
reviews, the Committee considers the overall requirement that the financial statements present a ‘true and
fair view’.
The main responsibilities of the Audit, Risk & Ethics Committee are to oversee various aspects of the Group’s:
• financial controls, financial reporting and external audit
• internal audit function including operational audit since mid-2022 (combined as Group Audit & Risk)
• risk management controls and processes and
• management of its Ethics and Compliance programme
External auditor and internal audit – Principle M
The Audit, Risk & Ethics Committee has primary responsibility for managing the relationship with the external auditors, including
assessing their performance, effectiveness, and independence annually and recommending to the Board their reappointment or
removal. During the year, the Committee received confirmation
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’s external audit partner to rotate every five years.
Further detail on the work of the Audit, Risk & Ethics Committee is on pages 118 to 121.
Fair, balanced and understandable – Principle N
The Board considers that the annual report and accounts, taken as a whole, are fair, balanced, and understandable and provide
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
financial statements and disclosures therein and noted
the discussions between the Audit, Risk & Ethics 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, Risk & Ethics 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 a Board meeting in March 2023.
John Wood Group PLC
Annual Report and Accounts 2022
96
Directors’ report
continued
Risk management and internal control – Principle O
The Board has overall responsibility for the Group’s systems of internal control and risk management which are 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 codifies 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 page 80.
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 page 82.
• Internal control structure
The Group has a clear organisational structure for the control and monitoring of its businesses, including de
fined lines o
f
responsibility through the organisation up to Board level and delegations of authority in place. The Group has issued policies which
define the standards o
f business conduct and include Accounting; Contract Risk Management and Review; Health, Safety, Security
& 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 con
fidence about possible non-compliance with the Group’s Code o
f Conduct.
For more information on Ethics & Compliance see page 70.
• 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
financial matters. Our internal controls and risk management systems in relation to the preparation o
f the
financial 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 2022; 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 signi
ficant contracts; review o
f provisions; and review of the signi
ficant
underlying assumptions for the accounting of de
fined benefit pension obligations. The Audit, Risk & Ethics Committee has been
delegated the responsibility to review various aspects of (a) the Group’s
financial controls, financial reporting and external audit, (b)
the Group’s Audit & Risk function including operational audit, (c) the Group’s risk management controls and processes and (d) the
Group’s management of its Ethics and Compliance programme.
The Safety & Sustainability Committee has been delegated responsibility for the effectiveness of the Group’s management of
HSSE, and Sustainability.
The Board and its Committees are assisted by the various Group functions including Group Audit & Risk, HSSES and, where
appropriate, the external auditors and other external advisors. Where the internal or external auditors identify any signi
ficant
deficiencies in the financial or IT internal control systems, or more broadly across operational Group Audit & Risk audits, a plan o
f
action is agreed to remedy these and progress against them is tracked and reported with updates provided to the Audit, Risk &
Ethics Committee as necessary.
The Audit, Risk & Ethics Committee receives regular updates concerning ongoing audits. Details of audit updates received by the
Committee in 2022 are set out on page 118. The Chairs of the Audit, Risk & Ethics Committee and the Safety & Sustainability
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 financial review against budgets and latest
forecasts. The Executive Leadership Team receives
detailed monthly financial reports and meets monthly to discuss financial per
formance and other operational matters.
Audit, risk and internal control
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
97
Governance
Financial statements
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
stakeholder value. The Remuneration Policy and principles support the needs of our business, 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, delivery of the strategy, 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 and a revised policy will be presented for
shareholder approval at the 2023 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, stakeholder experience, and wider circumstances.
Further detail on the work of the Remuneration Committee is on page 122.
Remuneration
John Wood Group PLC
Annual Report and Accounts 2022
98
Directors’ report
continued
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 towards our shareholders,
and other stakeholders, as a whole and
treat them fairly and equally so they
may benefit
from the successful delivery
of our strategy; and to ensure that
management operates 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
benefit o
f 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 page 44
describes how the Board’s principal
decisions taken during the year ended 31
December 2022 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 vision to deliver
solutions that transform the world, the
Board has:
• implemented a ‘go forward’ strategy
review to build new visions and values
following the Built Environment
Consulting sale, The review defined
and clarified the company’s purpose
and strategic framework, utilising
internal “Tiger Teams” and input from
an external consultant. The Board
received regular updates of the review
as a standing agenda item during the
year, allowing them to debate and
align the path forward.
• Approved the refreshed strategy
that is underpinned by three strategic
pillars: creating an inspired culture,
delivering performance excellence
and achieving profitable growth. Those
pillars signify our focus on meeting the
needs of three important stakeholder
groups – our employees, our clients
and our shareholders. The strategic
pillars provide a platform to deliver
solutions across two end markets:
Energy and Materials and realise our
vision of delivering solutions that
transform the world.
• Recognised that building an inspired
culture is core to our strategy and
therefore critical to the success
of our business overall. With an
inspired culture, we can ensure
performance excellence and deliver
profitable growth. 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 74).
• Engaged with our shareholders
via a perception study to ensure
we understood their views and
our refreshed strategy generates
profitable growth.
• 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
42); and our credit investors (see page
39); 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 page 40).
Profit
forecast
In our trading update on 13 January
2023, we made the following statement
which is regarded as a profit
forecast for
the purposes of the Financial Conduct
Authority’s Listing Rule 9.2.18: "Adjusted
EBITDA of around $375 million to $385
million and adjusted EBITDA margin of
around 7.1%". Full year adjusted EBITDA
was $385 million and adjusted EBITDA
margin was 7.1%.
Disclosures under Listing Rule 9.8.4R
Disclosures in relation to listing rule LR
9.8.4R where applicable are included in
note 23 to the financial 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 80 to 87 and details of the actions
the Company is taking to manage and
minimise our impact are set out on page
50 to 59.
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
2022, no political donations were made
and no political expenditure was incurred,
as defined in Part 14 o
f 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 specified limit.
This initiative is the foundation of our
charitable donation programme.
See page 66 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 filed with the
Registrar of Companies.
Statutory disclosures
Our Articles of Association are available at:
woodplc.com/articlesofassociation
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
99
Governance
Financial statements
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 signi
ficant direct or indirect
holders of securities in the Company can
be found on page 108 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 2022 annual general meeting
shareholders passed a resolution
authorising the Company to purchase its
own shares up to a maximum number
of 69,183,937 ordinary shares. During
the year ended 31 December 2022 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 financial
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,
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 of
ficers
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
fiduciary duty or trust by the indemnified
person. In addition, the Company may
purchase and maintain for any director
or other of
ficer, insurance against
any liability. The Company maintains
appropriate insurance cover against legal
action brought against its directors and
of
ficers and the directors and o
f
ficers o
f
its subsidiaries.
Approval of the directors’ report
The strategic report set out on pages 01
to 87 and the directors’ report set out
on pages 92 to 101 were approved by the
Board on 16 March 2023 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 38 to the financial statements.
John Wood Group PLC
Annual Report and Accounts 2022
100
Directors’ report
continued
Directors’ responsibility
statement
The directors confirm that, to the best o
f
their knowledge:
• The financial statements, prepared
in accordance with the applicable set
of accounting standards, give a true
and fair view of the assets, liabilities,
financial position and profit or loss o
f
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 principal risks and uncertainties
that they face; and
• The directors consider the annual
report and financial 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 de
fined 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
16 March 2023 and is signed on its behalf
by:
Ken Gilmartin
Chief Executive Of
ficer
David Kemp
Chief Financial Of
ficer
The following statement, which
should be read in conjunction with
the directors’ report and statement
of Auditor’s responsibilities set out on
page 165 describes the responsibilities
of the directors with respect to the
financial statements.
The directors are responsible for
preparing the annual report, the annual
report on directors’ remuneration and
the financial statements o
f the Group
and the Company in accordance with
applicable law and regulations.
Company law requires the directors to
prepare Group and parent Company
financial statements
for each
financial
year. Under that law they are required to
prepare the Group financial statements
in accordance with UK-adopted
international accounting standards
and applicable law and have elected to
prepare the parent Company financial
statements on the same basis. In
addition the Group financial statements
are required under the UK Disclosure
Guidance and Transparency Rules to be
prepared in accordance with UK-adopted
international accounting standards.
The Company financial statements are
prepared in accordance with FRS 101
“Reduced Disclosure Framework”.
Under company law the directors must
not approve the financial statements
unless they are satisfied that they give a
true and fair view of the state of affairs
of the Group and Company and of their
profit or loss
for that period.
In preparing each of the Group and
Company financial statements, the
directors are required to:
• Select suitable accounting policies and
then apply them consistently;
• 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 suf
ficient to show and explain
the Company’s transactions and
disclose with reasonable accuracy at
any time the financial position o
f the
Company and the Group and to enable
them to ensure that the financial
statements and the annual report on
directors’ remuneration comply with the
Companies Act 2006 and, as regards
the Group financial statements, Article
4 of the IAS Regulation;
• Implementing such internal controls
as they determine are necessary to
enable the preparation of
financial
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
• Ensuring the maintenance and
integrity of the corporate and
financial
information included on the Company’s
website. Legislation in the United
Kingdom governing the preparation
and dissemination of
financial
statements may differ from legislation
in other jurisdictions.
Directors’ responsibilities
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
101
Governance
Financial statements
David Kemp
Chief Financial Of
ficer
Appointed:
2015
Contribution to the Company
David is an experienced Chief Financial
Of
ficer (CFO) with a significant track
record of building
financial discipline,
driving growth and margin improvement
and delivering excellence. His extensive
knowledge of the debt and equity markets
and the wider financial 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 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 49
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 Chair of Keller
Group PLC and former deputy Chair of
Equinor A/S. Until 25 February 2021, Roy
was Chair of privately held Energean Israel
Ltd and until 31 March 2021 was Chair of
Premier Oil plc.
N
Key to Committee membership
S
Safety & Sustainability
N
Nomination
R
Remuneration
A
Audit, Risk & Ethics
Chair
Ken Gilmartin
Chief Executive Of
ficer
Appointed:
2022
Contribution to the Company
Ken joined Wood in September 2021 as
the Group’s COO, and was appointed
CEO and an executive member of the
Board of Directors in July 2022. Ken
brings a wealth of industry experience
and excellent strategic and leadership
skills to Wood and is focused on building
on Wood’s strong foundations to capture
growth opportunities in energy security
and sustainability, and deliver value for
shareholders over the medium term.
Experience
Ken began his professional career over
25 years ago in civil engineering with
Deutsche Bahn and prior to joining
Wood, spent 15 years at Jacobs in various
Operational and Project leadership roles
including, Executive Vice President of
their People and Places solutions business
holding responsibility for more than half
of Jacobs’ overall business portfolio.
Former directors who served for
part of the
financial year
Robin Watson
Chief Executive Of
ficer
Appointed:
2013
Resigned: July 2022
Thomas Botts
Non-executive Director
Appointed:
2013
Resigned: June 2022
John Wood Group PLC
Annual Report and Accounts 2022
102
Board of Directors
Nigel Mills
Non-executive and
Senior Independent Director
Appointed:
2020
Contribution to the Company
Nigel has extensive financial, commercial
and investor relations skills, having advised
some of the UK’s largest companies across
a broad range of end markets. His strong
strategic financial 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
Wood strives for long-term growth.
Experience
Nigel is senior independent director of
Persimmon Plc, where he also served as
acting Chair for six months in 2018, and
in March 2023 he was appointed as a
non-executive director of Greggs plc. His
executive career was in investment banking,
as Chair of Corporate Broking at Citi and
Chief Executive Of
ficer at Hoare Govett.
N
A
R
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,
financial services, manu
facturing, travel &
transportation, energy and government is
an important element enabling the Board to
deliver its strategy and long-term growth.
Experience
Jacqui has been a non-executive director of
Tesco Bank since April 2018 and, in January
2023, she was appointed Interim Chair and
she is 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 three-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
firm
TriVista, Inc. and non-executive director of
Meggitt plc. Prior to that Brenda was Senior
Vice President, Chief Technology Of
ficer 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 signi
ficantly
strengthens the Board.
Experience
Susan is the Chief Executive Of
ficer o
f
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
Wood continues to strengthen its expertise
within renewable energy. Birgitte adds to
the balance of skills and diversity of views
on the Board.
Experience
Birgitte is a board member of Milton Huse
A/S and is a non-executive director of the
Danish based road contractor, Arkil Holding
A/S, and of the Danish fund companies
Danske Invest and Danske Invest Select.
She was previously Chief Technical Of
ficer
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
N
S
N
Adrian Marsh
Non-executive Director
Appointed:
2019
Contribution to the Company
Adrian has a wealth of
financial expertise
in large multi-national companies. He has
a proven track record in financial, 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 and has
recently announced his intention to resign
in September 2023. 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
A
S
N
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
103
Governance
Financial statements
Ken Gilmartin
Chief executive
of
ficer
David Kemp
Chief
financial
of
ficer
Azad
Hessamodini
Executive
President,
Consulting
Jennifer
Richmond
Executive
president,
Strategy &
Development
Steve Nicol
Executive
President,
Operations
Lesley Birse
Executive
President, People
& Organisation
Craig
Shanaghey
Executive
President,
Projects
Mike Collins
Executive
President,
Business
Sustainability
& Assurance
Martin
McIntyre
General Counsel
and Company
Secretary
Executive Leadership Team and
business unit update
There were a number of changes to our
Executive Leadership Team during 2022
and the first quarter o
f 2023.
In January 2022 Martin McIntyre joined
the Executive Leadership Team in his role
as Group General Counsel & Company
Secretary. Martin joined Wood in 2000,
becoming General Counsel and Company
Secretary in 2018 and currently leads the
Legal, Ethics and Compliance function.
In January 2022 Andrew Stewart
resigned from his position as Executive
President – Strategy & Development.
He was replaced by Azad Hessamodini
who held the interim position until the
appointment of Jennifer Richmond in
April 2022. Jennifer joined our business
at a pivotal time as we refreshed our
strategy and has an outstanding track
record in delivering best-in-class solutions
for clients, leading transformational
programmes and identifying strategic
growth areas.
In March 2022 Andy Hemingway, was
appointed as Executive President –
Consulting, but took the decision to
leave the role, and Wood, in May 2022.
He was replaced by Azad Hessamodini
who joined the Executive Leadership
Team on 1 May 2022 as Executive
President – Consulting progressing from
his previous role as President – Growth
and Development. Azad is a strategic,
dynamic, and proven leader, with
in-depth knowledge of our business and
holds many trusted relationships across
our teams and with our clients.
In July 2022 Ken Gilmartin was
appointed as Chief Executive Of
ficer
having previously been Chief Operating
Of
ficer
following Robin Watson’s
decision to retire.
In July 2022 Stephanie Cox resigned
from her position as Executive President
– Operations. She was replaced by
Craig Shanaghey who was President
– Operations for Europe, Middle East
and Africa (EMEA). Craig held the
position until February 2023 when he
was appointed Executive President –
Projects. Craig is a seasoned, successful,
and proven leader with a focus on
successfully growing our Operations
business, getting closer to our clients and
strengthening our position in the market.
In September 2022 Joe Sczurko
Executive President – Environment &
Infrastructure Consulting left Wood
subsequent to the Built Environment
Consulting sale.
Tragically, in September 2022, Nina
Schofield, Executive President – HSSES
died from injuries sustained in a road
traf
fic accident. Nina Schofield, had
been a member of the Wood family for
close to two decades and led the HSSES
function for the past eight years.
In February 2023 following a very
careful and sensitive new appointment
process, Mike Collins was appointed
as Executive President Business
Sustainability & Assurance (formerly
HSSES), moving from his role as
Executive President – Projects.
In February 2023 Craig Shanaghey was
replaced by Steve Nicol as Executive
President – Operations. Steve has been
successful in his previous leadership roles
in the Group as CFO of the Operations
BU and most recently as our deputy
CFO. He is an accomplished leader who
recognises the importance of energy
security and is passionate about the role
the Group can play in energy transition.
Executive Leadership Team
The ELT operates under the authority of, and reports directly to, the Chief Executive Of
ficer and comprises the Chie
f Executive
Of
ficer, Chie
f Financial Of
ficer, the Executive Presidents o
f our three business units (Consulting, Projects and Operations),
and the Executive Presidents of our four Group functions, namely Business Sustainability & Assurance (formerly known as
Health, Safety, Security, Environment & Sustainability), People & Organisation, Strategy & Development and Legal, Ethics and
Compliance. The ELT supports the Chief Executive Of
ficer with the development and implementation o
f Group strategy and
with the management of the business operations of the Group.
Find out more about the ELT at:
woodplc.com/leaders
John Wood Group PLC
Annual Report and Accounts 2022
104
Corporate governance
Executive Leadership Team
Investigations Oversight
Committee
An Investigations Oversight
Committee was established
following certain concerns raised
internally relating to the carrying
value of the Aegis Poland Project
and subsequent delay to the
announcement of the annual report
and accounts. More details can
be found at page 44 – Principal
Decisions.
The Committee was stood down
upon conclusion of the investigation.
The members of the Committee
were Roy Franklin (Chair) and Adrian
Marsh. Ken Gilmartin attended the
meetings of the Committee.
Role of the Board and Committees of the Board
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, signi
ficant
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, speci
fically
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,
Committee, the Nomination Committee, the Audit, Risk & Ethics Committee and the Remuneration Committee. The
structure of the Board Committees is subject to ongoing review to ensure the highest standards of governance. In August it
was decided that responsibility for the Ethics & Compliance and Operations Assurance functions should be assumed by the
Audit Committee. The Audit Committee was renamed the Audit, Risk & Ethics Committee and the Safety, Sustainability,
Assurance & Business Ethics Committee was renamed the Safety & Sustainability Committee. The work of these Committees
is supported by members of the ELT and other senior management.
The Company Secretary provides advice and support to the Board.
Safety & Sustainability
Committee
Is appointed by the
Board to oversee the
Group’s management
of Health, Safety,
Security, Environment &
Sustainability (HSSES),
consistent with the
Group’s values, purpose
and strategy.
Read more on page 113
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, Risk & Ethics
Committee
Responsible for various
aspects of (a) the
Group’s financial controls,
financial reporting
and external audit, (b)
the Group’s Audit &
Risk function including
operational audit, (c) the
Group’s risk management
controls and processes
and (d) the Group’s
management of its
Ethics & Compliance
programme.
Remuneration
Committee
Oversees and is
responsible for various
aspects of remuneration
and benefits o
f the
Chair, executive directors,
members of the ELT and
the Company Secretary.
Read more on page 115
Read more on page 118
Read more on page 122
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 identified 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 – Group
Audit & Risk 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 stood down in 2022
following a review of the current
state of the Covid-19 pandemic.
Additional Committees established by the Board
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
105
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 93 to 98.
Board composition
The Board comprised ten directors until
June 2022 and then nine directors for
the reminder of the year. Thomas Botts
resigned as a non-executive director with
effect from 22 June 2022, after nine
years of service. Robin Watson resigned
as a director and Chief Executive Of
ficer
with effect from 1 July 2022 and Ken
Gilmartin was appointed in his place.
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 Of
ficer.
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 Of
ficer is an
executive director and is responsible for
running the business of the Group in
close collaboration with and with the
support of the ELT. The Chief Executive
Of
ficer’s responsibilities include providing
coherent leadership of the Group with
the Chair consistent with the Group’s
vision and values, developing Group
objectives and strategy for approval
by the Board, effectively leading the
executive directors 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 acts
as a sounding board for the Chair and
provide support to the Chair in the
delivery of the Chair’s 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 Of
ficer. 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 Board 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
flows 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 review of the
effectiveness of the Board, Committees
and individual directors.
Board independence
After careful consideration, the Board
considers that 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. Thomas Botts
resigned as a non-executive director with
effect from 22 June 2022, his resignation
being in line with the principles of the
Governance Code regarding the tenure
of independent directors.
For brief biographies of the directors
see pages 102 and 103
More information on the roles and
responsibilities of the Chair, Chief
Executive Of
ficer 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 115
John Wood Group PLC
Annual Report and Accounts 2022
106
Corporate governance
continued
Conflicts o
f interest
The Board requires directors to declare
any appointments or other situations
which would amount to a possible
conflict o
f interest, including those
resulting from signi
ficant shareholdings,
and to ensure that the influence o
f third
parties does not compromise or override
independent judgement. The Board has
procedures in place to deal with and, if
necessary, approve any such conflicts.
At the start of any Board or Committee
meeting, directors are required to declare
any conflicts 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 specific 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 2022, Lintstock, a
corporate advisory firm, undertook
independent evaluations of the Board
and its Committees.
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 evaluation was conducted utilising
survey questionnaires 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.
The results of the evaluation
were reviewed by the Board and
Committees during the November 2022
Board meeting.
The top priorities for the Board were
identified as:
• Meeting management, focus and
prioritisation and improving the quality
of Board reporting
• Engagement with management
and providing appropriate support
and challenge
• Overseeing implementation of the
new strategy
• External engagement, particularly
with investors
In early 2023 Nigel Mills, Senior
Independent Director, spoke to each
director (executive and non-executive)
and will also discuss the Chair in
his absence. He will also discuss the
Lintstock evaluation with the Board as a
group without the Chair present early in
April 2023.
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 114, 117 121 and 124.
Board development
The training and continuing professional
development needs of directors are
periodically discussed at Board meetings
and during the year briefings 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
• Board responsibilities under the
Modern Slavery Act
• Investor perception
• Director responsibilities: preparation
and publication of accounts
• UK regulatory considerations; key
features of the UK Takeover Code and
the Board’s responsibilities, including
their fiduciary 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.
Following 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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
107
Governance
Financial statements
Sustainability of the
Group’s business model
The Board considers that climate
change is appropriately addressed as
a contributing factor to other principal
risks and that it is not necessary to
identify it as a separate risk. The impacts
of climate change on the resilience of
our business model are reflected in two
of our principal risks: ESG strategy and
performance and Strategic Delivery.
In addition, our Project Execution risk
considers any material climate-related
physical risks that impact on our ability
to successfully execute projects. 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 future, the technical
solutions it provides to clients related to
energy transition and decarbonisation
and the actions it is taking to minimise
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 the UN Global
Goals for Sustainable Development.
More information on the impact of
climate-related matters can be found in
our 2022 TCFD report.
Engagement with shareholders
Our investor relations (IR) activities are
led by the CEO and CFO, supported
by the IR team and other members of
senior management as appropriate.
We provide the opportunity for
significant shareholders to meet with
the CEO 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 2022, in addition to periodical
market updates and our interim and full
year results, shareholder engagements
took place as part of an investor
perception survey.
2022 saw a return to in-person meetings
and we were able to invite shareholders
to attend our AGM, held on 22 June
2022. In order to allow shareholders to
participate as much as possible, we also
facilitated submission of questions in
advance of the AGM through our website.
Engagement between significant
shareholders and the Chair proceeded
as normal. The engagement focused
on Wood’s medium-term strategic
objectives and capital allocation, and
later in the year engagement focused on
the Capital Markets Day and strategic
review in November.
Major shareholdings
The table below shows the holdings of
major shareholders in the Company’s
issued ordinary share capital, as at
31 December 2022, as notified and
disclosed to the Company in accordance
with the Disclosure Guidance and
Transparency Rules.
Shareholders
No of
shares
% of
shares
1
Liontrust Investment
Partners LLP
41,452,814
5.99%
Schroder Plc
37,098,551
5.36%
FIL Limited
35,594,123
5.14%
FMR LLC
35,255,690
5.09%
abrdn plc
34,373,800
4.99%
Pzena Investment
Management, Inc.
34,507,237
4.98%
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%
Kiltearn Partners LLP
23,028,390
3.32%
1.
Percentages provided were correct at the dates
of noti
fication.
The following changes in the interests
disclosed to the Company have been
notified between 31 December 2022 and
3 April 2023:
• On 1 March 2023 Schroders Plc
disclosed that their percentage
interest in the ordinary share capital of
the Company was 4.90% (33,900,442)
ordinary shares).
John Wood Group PLC
Annual Report and Accounts 2022
108
Corporate governance
continued
Board
(scheduled)
Board
(additional)
Safety &
Sustainability
Committee
Nomination
Committee
Audit, Risk
& Ethics
Committee
Remuneration
Committee
Roy Franklin
7/7
7/7
–
7/7
–
–
Robin Watson*
4/4
6/7
–
–
–
–
Ken Gilmartin**
3/3
–
–
–
–
–
David Kemp
7/7
7/7
–
–
–
–
Nigel Mills
7/7
7/7
–
7/7
6/6
7/7
Jacqui Ferguson
7/7
6/7
–
7/7
6/6
7/7
Birgitte Brinch Madsen
7/7
4/7
4/4
6/7
c
–
–
Thomas Botts***
4/4
7/7
2/2
6/6
–
–
Susan Steele
7/7
6/7
4/4
6/7
d
6/6
–
Adrian Marsh
7/7
7/7
4/4
7/7
6/6
–
Brenda Reichelderfer
7/7
7/7
–
7/7
–
7/7
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.
As noted on page 110, a number of additional meetings were arranged during the year to deal with certain matters outside the
normal schedule of meetings. Certain meetings were arranged at short notice and, accordingly, in some cases directors were unable
to attend; the relevant directors discussed their views with the Chair ahead of the relevant meetings. Those instances are noted in
the table above.
* Robin Watson resigned on 1 July 2022.
** Ken Gilmartin was appointed on 1 July 2022.
*** Thomas Botts resigned on 22 June 2022.
Read the Charters of the Board’s Committees at:
woodplc.com/charters
Board and Committee attendance 2022
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.
Video conference
In-person
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
109
Governance
Financial statements
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Activity
• Strategic review and subsequent Built Environment
Consulting sale process.
• Refreshing the Group’s strategy following the Built
Environment Consulting sale. Planning and preparatory work
(which included engagement with an external consultant and
internal engagement via “Tiger Teams”) was reviewed and
regularly discussed at Board meetings throughout the year.
Interim updates were provided to the Board during the year. A
Capital Markets Day was held in November in order to update
investors on strategic objectives.
• The Board considered a number of strategic options in
addition to refreshing strategy including strategic M&A.
• The Board considered the impact of certain categories of risk
to the successful implementation of the refreshed strategy.
Outcome/progress:
• The CFO provided updates on the Built Environment
Consulting sale throughout the year and the Board approved
the sale process follow the strategic review
• The Board received regular updates on the refreshed strategy
throughout the year from the CEO, the Executive President of
Strategy & Development
• Risks to the refreshed strategy were considered including
recession risk, other external risks and internal delivery
challenges, ensuring appropriate mitigations were in place to
manage those risks
• Other strategic options, including strategic M&A, were
considered with the Board deciding that the refreshed
strategy was the optimal choice given the impact of the Built
Environment Consulting sale and the opportunity to reset the
Group’s strategy
• The refreshed strategy was approved at the November Board
meeting ahead of being presented to the business leadership
at a leadership conference in November. Feedback from
leadership on the new strategy was positive
• A Capital Markets Day presentation was held in November
2022 to update investors on the Group’s medium-to long-
term strategic objectives
Activity
• Updates were received at each meeting on the activities
of the Safety & Sustainability Committee and from the
Executive President – HSSES
• Reports were received directly from the Chief Executive
Of
ficer, Chie
f Ethics & Compliance Of
ficer and senior
management on specific compliance related matters
• The Board was briefed on the current status of the Covid-19
pandemic including its impact on Wood employees globally
• HSSES performance updates were delivered including
detailed updates all key disciplines
• Progress against Wood’s sustainability targets was reviewed
and considered to be aligned to the required trajectory to
achieve the targets
• Strong progress across the business in the area of Mental
Health Awareness in light of the ongoing change in working
methodologies post pandemic
• Monitored developments regarding the imposition of
sanctions on Russia and their impact on Wood’s operations in
Russian territories or with Russian-owned clients
Outcome/progress:
• Wood’s response to the Covid-19 pandemic was well executed
and in line with best practice which enabled the business to
maintain operations globally throughout 2022
• Safety Performance throughout 2022 was excellent with
continuing good progress against key metrics and the
introduction of a new targeted metric called Serious Injury or
Fatality (SIF)
• The Modern Slavery and Human Traf
ficking 2022 statement
was approved
• Improved awareness and focus on the importance of Mental
Health resulting in maturing conversations across the business
• Reviewed the controls in place to ensure compliance with any
sanctions and provided oversight to Wood’s response to the
situation resulting in the decision to exit Russia and withdraw
from operations in the country
Board programme and agenda
The Board typically schedules four in-person meetings and three
calls throughout the year.
During 2022 a total of 14 board meetings took place:
five “in-
person” board meetings (four held in the UK (Aberdeen and
London/Reading) and one held in the US (Houston)) and nine
Board calls (all held via video conference). The majority of the
additional meetings held in 2022 were dedicated to matters
arising from the Built Environment Consulting sale.
The following are covered as standing agenda items:
• Review of Governance and reports from the Safety &
Sustainability, the Audit, Risk & Ethics and the Remuneration
Committees, and the CEO report
• Operations updates and functional updates from HSSES,
P&O, Strategy & Development, Legal, Ethics & Compliance
and Finance & Administration (including Investor Relations, IT,
Tax & Treasury and Commercial)
The Board also receives presentations from management and
discusses other matters arising some of which are set out in the
table on pages 111 to 112.
Strategy
Safety & Sustainability
John Wood Group PLC
Annual Report and Accounts 2022
110
Corporate governance
continued
Activity
• Updates were received at each meeting from the CFO,
including reports of progress against forecast
• Updates from the CEO
• 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, Risk & Ethics Committee
• Review of future
financing options
following the Built
Environment Consulting sale
Outcome/progress:
• Reports reviewed, challenged and approved for release
• Debt and cash performance reviewed and challenged
• The Audit, Risk & Ethics Committee reported on matters
including: Group Audit & Risk activity; financial results and
independence of the external auditors
• Proceeds from the Built Environment Consulting sale used to
repay certain debt facilities and debts
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, April and
August concerning dividend policy and reviewed whether
payment of dividends was appropriate given the level of net
debt held by the Group
• The Board recognises the importance of dividends to
shareholders and is committed to reviewing the policy in
the future
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
• Interviews with all Board members to reflect on changes to
the principal and emerging risks before and following the
planned Built Environment Consulting sale and the launch of
the new strategy
• Review of risks associated with climate change and review of
other emerging risks
Outcome/progress:
• Updated principal risks included in annual and interim reports
including as a result of the substantial changes in the year
noted above
• Refresh of principal risk owners and mitigations following ELT
changes during the year
• Further roll-out and adoption of ProRisk and BRisk apps across
the Group for project risk and business risk management
Activity
• Reviewed the Matters Reserved to the Board policy
• Reviewed the respective charters for the Audit, Risk &
Ethics, the Remuneration, the Nomination and the Safety &
Sustainability Committees and the roles and responsibilities
of the directors
• Reviewed the directors’ external appointments and conflicts
of interest register
Outcome/progress:
• Updated Matters Reserved to the Board policy was approved
• Responsibility for Ethics & Compliance, Operations Assurance
moved from the Safety & Sustainability Committee to the
Audit, Risk & Ethics Committee
• The respective Audit, Risk & Ethics, the Remuneration, the
Nomination and the Safety & Sustainability Committee
charters and the roles and responsibilities of the directors
were all approved and published on the Company website
• The directors’ external appointments and conflicts o
f interest
register was regularly updated
Review of
financial results
Review of dividend policy
Risk management and internal control
Governance
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
111
Governance
Financial statements
People and succession planning
Activity
• Retirement planning of Robin Watson. Search process
internal and external for new CEO, concluding in
implementation of internal succession plan and the
appointment of Ken Gilmartin
• Succession planning, development and appointment for
Executive President Business Sustainability & Assurance post
the untimely death of Nina Scho
field, Executive President
Operations and Executive President Projects
• Reviewed succession plans in place for the Board, ELT and
other senior management positions in the Group taking into
account the future strategy of the Company and the need for
a focus on diversity, particularly but not exclusively gender
• Reviewed the Company’s various initiatives on
Inclusion & Diversity
• Overview of the Employee Engagement Framework as
input and review of employee engagement survey data
as a measure of success (output)
Outcome/progress:
• New CEO, Executive President Business Sustainability &
Assurance, Executive President Operations and Executive
President Projects appointed following detailed process
• The Board noted the succession plans for senior executives
and senior management. They were encouraged to see
the plans executed during the year, with three successors
appointed to ELT positions, and subsequent successors
appointed within the broader business. The Board challenged
the diversity of the succession pipeline and were pleased to
note the increased focus on gender diversity for P&L roles,
and encouraged by the appointment of a functional leader
into a BU executive president role
• The Board was regularly updated on progress of the
engagement action plans and was pleased to note a
significant improvement in Wood’s employee net promoter
score during the year. The Board valued participating
in Listening Group Networks, and reward focus groups,
to enable them to hear the wider employee voice. The
considerable and successful effort on engagement has helped
to mitigate the potential risk of high voluntary turnover in an
active labour market with high demand
• Overview of leadership development activity including process
in our Leading Beyond programme
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 engaged with its investors via an investor
perception survey
• The Board received regular updates from the Executive
President People & Organisation on employee engagement
• A Capital Markets Day presentation was held in November
2022 to update investors on the Group’s medium-to long-
term strategic objectives
• The Board reviewed its obligations under the Governance
Code for meaningful engagement with its stakeholders,
including the workforce
Outcome/progress:
• Significant shareholders have the opportunity to meet with
the CEO at least twice a year around the interim and final
results announcements and with the Chair around the Annual
General Meeting.
• The AGM was held on 22 June with shareholders being invited
to attend in person following the end to Covid-19 restrictions
on public gatherings. Shareholders were invited to submit
questions in advance of the AGM through our website
• 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
John Wood Group PLC
Annual Report and Accounts 2022
112
Corporate governance
continued
The Safety and Sustainability
Committee is responsible for overseeing
the Group’s management of Health,
Safety, Security and Environment
(HSSE) and Sustainability in line with
the Group’s values purpose and strategy.
The Committee changed its title during
the year from Safety, Sustainability,
Assurance and Business Ethics
Committee and updated its charter, as
a result of the transfer of oversight for
business ethics and assurance matters
to the Audit, Risk and Ethics Committee.
This change was made to reflect the
internal reorganisation of our Ethics &
Compliance function now reporting to
our General Counsel. It also enables the
Committee to ensure an ongoing high
level of oversight on safety issues whilst
also recognising the continued growing
importance of sustainability matters.
The primary focus of the Committee is to
ensure that risks associated with issues
relating to HSSE and sustainability are
understood and managed and oversight
is provided to systems and assurance
activities in place to minimise the
occurrence of major events.
Safety & security
The Committee continued to monitor
and manage the impacts of the Covid
19 pandemic during 2022. 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. As
the impacts of the pandemic began to
subside, the Crisis Management Team
were stood down with responsibility being
passed to Incident Management Teams in
the business units. This evolving response
to the pandemic was seen as both
appropriate and effective in minimising
business disruptions. The Committee
received monthly briefings 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.
Safety & Sustainability Committee
“In 2022, the Committee’s remit was adjusted to
further increase its focus on sustainability re
flecting the
importance of the achievement of sustainability objectives
and targets to Wood’s overall success. The Committee also
endorsed a new metric to improve safety performance.”
Membership
Thomas Botts Chaired the Safety and
Sustainability Committee until stepping
down from the Committee following his
resignation as a non-executive director
in June 2022. Sue Steele, Adrian Marsh
and Birgitte Brinch Madsen served on
the Committee throughout the year
and Sue Steele was appointed as Chair
in June 2022. The Chairman, CEO,
Executive President of HSSES and, prior
to the change in the Committee’s remit,
the General Counsel and Chief Ethics
and Compliance Of
ficer 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 and sustainability strategy and
performance
• Effectiveness of the organisation’s
policies and systems and evidence of a
prevalent safety culture
• Effectiveness of the Group’s
sustainability management
approach, including risks and the
setting and achievement of targets
• HSSE and leadership development
throughout the Group, particularly in
frontline operations
• Quality and integrity of reporting of
HSSE and sustainability performance
• Preparedness for response to a
major HSSE incident
• Process for and outcomes of
investigations into major HSSES
incidents and the effectiveness
with which recommendations are
assimilated throughout the Group
• Expertise and appropriateness of
the structure of the HSSES and
Compliance function throughout
the organisation
• Adequacy and effectiveness of the
Assurance programmes for HSSE
and sustainability
• Effectiveness of Board and
senior management competency
to meet its HSSE and
sustainability obligations
Read the Safety & Sustainability
Committee Charter at:
woodplc.com/sandscommittee
Susan Steele
Chair, Safety & Sustainability Committee
V
V
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Committee meetings in 2022
Video conference
In-person
V
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
113
Governance
Financial statements
The Committee reviewed HSSE
performance on a group-wide as well as
undertaking deep-dives on an individual
business unit basis. Whilst recognising
that Wood’s safety performance had
been consistent, there is a need to drive
greater improvements. As a result, the
Committee endorsed the introduction
of Serious Injury and Fatality metric.
The metric is intended to be a measure
of actual and potential fatalities and
serious injuries that are considered
either life threatening or life altering and
sets a foundation for establishing an
improvement target going forward.
The Committee also monitored the
escalating tensions between Russia
and Ukraine providing oversight to
the management of the potential
impact on the security of our people
in both countries and were satisfied
that the transition plans put in place
were effective to ensure the safety and
security of our people.
Sustainability
In 2021, the Committee reviewed and
endorsed Wood’s Sustainability Targets.
The targets relate to Wood’s key material
sustainability development aspects
significant to our success and relevant
to our key stakeholders, linking Wood’s
journey into those of the UN Sustainable
Development Goals objectives.
Throughout 2022, the Committee
monitored and reviewed progress
towards the targets as well as providing
oversight to the materiality assessment
undertaken in 2022 to ensure that
Wood’s sustainability strategy continues
to align to the expectations of our key
stakeholder group. In addition, the
Committee reviewed information relating
to benchmarking Wood’s sustainability
performance compared to peers. While
it was noted that Wood compares
favourably to its peers, this is an evolving
area and continuous improved is required
to maintain this position.
As part of the commitment to
continuous improvement, the Committee
approved the development of a
sustainability hub on Wood’s external
website to increase external disclosures
on our sustainability agenda and provide
agility to respond evolving stakeholder
requirements. The Committee
supported the strengthening of the
core sustainability team endorsing the
appointment of a Vice President of
ESG Governance. This role is focused
on enhancing disclosure breadth and
depth as regulatory requirements evolve
requiring increased data disclosure.
The Committee endorsed the revised
Modern Slavery & Human Traf
ficking
Statement in pursuance of Wood’s legal
obligations under the Modern Slavery Act
2015; leading to substantive discussion
on Wood’s approach to drive Building
Responsibly principles into the supply
chain which is a key target supporting
Wood’s approach to the Act.
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 prior to
oversight for these matters being passed
to the Audit, Risk and Ethics Committee
during the year. This included oversight
for the organisational arrangements and
requirements that were put in place to
ensure compliance with the settlement
commitments related to investigations
concluded in 2021.
In addition to the potential security
implications, the Committee monitored
developments regarding the imposition
of sanctions on Russia and their impact
on Wood’s operations in Russian
territories or with Russian-owned clients.
The Committee reviewed the controls
in place to ensure compliance with
any sanctions and provided oversight
to Wood’s response to the situation
resulting in the decision to exit Russia and
withdraw from operations in the country.
Read our Sustainability Report:
woodplc.com/company/sustainability
Read the Modern Slavery & Human
Traf
ficking Statement:
woodplc.com/modernslavery
Safety & Sustainability Committee
continued
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 satisfied they were operating
effectively to address the key areas
identified
for improvement in 2021.
Copies of all Operations Assurance
audit reports are shared with the
Committee for ongoing discussion
around key findings and emerging trends,
organisational learning and timely close
out of actions. A key priority for 2022
and rolling into 2023 is our continued
focus on digitisation. Connecting
our comprehensive HSSES statistics
into machine learning and artificial
intelligence software offers the promise
of truly proactive HSSES management.
Committee evaluation
In October, 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 Safety
& Sustainability Committee was
rated highly overall. The key areas for
focus going forward were identi
fied
as maintaining the high standards
of oversight for safety matters while
continuing to mature the oversight of
sustainability matters to keep pace
with the rate of change in this area. The
change in the Committee’s remit earlier
in the year was seen as an important
step to enable these areas of focus.
Following the tragic loss of Nina
Schofield, Executive President o
f HSSES,
in 2022, the Committee was pleased to
endorse the appointment of Mike Collins
as Business Sustainability and Assurance
Executive President. The Committee
would like to acknowledge the significant
contribution Nina made during her
tenure at Wood.
John Wood Group PLC
Annual Report and Accounts 2022
114
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 robust Executive Leadership
succession plan with a lens on creating
a diverse pipeline of leadership talent.
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 seven formal
meetings during 2022 with a focus on
the appointment of a suitable candidate
to replace the retiring CEO.
Board appointments
During 2022 the Committee appointed a
global, reputable search firm to assist in
developing an objective, success profile
for CEO position with subsequent search
and assessment support. They provide
only senior level recruitment services to
Wood and were considered suf
ficiently
independent and suitably experienced by
the Board to carry out such an exercise.
In April 2022 it was announced that
Robin Watson intended to retire as CEO,
once a successor was appointed. The
Committee utilised the CEO Success
Profile and,
following an extensive search
and independent assessment process
involving both internal and external
candidates, unanimously recommended
the appointment of Ken Gilmartin as
CEO of the Company
Ken was appointed, and Robin Watson
resigned, as CEO on 1 July 2022. Robin
remained an employee of Wood until 30
September, 2022 in order to facilitate an
orderly transition.
Roy A Franklin
Chair, Nomination Committee
Read the Nomination
Committee Charter at:
woodplc.com/nomcommittee
V
“In 2022, the Committee focused on the appointment of a
suitable candidate to replace the retiring Chief Executive
Of
ficer (CEO), independence o
f non-executive directors
and the effectiveness of the Board and its leadership.”
Nomination Committee
Membership
The Nomination Committee comprises
the Chair and the independent non-
executive directors. Thomas Botts
stepped down from the Committee
in June 2022 following his resignation
as a non-executive director. It was
decided that a decision on a possible
replacement for Mr Botts would be
deferred to allow the Committee to
consider the position following the
Built Environment Consulting sale and
refreshed strategy during 2022.
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 and overseeing
the development of a diverse
pipeline for succession
• Monitoring non-executive
director independence and
external appointments
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Committee meetings in 2022
V
V
V
Video conference
In-person
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
115
Governance
Financial statements
Independence
The Board also regularly reviews
non-executive director independence.
After careful consideration, the Board
confirmed that 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.
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 suf
ficient
time and commitment to the Company.
The following changes to external
appointments occurred during 2022:
• David Kemp resigned as a director and
governor of Albyn School Limited
• Jacqui Ferguson was appointed as
chair of the remuneration committee
of Croda International plc, a company
of which she was already a non-
executive director
• Adrian Marsh was appointed as Grand
Secretary of the United Grand Lodge
of England
• Birgitte Brinch Madsen was appointed
as a board member of Milton Huse A/S
and also resigned as a board member
of Nordsøfonden/Nordsøenheden
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 ELT 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 Board’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.
For changes to the ELT during 2022 see
page 104.
The Committee recognises that the
Board currently has no ethnic minority
representation and does not yet meet
the recommendations of the FTSE
Women Leaders 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.
Nomination Committee
continued
John Wood Group PLC
Annual Report and Accounts 2022
116
Inclusion & Diversity
Wood is committed to its Inclusion
& 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 diversity and inclusion strategy
framework, including:
• improved gender and diversity
representation in senior leadership
roles and across the organisation
• development of employee initiated
and led Inclusion & Diversity
networks to provide platforms for
our employees to connect, learn,
challenge and to share views. The
networks provide a channel for
employees to share 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 Inclusion & Diversity
activities, championing those in
under- represented groups. Our
Inclusion & Diversity 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
Committee evaluation
Lintstock also facilitated evaluations
of each of the principal committees,
including the Nomination Committee.
The performance of the Committee was
rated positively overall and would be
improved further over the coming year by
focusing on succession planning.
The Committee remains cognisant of
the Governance Code’s requirement
to pay due regard to the benefits o
f
diversity, including gender.
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.
During 2022 the number of female
Board members was at least
one-third and at 31 December 2022
was 44%.
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 ful
filled
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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
117
Governance
Financial statements
Membership
Adrian Marsh chaired the Audit, Risk &
Ethics (ARE) Committee throughout
2022. Adrian has recent and relevant
financial expertise and is currently
Group Finance Director of DS Smith
PLC, although Adrian indicated to the
board of DS Smith in September 2022
that he will retire from that role during
2023. Nigel Mills, Jacqui Ferguson and
Susan Steele also served on the ARE
Committee throughout the whole
year. As Group Chair, Roy Franklin is
not a member of the ARE Committee
but attended all meetings in 2022 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 annually, setting out its roles
and responsibilities.
Main responsibilities:
• Compliance with financial
reporting standards and relevant
financial reporting requirements
• Consideration of the
financial and
IT internal control environment
• Consideration of the Group
internal audit programme and
results
• Review of the external audit
relationship and provision of non-
audit services
• Oversight of the Group’s Ethics &
Compliance programme
• Review of procedures for
whistle-blowing and ensuring
such arrangements support
proportionate and independent
investigation of such matters
• Oversight of the Group assurance
team, encompassing internal
audit and Group operations audit
Read the Audit, Risk and Ethics
Committee charter at:
woodplc.com/auditcommittee
Video conference
In early 2022 the Committee reviewed
the results of an external investigation
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 earlier review that had
been instigated following concerns raised
internally. The Committee concluded
that no changes to the historical carrying
value of the project were required and
no immediate actions were required
following the investigation. However,
the Committee 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 re
finement
to the Board in due course. As a result
of this review, from August 2022, the
Audit Committee was renamed the
Audit, Risk & Ethics Committee and
the Charter was extended to include
management of the Group Ethics &
Compliance programme and oversight of
the newly combined Group audit team,
encompassing internal audit and Group
operations audit.
The Committee met six times in 2022.
The February and April meetings
were held by video conference and the
March, August and November meetings
were held in person. In addition to the
members of the Committee, the Group
CFO, the Group Financial Controller, the
President of Group Audit and Risk, and
the external auditors, KPMG, attended
all Audit Committee meetings. The
Group General Counsel and Chief Ethics
and Compliance Of
ficer attended the
August and November meetings. During
the year other relevant people from the
business presented to the Committee
on the topics as set out below. The Chair
of the Committee also held regular
update calls with the CFO and President
of Group Audit & Risk. The President of
Group Audit & Risk, the Chief Ethics &
Compliance Of
ficer 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 key judgement
areas and risks they identified and the
outcomes of their work.
Audit, Risk & Ethics Committee
Committee meetings in 2022
Adrian Marsh
Chair, Audit, Risk & Ethics Committee
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
“As the Group returns to growth in 2023, a strong
financial control, risk and ethics environment with more
standardised and consistent processes is central to
supporting sustainable business growth.”
In-person
John Wood Group PLC
Annual Report and Accounts 2022
118
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 2021 Group financial
statements including the classification
of exceptional items, goodwill
impairment reviews, the going concern
assessment, dispensations from Group
accounting policies, material provisions,
uncertain tax positions and the
accounting for signi
ficant contracts
• Update on KPMG’s audit status,
independence and preliminary
conclusions
• Approval of KPMG’s non-audit fees
• Review of internal audit reports
and status
March
• Review of the internal audit annual
summary for 2021
• Review of the internal audit annual
summary for 2021 and the overall
Internal Financial Controls Assessment
• IT security update
April
• Review and recommendation to
the Board for approval of the 2021
Group financial statements and
related disclosures
• Review and recommendation to
the Board for approval of the going
concern and viability statements
• Review of KPMG’s 2021 external audit
work and audit opinion, including
discussion of their key
findings and
judgmental areas
• Review and approval of the 2021
Audit Committee Corporate
Governance Report
• Review of the results of an external
investigation undertaken, principally
in relation to the historical carrying
value of the Aegis Poland project
contract and the process by which
this was determined.
May
• Review with the Operations
Business Unit President Finance &
Administration on the process and
internal controls within that business
• Review of internal audit reports and
status against the 2022 plan
• Status update on the planned
combination of the internal audit and
Group operations assurance teams
from the President Group Audit & Risk
• IT Strategy update with the Group CIO
and Chief Information Security Of
ficer.
August
• Review and recommendation to the
Board of the 30 June 2022 Group
interim financial statements including
key accounting and tax judgements,
going concern, goodwill impairment
reviews, and classification o
f
exceptional items
• Update on KPMG’s 2022 interim
financial statements external
review findings, review opinion and
discussion of their key
findings
• Status update on the combination of
internal audit and Group operations
assurance teams as Group Audit
• Review of Group audit reports and
status of 2022 internal audit and
Group operations assurance plans
• Review of KPMG’s full year 2022 draft
audit scoping
• Review with senior business leadership
of an unsatisfactory audit report in the
Projects business unit and actions taken
• Effectiveness review of internal and
external audit
• Review of the Ethics & Compliance
(E&C) risk areas and programme
• E&C updates on the Anti Bribery
Anti Corruption (ABAC) programme,
culture and engagement, sanctions
risk assessment
• E&C case overview
• IT security update
November
• Review of material upcoming year end
accounting judgements and issues
• Review with senior business
leadership of an unsatisfactory audit
report in the Consulting business unit
and actions taken
• Approval of KPMG’s 2022 external
audit plan and approval of audit fees
• Status update on KPMG’s pre year end
audit work and pre year end planning
• Review of KPMGs external regulatory
performance
• Status update on the combination of
internal audit and Group operations
assurance as Group Audit
• Review of Group Audit reports issued
and status update against the 2022
plans in place
• Review and approval of the draft 2023
Group Audit Plan (combined internal
audit and Group operations assurance)
• Review with the Vice President ESG
Governance on assurance plans for
the 2022 annual report
• Audit Committee evaluation
• Review of the Group’s Internal
Financial Controls Programme and
update on roll-out of testing
• IT security update
During the year the Committee
focused on the following areas:
Financial reporting and
significant accounting issues
The Committee focused on the
application of our accounting policies and
on the areas of judgement and estimation
in relation to significant accounting
and tax matters. The primary areas of
judgement and estimation considered by
the Committee in relation to the 2022
financial statements and how they were
addressed are outlined below.
Review of signi
ficant contracts
The Group executes a number of
contracts on a fixed 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 satisfied with the
accounting for signi
ficant lump sum
projects in progress at the year end
and the material judgements taken by
management in recognising profit or the
quantification o
f 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.
Goodwill impairment reviews
At both half year and the year end,
the Committee considered whether
indicators of impairment of goodwill
existed and the results of any related
impairment reviews. At 30 June 2022
indicators of impairment of goodwill
were identified in respect o
f the Projects
business unit, therefore, a detailed
impairment review was performed at
that time. No impairment was necessary,
although the committee noted that
reasonably possible future changes
in discount rates could lead to an
impairment and appropriate disclosure
should be made in the interim financial
statements. At 31 December 2022
impairment reviews were carried out
on all business units on as required by
Accounting Standards. The Committee’s
role is primarily to challenge the
significant assumptions and estimates
made by management to ensure that
they are reasonable and appropriate
and to review the work done in these
areas by KPMG, who identified this as
a key audit matter. As a result of the
testing management concluded that
the Goodwill balance was impaired by
$493.2m, primarily in the Operations BU.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
119
Governance
Financial statements
The Committee challenged and was
satisfied with the assumptions and
forecasts used and the results of the
reviews, and with the sensitivities
disclosed. The significant assumptions
were around short and longer-term
growth rates, including the impact
of current challenging markets, the
impacts of energy transition on Wood’s
core markets and discount rates. The
impact of these changes at year end was
primarily in the Operations BU which
had seen the largest reduction in growth
rates and margins since the half year
reviews. Sensitivities related to these
were performed, further details of which
can be found in note 10 of the Group
financial statements.
Review of provisions
The Committee considered 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 financial statements. The
forecasts used were those approved by
the Board and form part of the short
and medium-term planning for the
Group. The Committee also reviewed
the level of committed facilities available
to the Group and compliance with the
interest cover covenant. The Committee
was comfortable that the going concern
basis remains appropriate.
Sale of Built Environment
Consulting
At year end the Committee reviewed
the accounting for the sale of the Built
Environment Consulting business including
the gain on disposal and the treatment of
the gain as an exceptional item.
Reporting measures
The Committee reviewed the interim
and year end annual reporting, including
the use of alternative performance
measures (APMs), such as adjusted
EBITDA, on behalf of the Board. The
Committee was comfortable that APMs
add to stakeholders’ understanding of
our financial per
formance 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 satisfied
that the items noted were suf
ficiently
material by nature or by size or a
combination of both to require separate
disclosure, and that all such items had
been identified.
Review of pensions
The Committee reviewed the accounting
for the Group’s de
fined benefit
obligations under IAS 19 Pensions
at the half year and year end. The
Committee reviewed the results of the
actuarial review performed on behalf
of management by a leading actuarial
firm, with a
focus on the key underlying
assumptions as set out in note 33 to the
financial statements. The Committee
also considered the appropriateness of
recognition of the pension asset under
IAS 19. To help with this assessment the
Committee received reports from KPMG
who use in-house actuaries to review
and challenge the assumptions made.
The Committee was satisfied with all the
assumptions, the disclosures made and
the results of the reviews.
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
profit. The Committee received a
detailed written report on taxation
matters at each meeting. Where
necessary, the Committee considers
advice received from professional
advisory firms and concluded that the
positions taken were appropriate. The
Committee also received updates on
work undertaken by KPMG in this area.
Internal financial control
The Board is ultimately responsible for
the Group’s system of internal control
and for reviewing its effectiveness. The
ARE Committee has been given the
responsibility to review the effectiveness
of the
financial and IT internal control
systems implemented by management.
This work was informed by regular
updates from the President Group Audit
& Risk and the results of a detailed self-
assessment processes undertaken across
the Group. The external auditors also
provide feedback on areas of
financial
or IT control which they wish to bring to
the Committee’s attention. The Board’s
assessment of the Group’s internal
financial and IT control environment, as
informed by Group Audit, is effective, with
some areas where improvement is needed.
More rigorous monitoring and application
of project controls is required over a small
number of higher risk contracts in the
Projects business unit, including the EPC
Americas Engineering projects, which are
diminishing as no further projects are
being pursued. Improvements are also
required in the internal controls of non-
integrated businesses, particularly in the
Consulting business unit, which are not
on the common ERP system or supported
by the shared service centre. The project
to establish a common ERP continued in
2022 with detailed planning and design
of a global Oracle Cloud instance. A more
consistent control environment was noted
for entities hosted in the common ERP
environment and supported by the shared
service centre. The ARE 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 2021
that a deputy CFO would be appointed to
further strengthen the Group team and to
relieve some of the pressure on the CFO. It
was felt that this, in combination with the
governance roles, would further enhance
the overall control environment, and this
role was filled in 2022.
IT security review
The responsibility for reviewing IT
security is delegated to the ARE
Committee. At the August Committee
meeting, the Committee received a
presentation from the CIO and CISO
who provided a cyber security update
which reflected an improving and
maturing cyber readiness posture.
Audit, Risk & Ethics Committee
continued
John Wood Group PLC
Annual Report and Accounts 2022
120
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 2022 and noted that the maturity
level had increased against a landscape
of increasing cyber risk.
Group audit
Monitoring the activity of the Group
Audit function is an agenda item at each
Committee meeting. The President of
Group Audit & Risk 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
findings
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 2022, the internal audit plan continued
to recognise the importance of ESG
matters with audits focused on the people
management aspects of modern slavery
and human rights, the sustainability
statement, and variable compensation
elements. End-to-end process audits were
carried out over the procure to pay and
record to report cycles on the Oracle Orbis
and Voyager platforms, re
flecting the
increased volumes of transactions handled
by the shared service functions, along with
an audit of the P&O shared service centre.
In mid-2022, the internal audit and Group
operations auditing teams were combined
under the leadership of the President
Group Audit & Risk. This expanded the
remit of the combined Group Audit team
to cover project execution, compliance
with HSSES, Technical and Quality policies
and standards, and clarified Group Audit
as the one provider of independent audits
across all the Group’s principal risks. The
2022 audit plans for each part of the
team continued to be executed for the
remainder of 2022 and reported to the
ARE Committee from August onwards.
For 2023, the Group Audit planning
process has been carried out across the
full remit of the combined team. Several
audits of key projects and locations will
cover multiple scope areas including
financial controls, commercial controls,
and project execution compliance. ESG
continues to be a significant part o
f
the audit plan with audits including the
Modern Slavery & Human Traf
ficking
Statement and an annual audit of
variable people compensation elements.
During 2022, EY have continued to be the
provider of strategic IT internal audits,
under the supervision of the President
Group Audit & Risk.
Any other internal audits that require
specialist knowledge or language
skills outside of the internal audit
team’s abilities, are wholly or partly
outsourced as appropriate. The Chair of
the Committee and other Committee
members hold private discussions with
the President of Group Audit & Risk as
necessary during the year outside the
formal Committee process.
Ethics & Compliance
As noted the scope of the Committee
was expanded in August 2022 to include
Ethics & Compliance. In the August and
November meetings the Chief Ethics &
Compliance Of
ficer and Group General
Counsel attended the meetings and gave
an update of the E&C programme, an
overview of major ongoing cases and at
the November meeting gave an update
on sanctions risk, which was heightened
following the situation in Ukraine. The
Committee also discussed the ‘Speak Up’
report that promoted an open door culture
and reviewed the nature and frequency
of reports. The Chair of the Committee
also periodically meets with the Chief
Ethics & Compliance Of
ficer 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 financial
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 2022 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 reviewed 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 agreement from the Company, the
KPMG lead partner for 2021 was changed
to Paul Glendenning, and 2022 was
his second year as partner. 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 2022
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
confirmation
from the external auditors
regarding their independence, and noted
the exceptions identified by KPMG and
set out in their auditor’s report had not
compromised thier 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 five years. As noted, the
lead partner was changed by KPMG
during 2021 and he will remain in place
for the 2022 audit. The Board approved
the Committee’s recommendation that
KPMG be reappointed for the 2023
audit. Accordingly, a resolution proposing
the appointment of KPMG as the
Group’s external auditor will be put to
shareholders at the 2023 AGM. There are
no contractual obligations that restrict
the Group’s choice of external auditors.
The Company confirms that it complied
with the provisions of the Competition
and Markets Authority (CMA) Order for
the financial 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 2022 is reported in
note 4 to the financial statements. In the
opinion of the Committee, the provision
of these non-audit services did not
impair KPMG’s independence. In respect
of the fees charged in connection with
the disposal of the Built Environment
Consulting business, the decision to
use KPMG for the assurance related
elements of the circular was based on
their existing knowledge of the Group
and the ef
ficiency that that would bring
and given the nature of the work the
Committee was comfortable that it did
not compromise their 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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
121
Governance
Financial statements
Read the Remuneration
Committee Charter at:
woodplc.com/remcommittee
Video conference
Jacqui Ferguson
Chair, Remuneration Committee
Membership
During 2022, the Remuneration
Committee membership comprised of
the following independent non-executive
directors: Jacqui Ferguson (Chair),
Nigel Mills and Brenda Reichelderfer.
In addition, all non-executive
directors were invited to attend the
Remuneration Committee meetings
to enable awareness of Committee
activity. Members of the Committee
are considered independent and short
biographies can be found on page 102.
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 “Policy”). The Committee
has a written charter, which is reviewed
annually and 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
Company strategy, 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 enables the strategy
• Reflects a balance o
f
fixed and variable
reward, 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 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 Policy and principles support
the needs of our business over the
next few years, delivery of 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 2022
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Remuneration contents
Remuneration Committee
122 – 124
Chair’s letter
125 – 127
Workforce reward
128 – 130
Remuneration Policy
131 – 139
Executive directors’ remuneration
140 – 152
Single figure o
f remuneration*
140 – 145
Leaving arrangements for Robin Watson*
146
Payments to past directors*
146
Share based interests awarded during the year*
147
Updating LTIP targets following the sale of Built Environment Consulting
147
Statement of directors’ shareholding and share interests*
148 – 149
Pay ratio of CEO
149
TSR performance summary & CEO remuneration
150 – 151
Relative importance of spend on pay
151
Statement of implementation of Policy
152
Chair of the Board and non-executive directors*
153
*Audited
Unless otherwise noted, the remaining sections of the
Annual Remuneration Report are not subject to audit.
“Our refreshed policy and application of remuneration
principles enable the business strategy and performance
at Wood.”
In-person
John Wood Group PLC
Annual Report and Accounts 2022
122
Remuneration Committee
Matters considered
Feb
Mar
Apr
May
Jun
Aug Nov
Policy application for year ahead: annual salary review
– executive directors and Chair of Board, ensuring
alignment with wider workforce
Short- and long-term incentives: future year
arrangements, performance measures for all plans,
executive director participation levels, risks and
impact of windfall gains
Review projected outcomes for previous performance
periods for ABP and LTIP, including review of team
and personal objectives
Variable reward: ongoing review of
performance against targets for executive
directors and all participants
Chief Executive retirement arrangements and new
CEO remuneration arrangements, including post
employment shareholding
Remuneration arrangements and impact on inflight
awards following sale of Built Environment Consulting
Review of Policy including feedback and
shareholder consultation
Preparation of annual remuneration report and sign
off; determine stakeholder engagement
Annual general meeting preparation
Review ELT and Company Secretary remuneration
including new appointments, discretionary awards,
and annual review
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), furlough, UK real living
wage, wellbeing, share plans, benefits, pensions, spot
bonus, annual salary review, employee engagement
and reward engagement framework
Review and approved the updated discretionary and
all employee share plan rules
Share dilution and management: discussion
and approval
External market update from advisors including
update on investor guidelines; emerging legislation/
best practices/current thinking
Committee performance, review effectiveness,
charter, and objectives – review of current year and
determination of following year
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 fixed and
variable pay, with the following main
components: base pay; benefits 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 reflect wider work
force
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,
significant environmental incidents,
large or serial fines or sanctions
from
regulatory bodies and/or significant legal
judgements or settlements.
To enhance the rigour in which
performance is reviewed, the Committee
utilises a discretionary matrix when
assessing short-term (ABP) and long-
term (LTIP) incentives outcomes. As
with all Committee decisions (in line
with section 172 of the Companies Act
2006), we reflect 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 2022 (detail)
During 2022, the Committee met seven times to discuss remuneration issues and
the operation of the Policy. Additional meetings were held in March, April and June
to determine variable reward outcomes for 2021, which were approved at the AGM;
the impact from the sale of Built Environment Consulting; and the remuneration
arrangements for the retiring and joining executive directors. There was full Committee
attendance at each meeting as well as additional Board member attendance where
appropriate. The Committee has a regular schedule of agenda items in addition to
other matters. The following matters were considered during the year:
Inform, discuss and planning
Decision made
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
123
Governance
Financial statements
Workforce engagement and remuneration
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
data on the composition, remuneration, engagement, retention
and diversity of the workforce.
In 2022, the Committee continued to engage with employees
globally, supported by the internal reward team, participating
in employee focus groups and feedback networks to ensure
our people are engaged, safe, and developed to reach their full
potential. We also discussed and reviewed updates on the wider
workforce at every Committee meeting, covering topics such
as pay equity, employee share plans, cost-of-living response,
retention, ethnicity pay reporting, benefits & retirement plans,
and gender diversity. The Committee continued to receive
regular updates from the Executive President of People &
Organisation (P&O) and President of Reward & Mobility
throughout the year on wider workforce remuneration matters,
ensuring that broader reward practices are understood and
aligned when setting executive remuneration.
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 £73,100 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 considered 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 con
flicts o
f interest and judged that there were
appropriate safeguards against such con
flicts. As well as
advising the Committee, Deloitte provided other services in
2022, predominantly related to tax compliance and advisory,
and immigration advice. Where appropriate, the Committee
also receives input from the Chair of the Board, CEO, CFO,
Executive President of P&O, 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 89, Lintstock undertook a review of the
Committee during the year. The performance of the Committee
continues to be positively rated overall. The Committee will
focus on continued engagement with management, particularly
the new CEO, to achieve the right balance between being
supportive and appropriately challenging management to
ensure accountability.
Shareholder consultation
As a minimum, the Committee engages annually with
significant 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 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 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 the year where appropriate and were
appreciative of the level of support for our voting resolutions
in 2022. The Committee, as always, is thankful for the time
and considerations conveyed by our stakeholders and trusts
that the proposed changes to and 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 2022 AGM voting
in respect of our remuneration matters and our voting outcome
in respect of the 2020 Policy.
Item
AGM
date
Vote For
(including
Discretionary)
Vote
Against
Votes
Withheld*
Advisory vote
on the 2021
Remuneration
Report
22
June
2022
468,842,224
(86.32%)
74,271,350
(13.68%)
173,240
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 2022
124
Remuneration Committee
continued
Chair’s letter
Dear Shareholder
I am pleased to present to you, on
behalf of the Board, the annual report
on remuneration for the year ending
31 December 2022, which has been
approved by both the Remuneration
Committee (the “Committee”) and the
Board. As part of our normal three-year
cycle this includes some minor updates
to our directors’ remuneration policy, and
its associated future application, which
we will be seeking your support for at the
2023 Annual General Meeting (AGM).
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,
enables the company culture, and
supports delivery of shareholder value.
We continue to be mindful that reward
reflects the wider stakeholder experience
at the same time as balancing the need
for motivation and retention. We have
also been mindful of the particular
challenges with regards to cost of living,
especially for our employees.
2022 was a significant year o
f
strategic progress for the Group
with the transformational sale of
Built Environment Consulting, which
restored financial strength to Wood,
along with a change in our Executive
leadership and the setting of a new
strategy with medium-term financial
targets. This new strategy is supported
by the changes we have made to our
remuneration application. This has
resulted in increased focus on
financial
performance in the 2023 annual bonus
plan, and simplification o
f the Long-Term
Incentive Plan performance measures to
align with the experience of shareholders
and the commitments made at our
Capital Markets Day to deliver strong
financial returns. 2023-25 LTIP awards
will see an increased weighting on
EBITDA performance, alongside relative
TSR versus our global peers and ESG
performance measures that are critical
to us and our investors over the long term.
Workforce considerations
Due to the impact of the rising cost
of living, management implemented
numerous actions to provide support to
our global workforce. Full details of these
are provided in the people section of the
annual report, and include:
• focused interim salary reviews
• increased financial resilience resources
• additional discounted benefits and deals
to ease the burden of everyday expenses
• early application of real living wage
increases in the UK
• wider engagement on our employee
assistance program, which underpins
our wellbeing activities
• increased engagement activities such
as global townhalls and leadership visits
During the year the Committee
continued to engage with employees
globally, supported by the internal
reward team, participating in employee
focus groups and feedback networks
to ensure our people are engaged,
safe, and developed to reach their
full potential. We also discussed and
reviewed updates on the wider workforce
at every Committee meeting, covering
topics such as pay equity, employee share
plans, cost-of-living response, retention,
ethnicity pay reporting, benefits &
retirement plans, and gender diversity.
Having considered the feedback, we
implemented a restricted stock plan for
those eligible leaders below the executive
leadership team in 2022 to support
retention across our wider leadership
team and increase their alignment with
the future recovery of the Company
and the experience of our shareholders.
We also listened to the desire from our
people to own more of the business. To
support this, we are submitting updated
plan rules for our global Employee Share
Plan (ESP), as approved by shareholders
in 2015 and now operational in 18
countries, including a tax ef
ficient Share
Incentive Plan (SIP) in the UK; this update
will enable the grant of free shares, when
we are able to do so. We are also seeking
your support to introduce a tax ef
ficient
plan in the US (the Employee Share
Purchase Plan (ESPP)). The intention
of these inclusive plans is to continue
to increase employee share ownership
across Wood and therefore further align
the interests of our employees with those
of shareholders.
ESG considerations
Wood continues to focus on creating
a diverse and inclusive workforce
with female representation in senior
leadership roles. Our female leadership
is at 31.6%, down from 33% in 2021
primarily due to the reshape of the
business through the sale of Built
Environment Consulting which
had a higher proportion of female
representation. Diversity continues to be
a key focus area for the business in 2023
as we are committed to our previously
disclosed target of 40% of leadership
roles being held by females by 2030. We
were delighted to see Wood progress in
the FTSE Women Leaders Review report,
to 44.4% of our Board and 27.3% of our
combined executive committee and
direct reports represented by women.
Further information on our continued
progress and actions taken can be found
in our People section on pages 60 – 65.
Sadly, we recorded two serious injury
incidents, which could potentially have
resulted in fatalities during the year.
We want every employee to go home
safely every day, and our local teams
continue to do all they can to ensure a
safe working environment. In addition
to carrying out full investigations to
understand what happened and how
we can prevent any future occurrence,
the safety and wellbeing of our
people remains paramount. From a
remuneration perspective there will be a
zero outcome for the Serious Injury and
Fatality (SIF) element of the 2022 annual
bonus plan.
Shareholder considerations
There was considerable strategic progress
in 2022 to strengthen Wood. We reset our
balance sheet through the sale of Built
Environment Consulting and addressed
our legacy issues. Throughout the year
we strengthened our engagement with
shareholders, including a perception
study in the summer that directly fed into
our strategy development and capital
allocation decisions. In November 2022 we
held a Capital Markets Day to outline our
new strategy – for selective growth across
energy and materials, along with our
three strategic pillars of inspired culture,
performance excellence and pro
fitable
growth. The event also introduced our
investors to our new executive team.
We are, however, very mindful of the
shareholder experience in the year.
Our share price reduced from £1.91
(closing mid-market price on 31 December
2021) to £1.32 (closing mid-market price
on 31 December 2022) and we did not
pay any dividends. This performance
is disappointing, and the Committee
considers the share price performance
when determining remuneration practices
and outcomes as well as the employee
and other stakeholder experiences.
Remuneration and performance
outcomes for 2022
The application of the Remuneration
Policy in 2022 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 Safety & Sustainability Committee,
with a further external audit carried
out by KPMG, following the end of the
financial year.
Annual Bonus Plan Outcome
In 2022 management focused on
continuing to de-risk the business; the
sale of Built Environment Consulting,
which reset the Group; and the
development and communication of a
new three-year strategy. The Committee
was therefore mindful of how to fairly
recognise achievements, whilst balancing
the experience of wider stakeholders.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
125
Governance
Financial statements
Commitments made prior to Ken joining
the Board will continue to be honoured
in accordance with the remuneration
policy. This includes legacy arrangements
made to facilitate his recruitment to his
previous role of COO, which was not an
executive director role. Further details
are set out on page 146.
Robin ceased to be an Executive Director
of Wood on 1 July 2022. He remained as
an employee until 30 September 2022
in an advisory role to support a smooth
transition and received salary, benefits,
allowances, and pension until this date,
as well as a payment in lieu of untaken
accrued annual leave. Details, as required
by section 430 (2B) of the Companies
Act 2006, were provided on our website,
and fully complied with the remuneration
policy; these are also found on page 146.
2023 Remuneration Policy update
During 2022 the Committee undertook
a comprehensive review of the current
policy, which expires at AGM in 2023,
considering its alignment to both our
new strategy and external best practice
guidance published by our investors and
advisory bodies. The Committee agreed
that the majority of the existing Policy
remains appropriate and is proposing
to make limited improvements to align
with best practice more closely. In
November 2022 we wrote to our top
thirty shareholders, representing circa
82% of our shareholding, along with the
voting agencies, advising them of our
considerations and intentions, to seek
engagement and feedback.
In response to feedback from shareholders,
we are strengthening post cessation
shareholding requirements. For awards
granted from 1 January 2023, executive
directors will be required to maintain
a shareholding equal to 100% of their
shareholding guidelines for two years
post-employment. The current approach
of a reduced requirement of 50% of
shareholding guideline applying the
second year will continue to apply for
awards granted between 1 January 2020
and 31 December 2022.
In addition, as our Long Term Plan rules
expire in May 2023, we are submitting
updated plan rules for approval at the
AGM in 2023, the Discretionary Share
Plan (DSP). The key terms of the plan
remain broadly unchanged, and we
have updated the proposed policy as
appropriate to ensure our policy for
leavers aligns more closely with current
investor expectations and market practice
around time pro-rating, performance
assessment and the timing of vesting.
As detailed in my letter to key investors
and the voting agencies in November
2022, following the completion of the
sale of Built Environment Consulting
in September 2022, the decision was
taken to exclude its contribution from
both the original targets set based on
the original plans for 2022, and the
performance achieved for 2022. This
adjustment was based on the original
anticipated contribution of the Built
Environment Consulting Business to
revenue and EBITDA. These targets are
detailed in full on pages 140-144, in line
with our usual practice of disclosing
targets retrospectively.
This approach has had no material
impact on the outcome, which is 36%
of maximum for Ken, CEO; David, CFO;
and Robin, former Chief Executive.
Having carefully considered outcomes
and stakeholder experiences, using the
discretionary matrix, the Committee
believes the bonus outcomes reflect
the performance of management and
the substantial efforts to strategically
position Wood for future growth by
the new CEO and his appointed team.
Payments for Ken and Robin will be pro-
rated for time in role.
Long Term Incentive Plan Outcome
Performance measures for LTIP 2020-
2022 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.
As detailed in my November 2022 letter,
no changes were made to performance
measures or targets as a result of the sale
of Built Environment Consulting for this
award because it formed part of the Group
for 33 of 36 months of the performance
period. None of the targets were achieved
and therefore no award is due for LTIP
2020-2022. This reflects the experience
of our shareholders during this time.
Impact of the sale of Built
Environment Consulting on
ongoing remuneration
The sale also impacted the performance
targets for outstanding LTIP awards
that will be measured over the 2021-2023
and 2022-2024 periods. Consistent with
the approach for 2022 Annual Bonus
Plan awards, the contribution of Built
Environment Consulting has been removed
from the performance assessments and
targets for EBITDA margin percentage
improvement and revenue growth for
LTIP 2021-2023 and LTIP 2022-2024;
the leadership gender diversity target
has also been updated for LTIP 2022-
2024; and carbon emission reduction
targets will remain unchanged for both
performance periods. This adjustment
was based on the original anticipated
contribution of the Built Environment
Consulting Business to target. The
updated targets are fully disclosed on
page 147.
We have also updated the relative TSR
peer group for these awards to make
sure that they appropriately reflect the
structure and operations of our ongoing
business and our focus on the Energy
and Materials markets. As such we
have removed Jacobs, WSP, TetraTech,
Stantec and Aecom due to the low
market overlap following the transaction,
and added Maire Technimont and
Técnicas Reunidas, due to their energy
focus, to ensure that the peer group size,
and therefore the
final per
formance
assessment, is robust.
These changes will take effect from the
start of the relevant performance period.
The Committee considered the potential
impact of these changes carefully,
including consulting with shareholders
on these changes in my November 2022
letter. The Committee took comfort that
based on performance achieved to the
end of 2022 these changes would not
materially impact projected outcomes,
which are currently likely to be at the
lower end.
CEO transition
In April 2022, we announced Robin
Watson’s intention to retire. Ken
Gilmartin was promoted from Chief
Operating Of
ficer to CEO on 1 July
2022, having joined Wood originally in
August 2021. Ken’s new remuneration
arrangements were set in accordance
with the Remuneration Policy and
disclosed externally in accordance with
corporate governance requirements.
Ken’s salary was set at £750,000 and he
will be entitled to our standard benefits,
although insured benefits support will
continue to be provided in the US as well
as the UK. His retirement entitlement
has been set at 9% of salary, which is
aligned with the arrangements for the
wider workforce in the UK. He will also
receive a gross allowance of £150,000,
payable in three equal instalments to
support with his relocation from the US
to the UK. Although there have been
no changes to the long-term incentive
and annual bonus opportunities, which
have been set at a maximum of 200%
and 175% of salary respectively, Ken’s
2022-2024 LTIP award granted in 2022
will remain unchanged at 100% of salary
granted in his previous role, and his ABP
opportunity will be pro rata to reflect
time spent in both roles.
John Wood Group PLC
Annual Report and Accounts 2022
126
Chair’s letter
continued
Jacqui Ferguson
Chair, Remuneration Committee
We are also introducing a payment of 20%
of maximum for threshold performance to
recognise performance more appropriately
within the target range.
Long Term Incentive Plan
To reflect our Capital Market Day
commitment to deliver strong financial
returns and to strengthen the alignment
between executives and the experience
of our shareholders, it is proposed that
the performance measures for 2023 LTIP
awards will be 60% EBITDA, 30% relative
TSR versus a sector peer group; and
an ESG framework weighted at 10%,
capturing progress against both carbon
emission reduction targets and gender
diversity targets. These measures align
our key strategic priorities with value
generation for our shareholders and
continue to support our sustainability
plan. No award will be made for the
EBITDA measure unless performance is
in line with the commitment to financial
returns made at our Capital Markets Day
in November 2022. Full details, along with
the threshold and maximum targets,
can be found on page 152.
We will continue to anchor participation
levels on 200% of salary for the CEO
and 175% for the CFO. However, having
carefully considered the material reduction
in share price during 2022, and feedback
received, the Committee has determined
to apply its discretion and reduce the
participation levels for 2023 by 15%. This
results in a participation level of 170%
of salary for the CEO and 149% for the
CFO. As in previous years, and detailed
in the Policy, no portion of these awards
is released until five years
from grant,
further aligning shareholder and executive
interests. We will continue to monitor share
price performance during 2023.
Proposed policy
application for 2023
Full details of our proposed
implementation of the Directors’
Remuneration Policy for 2023 can be
found on pages 131 – 139.
Salary and benefits
Recognising investor sentiment regarding
executive director pay and that of the wider
workforce, in January 2023 we increased
the base salary for both executive directors
by 3%, significantly less than that applied
to the wider workforce in the UK, where
the annual salary review budget was 6%.
This increases Ken Gilmartin’s base salary
to £772,500, from £750,000, and David
Kemp’s to £526,355 from £511,024. There
is no change to benefits provided since
our last report. As disclosed in previous
annual reports and Policy, executive
directors’ pension contributions are
aligned to those of the wider workforce
in the UK at 9%.
Annual Bonus Plan
For 2023 the maximum bonus opportunity
for the CEO 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. We have simpli
fied
the bonus structure by increasing the
weighting on financial measures
from
60% to 90% to directly incentivise delivery
of pro
fitable growth over the year ahead.
Details of the performance measures are
on page 152 and will be EBITDA at 40%;
cash generation at 40%; revenue backlog
at 10% and an ESG framework at 10%,
increasing the emphasis on financial
performance whilst remaining focused
on safety and retention of our people.
Our proposed changes to performance
measures for 2023 ABP and LTIP awards
align with our long-term vision to deliver
solutions that transform the world to be
cleaner, sustainable, safe, secure, faster,
ethical, and equitable, and our strategic
pillars of pro
fitable growth, per
formance
excellence and inspired culture.
Looking ahead
I trust that in the report for 2022 we
have clearly explained our application
of the existing Directors’ Remuneration
Policy. I also trust that the changes to the
Remuneration Policy reflect that we have
listened to feedback from our shareholders
and ensure remuneration is aligned to
our strategic pillars of pro
fitable growth,
performance excellence and creating an
inspired culture. Our share plans renewals
ensure we are focused on increasing share
ownership for our people in a more inclusive
manner and simplify renewal voting dates.
We enter 2023 as a new Wood, led by
a new team, focused on delivering the
strategy we recently shared at our Capital
Markets Day to enable us to deliver
sustainable returns. We have attractive
growth prospects in our core markets, we
are trusted by our clients, and we have
the talent and solutions to enable a net-
zero future. We are focused on designing
a strong future for Wood and enter this
New Year with positive momentum. I look
forward to your support on the relevant
resolutions at the AGM.
Signed on behalf of the Board and as
Chair of the Remuneration Committee
Annual
bonus plan
Long term
incentive plan
Underpins
Other
EBITDA
Revenue backlog
Cash generation
Safety
Voluntary employee
turnover
TSR
EBITDA
Carbon emission
reductions
Improvement in leadership
gender diversity
Discretionary matrix
Holding periods
Shareholding
Profitable Growth
A higher grade business portfolio
●
●
●
●
●
●
●
●
Inspired Culture
Creating a great place to work
●
●
●
●
●
●
Performance Excellence
Results focused and delivering for clients
●
●
●
●
●
●
●
●
Alignment to strategic pillars
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
127
Governance
Financial statements
More information on the details can be found
in our People section on pages 60 – 65.
Supporting our
people through
cost of living
challenges
Wood is a people business, and our people
will always be our differentiator. We are
committed to providing transparent,
internally fair and externally competitive
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.
Direct employees of Wood have a higher
than average salary in the UK due to the
unique skills and expertise required within
our professional workforce. In 2022 the
median salary in the UK was £62,000.
During the cost of living challenges we
continued to support all our people,
regardless of their income through the
following actions:
Pay equity
During 2022 we increased transparency
of pay for our people, with pay equity
reported for circa 78% of the global
population. The reports enable line
managers to review the pay of their
people against salary bands which are
specific to the
function and country of
work to ensure no bias in the application
of our pay frameworks. Line managers
are accountable for ensuring fair pay
practices for their people and engaging
with them in open, honest dialogue
about their pay.
Real Living Wage
Wood is an accredited Real Living Wage
employer. Following the announcement
of the 10.1% real living wage increase in
September, we will apply this early to
employees impacted, well ahead of the
May 2023 deadline. We also encouraged
our third-party suppliers to take the
same approach to early adoption ahead
of the winter period.
Flexible and hybrid working
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
also helps mitigate transportation costs
for those who can, and wish to, work
from home.
Wellbeing
Our Employee Assistance Programme
(EAP), continues to play a significant role
in our commitment to the wellbeing of
our people. Services are provided through
two vendors, one for the UK and one for
the rest of the world. The EAP underpins
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, financial pressures,
managing stress, career success,
parenting, managing workplace pressure,
improving esteem and confidence, and
maintaining physical health.
Financial resilience
We remain committed to supporting
employees to assess and manage their
financial commitments and goals.
Financial wellbeing is a key pillar on our
Living Well strategy, providing employees
with a range of useful resources on how
to improve their resilience, reassess their
priorities and build stronger foundations
as well how to seek additional support.
We continue to offer a range of deals
and discounts through our established
benefit providers to help with easing the
burden of everyday expenses.
Interim salary adjustments
In July, business leaders were empowered
to consider and implement interim
salary adjustments, supported by P&O.
A targeted approach was taken in the
majority of locations. In addition, in
collaboration with our clients, interim
reviews were implemented for some
colleagues in our trade and craft teams in
the UK to support cost of living increases.
Annual salary review
Towards the end of the year we
completed our annual salary review
process for eligible employees with
an effective date of 1 January 2023.
We applied appropriate budgets in
all 60+ countries in which we operate,
considering inflation projections;
economic outlook; business performance;
industry and/or client considerations;
attraction; retention and adjustments
following pay equity reviews. In the UK,
US, Canada and Australia the annual
salary review budget was 6%. Line
managers engaged with their teams
before the end of year, supporting
household budgeting.
John Wood Group PLC
Annual Report and Accounts 2022
128
Workforce reward
Read our full gender pay gap report at:
woodplc.com/genderpay
Employees at snapshot date
5,488
23%
female
77%
male
Gender balance
Mean gap/median gap pay
32.8%
median
26.0%
mean
Mean gap/median gap bonus
32.5%
median
44.2%
mean
Sharing success
We are committed to ensuring that
our people benefit
from the collective
success of Wood and are rewarded for
their commitment to delivering our vision,
values, and purpose.
Our employee share plans, the Employee
Share Plan (ESP) and the Share Incentive
Plan (SIP), also offered for our UK
workforce, continue to offer employees
the chance to own a stake in the future
of Wood, along with the ability to bene
fit
from matching shares and dividends.
In 2022 we extended the ESP offering to
eligible employees in Brunei and Kuwait
and also moved to an “evergreen” SIP
in the UK enabling our employees the
flexibility to join the plan at any time
throughout the year, subject to eligibility.
Since May 2022, when we launched
global spot bonus reporting, we
rewarded more than 650 employees
with spot bonus awards 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 60 – 65.
Summary of 2022 share plans
enrolment:
28,423
eligible employees
18
countries
9
languages of inclusive
communications and materials
2,325
enrolled (8.2% of total eligible)
16%
UK SIP enrolment (23% in 2021)
Gender pay
We remain focused on gender pay equity
and are committed to ensuring that all
our employees, regardless of gender,
are paid the same for equivalent work,
aligned to competitive market rates.
The nature of our business attracts a
higher percentage of males due to the
predominantly technical focus of the
roles in of
fice, site and o
ffshore locations.
This means, notwithstanding our efforts,
we still have a higher percentage of
male employees in technical, higher paid
roles leading to a pay gap against the
reporting criteria.
We recognise the importance and value
of diversity in our workforce and the part
we have to play in encouraging female
progression within our industry. We have
local action plans in all our locations
as well as gender specific targets over
the longer term built into our variable
remuneration plans.
In 2022, we also introduced voluntary
internal ethnicity pay gap reporting in
Australia, the UK and US.
Through engagement with the workforce
this year we have taken the following
actions to enhance how we share success:
• Updating our annual bonus plan for
key leaders with a simplified bonus
structure for 2023 aligned with
the operation of the plan for the
executive directors.
• We implemented a restricted stock
plan for eligible leaders below the
Executive Leadership Team (ELT).
• Seeking shareholder support at our
AGM for more inclusive employee
share plans to encourage greater
employee ownership.
We continue to engage with our
workforce around the best ways to
share success and will continue to
engage on this topic through appropriate
channels including our global employee
engagement survey.
Pay ratio of CEO
The pay ratio of the CEO continues to
reflect 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.
12:1
CEO pay ratio
More information on our gender pay
gap results can be found in our People
section on pages 60 – 65.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
129
Governance
Financial statements
Alignment to the workforce
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.
This table provides a summary of executive directors’ remuneration outlined in our revised Policy and alignment to the wider
workforce. The Policy with updated scenario charts can be found at
woodplc.com/rempolicy
Element and purpose of executive director
remuneration
Alignment with workforce
Salary
To provide an appropriate level of
fixed 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 fixed
instalment basis.
Benefits
To provide fair and market competitive bene
fits
which support the health and wellbeing of our
executives to perform at their best. Employee share
plans give our people the opportunity to benefit
from the success to which their performance and
commitment contributes.
All employees are provided with benefits typical o
f 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
benefits to suit their li
festyle and circumstances.
Employee share plans are 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).
Retirement related benefits
To support the long-term financial 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, executive directors are currently aligned to the wider
workforce with a maximum of 9% employer contribution.
Short-term incentives
To incentivise executives to deliver strategic
business priorities for the
financial year with
compulsory deferred payment designed to provide
additional alignment with stakeholders and
reinforce retention.
The Annual Bonus Plan (ABP) provides a reward for senior employees critical to future
success and who are in a position that can materially influence the success o
f 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
aligned to strategy throughout the organisation. Executive directors and the ELT
receive 75% of any award earned in cash, with the remainder deferred into a share
based award for a further two years. Other participants are paid fully in cash.
ABP participation typically applies to circa 3.7% of the global employee population.
Long-term incentives
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. For executive directors and the ELT the Long Term Incentive Plan (LTIP),
a performance-based plan, provides an opportunity to earn an award, in the form of
conditional shares, subject to remaining in employment. Measures are linked to long-
term creation of shareholder value. For other senior leaders a time-vested restricted
stock model ensures alignment of variable pay in the form of shares, consistent with
global markets in which we operate. Participation levels are based on the job which an
individual carries out, linked to a global framework.
Long-term incentive participation typically applies to circa 0.8% of the global
employee population.
Shareholding requirements
To ensure that executive directors’ interests
and individual wealth are aligned with those of
shareholders over a long-term performance period.
Shareholding requirements apply to executive directors only, including the requirement
to hold shares post-employment.
John Wood Group PLC
Annual Report and Accounts 2022
130
Workforce reward
continued
Remuneration Policy
Remuneration Policy 2023
In accordance with section 439A of the Companies Act, this Policy will be proposed as a binding resolution for
approval at the AGM in 2023. It is intended that this Policy will take effect from the date of the AGM, subject to
shareholder approval. This policy will replace in full the Policy set out in the 2019 annual report which was approved
by shareholders at the 2020 AGM. If approved, the Committee will put a revised policy to shareholders again no later
than the AGM in 2026. If not approved, the Committee will present a revised policy for a further shareholder vote
within 12 months.
Introduction
The objective of the Policy is to provide a remuneration and
benefits package that promotes the long-term success o
f the
organisation and supports the delivery of its strategy, with the
intent of creating a competitive total remuneration package
which attracts and retains executives while creating alignment
between incentivising executive performance and the interests
of stakeholders. The future policy table on pages 132 – 134
summarises the Policy and its components.
Full details of the application of the Policy are contained in the
Annual Remuneration Report and the illustrations of future
Policy application are updated annually in the scenario charts
on page 138.
Scope of the Remuneration Committee
The Committee has overall responsibility to the Board and other
stakeholders to oversee and be accountable for all aspects
of remuneration and bene
fits
for the executive directors
including the Policy, ensuring appropriateness and governance.
In addition, in line with the Corporate Governance Code, the
Committee is also accountable for overseeing remuneration
and benefits
for members of the ELT, including the Company
Secretary. The Committee achieves this by ensuring alignment
of compensation philosophy, incentives and rewards with the
wider workforce and prevailing culture at Wood.
Read the Remuneration Committee Charter at
woodplc.com/remcommittee
Committee decision making process
The Committee is mindful of shareholder expectations
in respect of executive pay and proactively carried out
engagement with shareholders during 2022, incorporating
feedback in the future policy proposals and application for 2023
and beyond. We have also been mindful to listen to the views
of the wider workforce through our employee listening group
network, reward engagement focus groups, other networks
such as Wood’s Race and Ethnicity Network, (WREN), the
employee engagement survey and localised feedback sessions.
In determining the Policy, the Committee considered the
relevant provisions of the UK Corporate Governance Code and
guidelines produced by relevant advisory bodies such as the
Investment Association.
The Committee also received input from the Chair of the
Board, other non-executive directors, the CEO, CFO, Executive
President of P&O and the President of Reward & Mobility, while
ensuring that conflicts o
f interest were suitably mitigated.
The Policy for executive directors is designed in line with
the philosophy and principles that underpin remuneration
throughout the organisation. It is more heavily weighted
towards variable pay for executive directors and senior leaders
ensuring longer term alignment with shareholders.
To enhance the rigour with which performance is reviewed, and
ensure alignment with stakeholder experience, the Committee
utilises its discretionary matrix when assessing remuneration,
and short- and long-term incentive outcomes. As with all
Committee decisions (in line with section 172 of the Companies
Act 2006), the experience of all stakeholders throughout the
course of plan performance periods is considered. A copy of the
framework can be found at:
woodplc.com/discretionarymatrix
Consideration of employment conditions
elsewhere in the organisation
The organisation’s reward policy ensures the wider workforce
is provided with fair remuneration packages that are market
competitive within each employee’s country of employment and
compliant with the organisation’s equal opportunities policy
and national legislative requirements. Remuneration differs
based on location, role, competency and job level within the
organisation. Where appropriate, employees participate in the
organisation’s short and long-term incentive arrangements,
with levels of participation being set by reference to their
position in the organisation.
Read the global reward policy which applies to all employees of
Wood at:
woodplc.com/rewardpolicy
The Committee is respectful and thoughtful of pay and
conditions within the organisation and is committed to aligning
pay structure decisions for executive director remuneration to
employees in the country where the executive director is based.
The Committee also considers relevant information received
from the Executive President of P&O, including feedback from
the wider workforce.
Changes to Remuneration Policy
Although our existing Policy is broadly fit
for purpose, we have
proposed some minor improvements which continue to support
and remain in line with our key remuneration principles as well
as updated UK Corporate Governance legislation as follows:
• Enhancement of post cessation shareholding requirements
to 100% of shareholding for two years following cessation of
employment. Current requirements are 100% of shareholding
held for one year, reducing to 50% in the second year
following cessation of employment.
• Short-term incentive: updated to allow for the inclusion or
exclusion of either corporate or personal objectives within the
non-financial element.
• Long-term incentive: aligned to market practice, with
the removal of 18-month qualifying service for long-term
incentives for good leavers.
The Policy applies equally to any individual who is required to be
treated as a director under the applicable regulations.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
131
Governance
Financial statements
Element
Purpose and link to
strategic objectives of
the organisation
Remuneration Policy details
Salary
To provide an appropriate
level of
fixed salary
to attract and retain
executives with the
qualities, skills and
experience required to
deliver our strategic
objectives.
Operation
Typically reviewed annually by the Committee, with any changes approved and effective
from 1 January (although the Committee may make changes effective from any other date
if it considers it appropriate).
The Committee determines the appropriate level of base salary through consideration of:
•
the range of salary increases applied to the wider workforce;
•
the scale, scope and responsibility of the individual executive’s role, including any changes
in responsibility;
•
the skills, experience, development, contribution, and performance of the individual in
the role;
•
the salary of individuals undertaking similar roles in peer companies of comparable size
and complexity around the world;
•
business performance and the wider market and economic conditions; and
• growth and development of incumbents.
Executive directors will typically be paid in the currency of their employment location.
Maximum opportunity
Annual increases will normally be in line with comparable increases across the wider
workforce in their country of employment.
Higher increases may be awarded, at the Committee’s discretion, in certain circumstances
through consideration of relevant factors, for example, in recognition of progression and
performance.
Performance metrics
None.
Benefits
To provide fair and
market competitive
benefits which support
the health and wellbeing
of our executives to
perform at their best.
Operation
Benefits typically include transportation allowance, private medical insurance (or
equivalent), income protection insurance (where applicable) and life assurance, in line with
the wider workforce in the country of employment.
For executive directors based in the United Kingdom, life assurance cover of four times
annual base salary is provided, in line with that for the wider workforce; where cover of four
times salary exceeds the maximum free cover limit, as speci
fied in the li
fe assurance policy
which may be amended from time to time, medical underwriting is required, and cover will
be subject to insurer acceptance.
The types of bene
fits provided are reviewed
from time to time and may be adjusted by the
Committee if deemed appropriate to ensure ongoing competitiveness.
Executive directors may participate in the Company’s employee share plans on the same
terms as other employees.
Where executive directors are required to relocate or complete an international assignment
due to business requirements, additional benefits such as relocation assistance or other
expatriate benefits may be o
ffered if considered appropriate. Bene
fits may vary according
to local practice.
Maximum opportunity
Given the complexity of assessing the future monetary cost of some bene
fits, the Committee
has not set an absolute limit on the value of bene
fits delivered but aims to ensure that the
level of bene
fits provided remains appropriate and aligned to the wider work
force and in
line with appropriate rules, where applicable.
Performance metrics
None.
Future policy table for executive directors
John Wood Group PLC
Annual Report and Accounts 2022
132
Remuneration Policy
continued
Element
Purpose and link to
strategic objectives of
the organisation
Remuneration Policy details
Pension
related
benefits
To support the long-term
financial wellbeing and
future stability of our
executives in return for
their commitment to
delivering our strategic
objectives.
Operation
Executive directors can choose to participate in the relevant local defined contribution
pension arrangement, or equivalent, or receive a cash allowance in lieu of pension, or a
combination thereof.
Maximum opportunity
In line with pension, or equivalent, arrangements for the wider workforce in the country in
which the executive is employed.
Performance metrics
None.
Short-term
incentives
To incentivise executives
to deliver strategic
business priorities
for the
financial year
with compulsory
deferred payment
designed to provide
additional alignment
with stakeholders and
reinforce retention.
Operation
Bonuses are awarded annually based on performance in the relevant
financial year.
Performance measures are chosen by the Committee at the start of the year to ensure
the organisation is focused on its short-term
financial and strategic objectives and cultural
alignment. The Committee typically sets threshold, target and maximum, and determines
the appropriate weighting, for each measure.
The Committee may set objectives in relation to the non-financial element o
f the
plan, either corporate or personal or a combination, with the aim of delivering value to
stakeholders and achieving the business strategy. Any objectives, targets, and outcomes will
be disclosed in the Annual Remuneration Report for the relevant reporting period.
At the end of the year, the Committee reviews actual performance against the relevant
measures. Assessment of non-
financial objectives is based on demonstrable evidence o
f
achievement during the year. The Committee may adjust the outcome at its discretion,
utilising the discretionary matrix, to ensure it is fair and appropriate, considering the overall
performance of the organisation and stakeholder experience. Achievement of bonus,
including the use of discretion, will be disclosed in the following year’s report as appropriate.
At least 25% of the value of any bonus earned is subject to deferral for a further period
of at least two years and, subject to legal restrictions or adverse tax consequences, will
be awarded as a nil cost share based award. Dividend equivalent payments may accrue
on shares comprising the deferred bonus award prior to vesting and will be paid out (in
shares) proportionately with the award. In exceptional circumstances, such as where there
are regulatory restrictions on the delivery of shares, the Committee may decide to settle
deferred awards in cash.
Malus and clawback provisions apply; further details can be found on page 135.
Maximum opportunity
The maximum opportunity will not exceed 200% of base salary in respect of any
financial
year.
Performance metrics
At least 50% of the maximum potential bonus is based on
financial measures with the
remainder being based on non-financial measures. The balance is reviewed annually
and may be adjusted by the Committee, if appropriate to ensure alignment with the
organisation’s overall objectives.
•
For financial measures, threshold per
formance must be met before any award is paid,
with 100% payable for maximum performance. 50% will be awarded for achievement of
target and a proportionate award is calculated for performance between threshold and
target, and between target and maximum.
•
Non-financial measures may include appropriate corporate environmental, social and
governance (ESG) targets, which align to the organisation’s strategic and/or operational
priorities for the individual director.
Performance measures that will apply are set out in the relevant Annual Remuneration
Report.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
133
Governance
Financial statements
Element
Purpose and link to
strategic objectives of
the organisation
Remuneration Policy details
Long-term
incentives
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.
Operation
The Long Term Incentive Plan (LTIP) operates with a performance period of at least three
years. Executive directors may be granted conditional share awards or nil cost options at
the start of the performance period (or in the case of a new appointment, at the earliest
opportunity deemed appropriate by the Committee).
Share awards that vest are subject to meeting performance criteria and are subject to
a holding period which is a minimum of two years, unless the Committee determines
otherwise. When determining the number of shares to vest, the Committee may adjust
the formulaic performance outcome for awards at its discretion to ensure it is fair
and appropriate, taking into account the overall performance of the organisation and
stakeholder experience, utilising the discretionary matrix, and considering the impact of any
potential windfall gain.
Notional dividends may accrue on performance share awards to the extent that the
performance conditions have been met, delivered as shares or cash at the discretion of the
Committee at the end of the vesting period.
For nil-cost options, no shares will be awarded in lieu of dividends post-vesting (i.e. between
vesting and exercise).
The vesting of any award may be reduced or cancelled, in line with malus provisions, and is
subject to clawback provisions at the absolute discretion of the Committee, as detailed in
the malus and clawback policy. Malus and clawback provisions apply, further details can be
found on page 135.
Maximum opportunity
The maximum opportunity will not exceed 200% of base salary in respect of any
financial
year of the organisation.
Where a salary is materially amended during the performance period, the Committee may
adjust the number of shares under award to re
flect the salary change.
Performance metrics
Awards made to executive directors vest based on performance against a combination of
performance measures. The Committee will determine the appropriate measures at the
commencement of each performance period; consideration will be given but not limited to
business context, internal factors, external environment, and market consensus. At least
25% of the award will be based on relative total shareholder return (TSR) and a portion of
the remainder will be based on financial and/or ESG measures.
During a performance period, the Committee has the discretion to adjust the performance
targets when it considers an amended target would be more appropriate and not
materially easier to satisfy.
For threshold levels of performance, up to 25% of the award vests, increasing on a straight-
line basis to 100% of the award for maximum performance.
Shareholding
guidelines
To ensure that executive
directors’ interests and
individual wealth are
aligned with those of
shareholders over a long-
term performance period.
Operation
Executive directors are required to hold shares in the Company, with the value of those
shares expressed as a percentage of salary. The holding will be built up from shares
purchased from their own resources and after-tax share awards held personally or in a
nominee account which are not subject to any further performance conditions, including
those matched via the employee share plans.
Until shareholding requirements are satisfied, executive directors are not permitted to sell
any shares unless to cover tax liabilities.
The holding does not include shares held by connected persons.
Post cessation shareholding requirements
Executive directors are required to hold shares in the Company post cessation of
employment. Awards granted from 1 January 2023 are subject to 100% of shareholding
guidelines for two years. Awards granted from 1 January 2020 to 31 December 2022 will
remain subject to 100% of shareholding guidelines for the
first year, reducing to 50%
in the second year in line with the previous policy. The Committee has the discretion to
reduce or waive the requirements in certain circumstances such as death or where personal
circumstances are materially changed.
Requirement
The shareholding guidelines are as follows:
• CEO: 250% of base salary
•
Other executive directors: 200% of base salary
Performance metrics
n/a
Future policy table for executive directors (continued)
John Wood Group PLC
Annual Report and Accounts 2022
134
Remuneration Policy
continued
Notes to the policy report for executive directors
Use of discretion
During a performance period, the Committee has the discretion
to adjust the achievement levels required to ensure the
performance targets remain effective, whilst ensuring new
levels remain as demanding and achievable as those first set.
The Committee may exercise discretion when determining the
outcomes of short- and long-term variable reward in addition
to the formulaic outcomes, utilising the discretionary matrix
when assessing short-term incentive and long-term incentive
plan outcomes. As with all Committee decisions (in line with
section 172 of the Companies Act 2006), the experience of
all stakeholders is considered through the course of plan
performance periods. A copy of the framework can be found at:
woodplc.com/discretionarymatrix
Malus and clawback provisions
Malus and clawback provisions safeguard the Company against
future risk in relation to our long and short-term incentive
plans. Malus and clawback provisions can be operated in
circumstances which include but are not limited to:
• material misstatement of the Group’s
financial results;
• a material failure of risk management by the Group;
• corporate failure; serious reputational damage to the Group;
• negligent conduct or omission contributing to financial
downturn of the Group;
• serious breach of health and safety standards; or
• serious misconduct or fraud by the executive.
Under the Malus and Clawback Policy, which applies to awards
from 2020, if the Board decides to operate malus in respect of
an award, the 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 an 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.
Commitments entered into prior to policy effective date
The Committee reserves the right to make any remuneration
payments and payments for loss of of
fice, including exercising
any discretions available to it in connection with such payments,
notwithstanding that they are not in line with the Policy set out
above, where the terms of the payment were agreed (i) before
the Policy contained in this report came into effect, provided
that the terms of payment were consistent with any applicable
shareholder approved Policy in force at the time they were
agreed or were otherwise approved by shareholders; or (ii) at
a time when the relevant individual was not a director of the
organisation (or other person to whom the policy set out above
applies) and, in the opinion of the Committee, the payment
was not in consideration for the individual becoming a director
or such other person of the organisation. For these purposes,
payments include the Committee satisfying awards of variable
remuneration and, in relation to an award over shares, the
terms of the payment are deemed to be agreed and in line with
policy at the time the award is granted.
Takeovers and other corporate events
In the event of a takeover of the Company, the Committee
may decide (with the agreement of the person who obtained
control of the Company) that awards may be exchanged for
new awards over shares in the new parent company. Exchanged
awards will be subject to similar conditions as the awards
which they replace. However, in the case of the Wood Share
Incentive Plan, takeovers are managed in accordance with the
SIP legislation.
Where awards are not exchanged, un-vested awards will
normally vest to the extent that any financial and/or non-
financial per
formance measures have been met (if the
performance period has ended) or to the extent the Committee
estimates the measures would have been met over the
performance period (in the case of the LTIP) or to the extent
that any performance measures have been met over a period
chosen by the Committee (in the case of the Employee Share
Plan). Awards that vest on a takeover (other than deferred
awards) will be pro-rated for time, but time pro-rating may be
dis-applied if the Committee considers it appropriate.
If there is a demerger, delisting, special dividend, or other event
that may materially affect the current or future value of shares,
the Committee may decide to treat awards in a similar way to
a takeover. If the Company is wound up, awards will be treated
in a similar way to a takeover. Where an option vests in the
event of a takeover or other corporate event, in the case of the
LTIP it will normally be exercisable for a period of three months
from the relevant date and will then lapse, but the Committee
may choose an alternative exercise period. In the case of the
Wood US Employee Share Purchase Plan the option will be
automatically exercised on the relevant date. In addition, on
a takeover or other corporate event, (i) the Committee may
decide that the Malus and Clawback Policy will no longer apply
to an award, or will be varied in its application, and (ii) any
holding period under the LTIP will continue to apply unless the
Committee decides otherwise.
External appointments
Executive directors are permitted, with Board approval and
subject to corporate governance guidelines, to undertake
external duties provided there is no conflict o
f interest, and the
Committee determines they are still able to operate effectively
in role. The executive director will keep any fees associated with
external appointments.
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John Wood Group PLC
Annual Report and Accounts 2022
135
Governance
Financial statements
Service contracts, notice and payment for loss of of
fice
The current service contract effective dates are shown
below. Executive directors have service contracts which can
be terminated by the director or by the organisation with
12 months’ notice; this length of notice period has been
determined as necessary to ensure appropriate succession can
be planned and managed.
Executive director
Current contract date
Contract duration
Ken Gilmartin
1 July 2022
No fixed end date
David Kemp
13 May 2015
No fixed end date
None of the service contracts provide for predetermined
amounts of compensation to be paid in the event of early
termination and there are no further obligations contained
within the executive directors’ service contracts which could give
rise to any remuneration payment which has not already been
disclosed in this Policy.
The executive director service contracts are available for
inspection at the Company’s registered of
fice.
Executive directors’ contracts allow for termination with
contractual notice from the organisation or termination with a
payment in lieu of notice, at the Committee’s discretion.
The Company also reserves the right to place executive
directors on garden leave during their notice period.
The Committee, at its discretion, has the flexibility to apply
good leaver status to each different element of payment
for executive directors outlined in the Policy table below and
illustrates payment due when leaving as any other leaver.
The Committee reserves the right to make any other payments
in connection with an executive director’s cessation of of
fice
or employment where the payments are made in good faith in
discharge of an existing legal obligation (or by way of damages
for breach of such an obligation) or by way of a settlement of
any claim arising in connection with the cessation of a director’s
of
fice or employment. The Committee may also make a payment
in respect of outplacement costs and reasonable legal fees.
Recruitment and promotion
The Committee’s approach where the organisation appoints a
new executive or non-executive director is typically to align the
remuneration package with the terms of the Policy laid out in
the relevant tables of this report and aligned to the principles of
remuneration which apply to the wider workforce.
In the event of internal promotion to the Board, any
commitments made before promotion will continue to
be honoured under this Policy, even if they would not
otherwise be consistent with the Policy prevailing when
the commitment is ful
filled.
As far as possible, the Committee will seek to structure all
awards in line with the stated Policy.
To facilitate external recruitment, the Committee may make
one-off awards to compensate variable pay or contractual
rights which an individual would forfeit on leaving their current
employer. Any such buy-out would, where possible, be on a
comparable basis and would consider value, performance
targets, the likelihood of those targets being met and vesting
periods. In considering its approach, the Committee will give
due regard to all relevant factors, including quantum, the
nature of remuneration and the jurisdiction from which the
candidate was recruited.
Excluding the value of any potential buy-out, the maximum
value of variable remuneration offered at recruitment to any
new executive director will be 400% of base salary. This is
within the maximum amounts currently laid out in the policy
table of this report.
Shareholders will be provided with full details including
the rationale for the arrangements in the relevant Annual
Remuneration Report. For the recruitment of Chair and non-
executive directors, remuneration would be provided in line with
the existing fee structure.
John Wood Group PLC
Annual Report and Accounts 2022
136
Remuneration Policy
continued
Cessation payments and scenarios
Base salary, pension and benefits
Paid up to the date of leaving, including any untaken holidays
or, subject to mitigation, payment in lieu of notice where the
organisation considers it inappropriate for a departing executive
director to work the required notice period. Disbursements such
as legal costs and outplacement fees may be considered.
Annual bonus
Good leaver
For reason of injury, disability, ill-health, retirement, sale
of employing entity out of the organisation and in such
circumstances as the Committee may determine otherwise:
• Paid up to the date of leaving based on completed months
worked in the year with payment made on normal payment
date once plan outcomes are known.
• Any deferred award from previous years which have not yet
vested will vest at the normal vesting date for such deferrals.
The Committee may determine, in its absolute discretion,
that awards could vest as soon as practicable following
cessation.
• On death, an immediate payment may be made to the
estate and/or designated beneficiary at the discretion o
f the
Committee, considering performance and the proportion of
the relevant bonus year served. Deferred bonus amounts will
vest in full at the time of death.
Other leaver
No entitlement to any award for the current year and forfeit of
any deferred awards from previous years not yet paid.
Long-term incentives
Good leaver
For reason of injury, disability, ill-health, death, sale of
employing company or business or, for any other reason
determined by the Committee the following shall apply:
• The Committee may determine, in its absolute discretion, that
awards could vest as soon as practicable following cessation.
• The number of shares that vest in these circumstances shall
be determined by the Committee (on a proportionate basis if
appropriate) considering the extent to which the performance
conditions have been satisfied and, unless the Committee
determines otherwise, the period of time elapsed since grant.
• The Committee may determine different arrangements to
take effect of any local tax or legal requirements.
• On death, unvested awards will vest (on a proportionate basis
if appropriate) to the extent determined by the Committee
considering the extent to which performance conditions have
been satisfied and, i
f the Committee considers it appropriate,
the period that has elapsed since grant.
Other leaver
All outstanding awards lapse.
Employee Share Plan
Good leaver
Leaver provisions will be on the same basis as all other employees
and in accordance with local legislative and plan rules.
Other leaver
All matching shares will lapse.
Remuneration Policy for the Chair of the Board
and non-executive directors
Purpose and link to strategic objectives of the organisation
To attract and retain individuals with the qualities, skills and
experience required to provide a positive contribution to the
Board and to deliver our strategic objectives.
Fees and remuneration
Operation
Remuneration is in the form of fees, payable monthly for
the position of Chair, or quarterly for all other positions.
The Chair receives an all-inclusive remuneration package
which is reviewed annually by the Committee, which makes
a recommendation to the Board, with changes ordinarily
effective from 1 January.
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, CEO 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, for example the senior independent
directorship and for chairing, membership, and attendance of
certain Board Committees.
Fees are set by the Board at a level considered appropriate
to attract and retain the calibre of individual required but
avoiding paying more than necessary for this purpose. Fee
levels are typically set considering the expected commitment
levels, the skills and the experience of the individual, and
the fee levels paid to individuals undertaking similar roles in
companies of comparable size and complexity.
Non-executive directors can elect to be paid in any currency at
the time of appointment; this will typically be in either pounds
sterling or in US dollars at the applicable exchange rate at the
time of payment. Payments may be made in the form of either
cash or shares as elected by the non-executive director.
Non-executive directors are reimbursed all necessary and
reasonable expenses incurred in the performance of their duties
and any tax thereon.
Maximum opportunity
No prescribed maximum for Chair or non-executive directors’
remuneration, although the aggregate maximum for non-
executive directors’ remuneration is included in the Articles of
Association.
Performance metrics
None.
Service contracts, notice and payment for loss of of
fice
Non-executive directors have letters of engagement addressing
remuneration, services to be provided, conflicts o
f interest and
confidentiality. The letters o
f engagement do not have
fixed terms
to be paid and are terminable with up to 90 days’ written notice.
None of the letters of engagement provide for predetermined
amounts of compensation in the event of early termination and
there are no further obligations contained within the letters of
engagement which could give rise to any remuneration payment
or loss of of
fice payment which has not already been disclosed
in this Remuneration Policy.
The non-executive director letters of engagement are available
for inspection at the Company’s registered of
fice.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
137
Governance
Financial statements
Notes to the illustrations of future application of Policy
In all scenarios, fixed remuneration comprises base salary, benefits, and pension. The figures used in preparing the charts are as
follows:
• Fixed pay is the salary at 1 January 2023
• Benefits is the last known figure as set out in the single figure o
f remuneration table for 2022 calculated on an annualised basis
• Pension related benefits are based on 9% o
f the base salary, covering de
fined contribution pension or cash allowance in lieu o
f pension
• Short-term incentives is the annual bonus plan (ABP) and is based on the proposed application of the Policy for 2023 and the base salary. The illustrations above
reflect maximum potential opportunity as a percentage o
f base salary; 175% for the CEO and 150% for the CFO
• Long-term incentives includes the Long Term Incentive Plan (LTIP) awards. The illustrations above reflect the Policy maximum o
f 200% of base salary. For
clarity, any dividend accrual has been excluded from the charts above.
Fixed
– It been assumed that each executive director receives base salary, benefits, and pension related benefits only; there are no elements o
f variable reward
included.
Target
– It has been assumed that short-term incentives have met target levels, which results in payout at 50% of maximum and that long-term incentive
performance is such that awards have vested at 50%.
Maximum performance
– It has been assumed that short-term incentives have met maximum levels and that long-term incentive 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 long-term incentive awards.
% mix
of pay
% mix
of pay
David Kemp
CFO
Ken Gilmartin
CEO
21%
2%
36%
41%
22%
3%
32%
43%
Maximum value £3.75m
Maximum value £2.43m
Illustrations of future application of Policy
As detailed in the future Policy table, a signi
ficant proportion o
f remuneration for executive directors is linked to variable pay
opportunity, particularly at maximum performance levels, through the short- and long-term incentives, 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
fixed 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 fixed value, target and maximum per
formance, 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.
David Kemp
CFO
(£000’s)
Ken Gilmartin
CEO
(£000’s)
Fixed
Target
Maximum
Maximum +
50% share
growth
Fixed
Target
Maximum
Maximum +
50% share
growth
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
0
500
1000
1500
2000
2500
3000
£0.86m
£2.30m
£3.75m
£4.53m
£0.59m
£1.44m
£2.43m
£2.96m
John Wood Group PLC
Annual Report and Accounts 2022
138
Remuneration Policy
continued
Fixed pay
Benefits & Pension
Short-term incentives
Long-term incentives
Fixed pay
Benefits & Pension
Short-term incentives
Long-term incentives
Remuneration Policy
In reviewing our Policy and its application, the Committee was mindful to consider the following areas as required under the UK
Corporate Governance Code and believe that we have fully considered each 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 short- and long-term incentives are simple and aligned to our
stakeholders, with the operation, targets and outcomes fully disclosed in the annual report each year. Where
possible we communicate future performance measures and targets, such as in our long-term incentives, but
in certain areas, such as short-term incentives, 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 defined in our 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 reflect stakeholders experience.
Predictability
The Committee discloses and explains all relevant limits and discretions allowed under the terms of the 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
financial and
non-financial targets. They reward those who exempli
fy 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
financial
year. Our enhanced malus and clawback provisions safeguard the company against future risk in relation to
our short- and long-term incentive plans which applies to awards from 2020.
Strategic report
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Annual Report and Accounts 2022
139
Governance
Financial statements
Single figure o
f remuneration*
The following table sets out the single
figure o
f remuneration received or receivable (£000’s) in the year for each of the executive
directors for time in role. No remuneration for executive directors was waived during the year.
 
Year
Salary
(a)
Benefits
(b)
Bonus
Long–term
incentives
(c)
Pension related
benefits
(d)
Total
Total fixed
remuneration
Total variable
remuneration
Executive directors
Ken Gilmartin
2022
£375
£68
£238
£243
£34
£958
£477
£481
David Kemp
2022
£511
£14
£276
£0
£46
£846
£571
£276
David Kemp
2021
£499
£14
£112
£74
£75
£773
£587
£186
Former executive directors
Robin Watson
2022
£605
£26
£380
£0
£54
£1,065
£685
£380
Robin Watson
2021
£787
£14
£207
£134
£118
£1,260
£919
£341
Notes to the single figure o
f remuneration
a. Salary received during the year.
b. Taxable benefits received during the year. These include transport allowance and ptrivate medical cover. For Ken this also includes a payment o
f £50,000 made
in August 2022 for relocation costs. Ken also received medical coverage for his dependents whilst they remain in the US to facilitate his relocation; this has been
included using a conversion rate of 1 GBP = 1.2324 USD. For Robin, annual leave accrued but not taken was been paid upon termination.
c. The share price used to calculate the LTIP value is £1.35, the closing mid-market share price on 31 December 2022 and vesting date of the award. The
share price at grant was £3.64; the value shown is not as a result of share price growth. Long-term incentive payment to Ken Gilmartin formed part of the
guaranteed buy-out arrangements upon Ken joining Wood in 2021, prior to his qualifying service as an executive director. The conversion rate used was 1 GBP =
1.2324 USD.
d. Pension figure reflects cash value o
f de
fined 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, bene
fits including cash pension
allowances; and bonus and long-term incentives) is ££2,869,258.
The aggregate amount of Company contributions to executive directors’ pension schemes was £63,750.
Pension benefits
In line with the Policy, executive directors can choose to participate in the relevant local defined contribution pension arrangement
or receive a cash allowance in lieu of pension, or a combination thereof. In line with our current Policy and aligned with the wider
workforce, payment may be up to 9% of base salary in the UK. Ken Gilmartin received 9% in de
fined pension contributions; David
Kemp chose to receive his full pension entitlement as a cash allowance; and former Executive Director Robin Watson continued to
split his pension benefits with 66% as cash allowance and the remainder as defined pensions contributions until his termination
date of 30 September 2022.
Normal retirement age specified in the pension plan rules is 65 years. There are no additional benefits that become receivable in the
event of early retirement.
Bonus
For 2022, the maximum bonus opportunity was 175% of base salary for Robin, 150% for David and 175% for Ken, pro-rated from his
appointment date as CEO. Robin’s participation was pro-rata to his termination date of 30 September 2022. Bonus measures were
split between financial, ESG and corporate or individual per
formance objectives with a balance of 60%, 10% and 30% respectively.
Financial measures were further split into two measures – a measure of pro
fit and a measure o
f 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 Committee, with a further external independent audit carried out following the end of the
financial year as
appropriate.
ESG
10%
Profit
30%
Cash generation
30%
Corporate/personal objectives
30%
financial measures
60%
non-financial measures
30%
ESG framework
10%
John Wood Group PLC
Annual Report and Accounts 2022
140
Executive directors’ remuneration
ESG measures and outcomes
ESG measures accounted for a total 10% of the maximum
bonus opportunity and comprised of three Key Performance
Indicators (KPIs), equally weighted. To provide assurance
of achievement outcomes against targets, performance
is considered and approved by the Safety& Sustainability
Committee.
Measure
Target & payment
Achieved
Serious injury and
fatality (SIF)
Zero SIFs
If this KPI is achieved, 3.33%
will be paid; if it is not fully
achieved, no payment will
be made
Not achieved –
0% payable
2 SIFs recorded
during the year
Delivery against
leadership safety
engagement
Complete 2,589 leadership
safety visits.
If this KPI is achieved, 3.33%
will be paid; if it is not fully
achieved, no payment will
be made
Fully achieved –
100% payable
3,289 leadership
safety visits
completed
Improvement
in employee
engagement score
Payment is made on a
straight-line basis between
threshold score +7 and
maximum score +10. If
threshold is not met no
payment will be made
Fully achieved –
100% payable
Engagement
score +12
achieved
Financial measures and outcomes
Financial measures for the bonus year which ended 31
December 2022 consisted of:
• Profit target – we used EBITDA (Earnings Be
fore Interest,
Taxes, Depreciation and Amortisation) as our measure of
success
• A cash generation target – this was based on pre-tax cash
from operations before exceptional items less capex
Threshold performance for 2022 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:
Financial targets were updated by the Committee in November
2022 to reflect the sale o
f Built Environment Consulting. The
Committee has ensured that these targets remain stretching
and challenging. These had not previously been disclosed as
they were considered commercially sensitive. A summary of the
adjusted financial 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
Note:
Illustrations not to scale
Profit
Achieved
$385.1m
Cash generation
% achievement
28%
Achieved
$-186m
Threshold
$98
Target
$115
Maximum
$132
% achievement
0%
Threshold
$350.9
Target
$412.8
Maximum
$474.7
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John Wood Group PLC
Annual Report and Accounts 2022
141
Governance
Financial statements
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, and 70% of
maximum has been achieved by all executive directors.
Corporate performance objectives
Achievements
Strategic plan:
Develop initial refreshed strategy for Wood
post the sale of Built Environment Consulting,
including options for the use of proceeds.
Considerable strategic progress in the last year to strengthen Wood. We reset our
balance sheet through the sale of Built Environment Consulting and we addressed
our legacy issues. Throughout the year we strengthened our engagement with
shareholders, including a perception study in the summer that directly fed into our
strategy development and capital allocation decisions. In November 2022 we held a
Capital Markets Day to outline our new strategy – for selective growth across energy
and materials, along with our three strategic pillars of inspired culture, performance
excellence and profitable growth. The event also introduced our investors to our new
executive team.
Develop Voice of the Customer Program
Develop Voice of the Customer Program
with comprehensive metrics to enable strong
customer focus.
Customer program and feedback is very positive, clear and was independently
verified by Bain, via customer perception study.
Leadership effectiveness
Planning and Transition for ELT succession and
organisational development.
Further develop group-wide culture of strong
customer and innovation focus.
Comprehensive CEO transition plan implemented.
Wood’s leadership capability strengthened, with ELT succession evident through
promotion of three key leaders to executive level; good blend of experience and
freshness.
Market capture, win rates and backlog growth are evidence of Wood’s strong
customer positioning, validated externally by Bain. Digital and innovation work
ongoing and underpins future strategy.
Individual performance objectives
Objective
Achievement
CEO
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
Consulting
• Restructuring of the business following the
sale of Built Environment Consulting
• Embedding new consultancy and Strategy
& Development leadership teams
• Key customer KPIs for engagement,
satisfaction, and growth
• Further develop digitisation strategy
Sale of Built Environment Consulting completed ahead of time with value
maximised despite challenging macro environment.
Business restructured, including transition of CEO role, promotion and
onboarding of new team members to ELT, and support to colleagues following
the tragic death of Nina Scho
field, executive president HSSES.
Customer engagement plan completed with feedback very positive, supported
by win rates and future growth plans.
Projects business unit
Continue to mature our projects business
through growth and appropriate risk
management.
Significant de-risking o
f the portfolio and decision taken to cease
fixed-
price lump sum turnkey projects clearly articulated to investors. We continue
to mature the 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
Consulting and restructuring of business
• Continue to deliver against our ESG
dashboard and commitments
ESG dashboard is now well established and well received internally, with
customers and investors. Demonstrable progress across our ESG dashboard
through 2022. Wood well positioned in the markets which will deliver across the
twin tracks of energy security and energy sustainability.
John Wood Group PLC
Annual Report and Accounts 2022
142
Executive directors’ remuneration
continued
Individual performance objectives
Objective
Achievement
CFO
Deliver strategic review of Built Environment
Consulting
• Implement Board’s decision
• Implement sale of business
• Gain shareholder approval
Successfully led Board review of strategic options and delivered sale of
Built Environment Consulting for an attractive price following approval
from shareholders.
Contribute to the Group strategy post sale
of Built Environment Consulting
taking
responsibility for key
financial areas including
dividend policy
Played significant leadership role in developing
future strategy, with key focus
on all financial areas including three-year plan, capital allocation, and target
setting. Led and supported global teams with in-depth analysis, leading to
development of Capital Markets Day materials.
Reshape Group’s cost base post sale of Built
Environment Consulting
• Central and shared cost review and
implementation
• Implement F&A actions
Led review of Group’s cost base resulting in c. 20% reduction in central
cost base.
Capital structure and financing:
• Develop Financing strategy post sale of
Built Environment Consulting
• Execute agreed financing strategy
ensuring business maintains suf
ficient
liquidity, suf
ficient covenant headroom
and meets audit requirements
Developed and implemented financing strategy, including the negotiation
of covenant increases, maintaining appropriate liquidity for business and
audit purposes.
Investor engagement:
• Proactive engagement with investor
community to ensure support and approval
of sale of Built Environment Consulting
• Preparation for Capital Markets
Day to outline the new investment
case for Wood post the sale of Built
Environment Consulting
Key leadership role in engaging with, and gaining support from, the investor
community for the sale of the Built Environment Consulting. Key leadership role
in preparing the post-sale investment case and Capital Markets Day material.
Individual performance objectives
Objective
Achievement
CEO
Active risk management and business
ethics leadership
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 (CMT) through business
‘normalisation’/hybrid working in 2022
• Handover of ethics & compliance function
to Group legal function
Primary risks have reduced significantly in 2022 through project risk reduction,
CMT management through pandemic-end, growth, and the strategic focus on
a sustainable and secure energy transition. The anti-bribery and anti-corruption
programme progress is effective and enduring, with the ethics & compliance
function successfully transferred to report directly to the Legal function and
associated reporting to Board level enhanced.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
143
Governance
Financial statements
36%
Bonus award achievement summary
The charts below provide a summary of the overall bonus achievement for each of the executive directors for time in role:
David Kemp
Final bonus payment:
£275,528
Final award as % of salary: 54%
Final award as a % of
max bonus opportunity
Ken Gilmartin
Final bonus payment:
£237,825
Final award as % of salary: 63%
Final award as a % of
max bonus opportunity
Robin Watson
Final bonus payment:
£379,621
Final award as % of salary: 63%
Final award as a % of
max bonus opportunity
36%
36%
In 2022 management focused on continuing to de-risk the business; the sale of Built Environment Consulting, which reset the Group;
and the development and communication of a new three-year strategy. The Committee was therefore mindful of how to fairly
recognise achievements, whilst balancing the experience of wider stakeholders.
Following the completion of the sale of Built Environment Consulting in September 2022, the decision was taken to exclude its
contribution from both the original targets set based on the original plans for 2022, and the performance achieved for 2022. This
adjustment was based on the original anticipated contribution of the Built Environment Consulting Business to revenue and EBITDA.
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 the
Safety & Sustainability Committee.
A full copy of the discretionary decision matrix can be found at
woodplc.com/discretionarymatrix
75% of the award will be paid in cash, 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 award, other than for those classi
fied as good leavers as
detailed in our Policy. Our malus and clawback provisions safeguard the Company against future risk in relation to this award.
John Wood Group PLC
Annual Report and Accounts 2022
144
Executive directors’ remuneration
continued
Long-term incentives – Long Term Incentive Plan (LTIP 2020-2022)
The figures set out in the single figure o
f remuneration table are related to the performance period which ended on 31 December
2022. The participation level for Ken was 125% (based on his previous role as Chief Operating Of
ficer, and awarded as part o
f his
buy-out arrangements upon joining), for Robin was 170% and for David was 149%. To provide assurance of achievement outcomes
against targets within variable incentives, performance is considered and approved by the Safety & Sustainability Committee,
with a further external independent audit carried out following the end of the
financial year as appropriate. For each per
formance
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 2020-2022, including the weightings of the performance
measures and the extent to which they were achieved, are set out in the table below.
Measure
Weighting
Threshold
Maximum
Achieved
Award %
TSR
a
50%
50
th
percentile
75
th
percentile
15
th
position
(out of 17)
0%
Gross Margin Improvement
(growth from 2020 to 2022)
25%
9%
19%
–29%
0%
Overhead Percentage Improvement
(reduction)
25%
2022 performance of 10.3%
2022 performance of 9.8%
11.4%
0%
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
The TSR peer group for the performance period comprised the following companies – Aecom, Aker Solutions, Fluor, Hunting, Jacobs
Engineering, KBR, 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. McDermott was removed
from the peer group on this basis.
LTIP award achievement summary
Wood did not achieve any of the performance measures and this has been independently assured. Having considered the
discretionary matrix, there will be no use of discretion and no award will vest.
Ken Gilmartin participated in LTIP 2020-2022 subject to performance, but with a
fixed minimum vesting value o
f $300,000 as part
of his buy-out arrangements upon joining Wood in 2021, prior to his qualifying service as an Executive Director (see page 146 for
details).
The discretionary decision matrix can be found at
woodplc.com/discretionarymatrix
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
145
Governance
Financial statements
Leaving arrangements for Robin Watson*
Robin retired from the Company on 30 September 2022, with
his termination arrangements complying with the Policy. He
received his contractual salary, allowances, benefits and pension
benefits up to his retirement date, and this sum is disclosed on
the single figure table on page 140.
In line with the 2020 Policy, the Committee deemed that due
to leaving for retirement he would be treated as a good leaver
under the Long Term Incentive Plan (LTIP), Annual Bonus Plan
(ABP), Employee Share Plan (ESP) and Share Incentive Plan
(SIP). The Committee determined the following:
• ABP for the 2022 performance period will apply pro rata to
30 September 2022, with 75% of any award paid in cash and
25% as a deferred share based award.
• LTIP 2020-2022 and LTIP 2021-2023 will be reduced on a pro
rata basis to 30 September 2022, and will vest subject to
performance in 2025 and 2026 respectively.
• ABP deferred award from the 2021 performance period will
vest as scheduled in 2024.
• Employee Share Plan and Share Incentive Plan matching
shares were released upon termination in line with plan rules.
In line with the 2020 Policy and Robin’s contractual agreement,
a sum of £457,543 was paid in lieu of outstanding notice
comprising salary and benefits
for the unexpired period of
his notice period in October 2022. This payment is subject to
mitigation in the event that Robin takes up a remunerated
executive position elsewhere prior to 19 April 2023.
Robin also received a Company contribution towards legal fees
of £4,200.
As a former Executive Director, Robin will comply with post
employment shareholding requirements outlined in the 2020
Policy in respect of share awards granted from 1 January 2020;
250% of salary in year one following cessation of employment,
reducing to 125% of salary in year two. On 1 October 2024, all
requirements will cease to be required and restrictions on his
share account lifted.
He will not receive any other payment, including for loss
of of
fice.
Joining arrangements for Ken Gilmartin
As disclosed at the time of his promotion, 1 July 2022, as CEO
Ken receives:
• a base salary of £750,000.
• benefits including an annual transport allowance o
f £12,360,
eligibility for group income protection insurance, private
medical insurance, and life assurance of four times base
salary (subject to underwriting). These insured benefits are
applicable to the wider workforce in the United Kingdom.
• To support with his relocation from USA to the UK, Ken will
receive a gross allowance of £150,000, payable in three equal
instalments on the normal payroll dates in August 2022,
January 2023, and August 2023.
• A pension contribution (or a fixed cash allowance in place o
f
such contribution) of up to 9% of base salary, in line with the
maximum pension rate applicable to the wider workforce in
the United Kingdom.
• Any annual bonus award as CEO for 2022 would be
calculated pro-rata, resulting in a maximum award of 50%
of his maximum entitlement (175%) based on salary in his
role as CEO.
• Eligible to participate in Wood’s Long Term Incentive Plan
(the “LTIP”), subject to the rules and limits of the LTIP and
performance conditions being met which will be set in line
with the Policy. His award for the 2022-2024 performance
period was granted to him in his previous role. Any shares
received will be subject to the applicable shareholding
requirements.
• Ken will be required to build up and maintain a minimum
shareholding equal to 250% base salary in line with
shareholding requirements set out in the Policy.
Tax advice and filing support will be provided to Ken
for a period
of three years by the Company for the tax years 2022/23,
2023/24 and 2024/25.
Commitments made prior to him joining the Board will continue
to be honoured in accordance with the Policy. This will include
legacy arrangements made to facilitate his recruitment to
his previous role of Chief Operating Of
ficer which was not an
executive director role. Details of these outstanding awards will
be included in the annual report, but are summarised below:
• 100,000 restricted stock units, 50% vested in September
2022 and 50% will vest in September 2023. Ken has met the
tax liabilities on these vested shares from his own resources,
although he is permitted to sell the shares in order to meet
such liability.
• Participation in LTIP 2020-2022 with an award of award of
up to 187,771 nil cost shares, subject to performance with a
fixed minimum vesting value o
f $300,000.
• Participation in LTIP 2021-2023 with an award of award of
up to 209,018 nil cost shares, subject to performance with a
fixed minimum vesting value o
f $900,000.
Payments to past directors*
There were no payments made to past directors which require
disclosure during the year.
John Wood Group PLC
Annual Report and Accounts 2022
146
Executive directors’ remuneration
continued
Share based interests awarded during the year*
The following table sets out the awards made to executive directors under LTIP for the performance period 2022-2024 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.
David’s participation level was anchored at 175% of his base salary. However, having carefully considered the material reduction in
the share price during 2021 and feedback received, the Committee determined to apply one-off discretion and reduce the participation
level to 140% for 2022. In his role as COO, Ken Gilmartin was awarded a conditional award of shares, under the LTP rules, with a face
value of £551,311.
Executive
director
Type
of award
Participation
level
Salary relevant
to performance
cycle
Face value
of award
Performance
period
Holding period
for 100% of
award
Dividends
David Kemp
Conditional
award of
shares
awarded under
the LTP rules
140%
£511,024
£715,434
1 Jan 2022 – 31
Dec 2024
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
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 £1.88
as at 1 January 2022.
Performance is measured over a period of three
financial years, with 100% o
f any award deferred for a period of two years
following the end of the performance period. This timeline for executive director awards is demonstrated below:
LTIP timeline
Updating LTIP targets following the sale of Built Environment Consulting
Following the sale of Built Environment Consulting in 2022 the Committee determined to adjust
financial and TSR targets
for LTIP 2021-
2023, and adjust financial, TSR and leadership gender diversity targets
for LTIP 2022-2024 to ensure they remain relevant. For EBITDA
and revenue targets the contribution of Built Environment Consulting that was included in the original targets set in 2021 and 2022
has been removed based on the business expectations at that time, and will also be excluded from the performance assessment. The
Committee is satisfied that the revised targets remain challenging and stretching, and that based on per
formance achieved so far, will
not materially impact projected outcomes. The TSR peer group has also been updated to remove peer companies that were included
due to their market overlap with Built Environment Consulting, and to focus the on peers that are relevant to the energy and materials
markets. This has resulted in the removal of Jacobs, WSP, Stantec, Tetratech and Aecom. Maire Technimont and Técnicas Reunidas have
been added due to their energy focus. There will be no change to the carbon emission reduction targets. The changes are outlined below:
Performance cycle
Performance measure
Weighting %
Previously disclosed
Updated
Threshold
Maximum
Threshold
Maximum
LTIP 2021-2023
EBITDA margin percentage improvement
30%
8.5%
9.8%
7.8%
9.0%
Revenue growth
10%
$7.36bn
$8.6bn
$6.4bn
$7.2bn
LTIP 2022-2024
EBITDA margin percentage improvement
30%
8.8%
9.6%
7.6%
8.3%
Revenue growth
10%
$7.3bn
$8.2bn
$5.9bn
$6.6bn
Improvement in leadership gender diversity
5%
35.0%
36.0%
33.0%
35.0%
Performance cycle
Previously disclosed
Updated
LTIP 2021-2023
Aecom, Aker Solutions, Fluor, Hunting, Jacobs Engineering, KBR, Petrofac,
Saipem, SBM Offshore, SNC Lavalin, Stantec, Technip Energies, Technip FMC,
Tetratech, Worley and WSP.
Aker Solutions, Fluor, Hunting, KBR,
Maire Tecnimont, Petrofac, Saipem,
SBM Offshore, SNC Lavalin, Technip
Energies, Technip FMC, T
é
cnicas
Reunidas and Worley.
LTIP 2022-2024
Aecom, Aker Solutions, Fluor, Hunting, Jacobs Engineering, KBR, Petrofac,
Saipem, SBM Offshore, SNC Lavalin, Stantec, Technip Energies, Technip FMC,
Tetratech, Worley and WSP.
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
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
147
Governance
Financial statements
Statement of directors’ shareholding and share interests
Share interests summary*
The table below sets out the total number of shares held by each executive director as at 31 December 2022, with and without
performance conditions; the declaration includes shares held by connected persons as de
fined
for the purposes of section 96B (2)
of the Financial Services and Markets Act 2000. Where applicable the
figures include interest in retained long-term plan awards.
Changes in the shareholding of directors between 31 December 2022 and 28 March 2023 are related to permitted purchases
under the Wood employee share plans. David acquired an additional 7,176 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.
Beneficial interest
Shares owned
outright as at
1 January 2022
Shares owned
outright as at
31 December 2022
Unvested share awards
Vested
unexercised
Share interests without
performance conditions
Share interests with
performance conditions
Executive directors
Ken Gilmartin
–
309,000
50,000
689,634
–
David Kemp
132,184
168,968
118,877
858,978
30,312
Former executive director
Robin Watson
464,819
537,736
211,681
626,237
–
Shareholding requirements
The revised Policy approved at our 2020 AGM requires the CEO 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 2022 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 2022 of £1.35 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 reflects that the LTIP per
formance has resulted in
minimal outcomes over the last five years, compounded by the
fall in share price and Ken’s recent appointment to the role of CEO.
To assist in achieving the shareholding requirement David continued to purchase shares over and above any awards earned during
his employment via the Employee Share Plan (ESP) and the Share Incentive Plan (SIP), continuing to contribute 10% of his salary on
an ongoing basis. Cumulatively, as of 31 December 2022 he contributed £288,437. Ken purchased an additional 259, 000 shares out
of his own resources to assist in building his shareholding. Ken has also paid approximately £31,470 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 2020 Policy, 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
first 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 and former executive directors post-cessation. Post-cessation controls are managed
through the online system provided by our third-party stock administrator. The Committee will continue to monitor post-cessation
shareholding on an annual basis, a summary of shareholding for former executive directors is listed below:
Former executive directors
Date of calculation
Number of shares subject to
requirements
Expiry date of all requirements
Robin Watson
30 September 2022
40,283
1 October 2024
Ken Gilmartin
Shareholding
requirement
0%
50%
100%
150%
200%
250%
David Kemp
Shareholding
requirement
0%
50%
100%
150%
200%
250%
300%
56%
60%
45%
60%
Calculation 1
Calculation 2
John Wood Group PLC
Annual Report and Accounts 2022
148
Executive directors’ remuneration
continued
Share interests table*
Details of executive directors’ interests in long-term incentive and bonus plans as at 31 December 2022; all interests are awarded as
share options or conditional share awards:
 
Date of
award/
performance
period
Performance
conditions
Y/N
Earliest
exercise
date
Exercise
price per
share
Market
value at
date of
exercise
per share
Number
as at 1
Jan 2022
Granted
in 2022
Exercised
in 2022
Lapsed
in 2022
Dividends
awarded as
additional
share
options
Number
as at 31
December
2022
Ken Gilmartin
LTIP
2020 – 2022
Y
March 2025
0
–
187,771
187,771
LTIP
2021 – 2023
Y
March 2026
0
–
209,018
209,018
LTIP
2022 – 2024
Y
March 2027
0
–
292,845
292,845
Discretionary
Award
30 September
2021
N
September
2023
0
–
50,000
50,000
Total
446,789
292,845
0
0
0
739,634
David Kemp
LTIP
2018 – 2020
N
March 2023
0
–
65,091
65,091
LTIP
2019 – 2021
N
March 2024
0
–
146,084
109,563
2,377
38,898
LTIP
2020 – 2022
Y
March 2025
0
–
203,893
203,893
LTIP
2021 – 2023
Y
March 2026
0
–
275,061
275,061
LTIP
2022 – 2024
Y
March 2027
0
–
380,024
380,024
ABP 2019
01 March 2020
N
March 2022
0
–
30,312
30,312
ABP 2021
01 April 2021
N
March 2023
0
–
14,888
14,888
Total
720,441
394,912
0
109,563
2,377
1,008,167
 
Total for all executive directors
1,167,230
687,757
0
109,563
2,377
1,747,801
Notes to incentive plan interests table
For LTIP 2018-2020 and 2019-2021, awards vest and are available to exercise after a two-year deferral period. For all awards, dividends accrue on 100% of the
final award, where applicable. There has been no change to the exercise price or date o
f vesting of shares as outlined in this table.
Pay ratio of CEO
The CEO pay ratio is calculated at the 25th, 50th and 75th percentiles for total pay and bene
fits
for all UK employees for the
relevant financial year on the same basis as the single figure table as stipulated by The Companies (Miscellaneous Reporting)
Regulations 2018. Option B (utilising gender pay gap data as at 5 April 2022) 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.
The CEO pay has been adjusted to reflect
full year equivalent and does not include one off relocation arrangements or
remuneration received for Ken’s previous role as COO to provide meaningful comparison. 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 re
flect 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 fluctuate with the evolution
of our workforce through integration, divestment, and acquisitive growth. We are con
fident the pay ratio remains relatively static
reflective o
f aligned remuneration application between executive directors and our wider workforce.
Year
Method
 
Ratio of CEO pay to employee pay
25
th
percentile
Median
75
th
percentile
Ratio
Value (000s)
Ratio
Value (000s)
Ratio
Value (000s)
2022
Option B
Salary
18:1
£42
12:1
£62
10:1
£75
Total pay
28:1
£47
19:1
£68
14:1
£93
2021
Option B
Salary
19:1
£41
13:1
£62
11:1
£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
£49
11:1
£64
Total pay
50:1
£38
35:1
£53
26:1
£71
Notes
We reported our CEO pay ratio for the
first 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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
149
Governance
Financial statements
TSR performance summary & CEO 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
financial years.
The total remuneration for the CEO 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.
CEO remuneration (£000)
Year
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2022
CEO
Bob
Keiller
Bob
Keiller
Bob
Keiller
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
Robin
Watson
Ken
Gilmartin
CEO single figure o
f total
remuneration (£’000)
£1,624
£1,330
£1,146
£1,179
£1,417
£1,875
£1,690
£1,214
£1,260
£1,063
£958
Annual bonus award as
a % of maximum opportunity
60%
48%
37%
43%
59%
88%
62%
0%
14%
36%
36%
Long-term incentive vesting as
a % of maximum opportunity
79%
51%
16%
25%
11%
0%
0%
50%
25%
0%
–
Notes to CEO remuneration table
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. Robin retired from the Company on 30 September 2022.
Ken Gilmartin was appointed as CEO on 1 July 2022. Long-term incentives vesting during the year were awarded during his time as Chief Operating Of
ficer and
vested based on Group performance and the terms of his buy-out arrangement upon joining Wood in 2021, prior to his qualifying service as an executive director
(see page 146 for details).
197%
185%
24%
Wood
FTSE 100
FTSE 250
0
50
100
150
200
250
300
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
John Wood Group PLC
Annual Report and Accounts 2022
150
Executive directors’ remuneration
continued
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 CEO, CFO and non-executive directors as per the single
figures reported
each year and all other employees within the Group. This table will accumulate over a five-year rolling period and excludes long-term
incentives and pension in line with the regulations.
Executive directors’ salaries were increased in line with the wider workforce from 1 January 2022. Change in remuneration for Robin
Watson reflects his pro-rated pay during the year. Change in employee benefits is impacted mainly by the operational nature o
f our
self-funded medical plans in the US and the increase in the global cost of healthcare provision; we continue to experience modest
changes in premiums for our non-US employees, but there has been no change to Company funded bene
fit provision in line with
executive directors.
The changes to non-executive directors fees are in line with the proposed increases effective 1 January 2022 as disclosed in our 2021
report. Susan Steele was appointed Safety & Sustainability Chair from 22 June 2022 and the increase in her fees re
flects this pro-
rata for her period of appointment.
For further commentary on year-on-year changes, refer to previous annual remuneration report disclosures.
Year-on-year change (%)
2019 – 2020
2020 – 2021
2021 – 2022
Salary Benefits
Bonus
Salary
Benefits
Bonus
Salary
Benefits
Bonus
All employees
–1%
7%
–100%
3%
16%
100%
0%
0%
105%
Executive directors
Ken Gilmartin
David Kemp
–3%
0%
–100%
8%
0%
100%
3%
0%
145%
Former executive directors
Robin Watson
–3%
0%
–100%
8%
0%
100%
–23%
–25%
83%
Non-executive directors
Roy Franklin
47%
7%
3%
Birgitte Brinch Madsen
24%
3%
Jacqueline Ferguson
0%
15%
3%
Adrian Marsh
36%
8%
3%
Nigel Mills
42%
3%
Brenda Reichelderfer
36%
Susan Steele
49%
Notes to the percentage change in CEO remuneration
Salary and benefits 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 32 of the
financial statements.
Bonus is calculated as the average award paid to all participants of the Annual Bonus Plan. Participants in the Built Environment Consulting Business historically
achieved higher bonus payouts impacting the percentage change in average bonus value.
In line with regulations, pensions and long-term incentives are not required to be included in this table.
Non-executive directors do not receive benefits or bonuses.
The percentage increase in executive director salary and non-executive director fees reported between 2020-2021 re
flects the reinstatement o
f the voluntary 10%
reduction with effect from 1 January 2021.
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
figures displayed in this table are impacted by movements
in the number of employees each year.
 
2022
($m)
2021
($m)
Difference
($m)
%
change
Remuneration paid to or received by all employees
3,130.0
3,141.8
–11.8
–0.38%
Distributions to shareholders by way of dividend and share buyback
–
–
–
–
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
151
Governance
Financial statements
A full copy of the Remuneration Policy can be found at:
woodplc.com/rempolicy
Statement of implementation of Policy in the following
financial year
This section provides an overview of how the Committee will implement the Policy in 2023. 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.
Salary
Benefits
Pension related benefits
Shareholding requirements
Base salaries will
increase by 3%
for both executive
directors. Ken
Gilmartin’s annual
salary will be
£772,500; and
David Kemp’s will
be £526,355 from
1 January 2023,
significantly less
than the wider
workforce where the
budget is 6%.
There will be no change to benefits
for 2023. The executive directors will
continue to participate in existing
benefit arrangements in line with the
agreed Policy. Ken will continue to receive
additional US benefits
for his dependents
as part of his relocation arrangement.
Both executive directors will remain
eligible to participate in the employee
share plans, with contributions of up
to 10% of gross salary, subject to plan
rules; both executive directors have
chosen to enrol at 10%.
Both executive directors will
remain eligible to participate
in the pension arrangement
aligned to their country of
employment. In the UK this
is 9%, aligned with the wider
workforce.
As detailed in line our Policy,
shareholding requirements are
250% for the CEO and 200% for
all other executives.
Short-term incentives
Long-term incentives
Bonuses will operate with a maximum opportunity of 175%
of salary for Ken Gilmartin and 150% of salary for David
Kemp. In line with the Policy, 25% of any payment will be
deferred into nil cost share based awards for a further two
years. Bonus measures will be split between financial and
environmental, social and governance (ESG) measures with
a balance of 90%
financial and 10% ESG reflecting our
repositioning for growth.
The ESG framework will comprise of three key performance
indicators split as follows:.
• 5% – Voluntary professional turnover
• 2.5% – Fatality and Permanent Impairment (FPI)
• 2.5% – Safety leadership engagement
Achievement of the safety measures will be overseen by the
Safety & Sustainability Committee.
Financial measures will comprise of 10% growth, 40% pro
fit
and 40% cash measures. Threshold performance remains
at 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; 20% of maximum becomes payable for reaching
threshold performance; 50% of maximum becomes payable
for reaching target performance; and 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 Safety & Sustainability Committee and external
auditors as appropriate.
The Committee set the targets for the annual bonus plan for
the year ending 31 December 2023 at its meeting in March
2023. 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.
Participation levels in 2023 will be 170% of salary for Ken Gilmartin
and 149% of salary for David Kemp including a discretionary
reduction of 15%. The number of shares granted will be based, as
usual, on the 20 days’ trading average price as at 1 January 2023.
The performance measures will be 60% EBITDA, 30% on a
bespoke TSR peer group and 10% on an ESG framework. All
measures are key strategic priorities aligned with value generation
for our stakeholders, and with the commitment to deliver
financial
returns made at our Capital Markets Day in November 2022.
Our ESG measures align closely with our long-term sustainability
goals to reduce our carbon emissions (Scope 1 and 2) by 40%, and
achieve our target of 40% female gender representation by 2030.
The bespoke TSR peer group will be Aker Solutions, Fluor, Hunting,
KBR, Maire Technimont, Petrofac, Saipem, SBM, SNC Lavelin,
TechnipEnergies, Technip FMC, Técnicas Reunidas and Worley.
The weightings and targets for each of the performance measures
are detailed below. No award will be made for less than threshold
performance; 25% becomes payable on reaching threshold and
100% is 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 Safety & Sustainability
Committee and external auditors as appropriate.
Performance Measure
Weighting %
Targets
Threshold
Maximum
EBITDA
60%
$450m
$525m
Bespoke TSR peer group
30%
50th
percentile
75th
percentile
Carbon emission reduction
from 2019 baseline
5%
26%
37%
Improvement in leadership
gender diversity
5%
33%
35%
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.
John Wood Group PLC
Annual Report and Accounts 2022
152
Executive directors’ remuneration
continued
Single figure o
f remuneration*
In line with our 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, CEO 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
figure o
f
remuneration for the Chair and each of the non-executive
directors in the financial year. Fees are pro-rata where there
was a change of appointment during the year; further details
of Board changes are outlined on page 89.
 
Year
Total fees
(£’000)
Roy Franklin
2022
£287.0
2021
£280.0
Birgitte Brinch Madsen
2022
£58.5
2021
£57.0
Jacqui Ferguson
2022
£68.8
2021
£67.0
Adrian Marsh
2022
£68.8
2021
£67.0
Nigel Mills
2022
£68.8
2021
£67.0
Brenda Reichelderfer
2022
£58.5
2021
£42.9
Susan Steele
2022
£63.9
2021
£42.9
Thomas Botts (to 22 June 2022)
2022
£32.9
2021
£67.0
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 benefits 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 2022, including those held by connected persons.
Between 31 December 2022 and publication of this annual
report. There have been no other changes to non-executive
director shareholding detailed below since 31 December 2022.
Shares owned
outright as at 1
January 2022
Shares owned
outright as at 31
December 2022
Roy Franklin
15,000
37,000
Birgitte Brinch Madsen
5,000
5,000
Jacqui Ferguson
12,272
20,084
Adrian Marsh
27,000
27,000
Nigel Mills
7,341
7,341
Brenda Reichelderfer
–
15,000
Susan Steele
–
8,500
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
fixed 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 2022 AGM and
expiry of the current term of their agreements if applicable.
 
Date of
Appointment
Notice
period
Current term
expiry
Roy Franklin
06 October 2017
90 days
No fixed expiry
Birgitte Brinch
Madsen
01 March 2020
90 days
No fixed expiry
Jacqui Ferguson
01 December 2016
90 days
No fixed expiry
Adrian Marsh
10 May 2019
90 days
No fixed expiry
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
Fee structure
The Chair and non-executive director fee structure for 2022
and 2023 are set out below. Following market benchmarking
analysis the Board and Committee determined the Chair,
non-executive directors and additional fees would increase by
2%, effective 1 January 2023. Fees will be reviewed again in
2023 during the annual process. The fee structure re
flects the
time commitment of Committee responsibilities and ensures
we continue to attract and retain from a diverse range of
backgrounds.
 
2022
fees per
annum
2023
fees per
annum
Chair of the Board annual fee
£287,000
£292,740
Annual non-executive director fee inclusive
of all Committee attendance
£58,500
£59,670
Additional annual fee for Senior
Independent Director
£10,300
£10,500
Additional annual fee for Audit, Risk
& Ethics/Remuneration/Safety &
Sustainability Chairs
£10,300
£10,500
Changes during the year
Directors appointed
There were no new non-executive directors appointed
during the year.
Director changes
Already appointed as a Non-Executive Director, Sue Steele
was also appointed Safety & Sustainability Committee
Chair effective 22 June 2022.
Directors resigned
Thomas Botts resigned from the Board effective 22 June
2022.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
153
Governance
Financial statements
Chair of the Board and non-executive directors
Page intentionally left blank
John Wood Group PLC
Annual Report and Accounts 2022
154
Financial statements
Group financial statements
The audited financial statements
of Wood for the year ended
31 December 2022.
Independent auditor’s report
156
Consolidated income statement
166
Consolidated statement of
comprehensive income/expense
167
Consolidated balance sheet
168
Consolidated statement of changes
in equity
169
Consolidated cash flow statement
170
Notes to the financial statements
172
Company financial statements
Company balance sheet
248
Statement of changes in equity
249
Notes to the Company financial
statements
250
Five year summary
257
Information for shareholders
258
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
155
Governance
Financial statements
Independent auditor’s report
to the members of John Wood Group PLC
1. Our opinion is unmodified
We have audited the financial statements o
f John Wood
Group PLC (“the Company”) for the year ended 31 December
2022 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 172 to 180 and 250 to 251.
In our opinion:
• the financial 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 2022 and of the Group’s loss for the
year then ended;
• the Group financial statements have been properly prepared
in accordance with UK-adopted international accounting
standards;
• the Parent Company financial statements have been properly
prepared in accordance with UK accounting standards,
including FRS 101 Reduced Disclosure Framework; and
• the financial 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 suf
ficient and appropriate
basis for our opinion. Our audit opinion is consistent with our
report to the Audit, Risk and Ethics Committee.
We were first appointed as auditor by the shareholders on 11
May 2018. The period of total uninterrupted engagement is for
the five financial years ended 31 December 2022.
We have ful
filled our ethical responsibilities and remain
independent of the Group in accordance with UK ethical
requirements, including the FRC Ethical Standard as applied
to listed public interest entities.
Apart from the matters noted below, we have not
performed any non-audit services during the year ended
31 December 2022 or subsequently which are prohibited by
the FRC Ethical Standard.
During 2023, we identified that certain KPMG member firms
had provided preparation of local GAAP
financial statement
services and foreign language translation services over the
period 2019 to 2022 to entities which are residual components
and therefore not in scope for the group audit. The services,
which have been terminated, were administrative in nature
and did not involve any management decision-making or
bookkeeping. The work in each case was undertaken after the
group audit opinion was signed by KPMG LLP for each of the
impacted financial years and had no direct or indirect e
ffect on
John Wood Group Plc’s consolidated financial statements.
In our professional judgment, we con
firm that based on our
assessment of the breach, our integrity and objectivity as
auditor has not been compromised and we believe that an
objective, reasonable and informed third party would conclude
that the provision of this service would not impair our integrity
or objectivity for any of the impacted
financial years. The audit
committee concurred with this view.
Overview
Materiality:
group financial
statements as a whole
$30m (2021: $40m)
0.5% (2021: 0.5%) of revenue
(2021: 0.5% of normalised revenue)
Coverage
79% (2021: 80%) of group revenue
Key audit matters
vs 2021
Recurring risks
Goodwill impairment
Revenue recognition on fixed
price contracts
US asbestos related claims
provisions
Parent Company
recurring risk
Recoverability of Parent
Company’s investment in
subsidiary
John Wood Group PLC
Annual Report and Accounts 2022
156
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 signi
ficance in the audit o
f the
financial
statements and include the most significant assessed risks o
f material misstatement (whether or not due to fraud) identi
fied 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 signi
ficance, 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
financial 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
Goodwill impairment
(Goodwill – $3,788.6
million, 2021: Goodwill in
relation to Projects and
Operations CGU’s $3,999.2
million).
(Goodwill impairment
-$493.2 million 2021: $Nil)
Refer to pages 119 and
120 (Audit, Risk and Ethics
Committee Report), pages
173 and 176 (accounting
policy) and note 10
(financial disclosures).
Forecast-based assessment:
The Group estimates recoverable amounts
based on value in use which requires
significant estimation in
forecasting future
cash flows and determining revenue growth
rates, long term growth rates and discount
rates. 
Global market conditions are challenging
which is impacting the global economy. This
includes increases in the risk free rate and
rising prices, which may impact margins of
the group. 
The market capitalisation of the group is
significantly below the carrying value o
f
net assets.
The effect of these matters is that, as part
of our risk assessment, we determined
that the value in use of goodwill has a high
degree of estimation uncertainty, with a
potential range of reasonable outcomes
greater than our materiality for the
financial
statements as a whole. The financial
statements (Note 10) disclose the sensitivity
estimated by the Group.
The risk over goodwill impairment has
increased as a result of increases to risk
free rates and discount rates, as well as
reduction in group headroom following the
sale of Built Environment Consulting.
Our procedures included:
•
Assessing methodology:
we assessed whether the principles
and integrity of the cash
flow model are in accordance with
applicable standards.
•
Sensitivity analysis:
we performed our own sensitivity
analysis including a reasonably possible reduction in forecast
cash flows, alternative higher discount rate assumption and
lower revenue growth to assess the level of sensitivity to
these assumptions
•
Our sector experience:
we challenged the cash flow and
growth assumptions applied with reference to the accuracy of
historical forecasts, group speci
fic
factors and wider macro-
environment conditions.
•
Our sector experience:
we challenged the revenue growth
assumptions in the value in use calculations by comparing
management’s assumptions of growth in market share
against external data (such as GDP and industry sector
forecasts (including current market expectations of the
impact of climate where available)).
•
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.
•
Comparing valuations:
We obtained and corroborated
explanations regarding significant di
fferences between
market capitalisation and the carrying value of the net assets.
•
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
change in the discount rate, revenue growth rate and long-
term growth rate reflected 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, and the
impairment recorded, to be acceptable (2021: We found the
Group’s conclusion that there is no impairment of goodwill to
be acceptable).
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
157
Governance
Financial statements
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk
Our response
Revenue recognition on
fixed price contracts
(Revenue from lump
sum contracts – $1,179.8
million, 2021: $1,695.8
million)
Refer to page 119 (Audit,
Risk and Ethics Committee
Report), pages 173 and 175
(accounting policy) and
note 2 and 21 (financial
disclosures).
Subjective estimate:
Long-term, fixed price contracts can
include complex technical and commercial
requirements and last for a number of years.
Recognition of revenue and pro
fit 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 satisfies 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 modifications
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.
The effect of these matters is that, as part
of our risk assessment, we determined that
revenue from
fixed price contracts has a
high degree of estimation uncertainty, with
a potential range of reasonable outcomes
greater than our materiality for the
financial
statements as a whole and possibly many
times that amount. This includes the
Aegis Poland contract disclosed in Note
21, which has the single greatest effect on
the estimate. The financial statements
(Page 173 and Notes 2 and 21) 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 final 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 finance contract
project teams to consider whether relevant information was
included in cost and revenue forecasts.
•
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 modifications 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
financial 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 historical
contract run rates.
•
KPMG specialists:
for the Aegis contract, we utilised
KPMG Project specialists to identify the risks and
opportunities associated with the contract and developed
a range of possible contract out-turns and challenged the
appropriateness of revenue recognised and provisions held
in relation to that contract. We performed an assessment
of whether an overstatement of revenue identi
fied through
these procedures was material.
•
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.
•
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
fixed
price contracts to be acceptable. (2021: acceptable)
Independent auditor’s report
continued
John Wood Group PLC
Annual Report and Accounts 2022
158
2. Key audit matters: including our assessment of risks of material misstatement
(continued)
The risk
Our response
US asbestos related
claims provision
($303.0 million, 2021:
$336.8 million)
Refer to page 120 (Audit,
Risk and Ethics Committee
Report), pages 173, 174
and 179 (accounting policy)
and note 21 (financial
disclosures).
Subjective estimate:
The amount of the US asbestos related
litigation provision depends on a number of
estimates, including the forecasted number
of new claims, the average indemnity
settlement amount and the estimated
defence costs.
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
significant 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
financial statements as a
whole, and possibly many times that amount.
The financial statements (note 21) 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 new claims, the average indemnity
settlement amount and the estimated defence costs.
•
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 US actuarial specialists
to develop our own model to estimate the liability range.
•
Test of detail:
we evaluated the assumption for the average
indemnity settlement amount against the recent history of
claims settled.
•
Historical comparisons:
We assessed the ability of the Group
to forecast accurately, by comparing prior period forecasts
of average indemnity settlement amount and forecasted
number of new claims, to the actual outcomes. We evaluated
the findings to assess i
f the current forecast used to develop
the US asbestos related claims provision, factored in an
appropriate level of risk.
•
Assessing valuer’s credentials:
we assessed the directors’
external valuation expert’s competence and objectivity.
•
Assessing transparency:
we assessed whether the Group’s
disclosures relating to the sensitivity of the provision to
reasonably possible changes in the average indemnity
settlement amount, forecasted number of new claims and
estimated defence costs re
flected the risks inherent in the
estimation of the provision.
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. (2021: acceptable)
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
159
Governance
Financial statements
2. Key audit matters: 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
– $3,873.6 million, 2021:
$4,370.4 million)
(Investment in subsidiary
impairment – $517.5
million, 2021: $Nil)
Refer to pages 119 and
120 (Audit, Risk and Ethics
Committee Report), pages
250 and 251 (accounting
policy) and note 1 of
the Company financial
statements (financial
disclosures).
Forecast-based assessment:
The carrying amount of the Parent
Company’s investment in subsidiary
represents 50% of the Company’s total
assets. Due to its materiality in the context
of the Parent Company
financial statements,
this is considered to be the area that had
the greatest overall effect on our Parent
Company audit.
The market capitalisation of the group is
significantly below the carrying value o
f
the investment.
The risk has increased as a result of
increases to risk free rates and discount
rates, as well as reduction in headroom on
the investment following the sale of Built
Environment Consulting.
The effect of these matters is that, as part of
our risk assessment, we determined that the
recoverable amount of the parent company’s
investment in subsidiary has a high degree
of estimation uncertainty, with a potential
range of reasonable outcomes greater than
our materiality for the
financial statements
as a whole. The parent company financial
statements (Note 1) disclose the sensitivity
estimated by the company.
Our procedures included: 
•
Assessing methodology: 
we assessed management’s
identification o
f indicators of impairment, which are
quantitative and qualitative.
•
Comparing valuations:
we compared the carrying amount of
the investment with a valuation calculated based on the net
present value of relevant cash
flows o
f the Group that were
assessed through our procedures responsive to the Group’s
goodwill impairment risk. We obtained and corroborated
explanations regarding significant di
fferences 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,
and the impairment charge recorded, to be acceptable.
(2021: We found the Group’s conclusion that there was no
impairment of the investment in subsidiary to be acceptable)
Litigation related provisions and contingent liabilities
We continue to perform procedures over litigation related provisions and contingent liabilities. However, following the settlement of the
Enterprise legal case, as disclosed in note 5 of the
financial statements, we have not assessed this as one o
f the most signi
ficant risks in our
current year audit and therefore it is not separately identi
fied in our report this year.
Going concern and exceptional items
We continue to perform procedures over going concern and the appropriate identi
fication and measurement o
f exceptional items. However,
following the sale of the Built Environment Consulting business and the subsequent signi
ficant reduction in net debt relevant to debt
covenants, we have not assessed these matters as one of the most signi
ficant risks in our current year audit and there
fore they are not
separately identified in our report this year. Please re
fer to section 5 of our audit report which covers going concern.
Independent auditor’s report
continued
John Wood Group PLC
Annual Report and Accounts 2022
160
3. Our application of materiality and an overview
of the scope of our audit
Materiality for the group
financial statements as a whole was
set at $30 million (2021: $40 million), representing 0.5% (2021:
0.5%) of the benchmark. Our 2021 benchmark was the Group
revenue from continuing operations normalised by averaging
over 2021, 2020 and 2019 due to the fluctuations caused by
COVID-19. In 2022, we consider the Group revenue to be the
most appropriate benchmark as it provides a more stable
measure year on year than Group profit be
fore tax.
Materiality for the parent company
financial statements as a
whole was set at $29 million (2021: $39 million), determined
with reference to a benchmark of Company total assets, of
which it represents 0.4% (2021: 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 financial statements as a whole.
Performance materiality was set at 75% (2021: 75%) of
materiality for the
financial statements as a whole, which
equates to $22.5 million (2021: $22.5 million) for the group and
$21.75 million (2021: $29.25 million) 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, Risk and Ethics Committee
any corrected or uncorrected identified misstatements
exceeding $1.5 million (2021: $2.0 million), in addition to
other identified misstatements that warranted reporting on
qualitative grounds.
Of the Group’s reporting components, we subjected 5 (2021:
6) to full scope audits for Group purposes and 17 (2021: 15) to
specified risk-
focused audit procedures over: revenue, cost of
sales and trade receivables (13 components (2021: 13)); gross
amounts due from customers (13 components (2021: 10)); trade
payables (9 components (2021: 9)); cash (15 components (2021:
14)) ; accruals and deferred income (11 components (2021: 8));
provisions (3 components (2021: 2)); administrative expenses
(4 components (2021: 2)); prepayments (1 component 2021:
1)); other receivables (2 components (2022: 3)); amortisation (1
component (2021: nil)) and; profit
from discontinued operations,
net of tax (1 component (2021: nil)). The latter were not
individually financially significant 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 significant risks o
f material misstatement within these.
The Group operates shared service centres, the outputs of
which are included in the financial in
formation of the reporting
components they service and therefore they are not separate
reporting components. One (2021: one) shared service centre
was subject to specified risk-
focused audit procedures,
predominantly the testing of transaction processing controls.
Group
revenue
Revenue
$30m
Whole financial
statements
materiality(2021: $40m)
$18m
Range of materiality at 22
components ($2.7m-$18m)
(2021: $1.8m to $18m)
$1.5m
Misstatements reported to
the Audit, Risk and Ethics
Committee (2021: $2.0m)
$5,434.2m (2021 Normalised
revenue: $7,774.9m)
Group materiality
$30m (2021: $40m)
Group Revenue
Group materiality
Total profits and
losses that made up
group loss before tax
Group
total assets
Full scope for group audit purposes 2022
Specified risk-
focused audit procedures 2022
Full scope for group audit purposes 2021
Specified risk-
focused audit procedures 2021
Residual components
$22.5m
Whole financial statements
performance materiality
(2021: $30m)
85%
(2021: 85%)
7
78
5
80
79%
(2021: 72%)
61
56
16
18
79%
(2021: 80%)
47
59
21
32
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
161
Governance
Financial statements
5. Going concern
The Directors have prepared the financial 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
financial position means that this is realistic. They have also
concluded that there are no material uncertainties that could
have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of
the financial statements (“the going concern period”).
We used our knowledge of the Group, its industry, and the
general economic environment to identify the inherent risks
to its business model and analysed how those risks might
affect the Group’s and Company’s
financial resources or
ability to continue operations over the going concern period.
The risks that we considered most likely to adversely affect
the Group’s and the Company’s ability to meet metrics
relevant to debt covenants over this period were:
• the ongoing impact that lasting changes to the energy
market from recent years have on the Group’s ability to
achieve revenue, Adjusted EBITDA and Adjusted EBITA
forecasts falling in the going concern period; and
• the ability of the Group to deliver the new strategy outlined
to the market.
We considered whether these risks could plausibly affect the
covenant compliance in the going concern period by assessing
the directors’ sensitivities over the covenant thresholds
indicated by the Group’s financial
forecasts taking account
of severe, but plausible adverse effects that could arise from
these risks individually and collectively.
Our procedures also included:
• Inspecting the Revolving Credit Facility Agreement (the “RCF
Agreement”), the UK Export Finance loan agreement and
the US private placement loan note agreements, evaluating
if there were any restrictions in the use of the funds. We
inspected these agreement to understand the terms,
including assessing the definitions o
f covenant metrics such
as Adjusted EBITA and Net Interest Charges and whether
the forecasts used for the purpose of assessing compliance
with covenants appropriately reflected those definitions. We
reperformed calculations for key
financial covenants at each
test date falling into the going concern assessment period, in
order to test the expected compliance with these covenants
and mathematical accuracy of the Directors’ calculations.
• Assessing the ability of the Group to forecast accurately, by
comparing budgets to historical results for key metrics. We
challenged the current forecast assumptions by reference
to the findings
from the above and assessed whether they
reflected market
forecasts, changes to the energy market
and the Group’s new strategy.
• Evaluating whether the key assumptions over revenue
growth, Adjusted EBITA and Adjusted EBITDA margin
are realistic, achievable and consistent with the external
and internal environment and other matters identified in
the audit.
We considered whether the going concern disclosure on page
172 of the
financial statements gives a
full and accurate
description of the directors’ assessment of going concern,
including the identified risks and dependencies.
3. Our application of materiality and an overview
of the scope of our audit
(continued)
The Group team instructed the auditors of 22 (2021: 21)
reporting components in 9 (2021: 9) locations, as to the
significant 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 $2.7 million to $18 million (2021: $1.8 million to
$18 million), having regard to the mix of size and risk pro
file o
f
the Group across the components. The work on 20 of the 22
(2021: 19 of the 21) 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 3 (2021: 4) reporting components in 2 of
9 (2021: 2 of 11) locations to assess the audit risks and
findings.
Video and telephone conference meetings were also held with
these component auditors and others that were not physically
visited. At these visits and meetings, the findings 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 financial reporting.
4. 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
financial
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 financial statements. We have
performed a risk assessment of how the impact of climate
change may affect the
financial statements and our audit. Our
risk assessment focused on the risk climate change may pose
to the determination of future cash
flows 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 10, 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
specific 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 identi
fied 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 financial statements and our audit knowledge.
Independent auditor’s report
continued
John Wood Group PLC
Annual Report and Accounts 2022
162
5. Going concern
(continued)
Our conclusions based on this work:
• we consider that the Directors’ use of the going concern basis
of accounting in the preparation of the
financial statements
is appropriate;
• we have not identified, and concur with the Directors’
assessment that there is not, a material uncertainty related
to events or conditions that, individually or collectively, may
cast significant 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 172 of the
financial statements on the use o
f the going concern basis
of accounting with no material uncertainties that may cast
significant doubt over the Group and Company’s use o
f that
basis for the going concern period, and we found the going
concern disclosure on page 172 to be acceptable; and
• the related statement under the Listing Rules set out on
pages 82 and 83 is materially consistent with the financial
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
6. 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, Risk and Ethics Committee,
internal audit, the ethics and compliance team, the internal
legal team, external law firms and inspection o
f 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, Risk and Ethics 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.
We communicated identified
fraud risks throughout the audit
team and remained alert to any indications of fraud throughout
the audit. This included communication from the Group
audit team to component audit teams of relevant fraud risks
identified at the Group level and requests to component audit
teams to report to the Group audit team any instances of fraud
that could give rise to a material misstatement at Group level.
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 identified
fraud risks.
As required by auditing standards, and taking into account
possible pressures to meet profit targets and external debt
covenant thresholds we perform procedures to address
the risk of management override of controls and the risk of
fraudulent revenue recognition, in particular the risk on
fixed
price contracts, and the risk of bias in accounting estimates and
judgements such as goodwill impairment assumptions.
We did not identify any additional fraud risks.
Further detail in respect of revenue recognition on
fixed price
contracts and goodwill impairment is set out in the key audit
matter disclosures in section 2 of this report.
We also performed procedures including: 
• Identifying journal entries to test at Group level and at
in-scope components based on risk criteria and comparing
the identified 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 tested all material post closing
journal entries.
• Evaluated the business purpose of signi
ficant unusual
transactions.
• Assessing whether the judgements made in making
accounting estimates are indicative of a potential bias.
Identifying and responding to risks of material
misstatement due to non-compliance with laws
and regulations
We identified areas o
f laws and regulations that could
reasonably be expected to have a material effect on the
financial 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 identified laws and regulations throughout
our team and remained alert to any indications of non-
compliance throughout the audit. This included communication
from the Group audit team to component audit teams of
relevant laws and regulations identified at the Group level, and
a request for all component auditors to report to the Group
audit team any instances of non-compliance with laws and
regulations that could give rise to a material misstatement at
the Group level.
The potential effect of these laws and regulations on the
financial statements varies considerably.
Firstly, the Group is subject to laws and regulations that
directly affect the
financial statements including financial
reporting legislation (including related companies legislation),
distributable profits legislation, taxation legislation
and pensions legislation in respect of de
fined benefit pension
schemes and we assessed the extent of compliance with these
laws and regulations as part of our procedures on the related
financial statement items.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
163
Governance
Financial statements
6. Fraud and breaches of laws and regulations –
ability to detect
(continued)
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
financial statements,
for instance through the imposition
of
fines or litigation. We identified 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 and certain aspects of company legislation
recognising the nature of the Group’s activities. 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 asbestos related litigation and contingent liability
matters discussed in notes 21 and 34, we assessed disclosures
against our understanding gained through the audit procedures
performed including inspection of legal correspondence.
We discussed with the Audit, Risk and Ethics Committee
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 financial 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 reflected in the financial 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.
Independent auditor’s report
continued
7. 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 financial
statements. Our opinion on the financial 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 financial statements
audit work, the information therein is materially misstated
or inconsistent with the financial statements or our audit
knowledge. Based solely on that work we have not identified
material misstatements in the other information.
Strategic report and Directors’ report
Based solely on our work on the other information:
• we have not identified material misstatements in the
Strategic report and the Directors’ report;
• in our opinion the information given in those reports for the
financial year is consistent with the financial 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 financial statements and our audit
knowledge.
Based on those procedures, we have nothing material to add or
draw attention to in relation to:
• the Directors’ confirmation within the Viability Statement
page 83 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 identified, 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 qualifications
or assumptions.
John Wood Group PLC
Annual Report and Accounts 2022
164
7. We have nothing to report on the other
information in the Annual Report
(continued)
We are also required to review the Viability Statement, set
out on page 83 under the Listing Rules. Based on the above
procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our
audit knowledge.
Our work is limited to assessing these matters in the context
of only the knowledge acquired during our
financial 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 financial statements
and our audit knowledge.
Based on those procedures, we have concluded that each of the
following is materially consistent with the
financial statements
and our audit knowledge:
• the Directors’ statement that they consider that the annual
report and financial 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, Risk and Ethics Committee, including the significant
issues that the Audit, Risk and Ethics Committee considered
in relation to the financial 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 speci
fied by
the Listing Rules for our review.
We have nothing to report in these respects.
8. 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 financial statements and the part o
f
the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration speci
fied 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.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page
101, the Directors are responsible for: the preparation of the
financial statements including being satisfied that they give
a true and fair view; such internal control as they determine is
necessary to enable the preparation of
financial 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 financial 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 influence
the economic decisions of users taken on the basis of the
financial statements.
A fuller description of our responsibilities is provided on the
FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
The Company is required to include these financial
statements in an annual financial report prepared using the
single electronic reporting format speci
fied in the TD ESEF
Regulation. This auditor’s report provides no assurance over
whether the annual financial report has been prepared in
accordance with that format.
10. 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
27 March 2023
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
165
Governance
Financial statements
Consolidated income statement
for the year ended 31 December 2022
2022
2021 (restated*)
Note
Pre–
exceptional
items
$m
Exceptional
items
$m
Total
$m
Pre–
exceptional
items
$m
Exceptional
items
$m
Total
$m
Continuing operations
Revenue
1,2,5
5,442.2
(8.0)
5,434.2
5,237.7
(25.4)
5,212.3
Cost of sales
5
(4,776.8)
(17.0)
(4,793.8)
(4,617.8)
(73.9)
(4,691.7)
Gross profit
665.4
(25.0)
640.4
619.9
(99.3)
520.6
Administrative expenses
5
(600.6)
(96.2)
(696.8)
(557.8)
(56.4)
(614.2)
Impairment of goodwill and intangible assets
5
–
(542.3)
(542.3)
–
–
–
Share of post-tax pro
fit
from joint ventures
13
30.4
–
30.4
31.5
–
31.5
Operating profit/(loss)
95.2
(663.5)
(568.3)
93.6
(155.7)
(62.1)
Finance income
3
6.9
–
6.9
3.3
–
3.3
Finance expense
3,5
(127.2)
(5.9)
(133.1)
(106.9)
(6.3)
(113.2)
Loss before taxation from continuing operations
4,5
(25.1)
(669.4)
(694.5)
(10.0)
(162.0)
(172.0)
Taxation
5,6
(47.3)
36.4
(10.9)
(32.4)
(9.1)
(41.5)
Loss for the year from continuing operations
(72.4)
(633.0)
(705.4)
(42.4)
(171.1)
(213.5)
Discontinued operations
Profit/(loss)
from discontinued operations, net
of tax
7
63.3
290.4
353.7
82.0
(4.0)
78.0
(Loss)/profit
for the period
(9.1)
(342.6)
(351.7)
39.6
(175.1)
(135.5)
(Loss)/profit attributable to
Owners of the parent
(13.7)
(342.6)
(356.3)
35.6
(175.1)
(139.5)
Non-controlling interests
29
4.6
–
4.6
4.0
–
4.0
(9.1)
(342.6)
(351.7)
39.6
(175.1)
(135.5)
Earnings per share (expressed in cents per share)
Basic
9
(52.4)
(20.6)
Diluted
9
(52.4)
(20.6)
Earnings per share – continuing operations
(expressed in cents per share)
Basic
9
(104.4)
(32.2)
Diluted
9
(104.4)
(32.2)
The notes on pages 172 to 246 are an integral part of these consolidated
financial statements.
*
The comparative information has been restated due to a discontinued operation outlined in note 7.
John Wood Group PLC
Annual Report and Accounts 2022
166
Consolidated statement of comprehensive income/expense
for the year ended 31 December 2022
Note
2022
$m
2021
(restated*)
$m
Loss for the year
(351.7)
(135.5)
Other comprehensive income from continuing operations
Items that will not be reclassified to profit or loss
Re-measurement gains on retirement benefit obligations
33
168.0
76.2
Movement in deferred tax relating to retirement bene
fit obligations
6
(41.6)
(9.5)
Total items that will not be reclassified to profit or loss
126.4
66.7
Items that may be reclassified subsequently to profit or loss
Cash flow hedges
28
5.1
7.9
Tax on derivative financial instruments
6
(1.7)
(3.4)
Exchange movements on retranslation of foreign operations
28
(165.1)
(51.0)
Total items that may be reclassified subsequently to profit or loss
(161.7)
(46.5)
Other comprehensive (expense)/income from continuing operations for the year, net of tax
(35.3)
20.2
Other comprehensive (expense)/income from discontinued operations
Re-measurement gains on retirement benefit schemes
33
2.9
7.1
Exchange movements on retranslation of foreign operations
28
(57.9)
(5.3)
Other comprehensive (expense)/income from discontinued operations for the year, net of tax
(55.0)
1.8
Total comprehensive expense for the year
(442.0)
(113.5)
Total comprehensive expense for the year is attributable to:
Owners of the parent
(446.6)
(117.5)
Non-controlling interests
4.6
4.0
(442.0)
(113.5)
Exchange movements on the retranslation of foreign operations could be subsequently reclassi
fied to profit or loss in the event o
f
the disposal of a business.
*
The comparative information has been restated due to a discontinued operation outlined in note 7.
The notes on pages 172 to 246 are an integral part of these consolidated
financial statements.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
167
Governance
Financial statements
Consolidated balance sheet
as at 31 December 2022
Note
2022
$m
2021
$m
Assets
Non-current assets
Goodwill and other intangible assets
10
4,309.1
6,075.3
Property plant and equipment
11
82.4
102.2
Right of use assets
12
276.0
356.1
Investment in joint ventures
13
156.5
169.7
Other investments
13
56.0
75.9
Long term receivables
15
129.5
107.5
Retirement benefit scheme surplus
33
432.4
259.6
Deferred tax assets
22
61.2
75.7
5,503.1
7,222.0
Current assets
Inventories
14
11.1
15.9
Trade and other receivables
15
1,545.0
1,791.3
Financial assets
15
10.8
7.7
Income tax receivable
40.7
55.2
Assets held for sale
31
21.0
–
Cash and cash equivalents
16
536.7
503.0
2,165.3
2,373.1
Total assets
7,668.4
9,595.1
Liabilities
Current liabilities
Borrowings
18
345.9
281.9
Trade and other payables
17
1,687.6
1,998.6
Income tax liabilities
218.1
183.2
Lease liabilities
12
83.2
118.3
Provisions
21
44.9
159.0
Liabilities held for sale
31
20.6
–
2,400.3
2,741.0
Net current liabilities
(235.0)
(367.9)
Non-current liabilities
Borrowings
18
584.0
1,614.1
Deferred tax liabilities
22
100.1
72.5
Retirement benefit scheme deficit
33
73.2
74.7
Lease liabilities
12
259.7
331.5
Other non-current liabilities
19
106.8
199.8
Asbestos related litigation
21
311.4
342.1
Provisions
21
103.4
134.1
1,538.6
2,768.8
Total liabilities
3,938.9
5,509.8
Net assets
3,729.5
4,085.3
Equity attributable to owners of the parent
Share capital
24
41.3
41.3
Share premium
25
63.9
63.9
Retained earnings
26
1,224.4
1,415.0
Merger reserve
27
2,540.8
2,540.8
Other reserves
28
(142.4)
21.0
Total equity attributable to owners of the parent
3,728.0
4,082.0
Non-controlling interests
29
1.5
3.3
Total equity
3,729.5
4,085.3
The financial statements on pages 166 to 246 were approved by the board o
f directors on 27 March 2023 and signed on its behalf
by:
Ken Gilmartin, Director
David Kemp, Director
The notes on pages 172 to 246 are an integral part of these consolidated
financial statements.
John Wood Group PLC
Annual Report and Accounts 2022
168
Consolidated statement of changes in equity
for the year ended 31 December 2022
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 2021
41.1
63.9
1,455.2
2,540.8
69.0
4,170.0
2.8
4,172.8
(Loss)/Profit
for the year
–
–
(139.5)
–
–
(139.5)
4.0
(135.5)
Other comprehensive income/(expense):
Re-measurement gains on retirement benefit
schemes
33
–
–
76.2
–
–
76.2
–
76.2
Re-measurement gains on retirement benefit
schemes (discontinued)
33
–
–
7.1
–
–
7.1
–
7.1
Movement in deferred tax relating to retirement
benefit schemes
6
–
–
(9.5)
–
–
(9.5)
–
(9.5)
Cash flow hedges
28
–
–
–
–
7.9
7.9
–
7.9
Tax on derivative financial instruments
6
–
–
(3.4)
–
–
(3.4)
–
(3.4)
Net exchange movements on retranslation of
foreign operations
28
–
–
–
–
(51.0)
(51.0)
–
(51.0)
Net exchange movements on retranslation of
foreign operations (discontinued)
28
–
–
–
–
(5.3)
(5.3)
–
(5.3)
Total comprehensive (expense)/income for the year
–
–
(69.1)
–
(48.4)
(117.5)
4.0
(113.5)
Transactions with owners:
Dividends paid
8,29
–
–
–
–
–
–
(2.7)
(2.7)
Credit relating to share based charges
23
–
–
22.1
–
–
22.1
–
22.1
Deferred tax impact of rate change in equity
6
–
–
4.5
–
–
4.5
–
4.5
Other tax movements in equity
6
–
–
(0.1)
–
–
(0.1)
–
(0.1)
Shares allocated to employee share trusts
26
0.2
–
(0.2)
–
–
–
–
–
Exchange movements in respect of shares held by
employee share trusts
26
–
–
1.1
–
–
1.1
–
1.1
Purchase of company shares by employee share
trust for the Share Incentive Plan (SIP)
26
–
–
1.5
–
–
1.5
–
1.5
Net exchange movements on disposal of foreign
currency operations
28
–
–
–
–
0.4
0.4
–
0.4
Transactions with non-controlling interests
29
–
–
–
–
–
–
(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
(Loss)/Profit
for the year
–
–
(356.3)
–
–
(356.3)
4.6
(351.7)
Other comprehensive income/(expense):
Re-measurement gains on retirement benefit
schemes
33
–
–
168.0
–
–
168.0
–
168.0
Re-measurement gains on retirement benefit
schemes (discontinued)
33
–
–
2.9
–
–
2.9
–
2.9
Movement in deferred tax relating to retirement
benefit schemes
6
–
–
(41.6)
–
–
(41.6)
–
(41.6)
Cash flow hedges
28
–
–
–
–
5.1
5.1
–
5.1
Tax on derivative financial instruments
6
–
–
(1.7)
–
–
(1.7)
–
(1.7)
Net exchange movements on retranslation of
foreign operations
28
–
–
–
–
(165.1)
(165.1)
–
(165.1)
Net exchange movements on retranslation of
foreign operations (discontinued)
28
–
–
–
–
(57.9)
(57.9)
–
(57.9)
Total comprehensive (expense)/income for the year
–
–
(228.7)
–
(217.9)
(446.6)
4.6
(442.0)
Transactions with owners:
Dividends paid
8,29
–
–
–
–
–
–
(1.1)
(1.1)
Credit relating to share based charges
23
–
–
20.7
–
–
20.7
–
20.7
Deferred tax impact of rate change in equity
6
–
–
(0.8)
–
–
(0.8)
–
(0.8)
Other tax movements in equity
6
–
–
(1.3)
–
–
(1.3)
–
(1.3)
Exchange movements in respect of shares held by
employee share trusts
26
–
–
12.5
–
–
12.5
–
12.5
Purchase of company shares by employee share
trust for the Share Incentive Plan (SIP)
26
–
–
1.7
–
–
1.7
–
1.7
Net exchange movements on disposal of foreign
currency operations
28
–
–
–
–
54.5
54.5
–
54.5
Transactions with non-controlling interests
29
–
–
5.3
–
–
5.3
(5.3)
–
At 31 December 2022
41.3
63.9
1,224.4
2,540.8
(142.4)
3,728.0
1.5
3,729.5
The notes on pages 172 to 246 are an integral part of these consolidated
financial statements.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
169
Governance
Financial statements
Consolidated cash flow statement
for the year ended 31 December 2022
Note
2022
$m
2021
$m
Reconciliation of loss before tax to cash generated from operations:
Loss for the period
(351.7)
(135.5)
Adjustments (excluding share of joint ventures)
Depreciation
11
25.2
34.9
Depreciation on right of use assets
12
82.3
101.9
Gain on disposal of leases
–
(1.0)
Gain on disposal of property plant and equipment
4
(1.6)
(10.0)
Impairment of goodwill and intangible assets
10
542.3
–
Impairment of property, plant and equipment
11
0.4
4.0
Impairment of right of use assets
12
–
2.0
Impairment of joint ventures
13
2.0
–
Gain on disposal of investment in joint ventures
5
–
(14.4)
Amortisation of intangible assets
10
151.9
189.9
Share of post-tax pro
fit
from joint ventures
13
(30.4)
(31.5)
Gain on disposal of business
7
(514.5)
–
Net finance costs
3,7
127.9
112.9
Share based charges
23
20.7
22.1
Decrease in provisions
21
(123.1)
(75.6)
Dividends from joint ventures
13
30.1
26.3
Other exceptional items – non-cash impact
1
35.3
126.2
Tax charge
6
236.2
54.9
Changes in working capital (excluding effect of acquisition and divestment of subsidiaries)
(Increase)/decrease in inventories
(1.6)
0.1
Increase in receivables
(97.5)
(70.1)
Decrease in payables
(398.9)
(326.1)
Exchange movements
8.1
2.9
Cash (outflow)/generated
from operations
(256.9)
13.9
Tax paid
(103.9)
(73.5)
Net cash used in operating activities
(360.8)
(59.6)
John Wood Group PLC
Annual Report and Accounts 2022
170
Note
2022
$m
2021
$m
Cash flows
from investing activities
Disposal of businesses (net of cash disposed)
7
1,751.4
19.3
Purchase of property plant and equipment
11
(27.6)
(22.4)
Proceeds from sale of property plant and equipment
7.1
22.1
Purchase of intangible assets
10
(109.2)
(92.5)
Interest received
4.5
3.1
Cash from short term investments and restricted cash
16
–
12.5
Repayment of loans from joint ventures
–
1.0
Net cash generated from/(used in) investing activities
1,626.2
(56.9)
Cash flows
from
financing activities
Repayment of short-term borrowings
30
(35.0)
(33.5)
Proceeds from short-term borrowings
30
88.0
–
Proceeds from long term borrowings
30
–
664.9
Repayment of long-term borrowings
30
(1,039.1)
(335.6)
Payment of lease liabilities
30
(121.6)
(167.6)
Proceeds from SIP shares
26
1.7
1.5
Interest paid
(98.1)
(87.5)
Dividends paid to non-controlling interests
29
(1.1)
(2.7)
Net cash (used in)/generated from
financing activities
(1,205.2)
39.5
Net increase/(decrease) in cash and cash equivalents
30
60.2
(77.0)
Effect of exchange rate changes on cash and cash equivalents
30
(26.5)
(5.0)
Opening cash and cash equivalents
503.0
585.0
Closing cash and cash equivalents
16
536.7
503.0
The repayment of long-term borrowings of $1,039.1m includes the partial repayment of $400.0m of the United Kingdom Export
Facility, the repayment of $416.3m of the senior loan notes and the reduction in utilisation of the long-term revolving credit facility
of $222.8m.
Payment of lease liabilities includes the cash payments for the principal portion of lease payments of $103.7m (2021: $147.3m) and
for the interest portion of $17.9m (2021: $20.3m). The classi
fication o
f interest paid within
financing activities is in line with the
Group accounting policy.
The Group has elected to present a cash flow statement that includes an analysis o
f all cash
flows in total, including both
continuing and discontinued operations. Amounts related to the discontinued operation by operating, investing and financing
activities are disclosed in note 7.
The notes on pages 172 to 246 are an integral part of these consolidated
financial statements.
Consolidated cash flow statement
continued
for the year ended 31 December 2022
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
171
Governance
Financial statements
Notes to the financial statements
for the year ended 31 December 2022
General information
John Wood Group PLC, its subsidiaries and joint ventures,
(‘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 and
materials 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 and listed on the London Stock Exchange.
Copies of the Group
financial statements are available
from
the Company’s registered of
fice at 15 Justice Mill Lane,
Aberdeen AB11 6EQ.
Accounting Policies
Basis of preparation
These financial statements have been prepared in accordance
with UK-adopted international accounting standards. The
Group financial statements have been prepared on a going
concern basis under the historical cost convention as modified
by the revaluation of
financial assets and liabilities at
fair
value through the income statement. The financial statements
are presented in US dollars and all values are rounded to the
nearest $0.1m, unless otherwise stated.
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
financial statements (the going
concern period), which includes financial
forecasts up to the end
of 2024 to re
flect severe, but plausible downside scenarios. The
directors have considered as part of this assessment the impact
of the events that happened post balance sheet date and up to
the date of issue of these
financial statements.
The Built Environment Consulting business disposal was
completed in September, leading to the receipt of gross
proceeds of $1,805.3m and has led to a signi
ficant reduction
in net debt (excluding leases) to $393.2m at 31 December 2022
compared with $1,393m at 31 December 2021. The proceeds
have principally been used to pay down the Group’s debt
facilities including a $400m repayment of the $600m term loan
and $416.3m repayment of the US private placement loan notes.
In order to satisfy themselves that they have adequate
resources for the going concern assessment period, the
directors have reviewed the Group’s existing debt levels, the
forecast compliance with debt covenants, and the Group’s
ability to generate cash from trading activities. As of 31
December 2022, the Group’s principal debt facilities comprise a
$1,200.0m revolving credit facility maturing in October 2026; a
$200.0m term loan maturing in July 2026 and $352.0m of US
private placement debt repayable in various tranches between
July 2024 and July 2031, with around 75% due in 2025 or later.
At 31 December 2022, the Group had headroom of $1,157.9m
under its principal debt facilities and a further $109.7m of
other undrawn borrowing facilities, and the Group expect to
have suf
ficient levels o
f headroom in the severe but plausible
downside scenario modelled.
At 31 December 2022, the Group had net current liabilities of
$235.0m (2021: $367.9 million).
The directors have considered a range of scenarios on the
Group’s future
financial per
formance and cash
flows. These
scenarios reflect our outlook
for the broad range of end
markets that the Group operates in, whilst also considering the
order book visibility and the restored financial strength o
f the
Group’s balance sheet.
The Group anticipates growth in priority markets and
geographies including conventional energy, which the directors
have increased confidence in due to the current market
focus on
energy security. In addition, the process and chemicals business
has strong growth drivers including decarbonisation of facilities
and population growth, which facilitates increased demand
for chemicals products. The order book as at December 2022
includes a high level of revenue coverage for 2023 which is also
improved from prior years and in conjunction with the strong
market drivers described above, gives the directors improved
confidence in the underlying
forecasts.
The directors have also considered severe, but plausible
downside scenarios which reflect
further material reductions
in revenue of between 5% and 10% and a 1% reduction in gross
margin 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 which could lead to
deferrals or cancellations of contracts by our clients. In each of
the scenarios modelled, the financial covenants were passed
with significant
facility headroom remaining available. In the
going concern forecast period, for the June 2023 covenants,
due to higher interest rates and elevated levels of net debt, in
the 12 months prior, the interest cover ratio reduced, but the
covenants are forecast to pass after adjusting for the non-
recurring interest which arose on facilities repaid and cancelled
during 2022. These repayments were made subsequent to
the disposal of the Built Environment Consulting business. In
addition, the directors considered the impact of the removal of
the receivables financing
facility (which is not committed) of
$200m and adverse movements in working capital as further
sensitivities. The Group still had suf
ficient headroom to meet its
liabilities as they fall due with these additional sensitivities.
Consequently, the directors are confident that the Group and
company will have suf
ficient
funds to continue to meet their
liabilities as they fall due for at least 12 months from the date
of approval of the
financial statements and there
fore have
prepared the financial statements on a going concern basis.
Significant accounting policies
The Group’s significant accounting policies adopted in the
preparation of these
financial statements are set out below.
These policies have been consistently applied to all the years
presented.
Critical accounting judgements and estimates
The preparation of the
financial statements requires the use o
f
estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the
financial 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 significant risk o
f resulting in a material
adjustment to the carrying amounts of assets and liabilities.
John Wood Group PLC
Annual Report and Accounts 2022
172
(a)
Revenue recognition on fixed price and long-term
contracts (estimate)
The Group has a large number of
fixed 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 from continuing operations
amounted to $1,179.8m in 2022 (2021: $1,272.4m).
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 fixed 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 modifications).
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 significant 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 modifications, management
recognise associated revenue when such modifications 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 significant
reversal in the amount of cumulative revenue recognised
to date will not occur when the final price
for the contract
modification has been agreed.
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 21 for further details of the
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 significant 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 significant 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
reflect 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 12.2% and 13.2% have been used
to discount the CGU cash flows and a terminal value is applied
using long term growth rates of 2.4%. A sensitivity analysis
has been performed allowing for possible changes to the key
assumptions used in the impairment model.
See note 10 for further details.
(c) Provisions and contingent liabilities (judgement
and estimate)
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 outflow o
f 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 financial
statements, if material. 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. The Enterprise claim was
settled in 2022, with the amount settled being in excess of the
amount provided for. Overall, the amount paid to Enterprise
was higher than our underlying legal assessment of the merits
of the case, but further drawn-out litigation was likely to be
costly and carried a risk that a court awarded a figure higher
than the amount paid. The excess payment was classed as
an exceptional item both by its nature, a historic litigation
settlement and by size.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
173
Governance
Financial statements
Notes to the financial statements
continued
As a result of the acquisition of Amec Foster Wheeler (“AFW”)
in 2017, the Group has acquired a significant 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 3.97% from 1.9% at the end of December 2021.
This has resulted in a credit of $35.6m being recognised through
the income statement and has been treated as exceptional
due to being outwith the control of the Group. 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.
The Group also recorded a $52.8m exceptional charge with
respect to the asbestos liability in the period and was a
result of an updated actuarial review which updated the best
estimate for recent claims experience and latest projections.
Further details of the asbestos liabilities are provided in note 21
including a sensitivity analysis showing the impact of changes
to the key assumptions.
(d) Retirement benefit schemes (estimate)
The value of the Group’s retirement bene
fit schemes surplus/
deficit is determined on an actuarial basis using several
assumptions. Changes in these assumptions will impact the
carrying value of the surplus/de
ficit. A sensitivity analysis
showing the impact of changes to these assumptions is
provided in note 33. The principal assumptions that impact
the carrying value are the discount rate, the inflation rate
and life expectancy. The Group determines the appropriate
assumptions to be used in the actuarial valuations at the
end of each
financial year
following consultation with the
retirement benefit 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
benefits will be paid and that have terms to maturity similar to
those of the related retirement bene
fit obligation. The inflation
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 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 reflect 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 33.
Basis of consolidation
The Group financial statements are the result o
f the
consolidation of the
financial statements o
f 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
financial 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 financial statements
from the date the
joint control commences until the date that it ceases. The
Group includes its share of joint venture pro
fit on the line ‘Share
of post-tax pro
fit
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.
John Wood Group PLC
Annual Report and Accounts 2022
174
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
financial statements:
2022
2021
Average rate £1 = $
1.2324
1.3757
Closing rate £1 = $
1.2029
1.3545
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 pro
fits 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, significant influence or joint control
is lost, the cumulative amount in the translation reserve related
to the foreign operation is reclassi
fied to profit 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 significant influence or joint control, the
relevant proportion of the cumulative amount is reclassi
fied
to profit or loss. The directors consider it appropriate to record
sterling denominated equity share capital in the financial
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 speci
fied
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 significant reversal in
future periods.
Lump sum or fixed price contacts
Revenue on fixed price or lump sum contracts
for services,
construction contracts and fixed 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 specification 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 significant
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 significant items which are
separately disclosed by virtue of their size or incidence to enable
a full understanding of the Group’s
financial per
formance.
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 financial statements (note 5).
Restructuring and redundancy costs or provisions will
include those costs associated with major Board approved
programmes which will deliver longer term benefits to the
Group. If this involves closure of a material of
fice, 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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
175
Governance
Financial statements
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 finance expense. Interest
expense and interest income on scheme assets relating to the
Group’s retirement benefit schemes are also included in finance
income/expense. See note 3 for further details.
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
financial instrument to:
• The gross carrying amount of the
financial asset; or
• The amortised cost of the
financial 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 8 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 identifiable 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 bene
fits attributable to
the asset, the cost of the asset can be measured reliably, the
asset is separately identifiable and there is control over the use
of the asset. Where the Group acquires a business, intangible
assets on acquisition are identified 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
16 years
As detailed in note 10, the Group has reassessed the useful
life of the brand intangible asset to 16 years following a review
of the use of the brand in each of the CGUs. Following this
review, an impairment charge of $44.9m was booked and the
remaining useful life was reduced accordingly. The anticipated
amortisation charge in 2023 to be taken against the brand
is around $25m based on 2022 average exchange rates and
compares with the $24.1m charge booked in 2022.
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
25-50 years
Leasehold improvements
period of lease
Plant and equipment
3-10 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.
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 profit or loss. They are
allocated to first reduce the carrying amount o
f 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
inflows
from continuing use that are largely independent of the
cash inflows o
f 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
benefit
from the synergies of the combination. The CGUs are
aligned to the structure the Group uses to manage its business.
Cash flows are discounted in determining the value in use.
See note 10 for further details of goodwill impairment
testing and note 13 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 classified as Held to Collect.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
176
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
flows due
to the entity in accordance with the contract and the cash flows
that the Group expects to receive). ECLs are discounted at the
effective interest rate of the
financial asset.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit-impaired. A financial
asset is ‘credit-impaired’ when one or more events that have
a detrimental impact on the estimated future cash
flows o
f
the financial asset have occurred. Evidence that a financial
asset is credit-impaired includes a customer being in significant
financial di
f
ficulty or a breach o
f contract such as a default.
The gross carrying amount of a
financial asset is written o
ff
when the Group has no reasonable expectation of recovering a
financial asset in its entirety or a portion thereo
f. 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 financing 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 15 for further details.
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 reflected 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 specific tax law and the likelihood o
f settlement. This
involves a significant amount o
f judgement as tax legislation can
be complex and open to different interpretation. Management
uses in-house tax experts, professional
firms 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 pro
fits 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 22 for details.
The tax charge represents the sum of tax currently payable
and deferred tax. Tax currently payable is based on the taxable
profit
for the year. Taxable pro
fit di
ffers from the pro
fit
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. 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 profit be
fore 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
financial statements. The principal temporary di
fferences 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 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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
177
Governance
Financial statements
Accounting for derivative
financial 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 flows o
f 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 re
flects
its non-performance risk. A number of the Group’s accounting
policies and disclosures require the measurement of fair values,
for both
financial and non-financial assets and liabilities.
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
flows. 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
financial instruments are verified by
comparison to valuations provided by financial institutions.
The carrying values of trade receivables and payables
approximate to their fair values.
The fair value of
financial liabilities is estimated by
discounting the future contractual cash
flows at the current
market interest rate that is available to the Group for similar
financial 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 identified 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 de
finition o
f 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 significantly a
ffect 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 and disclosed within the consolidated
financial statements. The Group believes short-term lease
commitments are not materially different than the short-term
lease cost for the period.
Retirement benefit scheme surplus/deficit
The Group operates a number of de
fined benefit and defined
contribution pension schemes. The surplus or deficit recognised
in respect of the de
fined benefit schemes represents the
difference between the present value of the de
fined benefit
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 defined benefit 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
defined benefit schemes expected to arise
from employee service
in the period is charged to operating profit. 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
finance 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 defined benefit schemes surplus or deficit 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 defined 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.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
178
Provisions
Provisions are recognised where the Group is deemed to have a
legal or constructive obligation, it is probable that a transfer of
economic benefits 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 21 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 financial
statements, if material.
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
benefit 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.
Awards are allocated under the Group’s Long Term Plan (‘LTP’)
which is the incentive plan in place for executive directors
and certain senior executives. The charge for awards granted
under the LTP is based on the fair value of those awards 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.
Employees may also be granted non-performance awards
either in the form of conditional share awards or share options.
These awards typically have a three year vesting period.
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 classified 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 financial statements o
f 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 qualifies
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 27 for further information.
Discontinued operations
The Group has classified its Built Environment Consulting
business as a discontinued operation for the reporting period
ending 31 December 2022. A discontinued operation is a
component of the Group’s business, the operations and cash
flows o
f which can be clearly distinguished from the rest of the
Group and which:
• represents a separate major line of business or geographic
area of operations;
• is part of a single co-ordinated plan to dispose of a separate
major line of business or geographic area of operations; or
• is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs at the
earlier of disposal or when the operation meets criteria to be
classified as held
for sale. When an operation is classi
fied as
a discontinued operation, the comparative income statement
and statement of comprehensive income are presented as
if the operation had been discontinued from the start of the
comparative period. Classification as held
for sale was from 1
January 2022 and in September 2022, the sale of this business
was completed. Details are outlined in note 7.
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. Our
financial reporting segments reflect our current 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 ef
ficiency by providing maintenance, modification
and operation 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.
Due to changes made to internal management reporting from
1 January 2022, the Group is reporting a new operating segment
known as Built Environment Consulting. This operating segment
reflects the Built Environment Consulting business which has
been disposed of in 2022 and was reported within the Consulting
segment in prior periods. Comparatives have been restated to
show this change, as noted throughout the financial statements.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
179
Governance
Financial statements
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 classified 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 profit or loss in line with its recognition o
f
the expenses that the grants are intended to compensate.
The Disclosure of impact of new and future accounting
standards
Standards issued but not yet effective
The Group is required to comply with the requirements of IFRS
17 Insurance Contracts for reporting periods beginning on or
after 1 January 2023. The new accounting standard sets out
the requirements that the Group should apply in reporting
information about insurance contracts it issues and reinsurance
contracts it holds.
The Group is undertaking an assessment of its insurance
contracts held under its captive insurance company, Garlan
Insurance Limited, and will fully adopt this standard from 1
January 2023. At this stage, the impact of the accounting
standard is not expected to have a material impact on the
Group financial statements.
Notes to the financial statements
continued
Amendments to IAS 37
Provisions, Contingent Liabilities and
Contingent Assets
clarifies that
for the purposes of assessing
whether a contract is onerous, the cost of ful
filling the contract
includes both the incremental costs of ful
filling that contract
and an allocation of other costs that relate directly to ful
filling
the contract. The Group undertook a review of its material
onerous contracts and concluded that the amendment to the
accounting standard is not expected to have a material impact
on the Group financial statements.
Amendments to other existing standards do not have a
material impact on the financial statements.
John Wood Group PLC
Annual Report and Accounts 2022
180
1
Segmental reporting
During the year, the Group monitored activity and performance through
five operating segments; Projects, Operations, Consulting,
Built Environment Consulting and Investment Services (‘IVS’). The Group is reporting a new Built Environment Consulting segment
due to changes made to internal management reporting in respect of the sale of the Built Environment Consulting business. Built
Environment Consulting is a new segment in addition to the reportable segments previously shown in the 2021 Annual Report.
Comparatives in the table below have been restated to reflect this change.
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 pro
fits 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 figures exclude joint venture revenue.
The segment information provided to the Group’s Chief Executive for the reportable operating segments for the year ended 31
December 2022 includes the following:
Revenue
(3)
Adjusted EBITDA
(1)
Operating profit/(loss)
Reportable operating segments
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
Projects
2,211.2
2,339.8
168.7
167.7
(125.3)
(19.6)
Operations
2,406.9
2,098.1
147.6
171.6
(344.3)
57.8
Consulting (restated)
(4)
625.3
599.2
73.1
77.2
(6.2)
32.5
Built Environment Consulting (discontinued)
(4)
881.1
1,188.3
72.9
149.6
66.2
94.4
Investment Services
198.8
200.6
69.3
64.4
46.2
(52.1)
Central costs
(2)
–
–
(73.6)
(76.6)
(138.7)
(80.7)
Total Group
6,323.3
6,426.0
458.0
553.9
(502.1)
32.3
Elimination of discontinued operation
(4)
(881.1)
(1,188.3)
(72.9)
(149.6)
(66.2)
(94.4)
Total (continuing operations)
5,442.2
5,237.7
385.1
404.3
(568.3)
(62.1)
Finance income
6.9
3.3
Finance expense
(133.1)
(113.2)
Loss before taxation from continuing operations
(694.5)
(172.0)
Taxation
(10.9)
(41.5)
Loss for the year from continuing operations
(705.4)
(213.5)
Profit
from discontinued operation, net of tax
353.7
78.0
Loss for the year
(351.7)
(135.5)
Notes
1. A reconciliation of operating pro
fit/(loss) to Adjusted EBITDA is provided in the table below. Adjusted EBITDA is provided as it is a unit o
f 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 $8.0m (2021: $25.4m) which is in respect of the Projects (2021: Investment Services) operating segment.
4. The Group’s Built Environment Consulting business, shown by the operating segment named ‘Built Environment Consulting’, was previously included within the
Consulting segment. Built Environment Consulting has been classified as a discontinued operation
for the year ended 31 December 2022 (see note 7) and the
comparative periods have been restated to show the results of this discontinued operation.
Reconciliation of Alternative Performance Measures
2022
$m
2021
$m
Operating loss per income statement
(568.3)
(62.1)
Share of joint venture
finance expense and tax (note 13)
14.3
15.3
Exceptional items (note 5)
663.5
155.7
Amortisation (including joint ventures)
153.4
169.1
Depreciation (including joint ventures)
29.3
35.1
Depreciation of right of use assets
90.5
85.9
Impairment of joint venture investments, PP&E and right of use assets
2.4
5.3
Adjusted EBITDA (continuing operations)
385.1
404.3
Discontinued operation
Operating profit (discontinued)
66.2
94.4
Exceptional items (note 5)
6.7
4.0
Amortisation (including joint ventures)
–
22.6
Depreciation (including joint ventures)
–
4.0
Depreciation of right of use assets
–
23.9
Impairment of PP&E and right of use assets
–
0.7
Adjusted EBITDA (discontinued operation)
72.9
149.6
Total Group Adjusted EBITDA
458.0
553.9
Upon classification as a discontinued operation and held
for sale on 1 January 2022, the Built Environment Consulting disposal
group was not depreciated or amortised in line with the IFRS 5 accounting standard.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
181
Governance
Financial statements
1
Segmental reporting
(continued)
Adjusted EBITDA(1)
Operating profit
Analysis of joint venture pro
fits by segment
2022
$m
2021
$m
2022
$m
2021
$m
Projects
3.9
3.5
3.5
3.2
Operations
15.2
13.2
13.0
12.0
Consulting
–
0.1
–
0.1
Investment Services
39.4
43.9
28.2
31.5
Total
58.5
60.7
44.7
46.8
The main joint ventures contributing to Adjusted EBITDA and Operating Profit within the Group’s Investment Services segment are
EthosEnergy and RWG. The results of these joint ventures are disclosed further in note 13.
Other segment items
At 31 December 2022
Projects
$m
Operations
$m
Consulting
$m
Built
Environment
Consulting
$m
Investment
Services
$m
Unallocated
$m
Total
$m
Capital expenditure
PP&E
7.3
11.6
1.3
3.1
3.2
1.1
27.6
Intangible assets
43.3
49.5
18.2
0.2
–
4.7
115.9
Non-cash expense
Depreciation
8.7
10.3
1.0
–
1.1
4.1
25.2
Depreciation of right of use assets
34.4
17.5
8.3
–
10.6
11.5
82.3
Amortisation
77.7
36.7
27.5
–
–
10.0
151.9
Impairment of intangible assets
113.3
396.3
32.7
–
–
–
542.3
Exceptional items (non-cash element)
14.3
–
1.8
–
–
19.2
35.3
At 31 December 2021
Projects
$m
Operations
$m
Consulting
$m
Built
Environment
Consulting
$m
Investment
Services
$m
Unallocated
$m
Total
$m
Capital expenditure
PP&E
7.1
8.3
2.2
3.0
–
1.8
22.4
Intangible assets
28.6
33.0
30.7
0.3
–
1.6
94.2
Non-cash expense
Depreciation
9.9
12.8
1.0
4.1
1.0
6.1
34.9
Depreciation of right of use assets
36.9
17.4
12.0
24.0
3.3
8.3
101.9
Amortisation
93.9
27.7
23.4
22.6
–
22.3
189.9
Exceptional items (non-cash element)
1.3
35.4
7.3
–
101.6
(19.4)
126.2
The figures in the tables above are prepared on an equity accounting basis and there
fore exclude the share of joint ventures.
Depreciation in respect of joint ventures totals $4.1m (2021: $4.2m), depreciation in respect of joint venture right of use assets
totals $8.2m (2021: $7.9m) and joint venture amortisation amounts to $1.5m (2021: $1.8m).
Non-current assets
Revenue
(continuing operations)
Geographical segments
2022
$m
2021
$m
2022
$m
2021
$m
United States of America
2,082.2
3,214.9
1,423.5
1,655.4
United Kingdom
803.4
960.4
731.5
702.2
Canada
436.8
728.5
383.2
339.2
Norway
103.2
112.1
342.3
193.2
Australia
150.3
196.6
331.9
344.5
Brunei
10.2
11.5
232.9
210.3
Saudi Arabia
102.6
105.2
187.5
83.4
Singapore
96.6
104.3
109.0
142.4
Germany
15.3
16.5
89.2
163.3
Kuwait
220.7
234.4
70.3
131.1
Rest of the world
858.7
1,094.8
1,540.9
1,272.7
Total
4,880.0
6,779.2
5,442.2
5,237.7
Non-current assets includes goodwill and other intangible assets, property plant and equipment, right of use assets, investment
in joint ventures and other investments. Revenue in the table above analyses total revenue and does not reflect the $8.0m (2021:
$25.4m) exceptional item as disclosed on the Income Statement.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
182
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 excluding our share of joint venture revenue.
Primary
geographical
market
Projects
2022
$m
Projects
2021
$m
Opera–
tions
2022
$m
Opera–
tions
2021
$m
Consul–
ting
2022
$m
Consul–
ting
2021
$m
Built
Environment
Consulting
2022
(discon–
tinued)
$m
Built
Environment
Consulting
2021
(discon–
tinued)
$m
IVS
2022
$m
IVS
2021
$m
Total
2022
$m
Total
2021
$m
USA
593.7
856.3
457.5
459.9
233.3
194.7
544.7
767.0
139.0
144.5
1,968.2
2,422.4
Europe
379.1
374.7
820.4
723.5
188.2
174.0
62.3
110.2
27.5
23.8
1,477.5
1,406.2
Rest of the world
1,238.4
1,108.8
1,129.0
914.7
203.8
230.5
274.1
311.1
32.3
32.3
2,877.6
2,597.4
Revenue
2,211.2
2,339.8
2,406.9
2,098.1
625.3
599.2
881.1
1,188.3
198.8
200.6
6,323.3
6,426.0
Major
service lines
Energy
Oil & Gas
704.7
578.2
1,989.7
1,647.7
316.6
350.4
–
–
18.7
1.1
3,029.7
2,577.4
Power
145.0
97.2
93.5
70.4
8.8
13.0
–
–
39.0
64.7
286.3
245.3
Renewables,
Hydrogen and
Carbon Capture
112.5
258.2
28.6
25.1
76.7
59.0
–
–
5.0
2.3
222.8
344.6
Materials
Refining &
chemicals
801.3
836.0
224.9
246.0
62.5
61.7
–
–
–
5.4
1,088.7
1,149.1
Minerals
Processing and
Life Sciences
417.4
441.1
19.5
22.1
43.9
57.0
–
–
–
39.7
480.8
559.9
Other
Built
Environment
5.4
5.8
44.2
68.8
10.2
5.5
881.1
1,188.3
136.1
87.4
1,077.0
1,355.8
Industrial
Processes
24.9
123.1
6.5
18.0
100.8
42.9
–
–
–
–
132.2
184.0
Other
–
0.2
–
–
5.8
9.7
–
–
–
–
5.8
9.9
Revenue
2,211.2
2,339.8
2,406.9
2,098.1
625.3
599.2
881.1
1,188.3
198.8
200.6
6,323.3
6,426.0
The Group’s revenue is largely derived from the provision of services over time.
Revenue from continuing operations in 2022 included $4,262.4m (78%) (2021: $3,965.3m, 74%) from reimbursable contracts and
$1,179.8m (22%) (2021: $1,272.4m, 26%) 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 $6.2m (2021: $7.5m) of revenue which had no associated cost.
Continuing operations
Discontinued operations
Total
2022
$m
2021
$m
2022
$m
2021
$m
2022
$m
2021
$m
Total revenue
5,442.2
5,237.7
881.1
1,188.3
6,323.3
6,426.0
Total revenue does not reflect the $8.0m (2021: $25.4m) exceptional item as disclosed on the Income Statement. This exceptional
item relates to the Projects (2021: Investment Services) business unit.
Contract assets and liabilities
The following table provides a summary of contract assets and liabilities arising from the Group’s contracts with customers.
2022
$m
2021
$m
Trade receivables
679.6
729.6
Non-current contract assets
97.0
66.5
Gross amounts due from customers
556.9
628.1
Gross amounts due to customers
(113.0)
(202.5)
1,220.5
1,221.7
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
183
Governance
Financial statements
2
Revenue
(continued)
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.
Non-current contract assets of $97.0m includes $72.9m of gross amounts due from customers and $1.4m of trade receivables in
relation to the Aegis contract as at 31 December 2022. The corresponding balances as at 31 December 2021 amounted to $66.5m,
with $46.6m included in gross amounts due from customers and $19.9m of trade receivables. The increase in the non-current
contract assets is mainly as a result of the Aegis contract progression towards completion. The Group has classi
fied the receivable
balances as non-current, due to the element of uncertainty surrounding the timing of the receipt of these balances. Refer to note 21
for further details of the 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. A reduction in each of the balances outlined above is observed as a result of the disposal of the Built
Environment Consulting business.
Revenue recognised in 2022 which was included in gross amounts due to customers and deferred income at the beginning of the
year of $194.0m represents amounts included within contract liabilities at 1 January 2022. Revenue recognised from performance
obligations satisfied in previous periods o
f $14.6m represents revenue recognised in 2022 for performance obligations which were
considered operationally complete at 31 December 2021.
Transaction price allocated to the remaining performance obligations
The transaction price allocated to the remaining performance obligations (unsatis
fied or partially unsatisfied) as at 31 December
2022 was as follows:
$m
Year 1
Year 2
Total
Revenue
3,539.3
1,905.8
5,445.1
The Group has not adopted the practical expedients permitted by IFRS 15, therefore all contracts which have an original expected
duration of one year or less have been included in the table above. The estimate of the transaction price represents contractually
agreed backlog and does not include any amounts of variable consideration which are constrained. The Group continues to move
into a reimbursable contract model, moving away from lump sum contracts which are inherently riskier. 83% of future performance
obligations relate to reimbursable contracts and the remainder to lump sum.
3
Finance expense/(income)
2022
$m
2021
$m
(restated)
Interest payable on senior loan notes
40.3
35.9
Interest payable on borrowings
47.2
32.8
Amortisation of bank facility fees
10.5
7.4
Unwinding of discount on other liabilities
0.9
0.1
Lease interest (note 12)
16.4
17.7
Other interest expense
11.9
13.0
Finance expense – continuing operations (pre-exceptional items)
127.2
106.9
Unwinding of discount on asbestos provision (note 5)
5.9
6.3
Finance expense – total
133.1
113.2
Interest receivable
(4.5)
(3.1)
Interest income – retirement benefit obligations (note 33)
(2.4)
(0.2)
Finance income
(6.9)
(3.3)
Finance expense – total – net
126.2
109.9
Net interest expense of $4.4m (2021: $3.6m) has been deducted in arriving at the share of post-tax pro
fit
from joint ventures.
The unwinding of discount on the asbestos provision is $5.9m (2021: $6.3m) and includes the unwinding of discount on long-term
asbestos receivables (note 21). This is presented within exceptional items in line with the Group’s accounting policies.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
184
4
Profit be
fore taxation
2022
$m
2021
$m
The following items have been charged/(credited) in arriving at pro
fit be
fore taxation:
Employee benefits expense (note 32)
3,130.0
3,141.8
Amortisation of intangible assets (note 10)
151.9
189.9
Depreciation of property plant and equipment (note 11)
25.2
34.9
Depreciation of right of use assets (note 12)
82.3
101.9
Gain on disposal of property plant and equipment
(1.6)
(10.0)
Impairment of intangible assets
542.3
–
Foreign exchange losses
4.2
2.0
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.
An impairment charge of $542.3m was recorded against intangible assets and related to goodwill, brands and customer relationships.
Services provided by the Group’s auditors and associate firms
During the year the Group obtained the following services from its auditors, KPMG and associate
firms at costs as detailed below:
2022
$m
2021
$m
Fees payable to the Group’s auditors and its associate firms
for
Audit of parent company and consolidated
financial statements
8.7
5.5
Audit of
financial statements o
f subsidiaries of the Company
2.4
2.8
Total statutory audit fees
11.1
8.3
Fees payable to the Group’s auditor for the audit on non-statutory
financial statements
0.6
–
Audit related assurance services
0.5
0.4
Other assurance services
1.4
–
Tax and other services
–
0.1
13.6
8.8
The ratio of audit related services to other non-audit services is 1: 0.18.
The fees of $8.7m disclosed for ‘Audit of parent company and consolidated
financial statements’ disclosed in 2022 include $1.8m
fees relating to audit work performed in respect of the 2021 consolidated
financial statements.
Fees payable to the Group’s auditor for the audit of non-statutory
financial statements relate to the audit o
f carve-out
financial
statements of Built Environment Consulting.
Other assurance services are Reporting Accountant services performed by KPMG in relation to the Built Environment Consulting
business disposal.
5
Exceptional items
2022
$m
2021
$m
Exceptional items included in continuing operations
Aegis contract loss (revenue)
–
25.4
Aegis contract loss (cost of sales)
–
73.9
Power and Industrial EPC losses (revenue)
8.0
–
Power and Industrial EPC losses (cost of sales)
17.0
–
Impairment of goodwill and intangible assets (note 10)
542.3
–
Gain on sale of business
–
(14.4)
Redundancy, restructuring and integration costs
30.1
73.9
Investigation support costs and provisions
(4.2)
–
Enterprise settlement
35.6
–
Asbestos yield curve, costs and fees
21.5
(3.1)
Russia exit costs and charges
13.2
–
Exceptional items included in continuing operations, before interest and tax
663.5
155.7
Unwinding of discount on asbestos provision
5.9
6.3
Tax charge/(credit) in relation to exceptional items
5.2
(1.2)
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
(41.6)
–
Exceptional items included in continuing operations, net of interest and tax
633.0
171.1
Exceptional items are those significant items which are separately disclosed by virtue o
f their size or incidence to enable a full
understanding of the Group’s
financial per
formance.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
185
Governance
Financial statements
5
Exceptional items
(continued)
Power and Industrial EPC losses
The Power and Industrial EPC losses relates to events in 2022 which resulted in a further write down of
fixed price contracts in the
Power and Industrial EPC business, following the strategic decision to exit this market during 2021. By virtue of its size and nature
of these projects being within a sector that the Group no longer operates, this was recorded as an exceptional charge through
revenue and cost of sales. The negative revenue of $8.0m represents the impact of a reduction in total value of the contract and is
in relation to revenue recognised in prior years.
Aegis contract loss
The Aegis contract loss in 2021 of $99.3m re
flected an estimate o
f the full contract loss at that time.
Impairment charge of goodwill and intangible assets
The impairment charge recognised against goodwill and intangible assets amounts to $542.3m and is recorded within exceptional
items by virtue of its size. The impairment charge was triggered by the disposal of the Built Environment Consulting business,
increases in discount rates and lower expectations of pro
fitability during the
forecast period.
The disposal of the Built Environment Consulting business and increasing discount rates increased the risk of an impairment charge
being recognised at the year end, as outlined in the Group’s interim condensed financial statements. The discount rate increased by
1.35% since the half year which was largely driven by increases to risk free rates and higher market volatility.
Included within the impairment charge of $542.3m were impairments of $44.9m and $4.2m taken against the brand and customer
relationships which were recognised on the acquisition of AFW. The Group performed an assessment over the brand asset
recognised on acquisition of AFW. The carrying value of the brand was tested by considering its value in use, as it was determined
that there is no readily available market to sell the brand as a standalone asset.
Redundancy, restructuring and integration costs
During the year to 31 December 2022, $30.1m was incurred in relation to redundancy and restructuring activities. During 2022 the
Group has continued to progress various initiatives which support the improved ef
ficiency and enhancement o
f underlying group
profitability in the medium to longer term. Included within the $30.1m were costs o
f around $11m in developing the new strategy
which is expected to further enhance pro
fitability and cash generation in the medium to long term.
Gain on sale of divestment of business
The gain in 2021 of $14.4m relates to the disposal of the Group’s interest in Sulzer Wood Limited.
Enterprise settlement
The Enterprise claim was concluded in November 2022, with the amount settled being in excess of the amount provided for. Overall, the
amount paid to Enterprise was higher than our underlying legal assessment of the merits of the case, but further drawn-out litigation was
likely to be costly and carried a risk that a court awarded a figure higher than the amount paid. The charge in the year was classed as an
exceptional item both by its nature, i.e. a historic litigation settlement, and by size.
Investigation support costs and provisions
The regulatory investigations were all closed out during the first hal
f of 2021 and the agreed settlements were materially in line with
the provision made at 31 December 2020. The $4.2m credit relates to the release of some provisions made for additional legal and
other costs which were ultimately not needed. Certain amounts due to the SFO and COFPS have been deferred in line with agreed
payment schedules and the disclosures in the financial statements reflect this.
Asbestos
All asbestos costs have been treated as exceptional on the basis that movements in the provision are non-trading and can be large
and driven by market conditions which are out with the Group’s control. Excluding these amounts from the trading results improves
the understandability of the underlying trading performance of the Group.
The $21.5m charge (2021: credit $3.1m) principally comprises a $52.8m charge in the period that was a result of an updated actuarial
review which updated the best estimate for recent claims experience and latest projections. This is offset by a credit of $31.3m in
2022, which comprises of a $35.6m yield curve credit as a result of higher discount rates (2021: $5.6m) and $4.3m (2021: $2.5m) of
costs in relation to managing the claims. The 30-year US Treasury rate has increased to 3.97%, from 1.90% at the end of December
2021, and led to the income statement credit.
$5.9m of interest costs which relate to the unwinding of discount on the asbestos provision are also shown as exceptional (2021: $6.3m).
Russia exit costs and charges
The Group has incurred costs of $7.0m in relation to the exit of its business in Russia as a result of Government sanctions. The
exceptional cost recognised during 2022 relates to early contract exits and associated losses, the closure of an of
fice and other legal
costs. In addition, the Group has impaired cash balances held within Russia by $6.2m. The Group has confidence in being able to
utilise the remaining balance of $5m, disclosed as restricted cash in note 16, to meet these exit costs.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
186
5
Exceptional items
(continued)
Tax
An exceptional tax credit of $36.4m (2021: $9.1m charge) has been recorded in continuing operations during the period. It consists
of a $5.2m tax charge on exceptional items (2021: $1.2m credit) and an exceptional credit of $41.6m recognised due to the actuarial
gain in relation to the UK defined benefit pension scheme. As de
ferred tax liabilities support the recognition of deferred tax assets,
the additional $41.6m of deferred tax assets have been recognised through exceptional items based on its size. In 2021, a $10.3m
tax charge was recognised relating to the change of the UK tax rate impacting on deferred tax balances created in prior years
through exceptional items.
6
Taxation
2022
$m
2021
$m
Current tax
Current year
188.5
104.7
Adjustment in respect of prior years
(14.8)
(29.5)
173.7
75.2
Deferred tax
Origination and reversal of temporary differences
62.7
(23.7)
Adjustment in respect of prior years
(0.2)
3.4
62.5
(20.3)
Total tax charge
236.2
54.9
Comprising
Tax on continuing operations before exceptional items
47.3
32.4
Tax charge in relation to exceptional items (note 5)
5.2
9.1
Recognition of deferred tax assets due to UK pension actuarial movements (note 5)
(41.6)
–
Tax on discontinued operations
225.3
13.4
Total tax charge
236.2
54.9
Tax credited to other comprehensive income/expense
2022
$m
2021
$m
Deferred tax movement on retirement bene
fit liabilities
41.6
9.5
Tax on derivative financial instruments
1.7
3.4
Total credited to other comprehensive income/expense
43.3
12.9
Tax charged/(credited) to equity
2022
$m
2021
$m
Deferred tax impact of rate change
0.8
(4.5)
Other
1.3
0.1
Total charged/(credited) to equity
2.1
(4.4)
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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
187
Governance
Financial statements
6
Taxation
(continued)
Reconciliation of applicable tax charge at statutory rates to tax charge
2022
$m
2021
$m
Loss before taxation from continuing operations
(694.5)
(172.0)
Profit be
fore taxation from discontinued operations (note 7)
64.5
91.4
Gain on sale of discontinued operation (note 7)
514.5
–
Less: Share of post-tax pro
fit
from joint ventures (note 13)
(30.4)
(31.5)
Loss before taxation from total operations (excluding pro
fits
from joint ventures)
(145.9)
(112.1)
Applicable tax charge at statutory rates
36.5
(16.6)
Effects of:
Non-deductible expenses
8.2
11.4
Non-taxable income
(1.0)
(4.2)
Non-deductible expenses – exceptional
332.8
1.1
Non-taxable income – exceptional
(0.3)
(3.0)
Deferred tax recognition:
Recognition of deferred tax assets not previously recognised
(4.3)
(19.4)
Utilisation of tax assets not previously recognised
(12.4)
(12.7)
Current year deferred tax assets not recognised
37.7
66.9
Write off of previously recognised deferred tax assets
5.2
22.4
Recognition due to UK pension actuarial loss
(41.6)
–
Utilisation of unrecognised deferred tax assets due to the Built Environment Consulting disposal
(145.5)
–
Irrecoverable withholding tax
20.4
10.4
US Base Erosion and Anti-abuse Tax
6.7
–
CFC charges
2.3
2.0
Uncertain tax provisions
7.5
23.6
Uncertain tax provisions prior year adjustments
(26.7)
(24.9)
Uncertain tax provisions prior year adjustments – exceptional
1.5
–
Prior year adjustments
7.7
0.9
Prior year adjustments – exceptional
2.5
(2.2)
Impact of change in rates on deferred tax
(1.0)
(0.8)
Total tax charge
236.2
54.9
Comprising
Tax charge on continuing operations
10.9
41.5
Tax charge on discontinued operations
225.3
13.4
Total tax charge
236.2
54.9
The weighted average of statutory tax rates is (25.0%) in 2022 (2021: 14.8%). The negative tax rate in 2022 re
flects the overall
profit be
fore tax being a small loss, and the geographical split resulting in a taxable gain in relation to the disposal of the Built
Environment Consulting business in the US, with losses in lower tax jurisdictions such as the UK.
The non-deductible expenses – exceptional relates to the impairment of goodwill, non-deductible expenses in relation to the Built
Environment Consulting business disposal, and the impact of permanent adjustments relating to the taxable gain on disposal of the
Built Environment Consulting business.
The adjustments in respect of prior years largely relate to the release of uncertain tax positions as the
final 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 most significant element relates to a provision in Saudi Arabia, accrued in 2021, which has reduced as the Group has
utilised an amnesty to settle the tax liability without penalty and without limiting the ability to appeal. The benefit is $11.7m, no
other movements are individually significant.
The utilisation of deferred tax assets not previously recognised primarily relates to the utilisation of losses in the US against the gain
on disposal of the Built Environment Consulting business.
In 2021 deferred tax of $18.3m in relation to undistributed reserves in Chile and Russia was released as it is not anticipated
distributions will be paid in the foreseeable future triggering a tax liability. This amount was included within irrecoverable
withholding tax.
During the year, the UK defined benefit pension
fund asset on the Wood Pension Plan increased due to actuarial gains of $166.3m,
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 $41.6m (2021: $12.5m) has been recognised and a
corresponding credit recognised in the profit and loss account. Due to the size o
f the credit in 2022 this has been recognised as an
exceptional item.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
188
6
Taxation
(continued)
Net income tax liabilities in the Group balance sheet include $108.0m (2021: $135.6m) 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 ($36.4m, 2021: $49.2m), group
financing ($25.2m, 2021: $27.1m) and trans
fer
pricing and tax residence ($9.6m, 2021: $9.2m). Where the final outcome on these issues di
ffers to the amounts provided, the
Group’s tax charge will be impacted.
Of the uncertain tax positions, $72.9m are currently under audit by tax authorities and the provision re
flects the maximum potential
liability reflecting the outcome o
f 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 2023. The remaining $35.1m comprises uncertain tax positions not yet under audit, none
of which are individually material. Of the $35.1m, $0.7m will become statute barred for tax authority audit during 2023 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 2024. Based on the 2022 results, this would have resulted in an increase in the tax
charge of $3.6m re
flecting additional tax on profits in the UAE and the captive insurance company in Guernsey.
During 2022, 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 2022 is $108.1m.
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 reflected in de
ferred 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.
As part the disposal of the Built Environment Consulting business, certain intangible assets were 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 incorporates the relevant deferred tax
liabilities and is reflected in the profit on disposal be
fore tax. In future years, the deferred tax credit in relation to the amortisation
of intangibles will reduce re
flecting 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
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
189
Governance
Financial statements
7
Discontinued operation
In September 2022, the Group announced it had completed an agreement to sell the Built Environment Consulting business, which
is included within the Built Environment Consulting operating segment. This follows the strategic review outlined in the 2021 Annual
Report and allows the Group to strengthen its balance sheet position and deliver value to shareholders.
The Built Environment Consulting business was classified as a discontinued operation
from 1 January 2022, at which point the
conditions under IFRS 5 were met. The comparative Group income statement and statement of comprehensive income have been
restated to show the discontinued operation separately from continuing operations.
(i)
Results of discontinued operation
Note
2022
$m
2021
$m
External revenue
881.1
1,188.3
Cost of sales
(759.6)
(1,024.1)
Gross profit
121.5
164.2
Administrative expenses
(48.6)
(65.8)
Exceptional items – administrative expenses
(6.7)
(4.0)
Operating profit
66.2
94.4
Finance expense
(1.7)
(3.0)
Profit be
fore tax
64.5
91.4
Taxation
(7.9)
(13.4)
Results from operating activities, net of tax
56.6
78.0
Gain on sale of discontinued operation
514.5
–
Income tax on gain on sale of discontinued operation (exceptional)
(217.4)
–
Profit
from discontinued operation, net of tax
353.7
78.0
Earnings per share (cents)
Basic
9
52.0
11.6
Diluted
9
52.0
11.6
The profit
from the discontinued operation, net of tax of $353.7m (2021: $78.0m) is attributable entirely to the owners of
the Company.
Exceptional items within administrative expenses of $6.7m relates to costs incurred on the Built Environment Consulting business
disposal project.
Total disposal proceeds of $1,808.9m are receivable from the disposal of the Built Environment Consulting business during 2022.
The final proceeds
from the Built Environment Consulting business will be
finalised during the first hal
f of 2023 upon agreement
of the completion balance sheet between the Group and WSP. The net impact of the disposal proceeds, less the net assets
disposed, disposal costs, post completion accruals, elimination of R&D tax credits and FX recycling is a $514.5m gain on disposal.
An exceptional tax charge in relation to the sale of the Built Environment Consulting business of $217.4m has been recognised.
The results of the discontinued operation contained in the table above excludes the impact of intercompany transactions with the
rest of the Group. Intercompany revenue of $23.6m (2021: $37.6m) was generated by the discontinued operation in the period.
(ii) Cash flows
from/(used in) discontinued operation
Note
2022
$m
2021
$m
Net cash (used in)/generated from operating activities
(6.0)
106.6
Net cash generated/(used in) investing activities
1,748.4
(6.1)
Net cash flows
for the period
1,742.4
100.5
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
190
7
Discontinued operation
(continued)
(iii) Effect of disposal on
financial position o
f the Group
The composition of assets and liabilities disposed of are set out in the table below:
$m
Intangible assets (note 10)
996.4
Deferred tax on intangible assets
(57.2)
Property, plant and equipment (note 11)
14.7
Right of use assets (note 12)
71.5
Trade and other receivables
384.6
Cash and cash equivalents
14.4
Deferred tax assets
39.0
Trade and other payables
(244.5)
Lease liabilities (note 12)
(62.7)
Income tax liabilities
(9.4)
Deferred tax liabilities
(37.0)
Retirement benefit obligations (note 33)
(2.8)
Provisions
(0.7)
Other non-current liabilities
(0.4)
Net assets and liabilities disposed
1,105.9
Post-acquisition translation reserve
54.5
Elimination of R&D tax credits
74.7
Post completion accrual
14.4
Disposal costs
44.9
Adjusted balances disposed
1,294.4
Gross proceeds receivable
1,808.9
Gain on disposal
514.5
An adjustment of $54.5m to recycle the cumulative translation adjustment (‘CTA’) amounts through the pro
fit and loss account
have been recorded as part of the disposal.
Following the disposal of the Built Environment Consulting business the taxable US pro
fits have significantly reduced, and there
fore
there is insuf
ficient
future forecast pro
fitability to support the recognition o
f R&D tax credits of $74.7m. In addition, the Group have
provided for probable out
flows in cash o
f $14.4m relating to post-completion negotiations with the buyers.
The Group incurred $44.9m of costs in relation to the disposal of the Built Environment Consulting business, mainly consisting of
professional fees, of which $39.5m has been paid at the year-end.
The cash inflow in respect o
f these disposals is analysed below.
$m
Gross proceeds received
1,805.3
Cash and cash equivalents disposed
(14.4)
Disposal costs paid
(39.5)
Cash inflow
1,751.4
8
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 pro
fitability and cash requirements.
9
Earnings per share
2022
2021
(Losses)/earnings
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
(13.7)
680.4
(2.0)
35.6
675.6
5.3
Exceptional items, net of tax
(342.6)
–
(50.4)
(175.1)
–
(25.9)
Basic
(356.3)
680.4
(52.4)
(139.5)
675.6
(20.6)
Diluted
(356.3)
680.4
(52.4)
(139.5)
675.6
(20.6)
Adjusted diluted earnings per share calculation
Basic
(356.3)
680.4
(52.4)
(139.5)
675.6
(20.6)
Exceptional items, net of tax
342.6
–
50.4
175.1
–
25.9
Amortisation related to acquisitions, net of tax
52.5
–
7.7
82.7
–
12.2
Adjusted diluted
38.8
680.4
5.7
118.3
675.6
17.5
Adjusted basic
38.8
680.4
5.7
118.3
675.6
17.5
Strategic report
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Annual Report and Accounts 2022
191
Governance
Financial statements
9
Earnings per share
(continued)
i)
(Losses)/earnings attributable to equity shareholders
2022
2021
Continuing
operations
$m
Discontinued
operations
$m
Total
$m
Continuing
operations
(restated)
$m
Discontinued
operations
(restated)
$m
Total
(restated)
$m
(Losses)/earnings attributable to equity
shareholders (basic pre-exceptional)
(77.0)
63.3
(13.7)
(46.4)
82.0
35.6
Exceptional items, net of tax
(633.0)
290.4
(342.6)
(171.1)
(4.0)
(175.1)
(Losses)/earnings attributable
to equity shareholders
(710.0)
353.7
(356.3)
(217.5)
78.0
(139.5)
Number of shares (basic)
680.4
680.4
680.4
675.6
675.6
675.6
Number of shares (diluted)
680.4
680.4
680.4
675.6
675.6
675.6
Basic earnings per share (cents)
(104.4)
52.0
(52.4)
(32.2)
11.6
(20.6)
Diluted earnings per share (cents)
(104.4)
52.0
(52.4)
(32.2)
11.6
(20.6)
2022
2021
Continuing
operations
$m
Discontinued
operations
$m
Total
$m
Continuing
operations
(restated)
$m
Discontinued
operations
(restated)
$m
Total
(restated)
$m
(Losses)/earnings attributable to equity
shareholders
(710.0)
353.7
(356.3)
(217.5)
78.0
(139.5)
Exceptional items, net of tax
633.0
(290.4)
342.6
171.1
4.0
175.1
Amortisation of intangibles on
acquisition, net of tax
52.5
–
52.5
60.8
21.9
82.7
(Losses)/earnings attributable
to equity shareholders (adjusted diluted)
(24.5)
63.3
38.8
14.4
103.9
118.3
(Losses)/earnings attributable to equity
shareholders (adjusted basic)
(24.5)
63.3
38.8
14.4
103.9
118.3
Number of shares (diluted)
680.4
680.4
680.4
675.6
675.6
675.6
Number of shares (basic)
680.4
680.4
680.4
675.6
675.6
675.6
Adjusted diluted (cents)
(3.6)
9.3
5.7
2.1
15.4
17.5
Adjusted basic (cents)
(3.6)
9.3
5.7
2.1
15.4
17.5
As the Group has reported a basic loss (2021: 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
profit, an additional 25.6m o
f dilutive potential shares would have been used in the calculation of diluted EPS metrics, which would
have reduced the adjusted diluted EPS by 0.2 cents.
In the comparative period, the Group reported an overall basic loss per ordinary share, therefore the effect of dilutive ordinary
shares was excluded in the calculation of diluted earnings per share. Where pro
fits have been made when disaggregating
discontinued and continuing operations, the calculation of diluted earnings per share was performed on the same basis as the
overall Group.
The calculation of basic earnings per share is based on the earnings attributable to owners of the parent divided by the weighted
average number of ordinary shares in issue during the year excluding shares held by the Group’s employee share trusts. For the
calculation of diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion
of dilutive potential ordinary shares, only when there is a pro
fit per share. 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.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
192
10 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 2022
5,226.2
288.8
815.7
183.9
661.0
7,175.6
Exchange movements
(173.2)
(40.3)
(21.8)
(2.8)
(13.3)
(251.4)
Additions
–
115.9
–
–
–
115.9
Disposals
–
(3.4)
–
–
–
(3.4)
Businesses divested (note 7)
(775.6)
(17.8)
(137.8)
(24.1)
(168.3)
(1,123.6)
At 31 December 2022
4,277.4
343.2
656.1
157.0
479.4
5,913.1
Amortisation and impairment
At 1 January 2022
0.8
205.7
581.2
171.7
140.9
1,100.3
Exchange movements
(5.2)
(33.4)
(15.8)
(2.5)
(3.0)
(59.9)
Amortisation charge
–
87.5
28.4
11.9
24.1
151.9
Impairment
493.2
–
4.2
–
44.9
542.3
Disposals
–
(3.4)
–
–
–
(3.4)
Businesses divested (note 7)
–
(17.0)
(50.3)
(24.1)
(35.8)
(127.2)
At 31 December 2022
488.8
239.4
547.7
157.0
171.1
1,604.0
Net book value at 31 December 2022
3,788.6
103.8
108.4
–
308.3
4,309.1
Cost
At 1 January 2021
5,266.4
323.6
822.2
184.9
664.4
7,261.5
Exchange movements
(40.2)
(3.6)
(6.5)
(1.0)
(3.4)
(54.7)
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
0.8
245.3
542.5
148.3
108.4
1,045.3
Exchange movements
–
(3.2)
(4.8)
(0.8)
(0.7)
(9.5)
Amortisation charge
–
89.0
43.5
24.2
33.2
189.9
Disposals
–
(125.4)
–
–
–
(125.4)
At 31 December 2021
0.8
205.7
581.2
171.7
140.9
1,100.3
Net book value at 31 December 2021
5,225.4
83.1
234.5
12.2
520.1
6,075.3
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
193
Governance
Financial statements
10Goodwill and other intangible assets
(continued)
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 2022 (the “test date”). The Group has five 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
flow projections included in the financial
forecasts
prepared by management and approved by the Board for the period 2023 through to 2027. In preparing the forecasts, management
have considered market outlook; growth in market share; resource utilisation; contract backlog; contract margins; and assumed
contract awards. The key market drivers, within energy, include energy security driven by the ongoing conflict in Ukraine and
supporting energy transition in our focus markets, such as hydrogen and carbon capture. Our materials growth drivers are also
underpinned by transition to net zero, as well as increased consumer demand driven by population growth and higher standards of
living. The Group’s impairment model assumes combined annual growth in market share for the majority of sectors of around 5%
of its current market share to 2025 and leads to a revenue CAGR of 14.2% and 4.8% for Projects and Operations respectively. The
Projects CAGR includes growth from the life sciences sector where Projects is expected to leverage from its existing engineering
capabilities and client relationships to grow its market share. If this growth does not materialise, there is a risk of further
impairment in the Projects and Operations CGUs.
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 decarbonisation. In addition to applying
decarbonisation capabilities within each CGU across each of the growth markets, digitization is another key driver which is
expected to draw demand for the digital tools, products and capabilities offered by the Consulting CGU. During 2022 each of the
CGUs have had significant contract wins in energy transition and decarbonisation and are there
fore well placed to bene
fit
from
significant levels o
f investment required by our clients to achieve net zero. The Group have also considered that there are risks
associated with energy transition, including energy transition and industrial decarbonisation markets not generating suf
ficient
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. However, offsetting this risk is the large near-term addressable
market focused on energy security within oil and gas along with the desire of those clients to pursue net-zero and decarbonisation
efforts. These projects are supporting the energy security agenda as major economies aim to reduce their dependency on Russian oil
and gas, whilst also ensuring affordable energy for consumers.
The terminal growth rates assumed from 2027 do not exceed the long-term average historical growth rates for the regions and
sectors in which the CGUs operate. The Group is well placed to benefit
from the signi
ficant 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 2.4% for
Operations (2021: 2.6%); 2.4% for Projects (2021: 2.7%); and 2.4% (2021: 2.5%) for Consulting.
The cash flows 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 signi
ficant volatility in
financial markets has led to an increase in the discount rate. The Group have considered the additional specific risks related to each
business such as country risk and forecasting risk. The pre-tax rates used for the 2022 review are tabulated as follows and were
derived from the Group WACC calculation with speci
fic adjustments
for CGU speci
fic risks including country risk premiums:
Cash Generating Unit
Pre–tax
discount rate
2022
%
Pre–tax
discount rate
2021
%
Post–tax
discount rate
2022
%
Post–tax
discount rate
2021
%
Projects
13.2
10.6
11.0
9.3
Operations
12.9
10.2
10.5
8.9
Consulting
12.2
10.2
9.9
8.8
Kelchner
12.4
10.4
10.4
9.6
Swaggart
12.8
10.4
10.4
9.6
In order to reduce headroom to $nil for the CGUs with headroom, the post-tax discount rate would need to increase to:
Cash Generating Unit
%
Projects
11.9
Consulting
14.9
Kelchner
28.9
Swaggart
18.0
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
194
10 Goodwill and other intangible assets
(continued)
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
2022 Test date
$m
Goodwill carrying
value
2021 Test date
$m
Projects
2,280.8
2,353.8
Operations
1,594.8
1,645.4
Consulting
372.4
1,193.0
Kelchner
16.9
16.9
Swaggart
16.3
16.3
The headroom for Projects was $153m and the Group recognised an impairment charge of $313m within the Operations CGU
based on the assumptions described above. The recoverable amount of the Operations CGU at the test date was $1,408m. 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. If the post-tax discount rate was 1.5% higher
for Projects, the impairment would be $238m. A 2.0% reduction in revenue CAGR over the forecast period would reduce headroom
to $nil and a 0.7% reduction in the long-term growth rate would also reduce headroom to $nil. The Operations post tax discount
rate would need to be 1.5% lower to reduce the impairment charge to $nil. A 1.5% increase in the post-tax discount rate would
increase the impairment charge to $530m and a 1% reduction in the long-term growth rate would increase the impairment charge
to $427m. A 1% reduction in the revenue CAGR would increase the impairment charge to $370m.
The carrying values of the corporate assets that were not allocated to the above cash generating units above were $73.2m (2021:
$91m) 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 Group post tax discount rate was 9.7% (pre-tax 11.5%) and a terminal growth rate
of 2.4% was applied to the forecast consolidated cash
flows o
f the Group, including the unallocated central costs. The recoverable
amount of the Group at the test date was $4,373m and highlighted an additional $180m of impairment to be allocated to the
CGUs. The Group post-tax discount rate would need to be 0.3% lower to reduce the impairment charge 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. Following the recent material disposals, including the built environment and nuclear businesses in
2022 and 2020 respectively, an impairment review was carried out over the brand assets recognised on acquisition of AFW in 2017.
Management considered the sectors that the Group is targeting as part of its refreshed strategy, and considered whether these
benefit
from the brand, which re
flected AFW’s history and capabilities in certain markets. This impairment review resulted in an
impairment of $44.9m being recognised and a reduction in the remaining useful life to 11 years, or a total useful life since acquisition
of 16 years.
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 was being amortised over periods of 2 to 5 years and has
fully amortised. Brands recognised relate entirely to the acquisition of AFW and the remaining carrying value is being amortised
over a period of 11 years.
Software and development costs includes internally generated assets with a net book value of $36.9m at 31 December 2022 (2021:
$25.4m). $19.9m (2021: $9.4m) 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.
Strategic report
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Annual Report and Accounts 2022
195
Governance
Financial statements
11
Property plant and equipment
Land and Buildings
$m
Plant and equipment
$m
Total
$m
Cost
At 1 January 2022
86.7
115.7
202.4
Exchange movements
(5.3)
(10.9)
(16.2)
Additions
1.5
26.1
27.6
Disposals
(11.0)
(21.7)
(32.7)
Businesses divested (note 7)
(22.1)
(28.1)
(50.2)
Reclassifications
1.8
(1.8)
–
At 31 December 2022
51.6
79.3
130.9
Accumulated depreciation and impairment
At 1 January 2022
50.5
49.7
100.2
Exchange movements
(3.5)
(11.4)
(14.9)
Charge for the year
5.5
19.7
25.2
Disposals
(7.5)
(19.4)
(26.9)
Businesses divested (note 7)
(18.3)
(17.2)
(35.5)
Reclassifications
1.8
(1.8)
–
Impairment
–
0.4
0.4
At 31 December 2022
28.5
20.0
48.5
Net book value at 31 December 2022
23.1
59.3
82.4
Cost
At 1 January 2021
63.1
174.5
237.6
Exchange movements
(1.2)
(3.2)
(4.4)
Additions
2.7
19.7
22.4
Disposals
(5.4)
(47.8)
(53.2)
Reclassifications
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
111.2
Exchange movements
(0.8)
(4.4)
(5.2)
Charge for the year
9.0
25.9
34.9
Disposals
(5.0)
(39.7)
(44.7)
Reclassifications
12.5
(12.5)
–
Impairment
3.6
0.4
4.0
At 31 December 2021
50.5
49.7
100.2
Net book value at 31 December 2021
36.2
66.0
102.2
The net book value of Land and Buildings includes $14.0m (2021: $21.8m) of Long Leasehold and Freehold property and $9.1m
(2021: $14.4m) of Short Leasehold property. There were no material amounts in assets under construction at 31 December 2022.
During 2021, net book value of $15.0m relating to Long Freehold property which was previously included within ‘Plant and
equipment’ was reclassified to ‘Land and Buildings’. This net book value comprises $27.5m o
f cost offset by $12.5m of accumulated
depreciation and impairment.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
196
12 Leases
Right of use assets
Land and Buildings
$m
Plant and equipment
$m
Total
$m
Net book value
At 1 January 2022
316.6
39.5
356.1
Exchange movements
(17.5)
(2.1)
(19.6)
Additions
67.8
27.0
94.8
Disposals
(1.5)
–
(1.5)
Businesses divested (note 7)
(53.7)
(17.8)
(71.5)
Depreciation of right of use assets
(62.2)
(20.1)
(82.3)
At 31 December 2022
249.5
26.5
276.0
Lease liabilities
At 1 January 2022
449.8
Exchange movements
(27.0)
Additions
91.9
Disposals
(5.4)
Businesses divested (note 7)
(62.7)
Interest expense related to lease liabilities
17.9
Repayment of lease liabilities
(121.6)
At 31 December 2022
342.9
Right of use assets
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
Included in the above, the Group has finance leases liabilities totalling $16.2m (2021: $13.5m) in addition to the IFRS 16 lease
liabilities in respect of leases previously classi
fied as operating leases under IAS 17.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
197
Governance
Financial statements
12Leases
(continued)
A maturity analysis of the Group’s total lease liability is shown below:
2022
$m
2021
$m
Current lease liability
83.2
118.3
Non-current lease liability
259.7
331.5
Total lease liability
342.9
449.8
The following table shows the breakdown of lease expense between amounts charged to operating pro
fit and amounts charged to finance
costs.
$m
$m
Depreciation charge for right of use assets
Property
62.2
85.1
Plant and equipment
20.1
16.8
Charged to operating profit
82.3
101.9
Interest expense related to lease liabilities
17.9
20.3
Charge to profit/(loss) be
fore taxation for leases
100.2
122.2
The Group leases real estate, including land, buildings and warehouses, machinery/equipment, vehicles and IT equipment. The right
of use assets generate cash
flows as part o
f the cash generating units disclosed in note 10. The majority of the lease liability relates
to real estate with leases generally entered into for
fixed periods o
f up to
five years, unless o
f 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
significantly a
ffect 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.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
198
13
Investment in joint ventures and other investments
The Group operates a number of joint ventures companies, the most signi
ficant o
f 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 defined as the contractually agreed sharing o
f 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
financial in
formation below has
been extracted from the management accounts for these entities.
EthosEnergy (100%)
RWG (100%)
2022
$m
2021
$m
2022
$m
2021
$m
Non-current assets
137.9
121.7
57.9
65.7
Current assets
520.7
517.9
141.4
155.3
Current liabilities
(347.7)
(335.9)
(74.6)
(94.2)
Non-current liabilities
(78.7)
(66.9)
(7.7)
(6.8)
Net assets
232.2
236.8
117.0
120.0
Wood Group share
118.4
120.8
58.5
60.0
Accumulated impairments and other adjustments
(65.9)
(70.8)
–
–
Wood Group investment
52.5
50.0
58.5
60.0
Revenue
824.8
832.7
234.3
237.9
Cost of sales
(721.5)
(701.4)
(169.8)
(170.9)
Administrative expenses
(80.5)
(103.3)
(31.2)
(32.7)
Exceptional items
–
–
–
–
Operating profit
22.8
28.0
33.3
34.3
Finance expense
(7.5)
(6.1)
(0.8)
(0.8)
Profit be
fore tax
15.3
21.9
32.5
33.5
Tax
(6.4)
(8.5)
(6.5)
(7.1)
Post-tax profit
from joint ventures
8.9
13.4
26.0
26.4
Wood Group share
4.5
6.8
13.0
13.2
Cash and cash equivalents amounted to $48.2m (2021: $77.5m) and $13.9m (2021: $8.2m) for EthosEnergy and RWG respectively.
Depreciation amounted to $29.0m (2021: $16.6m) and $9.2m (2021: $4.3m) for EthosEnergy and RWG respectively.
Amortisation amounted to $0.9m (2021: $1.0m) and $2.1m (2021: $2.5m) for EthosEnergy and RWG respectively.
EthosEnergy’s net debt at 31 December 2022 amounted to $85.7m (2021: $37.5m).
RWG had net debt at 31 December 2022 of $5.1m (2021: $1.8m).
The aggregate carrying amount of the Group’s other equity accounted joint ventures, which individually are not material, amounted
to $45.5m at 31 December 2022 (2021: $59.7m).
Strategic report
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Annual Report and Accounts 2022
199
Governance
Financial statements
13
Investment in joint ventures and other investments
(continued)
The Group’s share of its joint venture income and expenses is shown below:
2022
$m
2021
$m
Revenue
754.7
753.1
Cost of sales
(641.8)
(624.9)
Administrative expenses
(68.2)
(81.4)
Operating profit
44.7
46.8
Net finance expense
(4.4)
(3.6)
Profit be
fore tax
40.3
43.2
Tax
(9.9)
(11.7)
Share of post-tax pro
fit
from joint ventures
30.4
31.5
The movement in investment in joint ventures is shown below:
2022
$m
2021
$m
At 1 January
169.7
168.7
Exchange movements on retranslation of net assets
(11.9)
0.3
Share of pro
fit a
fter tax
30.4
31.5
Dividends received
(30.1)
(26.3)
Impairment of joint ventures
(2.0)
–
Additions
0.4
–
Disposals (note 7)
–
(4.5)
At 31 December
156.5
169.7
The joint ventures have no significant contingent liabilities to which the Group is exposed, nor has the Group any significant
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 38.
Other investments
Other investments of $56.0m (2021: $75.9m) includes $55.6m (2021: $75.9m) relating to the US SERP de
fined contribution scheme
referred to in note 33. 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 19).
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
200
14 Inventories
2022
$m
2021
$m
Materials
3.1
3.7
Work in progress
–
0.3
Finished goods and goods for resale
8.0
11.9
11.1
15.9
15 Trade and other receivables
2022
$m
2021
$m
Trade receivables
744.6
805.5
Less: provision for impairment of trade receivables
(65.0)
(75.9)
Trade receivables – net
679.6
729.6
Gross amounts due from customers
556.9
628.1
Prepayments
84.6
105.8
Amounts due from joint ventures
8.9
13.1
Asbestos related insurance recoveries
11.1
13.5
Research and development credits
24.7
119.1
Other receivables
179.2
182.1
Trade and other receivables – current
1,545.0
1,791.3
Long term receivables – asbestos related insurance recoveries
24.4
34.0
Long term receivables – other
105.1
73.5
Total receivables
1,674.5
1,898.8
As at 31 December 2022, the Group had received $200.0m (2021: $200.0m) of cash relating to a non-recourse
financing
arrangement with one of its banks. An equivalent amount of trade receivables was derecognised on receipt of the cash. At 31
December 2022, $113.6m (2021: $79.4m) had been received from customers in the normal course of business in relation to the same
amounts received from the facility. This $113.6m (2021: $79.4m) is due to be paid over to the bank and is included in trade payables.
The impact of both the cash received from the facility and the cash received from customers is included within cash generated from
operations.
Included within other long-term receivables of $105.1m (2021: $73.5m) are contract assets of $74.3m (2021: $66.5m) in relation to
the Aegis contract. Refer to note 21 for further details of the provisions recognised in respect of this contract.
Financial assets
2022
$m
2021
$m
Derivative financial instruments (note 20)
10.8
7.7
10.8
7.7
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Annual Report and Accounts 2022
201
Governance
Financial statements
15Trade and other receivables
(continued)
The Group’s trade receivables balance is shown in the table below.
31 December 2022
Trade
receivables –
Gross
$m
Provision for
impairment
$m
Trade
receivables –
Net
$m
Receivable
days
Projects
371.1
(40.4)
330.7
76
Operations
197.4
(5.3)
192.1
42
Consulting
105.1
(3.8)
101.3
75
Investment Services
71.0
(15.5)
55.5
73
Total Group
744.6
(65.0)
679.6
67
31 December 2021
Trade
receivables –
Gross
$m
Provision for
impairment
$m
Trade
receivables –
Net
$m
Receivable
days
Projects
318.1
(43.7)
274.4
73
Operations
162.2
(8.2)
154.0
47
Consulting
91.5
(3.7)
87.8
76
Built Environment Consulting
175.3
(5.1)
170.2
81
Investment Services
58.4
(15.2)
43.2
49
Total Group
805.5
(75.9)
729.6
69
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 67 indicates that closing trade receivables represent on average the most recent 67
days of revenue.
Receivable days for Investment Services has been adjusted to exclude the impact of the Aegis project for both 2022 and 2021. The
Total Group Receivable days reflects all Group activity including Aegis.
The ageing of the provision for impairment of trade receivables is as follows:
2022
$m
2021
$m
Up to 3 months
2.6
0.8
Over 3 months
62.4
75.1
65.0
75.9
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
202
15Trade and other receivables
(continued)
The movement on the provision for impairment of trade receivables is as follows:
2022
Projects
$m
Operations
$m
Consulting
$m
Built
Environment
Consulting
$m
Investment
Services
$m
Total
$m
At 1 January
43.7
8.2
3.7
5.1
15.2
75.9
Exchange movements
(2.7)
(0.1)
0.1
–
(0.6)
(3.3)
Disposed during year
–
–
–
(4.1)
–
(4.1)
Reclassed during year
–
0.1
(0.9)
–
–
(0.8)
Transfers during year
(0.1)
0.1
–
–
0.1
0.1
Provided during year
4.2
0.7
1.6
(0.2)
1.5
7.8
Utilised during year
(3.5)
(3.3)
(0.2)
–
–
(7.0)
Released during year
(1.2)
(0.4)
(0.5)
(0.8)
(0.7)
(3.6)
At 31 December
40.4
5.3
3.8
–
15.5
65.0
2021
At 1 January
58.8
7.3
4.4
5.9
18.4
94.8
Exchange movements
(2.8)
(0.1)
–
(0.1)
(0.7)
(3.7)
Reclassed during year
–
–
(0.1)
–
1.0
0.9
Transfers during year
(0.1)
0.1
(0.1)
–
–
(0.1)
Provided during year
3.0
2.2
0.8
(0.7)
0.3
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
3.7
5.1
15.2
75.9
The other classes within trade and other receivables do not contain impaired assets.
Included within gross trade receivables of $744.6m above (2021: $805.5m) and gross amounts due from customers of $556.9m
(2021: $628.1m) are contract assets of $244.6m (2021: $203.4m) 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:
2022
$m
2021
$m
Up to 3 months overdue
117.9
89.6
Over 3 months overdue
126.7
113.8
244.6
203.4
The above analysis excludes retentions relating to contracts in progress of $67.2m (2021: $90.5m).
16 Cash and cash equivalents
2022
$m
2021
$m
Cash at bank and in hand
521.7
480.0
Short-term bank deposits
–
10.5
Restricted cash
15.0
12.5
536.7
503.0
Cash at bank and in hand at 31 December 2022 includes $328.4m (2021: $240.4m) that is part of the Group’s cash pooling
arrangements and both cash and borrowings are grossed up by this amount in the financial statements.
The effective interest rate on short-term deposits at 31 December 2022 was nil% (2021: 2.8%) and these deposits have an average
maturity of zero days (2021: 20 days).
The restricted cash balance comprises $10.0m (2021: $12.5m) of cash held in jurisdictions where there is insuf
ficient liquidity in
the local market to allow for immediate repatriation. The remaining $5.0m (2021: $nil) relates to balances held within Russia that
are impacted by the sanctions associated with Russia’s invasion of Ukraine. Management considers it appropriate to include the
restricted cash balance in the Group’s net debt figure (see note 30) on the basis that it meets the definition o
f cash, albeit is not
readily available to the Group.
Strategic report
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Annual Report and Accounts 2022
203
Governance
Financial statements
17
Trade and other payables
2022
$m
2021
$m
Trade payables
550.6
856.6
Gross amounts due to customers
15.6
87.5
Deferred income
97.4
115.0
Other tax and social security payable
58.2
58.3
Accruals
637.0
483.1
Derivative financial instruments
10.8
3.7
Amounts due to joint ventures
0.3
0.4
Asbestos related payables
59.5
54.5
Other payables
258.2
339.5
1,687.6
1,998.6
Trade payables includes $113.6m (2021: $79.4m) relating to cash received from customers which is due to be paid over to the bank.
Gross amounts due to customers included above represent payments on account received in excess of amounts due from customers
on fixed 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 $37.3m.
18 Borrowings
2022
$m
2021
$m
Bank loans and overdrafts due within one year or on demand
Unsecured
345.9
246.9
Senior loan notes
Unsecured
–
35.0
Total current borrowings
345.9
281.9
Non-current bank loans
Unsecured
232.0
845.8
Senior loan notes
Unsecured
352.0
768.3
Total non-current borrowings
584.0
1,614.1
Borrowings of $328.4m (2021: $240.4m) 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 figure above.
Bank overdrafts are denominated in a number of currencies and bear interest based on the Bank of England base rate or the
relevant foreign currency equivalent.
Following the disposal of the Built Environment Consulting business in September, the Group repaid $400.0m of the $600.0m term
loan and the agreed early repayment totalling $416.3m of the US Private Placement loan notes. The Group had total facilities of
$1,866.9m as at 31 December 2022, which comprises of a $200.0m term loan maturing in July 2026, $1,200.0m of Revolving Credit
Facility maturing in October 2026, $352.0m of senior loan notes in the US private placement market with varying maturities and
$114.9m of other banking facilities.
Of the non-current borrowings of $584.0m, $50.4m is denominated in sterling and the balance in US dollars.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
204
18Borrowings
(continued)
The Group’s principal borrowing facilities at 31 December 2022 are set out in the table below.
Facility
Total available
$m
Drawn at 31
December 2022
$m
Undrawn at 31
December 2022
$m
Repayable
Term loan
200.0
200.0
–
July 2026
Revolving credit facility
1,200.0
42.1
1,157.9
October 2026
Senior loan notes
352.0
352.0
–
Various dates
Other facilities
114.9
5.2
109.7
Various dates
Accrued interest
–
12.2
(12.2)
N/A
Unamortised fees
–
(10.0)
10.0
N/A
1,866.9
601.5
1,265.4
The above table excludes borrowings of $328.4m that are part of the Group’s cash pooling arrangements and are offset by
equivalent cash balances.
The Group has $352.0m (2021: $803.3m) of unsecured senior loan notes issued in the US private placement market. The notes
mature at varying dates between 2024 and 2031 as shown in the table below. Interest is payable at an average rate of 5.95% (2021:
4.21%).
Repayable
2022
$m
2021
$m
July 2022
–
35.0
July 2024
11.5
25.0
August 2024
55.1
120.0
November 2024
23.0
50.0
July 2026
57.4
127.3
August 2026
58.8
128.0
February 2027
18.4
40.0
February 2029
46.0
100.0
July 2029
59.5
129.5
July 2031
22.3
48.5
352.0
803.3
The effective interest rates on the Group’s bank loans and overdrafts at the balance sheet date were as follows:
2022
%
2021
%
US dollar
4.79
1.79
Sterling
5.09
1.40
Euro
3.02
1.11
The carrying amounts of the Group’s borrowings, including those held within pooling arrangements, are denominated in the
following currencies:
2022
$m
2021
$m
US Dollar
611.6
1,537.3
Sterling
176.7
69.0
Euro
120.0
282.1
Other
21.6
7.6
929.9
1,896.0
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
2022, the Group’s bank facilities relating to the issue of bonds, guarantees and letters of credit amounted to $1,244.2m (2021:
$1,292.9m). At 31 December 2022, these facilities were 61% utilised (2021: 65%).
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
205
Governance
Financial statements
18 Borrowings
(continued)
Borrowing facilities
The Group has the following undrawn borrowing facilities available at 31 December:
2022
$m
2021
$m
Expiring within one year
109.7
148.9
Expiring between one and two years
–
–
Expiring between two and five years
1,155.7
954.2
1,265.4
1,103.1
All undrawn borrowing facilities are
floating rate
facilities. The facilities expiring within one year are annual facilities subject to
review at various dates during 2023. The Group was in compliance with its bank covenants throughout the year.
A reconciliation of movements of borrowings and lease liabilities to cash
flows arising
from
financing activities is presented in the
table below.
Short term
borrowings
$m
Long term
borrowings
$m
Lease liabilities
$m
Total
$m
Balance 1 January 2022
281.9
1,614.1
449.8
2,345.8
Changes from
financing cash flows
Repayments of long-term borrowings
–
(1,039.1)
–
(1,039.1)
Repayments of short-term borrowings
(35.0)
–
–
(35.0)
Proceeds short-term borrowings
88.0
–
–
88.0
Payment of lease liabilities (note 12)
–
–
(121.6)
(121.6)
Total changes from
financing activities
53.0
(1,039.1)
(121.6)
(1,107.7)
Effects of changes in foreign exchange rates (note 30)
(1.2)
0.1
(27.0)
(28.1)
Other changes
New leases (note 12)
–
–
23.8
23.8
Interest expense (note 3)
–
98.1
17.9
116.0
Interest paid
–
(98.1)
–
(98.1)
Other movements
12.2
8.9
–
21.1
Total liability other changes
12.2
8.9
41.7
62.8
Balance at 31 December 2022
345.9
584.0
342.9
1,272.8
Short term
borrowings
$m
Long term
borrowings
$m
Lease liabilities
$m
Total
$m
Balance 1 January 2021
315.3
1,296.5
541.4
2,153.2
Changes from
financing cash flows
Repayment of long-term borrowings
–
329.3
–
329.3
Repayment of short-term borrowings
(33.5)
–
–
(33.5)
Payment of lease liabilities (note 12)
–
–
(167.6)
(167.6)
Total changes from
financing activities
(33.5)
329.3
(167.6)
128.2
Effects of changes in foreign exchange rates (note 30)
0.1
0.4
(4.2)
(3.7)
Other changes
New leases (note 12)
–
–
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
2,345.8
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
206
19 Other non-current liabilities
2022
$m
2021
$m
Derivative financial instruments
–
8.1
Other payables
106.8
191.7
106.8
199.8
Other payables include $33.6m in respect of the regulatory investigations, which were closed out during 2021 and represents
payments due in 2024, $55.6m (2021: $75.9m) relating to the US SERP pension arrangement referred to in note 33 and
unfavourable leases of $3.3m (2021: $8.6m). Unfavourable lease liabilities represent non-lease components, such as facilities costs
which are not included within the IFRS 16 lease liability.
20 Financial instruments
The Group’s activities give rise to a variety of
financial risks: market risk (including
foreign exchange risk and cash
flow 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 financial per
formance.
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
financial risks. The Group’s Treasury
policies cover specific areas, such as
foreign exchange risk, interest rate risk, use of derivative
financial instruments and investment
of excess cash.
Where the Board considers that a material element of the Group’s pro
fits and net assets are exposed to a country in which there is
significant 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
significant currency exposures at the time o
f the transaction by using
financial 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
flow hedges
The notional contract amount, carrying amount and fair values of forward contracts and currency swaps designated as cash
flow
hedges at the balance sheet date are shown in the table below.
2022
Notional
contract
amount
$m
2021
Notional
contract
amount
$m
2022
Carrying
amount and
fair value
$m
2021
Carrying
amount and
fair value
$m
Current assets
144.9
99.4
2.1
1.3
Current liabilities
(180.7)
(52.5)
(4.8)
(1.0)
A net foreign exchange loss of $3.0m (2021: $0.9m) was recognised in the hedging reserve as a result of fair value movements on
forward contracts and currency swaps designated as cash
flow hedges.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
207
Governance
Financial statements
20Financial instruments
(continued)
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.
2022
Notional
contract
amount
$m
2021
Notional
contract
amount
$m
2022
Carrying
amount and
fair value
$m
2021
Carrying
amount and
fair value
$m
Current assets
990.4
583.2
8.7
6.4
Current liabilities
(337.8)
(411.9)
(6.0)
(2.7)
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 pro
fit earned in the UK and the translation o
f sterling denominated net assets.
A weakening of the pound has a negative impact on translation of UK companies’ pro
fits and net assets. Sterling denominated
trading profits in the UK are o
ffset 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.
(ii) Interest rate risk
The Group finances its operations through a mixture o
f retained pro
fits and debt. The Group borrows in the desired currencies
at a mixture of
fixed and floating rates o
f interest to manage the Group’s exposure to interest rate
fluctuations. At 31 December
2022, 53% (2021: 52%) of the Group’s borrowings were at
fixed rates. 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 financial
institution with a credit rating of BBB+ or better.
Hedging of interest rate risk – cash
flow hedges
The notional contract amount, carrying amount and fair value of interest rate swaps designated as cash
flow hedges at the
balance sheet date are shown in the table below.
2022
Hedged
amount
$m
2021
Hedged
amount
$m
2022
Carrying
amount and
fair value
$m
2021
Carrying
amount and
fair value
$m
Interest rate swaps
–
250.0
–
(8.1)
A net gain of $8.1m (2021: $8.8m) was recognised in the hedging reserve as a result of fair value movements on interest rate swaps
designated as cash flow hedges.
The $250m interest rate swap was closed out in September 2022, following the disposal of the Built Environment Consulting
business and led to a net gain of $8.1m recognised in the hedging reserve.
If average interest rates had been 2% higher or lower during 2022 (2021: 1%), post-tax pro
fit
for the year would have been $5.8m
lower or higher respectively (2021: $6.3m). 2% 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 significant price risk in relation to its financial instruments.
(b) Credit risk
The Group’s credit risk primarily relates to its trade receivables. The Group assumes that the credit risk on a financial asset has
increased significantly i
f it is more than 6 months past due and considers a
financial asset to be in de
fault when the
financial 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 finance instruments such as letters o
f 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 significant management
focus on customers that are classi
fied
as high risk in the current challenging market although the Group had no material write offs in the year.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
208
20Financial instruments
(continued)
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 suf
ficiently strong credit ratings, alternative
forms of security such as the trade
finance
instruments referred to above may be obtained.
The Group uses the simplified provision matrix when calculating expected credit losses on financial 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
five years. The average write o
ff 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 specific financial uncertainties.
Management review trade receivables based on receivable days calculations to assess performance. A table showing trade
receivables and receivable days is provided in note 15. 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 31 December 2022
was $536.7m (2021: $503.0m). 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 2022 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 finance operations and growth
from its
existing cash resources and the $1,265.4m undrawn portion of the Group’s committed banking facilities. The 2022 average net debt
(excluding leases) was $1,489.1m (2021: $1,680.0m). The cash balance and undrawn portion of the Group’s committed banking
facilities can
fluctuate throughout the year. Around the covenant remeasurement dates o
f 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. 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 2022, 100% (2021: 93%) 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 suf
ficient
funding in place to meet its future
obligations.
The Group’s total bank facilities comprise of a $200.0m term loan maturing in July 2026 and a $1,200.0m revolving credit facility
which matures in October 2026. The $200.0m term loan includes KPIs linked to growing revenues related to energy transition and
sustainable infrastructure and reducing scope 1 and 2 carbon emissions.
The Group has $352.0m of unsecured senior loan notes issued in the US private placement market. The notes mature in various
tranches between July 2024 and 2031.
(d) Capital risk
The Group seeks to maintain an optimal capital structure by monitoring its ratio of net debt to adjusted EBITDA, its interest cover
and its gearing ratio.
The ratio of net debt to Adjusted EBITDA at 31 December 2022 was 1.3 times (2021: 3.3 times). This ratio is calculated by dividing
net debt before leases by Adjusted EBITDA on a frozen GAAP basis which excludes the impact of IFRS 16.
Interest cover is calculated by dividing Adjusted EBITDA, excluding the impact of IFRS 16, by net recurring
finance expense and was
4.1 times for the year ended 31 December 2022 (2021: 4.5 times).
Gearing is calculated by dividing net debt, before leases, by equity attributable to owners of the parent. Gearing at 31 December
2022 was 10.5% (2021: 34.1%).
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
209
Governance
Financial statements
20Financial instruments
(continued)
Financial liabilities
The table below analyses the Group’s financial 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
flows which are not usually closed out be
fore contractual maturity.
At 31 December 2022
Less than
1 year
$m
Between
1 and 2 years
$m
Between
2 and 5 years
$m
Over 5
years
$m
Borrowings
361.2
116.2
431.2
132.7
Trade and other payables
1,628.7
–
–
–
Lease liabilities
107.0
80.5
123.6
145.2
Other non-current liabilities
–
51.2
55.6
–
At 31 December 2021
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
–
Fair value of non-derivative
financial assets and financial liabilities
The fair value of short-term borrowings, trade and other payables, trade and other receivables,
financial 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 2022 was $231.1m (book value $244.3m) (2021: $773.4m, book
value $845.8m). The fair value of the US Private Placement debt at 31 December 2022 was $358.1m (book value $352.0m) (2021:
$809.2m, book value $803.3m).
Fair values (excluding the fair value of assets and liabilities classi
fied as held
for sale) are determined using observable market prices
(level 2 as defined 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
flows based on the terms and maturity o
f
each contract and using market rates.
All derivative fair values are veri
fied 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 significant to the
fair value measurement as a whole) at the end of each reporting period. During the year
ended 31 December 2022 and 31 December 2021, there were no transfers into or out of level 2 fair value measurements.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
210
21 Provisions
2022
Asbestos
related
litigation
$m
Insurance
$m
Property
$m
Litigation
related
provisions
$m
Project
related
provisions
$m
Total
$m
At 1 January 2022
342.1
55.2
32.4
93.3
112.2
635.2
Reclassifications
(5.6)
1.3
–
1.1
4.5
1.3
Utilised
(44.1)
–
(3.2)
(88.5)
(45.5)
(181.3)
Divestments
–
–
–
–
(0.7)
(0.7)
Charge to income statement
59.6
17.4
0.4
10.0
15.3
102.7
Release of provisions
(37.0)
(27.7)
(2.3)
(2.5)
(18.1)
(87.6)
Exchange movements
(3.6)
–
(1.3)
(0.6)
(4.4)
(9.9)
At 31 December 2022
311.4
46.2
26.0
12.8
63.3
459.7
Presented as
Current
–
–
3.3
11.0
30.6
44.9
Non-current
311.4
46.2
22.7
1.8
32.7
414.8
2021
At 1 January 2021
403.7
71.0
34.0
333.0
100.9
942.6
Reclassifications
(18.9)
–
(0.1)
(214.6)
(1.6)
(235.2)
Utilised
(42.5)
–
(0.4)
(14.2)
(8.1)
(65.2)
Charge to income statement
6.3
5.6
3.5
0.7
44.7
60.8
Release of provisions
(6.3)
(21.6)
(4.1)
(11.7)
(22.0)
(65.7)
Exchange movements
(0.2)
0.2
(0.5)
0.1
(1.7)
(2.1)
At 31 December 2021
342.1
55.2
32.4
93.3
112.2
635.2
Presented as
Current
–
–
9.0
89.0
61.0
159.0
Non-current
342.1
55.2
23.4
4.3
51.2
476.2
Asbestos related litigation
The Group assumed the majority of its asbestos-related liabilities when it acquired Amec Foster Wheeler in October 2017. Whilst
some of the asbestos claims have been and are expected to be made in the United Kingdom, the overwhelming majority have been
and are expected to be made in the United States.
Some of Amec Foster Wheeler’s US subsidiaries are defendants in numerous asbestos-related lawsuits and out-of-court informal
claims pending. Plaintiffs claim damages for personal injury alleged to have arisen from exposure to, or use of, asbestos in
connection with work allegedly performed during the 1970s and earlier. The estimates and averages presented have been calculated
on the basis of the historical US asbestos claims since the initiation of claims
filed against these entities.
The number and cost of current and future asbestos claims in the US could be substantially higher than estimated and the timing of
payment of claims could be sooner than estimated, which could adversely affect the Group’s
financial position, its results and its cash flows.
The Group expects these subsidiaries to be named as defendants in similar suits and that new claims will be
filed in the
future. For
purposes of these
financial statements, management have estimated the indemnity and de
fence costs to be incurred in resolving
pending and forecasted claims through to 2050. Although we believe that these estimates are reasonable, the actual number of
future claims brought against these subsidiaries and the cost of resolving these claims could be higher.
Some of the factors that may result in the costs of asbestos claims being higher than the current estimates include:
• an increase in the rate at which new claims are filed and an increase in the number o
f 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. This
was the case in 2022 and is reflected by a charge to exceptional items.
The total liability recorded in the Group’s balance sheet at 31 December 2022 is based on estimated indemnity and defence costs
expected to be incurred to 2050. Management believe that any new claims filed a
fter 2050 will be minimal.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
211
Governance
Financial statements
21 Provisions
(continued)
Asbestos related liabilities and assets recognised on the Group’s balance sheet are as follows:
2022
2021
US
$m
UK
$m
Total
$m
US
$m
UK
$m
Total
$m
Asbestos related provision
Gross provision
425.4
32.5
457.9
406.0
38.2
444.2
Effect of discounting
(87.0)
–
(87.0)
(47.6)
–
(47.6)
Net provision
338.4
32.5
370.9
358.4
38.2
396.6
Insurance recoveries
Gross recoveries
(6.0)
(29.5)
(35.5)
(13.1)
(34.6)
(47.7)
Effect of discounting
–
–
–
0.2
–
0.2
Net recoveries
(6.0)
(29.5)
(35.5)
(12.9)
(34.6)
(47.5)
Net asbestos related liabilities
332.4
3.0
335.4
345.5
3.6
349.1
Presented in accounts as follows
Provisions – non-current
Trade and other payables
Trade and other receivables
Long term receivables
311.4
59.5
(11.1)
(24.4)
342.1
54.5
(13.5)
(34.0)
335.4
349.1
The gross US asbestos related provision of $425.4m (2021: $406.0m) includes $35.4m (2021: $21.6m) relating to agreed settlements
which have not been paid at 31 December 2022. The remaining $390.0m (2021: $384.4m) represents the gross US asbestos related
provision which is discounted to a net present value of $303.0 million (2021: $336.8 million).
A net interest charge of $5.9m (2021: $6.3m) representing the unwinding of the discount over time and a credit of $37.0m (2021:
credit $6.3m), of which $35.6m relates to the increase in the 30-year US Treasury Bond rate in 2022 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.
An additional $52.8m has been charged to the income statement in the year, reflecting
future actuarial adjustments in the overall
plan estimates. The increase to the estimates are driven by a higher number of
filings compared to the underlying actuarial model
and an increased number of settlements at higher settlement values.
A summary of the Group’s US asbestos claim activity is shown in the table below:
Number of open claims
2022
Number
2021
Number
At 1 January
57,490
60,400
New claims
2,330
2,440
Claims resolved
(2,620)
(5,350)
At 31 December
57,200
57,490
Claims not valued in liability
(42,170)
(42,570)
Open claims valued in liability at 31 December
15,030
14,920
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 2022 activity, the Group’s current forecast liabilities have been adjusted for payments made in 2022 of $44.1m and to
reflect the impact o
f discounting.
In 2022, the liability for asbestos indemnity and defence costs to 2050 was calculated at a gross nominal amount of $457.9m
(present value $370.9m), 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
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
212
21Provisions
(continued)
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 filed a
fter 2050, however these are
projected to be minimal.
In the last 5 years from 2018 to 2022, the average combined indemnity and defence cost per resolved claim has been approximately
$9k. The average cost per resolved claim is increasing and management believe it will continue to increase in the future as
the Group continues to resolve the current and estimated future claims inventory. 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 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
2022
Exceptional items
$m
10 year
3.88%
(34.0)
20 year
4.14%
(38.0)
30 year (basis used)
 
3.97%
(35.6)
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 $1.5m.
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 identified and validated insurance policies issued since 1952 and has consistently and vigorously de
fended
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:
2022
$m
2021
$m
Asbestos litigation, defence and case resolution payments
44.1
42.5
Insurance proceeds
(7.7)
(13.5)
Net asbestos related payments
36.4
29.0
The Group expects to have a net cash outflow o
f approximately $38m as a result of asbestos liability indemnity and defence
payments in excess of insurance proceeds during 2023. This estimate assumes 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 is expected to be fully recovered in 2023.
The Group has discounted the expected future cash
flows with respect to the asbestos related liabilities using discount rates
determined by reference to appropriate risk free market interest rates.
Insurance provisions
The Group has liabilities in relation to its captive insurance companies of $46.2m (2021: $55.2m).
The Group currently has one captive insurance company, Garlan Insurance Limited, which is active and is based in Guernsey. The
company provides insurance solely to other Group companies and does not provide any insurance to third parties. The provisions
recorded represent amounts payable to external parties in respect of claims, the value of which is based on actuarial reports which
assess the likelihood and value of these claims. These are reassessed annually, with movements in claim reserves being recorded in
the income statement.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
213
Governance
Financial statements
2121 Provisions
(continued)
Property provisions
Property provisions total $26.0m (2021: $32.4m). Property provisions mainly comprise of dilapidations relating to the cost of
restoring leased property back into its original, pre-let condition. The estimate of costs is the greatest area of uncertainty and the
timing of future cash out
flows is linked to the term dates o
f numerous individual leases.
Litigation related provisions
The Group is party to litigation involving clients and sub-contractors arising from its contracting activities. Management has taken
internal and external legal advice in considering known or reasonably likely legal claims and actions by and against the Group. Where
a known or likely claim or action is identified, management care
fully 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 out
flow will
be required.
Provision is made for management’s best estimate of the likely settlement costs and/or damages to be awarded for those
claims and actions that management considers are likely to be successful. Due to the inherent commercial, legal and technical
uncertainties in estimating project claims, the amounts ultimately paid or realised by the Group could differ from the amounts that
are recognised in the financial statements.
Investigations
Under the terms of the investigation agreements concluded in 2021, the Group will pay compensation, disgorgement and
prejudgment interest, fines and penalties in instalments, with the remaining amounts due to the SFO and the Crown O
f
fice and
Procurator Fiscal Service (“COPFS”) payable in 2023 and 2024, with approximately $38m paid in 2022.
During 2021, the Group reclassed $196.7m of provisions to Trade and other payables to re
flect the greater certainty as a result o
f the
agreement. At 31 December 2022, the Group has recognised the outstanding penalties comprising of a current portion of $37.3m
included within Trade and other payables and a non-current portion of $33.6m included in other non-current liabilities (note 19).
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 sought 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 totalled $695m,
which included an alleged $317m in lost revenue from delayed commercial operation.
The trial of the lawsuit commenced on 19 April 2022 and concluded on 22 July 2022, with agreement reached between the parties on
11 November 2022. The Group has agreed to settle the case for an amount of $115m. Prior to settlement, after deducting legal fees
incurred in the period up to settlement, a provision of $79m was held leading to a loss of $36m being recorded in 2022. This loss has
been classified as exceptional both by its nature and by its size. All claims against the Group and its subsidiaries have been released
per the settlement agreement and the action has been dismissed with prejudice on joint motion of the parties.
Overall, the amount paid to Enterprise was higher than the Group’s underlying legal assessment of the merits of the case, but
further drawn-out litigation was likely to be costly and carried a risk that a court awarded a
figure significantly more than the
amount paid. Negotiations with Enterprise brought the figure down as
far as possible and ultimately it was considered by the
Board that a premium was appropriate to bring the matter to a timely close.
Other litigations
Other items relating to litigation are included within the overall provision, none of which are individually material.
Project related provisions
The Group has numerous provisions relating to the projects it undertakes for its customers. The value of these provisions relies on
specific judgements in areas such as the estimate o
f future costs or the outcome of disputes and litigation. Whether or not each
of these provisions will be required, the exact amount that will require to be paid and the timing of any payment will depend on the
actual outcomes.
Aegis Poland
This legacy AFW project involves the construction of various buildings to house the Aegis Ashore anti-missile defence facility for
the United States Army Corps of Engineers (“USACE”). Wood’s construction scope is now substantially complete and is due to be
formally handed over to USACE at the end of March 2023. There has been no change in management’s assessment of the loss at
completion which remains at $222m. The full amount of this loss has been recognised to date.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
214
21Provisions
(continued)
The Group’s assessment of the ultimate loss includes change orders which have not been approved by the customer. They are
estimated based on the amount that is deemed to be highly probable to be recovered. That estimation is made considering the risks
and likelihood of recovery of change orders. The Group’s assessment of liquidated damages involves an expectation of relief from
possible obligations linked to delays on the contract. These liquidated damages and relief assumptions are estimates prepared in
conjunction with the change orders estimates noted above. The range of possible outcomes in respect to the change orders that
are highly likely to be recoverable and the liquidated damages for which a relief will be obtained is material. The Group has classi
fied
the receivable balances as non-current, due to the element of uncertainty surrounding the timing of the receipt of these balances.
The ultimate loss also includes the Group’s assessment of the total legal costs necessary to achieve recovery of the amounts
believed to be recoverable and defend our position on liquidated damages. At this point in time this is an estimate based on a
weighted average of several possible outcomes and the actual costs could be materially higher or lower depending on actual route
to settlement.
If the amounts agreed are different to the assumptions made, then the ultimate loss could be materially different. At 31 December
2022, provisions of $15.6m are recognised which represent the element of the full contract loss which has been recognised through
the income statement to date but for which revenue has not yet been recognised or costs incurred. In reaching its assessment of
this loss, management have made certain estimates and assumptions relating to the date of completion, recovery of costs from
USACE and the final costs to complete. I
f 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 2022, the
Group held provisions totaling $8.6m (2021: $15.3m) 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
flows is typically uncertain, the Group expects that certain
remediation obligations may continue for up to 100 years.
As described in note 34, 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 out
flow was no longer probable.
The balance of project related provisions relates to a number of provisions which are not individually material or signi
ficant. 
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
215
Governance
Financial statements
22 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% (2021: 25%). The
movement on the deferred tax account is shown below:
(Asset)/liability
As at
1 January
2022
$m
Income
statement
$m
OCI
$m
Other
$m
Disposals
$m
As at
31 December
2022
$m
Accelerated capital allowances
(26.8)
(5.4)
2.4
–
–
(29.8)
Intangibles
240.3
1.3
(4.5)
–
(57.2)
179.9
Pension
63.6
10.0
33.2
–
–
106.8
Share based charges
(2.3)
0.9
–
–
–
(1.4)
Other temporary differences
(3.3)
(38.0)
4.6
(0.4)
–
(37.1)
Provisions
(50.7)
41.2
1.8
–
0.4
(7.3)
Unremitted earnings
21.7
3.1
(1.3)
–
–
23.5
Deferred interest deduction
(54.2)
54.2
–
–
–
–
Tax credits
–
1.5
–
(1.5)
–
–
Losses
(191.5)
(6.3)
1.9
(0.1)
0.3
(195.7)
Total
(3.2)
62.5
38.1
(2.0)
(56.5)
38.9
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)
0.3
(0.6)
(26.8)
Intangibles
259.3
(14.6)
(1.3)
(3.1)
240.3
Pension
34.5
24.9
4.2
–
63.6
Share based charges
(2.3)
0.1
–
(0.1)
(2.3)
Other temporary differences
10.7
(16.1)
2.7
(0.6)
(3.3)
Provisions
(96.8)
42.8
2.5
0.8
(50.7)
Unremitted earnings
40.3
(18.8)
0.2
–
21.7
Deferred interest deduction
(63.3)
8.6
0.5
–
(54.2)
Losses
(149.3)
(45.2)
1.4
1.6
(191.5)
Total
8.6
(20.3)
10.5
(2.0)
(3.2)
Deferred tax is presented in the
financial statements as
follows:
2022
2021
$m
$m
Deferred tax assets
(61.2)
(75.7)
Deferred tax liabilities
100.1
72.5
Net deferred tax (asset)/liability
38.9
(3.2)
No deferred tax liability has been recognised in respect of $21,722.0m (2021: $19,607.7m) 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 $61.8m (2021: $55.6m).
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
216
22 Deferred tax
(continued)
The deferred tax balances are analysed below.
31 December 2022
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
(61.7)
(130.0)
(1.3)
(1.4)
(125.3)
(7.3)
–
–
(195.7)
461.5
(61.2)
Deferred tax
liabilities
31.9
309.9
108.1
–
88.2
–
23.5
–
–
(461.5)
100.1
Net
(29.8)
179.9
106.8
(1.4)
(37.1)
(7.3)
23.5
–
(195.7)
–
38.9
Included in the $195.7m (2021: $191.5m) of deferred tax assets in respect of losses is an amount of $97.4m (2021: $42.2m) relating
to the UK tax group which has suf
ficient de
ferred tax liabilities to offset, and $91.3m (2021: $129.4m) relating to the US tax group
of which no asset (2021: $32.7m) is recognised based on forecast pro
fits o
f the US business, the balance is supported by deferred
tax liabilities.
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)
21.7
(54.2)
(191.5)
–
(3.2)
The expiry dates of unrecognised gross deferred tax assets carried forward are as follows:
31 December 2022
Tax losses
$m
Deductible temporary differences
$m
Total
$m
Expiring within 5 years
676.1
131.9
808.0
Expiring within 6-10 years
–
7.5
7.5
Expiring within 11-20 years
137.7
–
137.7
Unlimited
5,271.2
1,179.5
6,450.7
6,085.0
1,318.9
7,403.9
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
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
217
Governance
Financial statements
23 Share based charges
The Group currently has a number of share plans 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 profit
for these plans for the year amounted to $20.7m (2021: $22.1m) 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, performance-based
awards to senior management made based on achievement of performance measures and non-performance awards either in the
form of conditional share awards or share options.
The performance measures are 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.
Employees may also be granted non-performance awards either in the form of conditional share awards or share options. These
awards typically have a three year vesting period. During 2022, a large portion of senior management who were previously eligible
for the performance-based element of the LTP were instead awarded these non-performance awards.
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 2022
Awards outstanding
31 December 2021
11
2018–20
£6.67
405,899
773,800
12
2019–21
£5.69
257,082
5,085,975
13
2020–22
£3.64
6,987,812
7,943,623
14
2021–23
£3.17
7,634,392
9,448,976
15
2022–24
£1.88
1,647,844
–
16,933,029
23,252,374
2,348,180 awards were made during the year, 80,330 awards accrued in respect of dividends, 1,438,398 awards were exercised
during the year and 7,313,617 awards lapsed or were cancelled due to performance targets not being achieved.
The awards outstanding under cycle 11 and 12 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. Awards under cycle 15 were granted to directors and the executive
leadership team only, with other senior management receiving non-performance LTP awards.
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.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
218
23Share 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 awards granted,
exercised and lapsed during the year.
ESOS
LTP and deferred bonus
2022
2021
2022
2021
Number of participants
218
400
349
85
Lapse rate
25%
25%
10%
10%
Risk free rate of return on grants during year
N/A
N/A
0.43%
0.43%
Share price volatility
40%
40%
40%
40%
Dividend yield on grants during year
N/A
N/A
0%
0%
Fair value of options granted during year
N/A
N/A
£1.91–£2.39
£2.30–£2.81
Weighted average remaining contractual life
0.7 years
1.4 years
2.2 years
2.4 years
Options outstanding 1 January
1,540,288
1,991,512
3,284,268
2,060,519
Options granted during the year
–
–
7,673,780
2,134,000
Options exercised during the year
–
–
(1,456,502)
(891,340)
Options lapsed during the year
(545,288)
(451,224)
(1,247,012)
(50,001)
Dividends accrued on options
–
–
–
31,090
Options outstanding 31 December
995,000
1,540,288
8,254,534
3,284,268
No. of options exercisable at 31 December
995,000
1,487,538
296,531
219,300
Weighted average share price of options exercised during year
N/A
N/A
£1.58
£2.45
Executive 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
2022
2021
Exercise price
(per share)
Exercise
period
2012
–
338,788
680½p
2016–2022
2013
518,500
622,000
845⅓p
2017–2023
2014
476,500
579,500
767⅔p
2018–2024
995,000
1,540,288
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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
219
Governance
Financial statements
23Share 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
2022
2021
Exercise price
(per share)
Exercise
period
2017
–
110,000
0.00p
2021–2022
2018
79,348
189,970
0.00p
2022–2023
2019
–
109,300
0.00p
2021–2022
2020
227,183
765,998
0.00p
2022–2023
2020
5,000
5,000
0.00p
2023–2024
2021
–
100,000
0.00p
2023–2024
2021
1,544,000
2,004,000
0.00p
2025–2026
2022
101,337
–
0.00p
2024–2025
2022
900,000
–
0.00p
2025–2026
2022
5,397,666
–
0.00p
2025
8,254,534
3,284,268
Awards 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 2022, 2,007,094 shares were awarded in relation to the
ESP, of which 578,944 and 1,428,150 shares related to the 2021/22 and 2022/23 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 2022, 690,804
partnership shares and 345,507 matching shares were awarded.
24 Share capital
Ordinary shares of 42/7 pence each (
2021: 4
2/7 pence)
Authorised, issued and fully paid
shares
2022
$m
shares
2021
$m
At 1 January
691,839,369
41.3
688,339,369
41.1
Allocation of new shares to employee share trusts
–
–
3,500,000
0.2
At 31 December
691,839,369
41.3
691,839,369
41.3
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.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
220
25 Share premium
2022
$m
2021
$m
At 1 January and 31 December
63.9
63.9
The shares allocated to the trust during the year were issued at 42/7 pence (
2021: 4
2/7 pence).
26 Retained earnings
2022
$m
2021
$m
At 1 January
1,415.0
1,455.2
Loss for the year attributable to owners of the parent
(356.3)
(139.5)
Credit relating to share based charges (note 23)
20.7
22.1
Re-measurement loss on retirement benefit liabilities (note 33)
170.9
83.3
Movement in deferred tax relating to retirement bene
fit liabilities
(41.6)
(9.5)
Shares allocated to employee share trusts
–
(0.2)
Deferred tax impact of rate change in equity
(0.8)
4.5
Tax on derivative financial instruments
(1.7)
(3.4)
Other tax movements in equity
(1.3)
(0.1)
Exchange movements in respect of shares held by employee share trusts
12.5
1.1
Purchase of shares by employee share trusts for the Share Incentive Plan (SIP)
1.7
1.5
Transactions with non-controlling interests
5.3
–
At 31 December
1,224.4
1,415.0
Retained 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 (2021: nil).
Shares held by employee share trusts
2022
2021
Shares
$m
Shares
$m
Balance 1 January
14,358,014
111.9
15,006,961
112.8
New shares allocated
–
–
3,500,000
0.2
Shares issued to satisfy option exercises
(1,456,502)
–
(870,503)
–
Shares issued to satisfy awards under Long Term Incentive Plan
(1,438,398)
–
(1,257,013)
–
Shares issued to satisfy awards under Employee Share Plan
(1,984,772)
–
(1,383,506)
–
Shares issued to satisfy awards under Share Incentive Plan
(1,036,311)
–
(637,925)
–
Other share transactions
–
–
–
–
Exchange movement
–
(12.5)
–
(1.1)
Balance 31 December
8,442,031
99.4
14,358,014
111.9
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 2022 was $13.7m (2021: $37.1m) based on the closing share price of £1.35 (2021: £1.91)
and closing exchange rate of 1.2029 (2021: 1.3545). The employee share trusts have waived their rights to receipt of dividends on
ordinary shares.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
221
Governance
Financial statements
27 Merger reserve
2022
$m
2021
$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 quali
fied
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.
28 Other reserves
Capital
reduction
reserve
$m
Capital
redemption
reserve
$m
Currency
translation
reserve
$m
Hedging
reserve
$m
Total
$m
At 1 January 2021
88.1
439.7
(441.1)
(17.7)
69.0
Cash flow 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
Cash flow hedges
–
–
–
5.1
5.1
Exchange movement on retranslation of foreign operations
–
–
(223.0)
–
(223.0)
Exchange movement on disposal of foreign operations
–
–
54.5
–
54.5
At 31 December 2022
88.1
439.7
(665.5)
(4.7)
(142.4)
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
financial instruments under IFRS 9. Fair value gains and losses in
respect of effective cash
flow hedges are recognised in the hedging reserve.
29 Non-controlling interests
2022
$m
2021
$m
At 1 January
3.3
2.8
Share of pro
fit
for the year
4.6
4.0
Dividends paid to non-controlling interests
(1.1)
(2.7)
Transactions with non-controlling interests
(5.3)
(0.8)
At 31 December
1.5
3.3
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
222
30 Analysis of net debt
2022
At 1 January
2022
$m
Cash
flow
$m
Other
$m
Exchange
movements
$m
At 31
December
2022
$m
Short term borrowings
(281.9)
(53.0)
(12.2)
1.2
(345.9)
Long term borrowings
(1,614.1)
1,039.1
(8.9)
(0.1)
(584.0)
(1,896.0)
986.1
(21.1)
1.1
(929.9)
Cash and cash equivalents
503.0
60.2
–
(26.5)
536.7
Net debt excluding leases
(1,393.0)
1,046.3
(21.1)
(25.4)
(393.2)
Leases
(449.8)
121.6
(41.7)
27.0
(342.9)
Net debt including leases
(1,842.8)
1,167.9
(62.8)
1.6
(736.1)
2021
At 1 January
2021
$m
Cash
flow
$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
(0.4)
(1,614.1)
(1,611.8)
(295.8)
12.1
(0.5)
(1,896.0)
Cash and cash equivalents
585.0
(77.0)
–
(5.0)
503.0
Restricted cash
12.5
(12.5)
–
–
–
Net debt excluding leases
(1,014.3)
(385.3)
12.1
(5.5)
(1,393.0)
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)
Cash at bank and in hand at 31 December 2022 includes $328.4m (2021: $240.4m) that is part of the Group’s cash pooling
arrangements. For internal reporting and the calculation of interest, this amount is netted with short-term overdrafts and is
presented as a net figure on the Group’s balance sheet. In preparing these financial statements, the Group is required to gross up
both its cash and short-term borrowings figures by this amount.
Cash and cash equivalents of $536.7m (2021: $503.0m) includes restricted cash of $15.0m (2021: $12.5m). The restricted cash
balance comprises $10.0m (2021: $12.5m) of cash held in jurisdictions where there is insuf
ficient liquidity in the local market to
allow for immediate repatriation. The remaining $5.0m (2021: $nil) relates to balances held within Russia that are impacted by the
sanctions associated with Russia’s invasion of Ukraine. Management considers it appropriate to include the restricted cash balance
in the Group’s net debt figure on the basis that it meets the definition o
f cash, albeit is not readily available to the Group.
The lease liability at 31 December 2022 is made up of long term leases of $259.7m (2021: $331.5m) and short term leases of $83.2m
(2021: $118.3m).
The other movements of $62.8m (2021: $68.1m) in the above table represents new leases entered into of $23.8m (2021: $59.9m),
interest expense of $17.9m (2021: $20.3m), amortisation of bank facility fees of $8.9m and accrued interest on loan notes of
$12.2m. As a result of new facilities entered into during 2021, there was an offsetting movement caused by new facility fees incurred
of $12.1m.
As at 31 December 2022, the Group had received $200.0m (2021: $200.0m) of cash relating to a non-recourse
financing
arrangement with one of its banks. An equivalent amount of trade receivables was derecognised on receipt of the cash. At 31
December 2022, $113.6m (2021: $79.4m) had been received from customers in the normal course of business in relation to the same
amounts received from the factor. This $113.6m (2021: $79.4m) is due to be paid over to the factor and is included in trade payables.
The benefit o
f this arrangement of $200.0m is included within cash generated from operations.
Strategic report
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Annual Report and Accounts 2022
223
Governance
Financial statements
31
Disposal Group held for sale
Included within the agreement for the sale of the Built Environment Consulting business is an arrangement to sell a subsidiary
separately to the rest of the transaction, which completed in September 2022. The sale of this subsidiary, residing in Saudi Arabia,
is anticipated to complete during 2023 and therefore the assets and liabilities of this disposal group are classi
fied as held
for sale as
at 31 December 2022.
The composition of assets and liabilities held for sale on the balance sheet as at 31 December 2022 is set out below.
Assets held for sale
$m
Trade and other receivables
21.0
Total
21.0
Liabilities held for sale
$m
Trade and other payables
20.6
Total
20.6
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
224
32 Employees and directors
Employee benefits expense
2022
$m
2021
$m
Wages and salaries
2,808.0
2,797.8
Social security costs
196.1
213.6
Pension costs – defined benefit schemes (note 33)
1.7
3.7
Pension costs – defined contribution schemes (note 33)
103.5
104.6
Share based charges (note 23)
20.7
22.1
3,130.0
3,141.8
Average monthly number of employees (including executive directors)
2022
No.
2021
No.
By geographical area:
UK
5,601
5,491
US
9,128
10,926
Rest of the World
20,721
19,062
35,450
35,479
The average number of employees excludes contractors and employees of joint venture companies.
Key management compensation
2022
$m
2021
$m
Salaries and short-term employee benefits
13.9
10.3
Amounts receivable under long-term incentive schemes
0.7
0.2
Social security costs
1.0
1.1
Post-employment benefits
0.3
0.2
Share based charges
3.6
3.6
Termination benefits
0.9
–
20.4
15.4
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 2022, key management held 0.1% of the voting rights of
the company.
Directors
2022
$m
2021
$m
Aggregate emoluments
3.8
3.3
Aggregate amounts receivable under long-term incentive schemes
0.3
0.1
Aggregate gains made on the exercise of share options
0.3
0.2
Share based charges
1.6
1.4
6.0
5.0
At 31 December 2022, one director (2021: one) had retirement benefits accruing under a defined contribution pension plan and no
directors (2021: none) had benefits accruing under a defined benefit pension scheme. Further details o
f directors’ emoluments are
provided in the Directors’ Remuneration Report.
Strategic report
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Annual Report and Accounts 2022
225
Governance
Financial statements
33 Retirement benefit schemes
The Group operates a number of de
fined benefit pension schemes which are largely closed to
future accrual. The assets of the
defined benefits 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 2022, the largest schemes by gross obligation are the Wood Pension Plan (‘WPP’) in the UK, the Foster Wheeler Inc
Salaried Employees Pension Plan (‘FW Inc SEPP’) in the US and the Foster Wheeler Inc Pension Plan for Certain Employees (‘FW Inc
PPCE’) in the US.
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 2022. The assets of the schemes are stated at their aggregate market value as at 31 December 2022.
The actuarial valuation method is prescribed by the IAS 19 accounting standard and uses discount rates determined by the yields
on high quality, AA rated, bonds at the measurement date. Conversely, each pension scheme is subject to a separate technical
provisions or funding basis valuation which is considered to be more prudent than the IAS 19 methodology. Under IAS 19, the Wood
Pension Plan is 119% funded on 31 December 2022 compared to 104% funded on the technical provisions basis.
Management have considered the requirements of IFRIC 14, ‘The Limit on a De
fined Benefit 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. The requirements of IFRIC 14 also mean there is no requirement to recognise any additional
liabilities in relation to deficit
funding requirements.
Scheme membership at the date of the most recent scheme census was as follows:
2022
Wood
Pension
Plan
2022
FW Inc
SEPP
2022
FW Inc
PPCE
2021
Wood
Pension
Plan
2021
FW Inc
SEPP
2021
FW Inc
PPCE
Active members
494
44
28
494
48
38
Deferred members
8,313
622
437
8,313
453
653
Pensioner members
10,149
2,233
871
10,149
2,305
857
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:
2022
Wood
Pension
Plan
%
2022
FW Inc
SEPP
%
2022
FW Inc
PPCE
%
2021
Wood
Pension
Plan
%
2021
FW Inc
SEPP
%
2021
FW Inc
PPCE
%
Discount rate
5.0
5.2
5.2
1.8
2.6
2.6
Rate of increase in pensions in payment and deferred pensions
2.8
N/A
N/A
3.1
N/A
N/A
Rate of retail price index in
flation
3.1
N/A
N/A
3.3
N/A
N/A
Rate of consumer price index in
flation
2.6
N/A
N/A
2.8
N/A
N/A
The mortality assumptions used to determine pension liabilities in the main schemes at 31 December 2022 were as follows –
Scheme
Mortality assumption
Wood Pension Plan
Scheme specific table with CMI 2021 (Sk =7.0) projections and a long-term rate o
f
improvement of 1.25% pa, initial addition (“A” parameter) of 0.3, no weight to 2020 and 15%
for 2021 data
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 and Pri-2012 Contingent Annuitant mortality
for spouses and bene
ficiaries with generational projection using Scale MP-2021 with no collar
adjustments
The mortality assumption uses 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. In relation to the Wood Pension Plan, the CMI’s latest mortality projections model,
‘CMI 2021’, published in March 2022, allowed flexibility to vary the weight on mortality data
for individual years in response to the
Covid-19 pandemic. As a result, the Group is using an s-kappa of 7.0 and a 15% weighting for 2021 mortality data in arriving at its 31
December 2022 mortality assumption. The impact of this is that there is more weight given to recent mortality experience than in
prior years, but recognising the impact of exceptional mortality experience across 2020 and 2021, no weight is placed on 2020 with
less than full weight placed on 2021. A small reduction of around 0.8% in the value of de
fined benefit obligation is observed through
these changes.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
226
33Retirement benefit schemes
(continued)
For the schemes referred to above the assumed life expectancies are shown in the following table:
2022
Wood
Pension
Plan
2022
FW Inc
SEPP
2022
FW Inc
PPCE
2021
Wood
Pension
Plan
2021
FW Inc
SEPP
2021
FW Inc
PPCE
Life expectancy at age 65 of male aged 45
23.8
22.1
22.1
24.1
22.0
22.0
Life expectancy at age 65 of male aged 65
22.5
20.6
20.6
22.8
20.5
20.5
Life expectancy at age 65 of female aged 45
25.5
24.0
24.0
25.5
23.9
23.9
Life expectancy at age 65 of female aged 65
24.0
22.6
22.6
24.0
22.5
22.5
The amounts recognised in the income statement are as follows:
2022
$m
2021
$m
Current service cost
1.7
3.7
Past service credit
–
(4.8)
Total expense/(income) included within operating profit
1.7
(1.1)
Interest cost
78.0
69.0
Interest income on scheme assets
(80.4)
(69.2)
Total included within finance income
(2.4)
(0.2)
The amounts recognised in the balance sheet are determined as follows:
2022
$m
2021
$m
Present value of funded obligations
(2,533.0)
(4,626.6)
Fair value of scheme assets
2,892.2
4,811.5
Net surplus
359.2
184.9
Changes in the present value of the de
fined benefit liability are as
follows:
2022
$m
2021
$m
Present value of funded obligations at 1 January
4,626.6
4,779.9
Current service cost
1.7
3.7
Past service cost/(credit)
–
(4.8)
Interest cost
78.0
69.0
Contributions
–
–
Re-measurements:
- actuarial gains arising from changes in
financial assumptions
(1,544.5)
(73.0)
- actuarial (gains)/losses arising from changes in demographic assumptions
(31.4)
35.7
- actuarial losses arising from changes in experience
72.0
53.6
Benefits paid
(177.3)
(201.6)
Decrease due to divestments
(58.7)
–
Exchange movements
(433.4)
(35.9)
Present value of funded obligations at 31 December
2,533.0
4,626.6
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
227
Governance
Financial statements
33Retirement benefit schemes
(continued)
Changes in the fair value of scheme assets are as follows:
2022
$m
2021
$m
Fair value of scheme assets at 1 January
4,811.5
4,844.3
Interest income on scheme assets
80.4
69.2
Contributions
42.5
50.1
Benefits paid
(177.3)
(201.6)
Re-measurement (gains)/losses on scheme assets
(1,333.0)
99.6
Expenses paid
(7.4)
(9.4)
Decrease due to divestments
(55.9)
–
Exchange movements
(468.6)
(40.7)
Fair value of scheme assets at 31 December
2,892.2
4,811.5
Analysis of the movement in the balance sheet surplus:
2022
$m
2021
$m
Surplus at 1 January
184.9
64.4
Current service cost
(1.7)
(3.7)
Past service credit
–
4.8
Finance income
2.4
0.2
Contributions
42.5
50.1
Re-measurement gains recognised in the year
170.9
83.3
Expenses paid
(7.4)
(9.4)
Increase due to divestments (note 7)
2.8
–
Exchange movements
(35.2)
(4.8)
Surplus at 31 December
359.2
184.9
The increased surplus due to divestments of $2.8m relates to sale of a net pension liability on a small US scheme. This forms part of
the disposal of the Built Environment Consulting business outlined in note 7.
The net surplus at 31 December is presented in the Group balance sheet as follows:
2022
$m
2021
$m
Wood Pension Plan
432.4
259.6
Retirement benefit scheme surplus
432.4
259.6
Foster Wheeler Inc SEPP/PPCE
(49.4)
(43.1)
All other schemes
(23.8)
(31.6)
Retirement benefit scheme deficit
(73.2)
(74.7)
Net surplus
359.2
184.9
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
228
33 Retirement benefit schemes
(continued)
For the principal schemes the defined benefit obligation can be allocated to the plan participants as
follows:
2022
Wood
Pension
Plan
%
2022
FW Inc
SEPP
%
2022
FW Inc
PPCE
%
2021
AFW
Pension
Plan
%
2021
FW Inc
SEPP
%
2021
FW Inc
PPCE
%
Active members
5.6
3.5
1.7
6.4
4.6
2.3
Deferred members
38.5
23.1
12.9
45.0
22.1
17.6
Pensioner members
55.9
73.4
85.4
48.6
73.3
80.1
The weighted average duration of the de
fined benefit obligation is as
follows:
2022
Wood
Pension
Plan
years
2022
FW Inc
SEPP
years
2022
FW Inc
PPCE
years
2021
AFW
Pension
Plan
years
2021
FW Inc
SEPP
years
2021
FW Inc
PPCE
years
Duration of de
fined benefit obligation
13.0
8.1
7.3
17.0
9.5
9.1
The duration of the de
fined benefit obligation has reduced during 2022 due to the rise in discount rates, which means that later
cash flows are more heavily discounted and so the weighted average duration o
f liabilities is lower.
The major categories of scheme assets as a percentage of total scheme assets are as follows:
2022
Wood
Pension
Plan
%
2022
FW Inc
SEPP
%
2022
FW Inc
PPCE
%
2021
AFW
Pension
Plan
%
2021
FW Inc
SEPP
%
2021
FW Inc
PPCE
%
2022
Quoted
on active
market
%
2021
Quoted
on active
market
%
Equities
0.4
42.9
54.1
10.7
54.4
59.7
89.8
97.4
Property
a
2.8
–
–
2.6
–
–
–
–
Bonds (including gilts)
100.8
51.4
38.5
84.8
44.6
39.3
100.0
99.9
Cash
13.9
1.1
1.5
2.8
1.0
1.0
100.0
100.0
Derivatives
b
(17.9)
–
–
(10.5)
–
–
–
–
Investment funds
–
4.6
5.9
9.6
–
–
–
–
100.0
100.0
100.0
100.0
100.0
100.0
n/a
n/a
Notes
a. Property assets are valued based on an analysis of recent market transactions supported by market knowledge derived from third-party, independent valuation experts
b. Derivatives are mainly related to repurchase agreements used to fund liability driven investments
As at 31 December 2022, 113.7% (2021: 98.0%) 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 bene
fits 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.
In October 2022, an updated schedule of contributions for the Wood Pension Plan was agreed, which will reduce contribution levels
from $9.6m to $nil for the 2023
financial year. An additional $29.6m o
f contributions were made towards the Wood Pension Plan
during 2022, linked to the Group net debt covenant being greater than 2.5x at the December 2021 and June 2022 reporting dates.
The US plans are funded to ensure that statutory obligations are met and contributions are generally payable to at least minimum
funding requirements.
Total contributions expected to be paid during the financial year ending 31 December 2023 amount to $nil (2021: $43.4m
for the
financial year ending 31 December 2022).
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
229
Governance
Financial statements
33Retirement benefit schemes
(continued)
Scheme risks
The retirement benefit schemes are exposed to a number o
f risks, the most signi
ficant o
f which are –
Volatility
The defined benefit obligation is measured with re
ference to corporate bond yields and if scheme assets underperform relative to
this yield, this will create a deficit, all other things being equal. The scheme investments are well diversified such that the
failure of a
single investment would not have a material impact on the overall level of assets.
The schemes hold various liability driven investments comprising physical gilts, swap and leveraged gilt exposures to provide asset
protection against interest and inflation
factors inherent in their liability valuations. Speci
fically in relation to the Wood Pension
Plan, the liquidity of the scheme has withstood recent market turmoil, without the need for any additional contributions from the
Group to support liquidity. Collateral buffers have been further strengthened by de-risking steps taken to disinvest from equities
and it is believed the WPP has suf
ficient collateral to withstand a sizable level o
f movement in interest rates.
Changes in bond yields
A decrease in corporate bond yields will increase the defined benefit obligation. This would however be o
ffset to some extent by a
corresponding increase in the value of the scheme’s bond asset holdings.
Inflation risk
The majority of bene
fits in de
ferment and in payment are linked to price in
flation so higher actual inflation and higher assumed
inflation will increase the defined benefit obligation.
Life expectancy
The defined benefit obligation is generally made up o
f bene
fits payable
for life and so increases to members’ life expectancies will
increase the defined benefit obligation, all other things being equal.
Sensitivity of the retirement bene
fit obligation
The impact of changes to the key assumptions on the retirement bene
fit 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 de
fined benefit obligation to significant 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
2022
$m
Wood
Pension
Plan
2021
$m
FW Inc
SEPP
2022
$m
FW Inc
SEPP
2021
$m
FW Inc
PPCE
2022
$m
FW Inc
PPCE
2021
$m
Discount rate
Plus 0.5%
(134.0)
(332.0)
(3.2)
(4.6)
(5.4)
(8.9)
Minus 0.5%
151.5
378.0
3.5
5.0
5.7
9.7
Inflation
Plus 0.1%
13.3
38.5
N/A
N/A
N/A
N/A
Minus 0.1%
(13.2)
(38.3)
N/A
N/A
N/A
N/A
Life expectancy
Plus 1 year
75.5
196.4
2.9
4.3
6.1
8.9
Minus 1 year
(73.6)
(192.2)
(2.9)
(4.2)
(6.0)
(8.9)
The sensitivity analysis covering the impact of increases in pensions is included in the in
flation sensitivity in the above table. The
discount rate sensitivities in the above table can be extrapolated downwards and upwards to broadly calculate the impact of a
0.25% and 1% discount rate movement respectively.
Defined contribution plans
Pension costs for de
fined contribution plans were as
follows:
2022
$m
2021
$m
Defined contribution plans
103.5
104.6
There were no material contributions outstanding at 31 December 2022 in respect of de
fined 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 (2021: $0.1m) 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 $55.6m (2021: $75.9m) and will be used to pay benefits when employees retire. The corresponding liability is recorded in other
non-current liabilities.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
230
34 Contingent liabilities
Cross guarantees
At the balance sheet date, the Group had cross guarantees without limit extended to its principal bankers in respect of sums
advanced to subsidiaries.
Legal claims
From time to time, the Group is notified o
f claims in respect of professional or other services performed by the Group for its
customers. 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 Re
fineria de Cartagena, S.A (“Reficar”) 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
financial impact.
The group carries insurance coverage and in the event of future economic out
flow arising with respect to any o
f these
contingencies, an element of reimbursement may occur, subject to any excess or other policy restrictions and limits.
Investigations
Following the settlement of the various regulatory investigations in 2021, it remains possible that there may be other adverse
consequences for the Group’s business including actions by authorities in other jurisdictions. At this time, these consequences and
likelihood of potential further investigations cannot be reliably estimated, and therefore no provision has made in respect of them in
the financial statements.
Employment claims
The Group received assessments from HMRC into the historical application of employer’s National Insurance Contributions to
workers on the UK Continental Shelf. The assessments have been appealed and our case is stayed pending the outcome of a similar
case with another Group. We believe it is more likely than not that we will be able to defend this challenge and therefore as a result
do not expect that it is probable a liability will arise. The maximum potential exposure to the Group in relation to tax and interest
should we be unsuccessful in our position is approximately $28m.
Indemnities and retained obligations
The Group has agreed to indemnify certain third parties relating to businesses and/or assets that were previously owned by the
Group and were sold to them. Such indemnifications relate primarily to breach o
f 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 quanti
fiable. During 2022 the Group
sold its Built Environment Consulting business to WSP in late 2022 and the share purchase agreement provided an indemnity for
losses on three specified contracts. No provisions were considered necessary
for these contracts as at 31 December 2022.
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 out
flow
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 $36m and in the
event of any amount ultimately being payable there is no prospect of any reimbursement.
35 Capital and other financial commitments
2022
$m
2021
$m
Contracts placed for future capital expenditure not provided in the
financial statements
74.8
119.9
The capital expenditure above relates to property plant and equipment and software costs.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
231
Governance
Financial statements
36 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.
2022
$m
2021
$m
Sale of goods and services to joint ventures
12.2
21.4
Purchase of goods and services from joint ventures
4.3
3.5
Receivables from joint ventures
8.9
13.1
Payables to joint ventures
0.3
0.4
Compensation of key management personnel includes salaries, non-cash bene
fits and contributions to post retirement benefits
schemes disclosed in note 32.
The Group operates a number of de
fined benefit pension arrangements and seeks to
fund these arrangements to ensure that all
benefits can be paid as and when they
fall due. The Group has an agreed schedule of contributions with the UK plan’s trustees where
amounts payable by the Group are dependent on the funding level of the respective scheme. The US plans are funded to ensure that
statutory obligations are met and contributions are generally payable to at least minimum funding requirements. Note 33 sets out
details of the Group’s pension obligations under these arrangements.
37 Post balance sheet events
During February 2023, the Group entered into an asset purchase agreement to sell the trade and assets of its Gulf of Mexico
offshore labour supply operations. The agreement was for a cash consideration of $17m with the Group retaining net working
capital. The transaction completed on 14 March 2023.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
232
38 Subsidiaries, joint ventures and other related undertakings
The Group’s subsidiary and joint venture undertakings at 31 December 2022 are listed below. All subsidiaries are fully consolidated in
the financial statements. Ownership interests noted in the table reflect holdings o
f 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, Edificio 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 1, 240 St Georges Terrace, Perth, WA 6000, Australia
100
Aus-Ops Pty Ltd
Level 1, 240 St Georges Terrace, Perth, WA 6000, Australia
100
Innofield 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 Architecture 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.
Rua Evaristo da Veiga No. 65, Salas 1101, 1201 e 1202 do Sector 1, Edificio
Passeio Corporate, Centro, Rio de Janeiro, CEP 20.031-040, 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
 
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
233
Governance
Financial statements
AMEC Minproc Bulgaria EOOD
7th Floor, 9-11 Maria Louisa Blvd, Vazrazhdane District, Sofia 1301,
Bulgaria
100
Cameroon
 
Amec Foster Wheeler Cameroun SARL
Cap Limboh, Limbe, BP1280, Cameroon
100
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 Canada Limited
1900, 520 – 3rd Avenue SW, Calgary, AB, T2P 0R3, Canada
100
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 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
Wood Chile Limitada
Avenida Presidente Riesco 5335, piso 8, Las Condes, Chile
100
Wood Ingenieria y Consultoria Chile Limitada
Avenida Larrain 5862, Piso 11, La Reina, Santiago, 7870154, Chile
100
China
 
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 floor, Bogota D.C., Colombia
100
Cyprus
 
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
Zippelhaus 4, 20457 Hamburg, 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
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
234
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 Pacific 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
6th Floor, Zenith Building, Ascendas IT Park, CSIR Road, Taramani,
Chennai 600 113, 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
 
Concetto Green S.r.l
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Concettorinnovabile s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
ForEarth S.r.l
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Geo Rinnovabile S.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Green2dream s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Green2grid 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
Newagro s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Oro Rinnovabile s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Orosolare s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Res4green s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
235
Governance
Financial statements
Res4planet S.r.l
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Res4power s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Resergy S.r.l
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Transizione s.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
Transizioneverde 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
Versogreen 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 Solare Italia S.r.l.
Via S. Caboto 15, Corsico, Milan, 20094, Italy
100
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 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
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
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
236
Harding Lawson de Mexico S.A. de C.V.
Edificio Omega, Campos Eliseos 345, floors 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 Pacific 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, Sandefjord, 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
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 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. Rufino 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
Qatar
 
Production Services Network Qatar LLC
PO Box 2515, Doha, Qatar
49*
Romania
 
AMEC Operations S.R.L
Rooms 1 and 2, 2nd Floor, No. 59 Strada Grigore Alexandrescu, Sector 1,
Bucharest 010623, Romania
100
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
237
Governance
Financial statements
Russia
 
OOO Amec Foster Wheeler
Of
fice 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*
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 Pacific 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 Pacific Pte. Ltd.
1 Marina Boulevard, #28-00, One Marina Boulevard, 018989, Singapore
100
Rider Hunt International (Singapore) Pte Limited
24 Raf
fles Place, #24-03 Cli
fford Centre, Singapore, 048621
100
Simons Pacific 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
Building No. 2, Silver Stream Business Park, 10 Muswell Road South,
Bryanston, Gauteng, 2021, 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
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
238
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 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
GoTechnology Services 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
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
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
239
Governance
Financial statements
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
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
100
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 Finance 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 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 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 Construction Management, Inc.
United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, 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.
3411 Silverside Road Tatnall Building #104, Wilmington, New Castle
County, DE, 19810, United States
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 Martinez, Inc.
United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
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 North Carolina, Inc.
225, Hillsborough Street, Raleigh, NC, 27603, United States
100
AMEC Oil & Gas World Services, Inc.
United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, 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
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
240
Ceres Solar 1, LLC
8275 South Eastern Avenue #200, Las Vegas, Clark County, NV, 89123,
United States
100
Equipment Consultants, Inc.
Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801
100
Energy Transition Ventures 1 LLC
5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Energy Transition Ventures 2 LLC
5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Energy Transition Ventures 3 LLC
5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Energy Transition Ventures 4 LLC
5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Energy Transition Ventures 5 LLC
5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
100
Wood Contract Services LLC
17325 Park Row, Suite 500, Houston, TX, 77084, United States
100
Foster Wheeler Energy Corporation
5444 Westheimer #1000, Houston, Harris County, TX, 77056, United
States
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
c/o The Corporation Trust Company, Corporation Trust Center, 1209
Orange Street, Wilmington, DE, 19801
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.
United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
100
Martinez Cogen Limited Partnership
United Agent Group Inc., 3411 Silverside Road Tatnall Building #104,
Wilmington, New Castle County, DE, 19810, United States
99
Mustang International, Inc.
5444 Westheimer #1000, Houston, Harris County, TX, 77056, 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 Contracting Services LLC
3411 Silverside Road Tatnal Building #104, Wilmington, New Castle
County, DE, 19810, United States
100
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
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
241
Governance
Financial statements
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, Ofic 903, Caracas,
Venezuela
100
*Companies consolidated for accounting purposes as subsidiaries on the basis of control. There is no material impact on the
financial statements o
f 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.
Notes to the financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
242
Joint Ventures
 
Company Name
Registered Address
Ownership
Interest %
Australia
 
Clough AMEC Pty Ltd1
Level 6, QV1 Building, 250 St Georges Terrace, Perth, WA, 6000,
Australia
50
Azerbaijan
 
Socar-Foster Wheeler Engineering LLC
88A Zardaby Avenue,Baku, Azerbaijan
35
Brunei Darussalam
TendrillWood Sdn Bhd
Lot 29 & 30, Tapak Perindustrian Sungai Bera, Kampong Sungai Bera,
Seria, Belait, KB1933, Brunei Darussalam
75
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
 
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
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.
Edificio Omega, Campos Eliseos 345, floors 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
Malaysia
ICE Wood Sdn. Bhd.
Level 7, Menara Milenium,Jalan Damanlela, Pusat Bandar Damansara,
Damansara Heights,Wilayah Persekutuan,Wilayah Persekutuan, Kuala
Lumpur, 50490, Malaysia
49
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
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
243
Governance
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
C/O Edf Renewables Atria One, 144 Morrison Street, Edinburgh, EH3
8EX
50
RWG (Repair & Overhauls) Limited
15 Justice Mill Lane, Aberdeen, AB11 6EQ, Scotland, United Kingdom
50
South Kensington Developments Limited
Ground Floor T3 Trinity Park, Bickenhill Lane, Birmingham, B37 7ES,
United Kingdom
50
Stornoway Wind Farm Limited
C/O Edf Renewables Atria One, 144 Morrison Street, Edinburgh, EH3
8EX
50
United States
 
Flour AMEC II, LLC
100 Fluor Daniel Drive, Greenville, SC, 29607-2770, United States
45
1 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
financial statements.
John Wood Group PLC
Annual Report and Accounts 2022
244
The Group will be exempting the following companies from an audit in 2022 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 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)
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
245
Governance
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)
GoTechnology Services 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)
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 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 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 Finance UK 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)
John Wood Group PLC
Annual Report and Accounts 2022
246
Company financial statements
Company financial statements
Company balance sheet
248
Statement of changes in equity
249
Notes to the Company financial
statements
250
Five year summary
257
Information for shareholders
258
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
247
Governance
Financial statements
Company balance sheet
As at 31 December 2022
Note
2022
$m
2021
$m
Non-current assets
Investments
1
3,873.6
4,370.4
Long term receivables
2
2,565.2
2,573.3
6,438.8
6,943.7
Current assets
Trade and other receivables
3
1,189.3
1,424.9
Income tax receivable
5.7
9.1
Cash and cash equivalents
4
24.8
1.0
1,219.8
1,435.0
Current liabilities
Borrowings
5
234.9
230.3
Trade and other payables
6
3,646.8
1,904.8
3,881.7
2,135.1
Net current liabilities
(2,661.9)
(700.1)
Non-current liabilities
Borrowings
5
584.0
1,514.1
Other non-current liabilities
7
131.7
1,128.7
715.7
2,642.8
Net assets
3,061.2
3,600.8
Equity
Share capital
9
41.3
41.3
Share premium
10
63.9
63.9
Retained earnings
11
(123.0)
416.6
Merger reserve
12
2,540.8
2,540.8
Other reserves
13
538.2
538.2
Total equity
3,061.2
3,600.8
As permitted by Section 408 (3) of the Companies Act 2006, no pro
fit and loss account o
f the Company is presented. The loss for
the financial year o
f the Company was $572.2m (2021: $16.0m).
The financial statements on pages 248 to 256 were approved by the board o
f directors on 27 March 2023, and signed on its behalf
by:
Ken Gilmartin, Director
David Kemp, Director
Company Registration Number: SC036219
John Wood Group PLC
Annual Report and Accounts 2022
248
Statement of changes in equity
For the year ended 31 December 2022
Share capital
$m
Share
premium
$m
Retained
earnings
$m
Merger
reserve
$m
Other
reserves
$m
Total
equity
$m
At 1 January 2021
41.1
63.9
408.4
2,540.8
538.2
3,592.4
Loss 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
Loss for the year
–
–
(572.2)
–
–
(572.2)
Total comprehensive loss for the year
–
–
(572.2)
–
–
(572.2)
Transactions with owners:
Credit relating to share based charges
–
–
20.7
–
–
20.7
Purchase of company shares by employee share trust for the
share incentive plan (SIP)
–
–
1.7
–
–
1.7
Foreign exchange movements on employee share trusts
–
–
10.2
–
–
10.2
At 31 December 2022
41.3
63.9
(123.0)
2,540.8
538.2
3,061.2
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
249
Governance
Financial statements
Notes to the Company financial statements
For the year ended 31 December 2022
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 signi
ficant accounting policies
The principal accounting policies, which have been applied in the
preparation of the Company
financial statements, are set out
below. These policies have been consistently applied to all the
years presented.
Basis of preparation
These financial statements were prepared in accordance
with Financial Reporting Standard 101 Reduced Disclosure
Framework (“FRS 101”).
In preparing these financial statements, the Company applies
the recognition, measurement and disclosure requirements of
UK-adopted international accounting standards (“UK-adopted
IFRS”) 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 significant are:
• no detailed disclosures in relation to financial instruments;
• no cash flow statement;
• no disclosure of related party transactions with wholly owned
subsidiaries;
• no statement regarding the potential impact of forthcoming
changes in financial 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;
• no detailed disclosure in relation to share based payments.
Where required, equivalent disclosures are given in the
consolidated financial statements o
f John Wood Group PLC.
The financial statements are presented in US dollars and
all values are rounded to the nearest $0.1m except where
otherwise indicated.
The financial position o
f the Company is shown in the balance
sheet on page 248. Note 8 includes the Company’s objectives,
policies and processes for managing its
financial risks, details
of its
financial 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
financial 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 pro
fit
for
the year is disclosed in the statement of changes in equity.
Going concern
At 31 December 2022, the Company had net current liabilities
of $2,661.9m. The Company has control over the timing of
repayment of current liabilities due to Group undertakings
amounting to $3,560.4m. As a result of this, and the matters
included in the consolidated financial statements on going
concern, the directors are confident that the Company will
have suf
ficient
funds to continue to meet its liabilities as they
fall due for at least 12 months from the date of approval of the
financial statements and there
fore have prepared the
financial
statements on a going concern basis.
Reporting currency
The Company’s transactions are primarily US dollar
denominated and the functional currency is the US dollar.
The following sterling to US dollar exchange rates have been
used in the preparation of these
financial statements:
2022
2021
Average rate £1=$
1.2324
1.3757
Closing rate £1=$
1.2029
1.3545
Investments 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
flows due to the entity in accordance with the contract and
the cash flows that the Company expects to receive). ECLs are
discounted at the effective interest rate of the
financial asset.
At each reporting date, the Company assesses whether
financial assets carried at amortised cost are credit-impaired. A
financial asset is ‘credit-impaired’ when one or more events that
have a detrimental impact on the estimated future cash
flows
of the
financial asset have occurred. Evidence that a financial
asset is credit-impaired include a customer being in significant
financial di
f
ficulty or a breach o
f contract such as a default. The
gross carrying amount of a
financial asset is written o
ff when
the Company has no reasonable expectation of recovering a
financial asset in its entirety or a portion thereo
f.
John Wood Group PLC
Annual Report and Accounts 2022
250
Foreign currencies
Transactions in foreign currencies are translated to the
Company’s functional currencies 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. Non-monetary assets and
liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the
date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value
are translated to the functional currency at foreign exchange
rates ruling at the dates the fair value was determined.
The directors consider it appropriate to record sterling
denominated equity share capital and share premium in the
financial statements o
f John Wood Group PLC at the exchange
rate ruling on the date it was raised.
Financial instruments
The accounting policy for
financial instruments is consistent
with the Group accounting policy as presented in the notes to
the Group financial statements. The Company’s financial risk
management policy is consistent with the Group’s financial
risk management policy outlined in note 20 to the Group
financial 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
financial statements o
f 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 23 to the Group
financial statements. Details relating to the calculation o
f share
based charges are provided in note 23 to the Group financial
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
financial assets and liabilities
A financial asset is derecognised where the rights to receive
cash flows
from the asset have expired. A
financial liability
is derecognised when the obligation under the liability is
discharged, cancelled or expires.
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 profit
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 profit di
ffers from pro
fit 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
financial
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 profit 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
financial 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 significant risk o
f causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial 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.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
251
Governance
Financial statements
1
Investments
2022
$m
2021
$m
Cost
At 1 January
4,370.4
4,348.3
Additions
20.7
22.1
At 31 December
4,391.1
4,370.4
Impairment
At 1 January
–
–
Charge for the year
517.5
–
At 31 December
517.5
–
Net book value
At 31 December
3,873.6
4,370.4
During the year, the Company contributed $20.7m of share based charges against John Wood Group Holdings Ltd.
The Directors performed an assessment of the carrying value of the investment in John Wood Group Holdings Limited as at 31
December 2022. A value in use calculation was performed for the Group using cash
flow projections prepared by management and
approved by the Board for the period 2023 through to 2027. The assumptions underpinning the forecasts and impairment model are
discussed in note 10 of the Group
financial statements.
The Group post-tax discount rate was 9.7% (pre-tax 11.5%) and a terminal growth rate of 2.4% was applied to the forecast
consolidated cash flows o
f the Group. The recoverable amount of the Group at the test date was $4,373m based on the
assumptions described above and note 10 of the Group
financial statements. An adjustment o
f $511.4m was made to the
recoverable amount reflecting debt and debt like items resulting in an impairment o
f $517.5m. The post-tax discount rate would
need to be 0.9% lower to reduce the impairment charge to $nil.
A 1.5% increase in the post-discount rate would increase the impairment charge to $1,295m and a 1% reduction in the long term
growth rate would increase the impairment charge to $973m.
The Company’s direct subsidiaries at 31 December 2022 are listed below. Ownership interests reflect holdings o
f ordinary shares.
Details of other related undertakings are provided in note 38 to the Group
financial 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
2022
$m
2021
$m
Loans to Group undertakings
2,565.2
2,573.3
The long-term loan receivable at 31 December 2022 includes the promissory note of $2,565.2m (2021: $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. The loan is due to be paid by November 2024.
Notes to the Company financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
252
3
Trade and other receivables
2022
$m
2021
$m
Loans to Group undertakings
985.2
1,367.3
Trade receivables – Group undertakings
191.8
52.2
Other receivables
6.3
3.9
Prepayments and accrued income
6.0
1.5
1,189.3
1,424.9
Interest on loans to Group undertakings is charged at market rates. At 31 December 2022, $45.7m (2021: $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:
2022
$m
2021
$m
Over 3 months
45.7
45.7
The movement on the provision for impairment is as follows:
2022
$m
2021
$m
At 1 January
45.7
45.7
Provided during the year
–
–
At 31 December
45.7
45.7
The Company had $84.2m (2021: $nil) of outstanding balances that were past due but not impaired at either 31 December 2022 or
31 December 2021. The other classes within receivables do not contain impaired assets.
The ageing of these amounts is as follows:
2022
$m
2021
$m
Under 3 months
11.3
–
Over 3 months
72.9
–
84.2
–
4
Cash and cash equivalents
2022
$m
2021
$m
Cash and cash equivalents
24.8
1.0
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
253
Governance
Financial statements
5
Borrowings
2022
$m
2021
$m
Borrowings repayable on demand
Bank overdrafts
234.9
195.3
Senior loan notes
–
35.0
234.9
230.3
Non-current borrowings
Bank loans
232.0
745.8
Senior loan notes
352.0
768.3
584.0
1,514.1
The bank overdrafts relate to the Group’s cash pooling arrangements and are largely denominated in US dollars and pounds
sterling. At 31 December 2022 interest on US dollar overdrafts was payable at 5.48% (2021: 1.45%) and on sterling overdrafts at
4.63% (2021: 1.40%).
Bank loans are unsecured and bear interest based on the Bank of England base rate or foreign currency equivalent. At 31 December
2022, bank loans included $200.0m of US dollar loans and $42.1m of GBP loans. Interest was payable at 6.4% (2021: 1.8%) on the
US dollar loans and 6.42% (2021: n/a) on the GBP loans. Bank loans are stated net of unamortised fees totalling $10.0m (2021:
$19.1m) and accrued interest of $12.2m.
In July 2021, the Company entered into a $600.0m loan agreement with lenders supported by UK Export Finance (“UKEF”). The
five-year
facility is effective from July 2021 and extends the maturity pro
file o
f the Group’s debt facilities. Following the disposal of
the built environment business, the Company repaid $400.m of these term loans in 2022.
The Company has $352.0m (2021: $803.3m) of unsecured senior notes in the US private placement market maturing between 2024
and 2031 at an average fixed rate o
f 5.95% (2021: 4.21%). These notes are largely US dollar denominated. $127.8m (2021: $318.0m)
of the notes are repayable after more than 5 years.
6
Trade and other payables
2022
$m
2021
$m
Loans from Group undertakings
3,560.4
1,884.5
Trade payables – Group undertakings
61.9
–
Other creditors
6.3
3.7
Accruals
18.2
16.6
3,646.8
1,904.8
Interest on loans from Group undertakings is payable at market rates.
Loans from Group undertakings re
flect amounts which are repayable on demand or are due within the next 12 months. The increase
in the current year is due to loans that were previously due over 12 months now falling due within 12 months.
Included within loans from Group undertakings certain amounts are not expected to be settled in the next 12 months given the
company has control over the timing and repayment of current liabilities. The loan with WGPSN (Holdings) Limited amounts to
$879.9m. The comparative amount of $879.9m was included in non-current liabilities.
7
Other non-current liabilities
2022
$m
2021
$m
Amounts due to Group undertakings
131.7
1,128.7
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.
Notes to the Company financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
254
8
Financial instruments
Financial risk factors
The Company’s activities give rise to a variety of
financial risks: market risk (including
foreign exchange risk and cash
flow 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 financial per
formance.
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
financial risks. The Group Treasury
policies cover specific areas, such as
foreign exchange risk, interest rate risk, credit risk, use of derivative
financial 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 significant currency exposures at the time o
f the transaction by using
financial 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 finances its operations through a mixture o
f retained pro
fits and debt. The Company borrows in the desired
currencies at a mixture of
fixed and floating rates o
f interest to generate the desired interest pro
file and to manage the Company’s
exposure to interest rate fluctuations. At 31 December 2022, 52.6% (2021: 42%) o
f the Company’s borrowings were at
fixed rates.
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 financial institution with a credit rating o
f at least BBB+.
(iii) Price risk
The Company is not exposed to any significant price risk in relation to its financial 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 2022, 73% (2021: 87%) 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 suf
ficient
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 20 to the Group
financial statements.
9
Share capital
2022
$m
2021
$m
Issued and fully paid
691,839,369 (2021: 691,839,369) ordinary shares of 4
2/7 p each
41.3
41.3
The additional information required in relation to share capital is given in note 24 to the Group
financial statements.
10 Share premium
2022
$m
2021
$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 (
2021: 4
2/7 pence) and consequently there was
no credit to the share premium account.
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
255
Governance
Financial statements
11 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 8,442,031 (2021: 14,358,014) of the Company’s ordinary shares totalling $99.4m (2021: $111.9m).
The Company’s loss for the
financial year was $572.2m (2021: $16.0m).
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 financial statements. The loss
for the
financial year is stated a
fter
charging audit fees of $73,500 (2021: $63,700). Details of dividends paid and proposed are provided in note 8 to the Group
financial
statements. Further details of share based charges are provided in note 23 to the Group
financial statements.
12 Merger reserve
2022
$m
2021
$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 definition o
f qualifying consideration under Tech 02/17BL
Guidance on realised and distributable profits 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.
13 Other reserves
Capital
reduction
reserve
$m
Capital
redemption
reserve
$m
Hedging
reserve
$m
Total
$m
At 1 January 2021, 31 December 2021 and
31 December 2022
88.1
439.7
10.4
538.2
No movements in other reserves have occurred during 2021 or 2022.
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.
14
Financial commitments and contingent liabilities
Where the Company enters into financial guarantee contracts in respect o
f 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.
None (2021: $100.0m) of the Group’s bank borrowings drawn down by an indirect subsidiary undertaking are guaranteed by the 
Company.
At 31 December 2022, the Company had contingent liabilities in respect of outstanding guarantees for performance bonds and
contracting arrangements given on behalf of its subsidiaries amounting to $658.0m (2021: $733.1m).
Notes to the Company financial statements
continued
John Wood Group PLC
Annual Report and Accounts 2022
256
Five year summary (unaudited)
2022
$m
2021
(*restated)
$m
2020
$m
2019
$m
2018
$m
Revenue
5,442.2
5,237.7
7,564.3
9,890.4
10,014.4
Adjusted EBITDA
385.1
404.3
630.4
855.4
693.8
Depreciation (including joint ventures)
(119.8)
(121.0)
(180.0)
(182.0)
(63.9)
Amortisation (including joint ventures)
(153.4)
(169.1)
(227.7)
(243.7)
(248.8)
Non-recurring items (including joint ventures)
(665.9)
(161.0)
(247.3)
(107.6)
(191.3)
Net finance expense (including joint ventures)
(130.6)
(113.5)
(119.2)
(160.6)
(119.9)
(Loss)/profit be
fore taxation (including joint ventures)
(684.6)
(160.3)
(143.8)
161.5
69.9
Taxation (including joint ventures)
(20.8)
(53.2)
(84.3)
(88.7)
(77.5)
(Loss)/profit
for the year
(705.4)
(213.5)
(228.1)
72.8
(7.6)
Equity attributable to owners of the parent
3,728.0
4,082.0
4,170.0
4,418.8
4,590.8
Net debt excluding leases
393.2
1,393.0
1,014.3
1,424.0
1,513.2
Net debt/adjusted EBITDA
1.3
3.3
2.1
2.0
2.2
Gearing ratio
10.5%
34.1%
24.3%
32.1%
33.0%
Interest cover
4.1
4.5
5.5
5.6
6.2
Diluted earnings per share (cents)
(52.4)
(20.6)
(34.1)
10.5
(1.3)
Adjusted diluted earnings per share (cents)
5.7
17.5
23.2
46.0
46.6
Dividend per share (cents)
–
–
–
35.3
35.0
Dividend cover
–
–
–
1.3
1.3
*
The comparative information has been restated due to a discontinued operation outlined in note 7 of the
financial statements.
Figures leading to the loss for the 2022 and 2021 periods include continuing operations only
Strategic report
John Wood Group PLC
Annual Report and Accounts 2022
257
Governance
Financial statements
Information for shareholders
Of
ficers and advisers
Secretary and Registered Of
fice
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
Corporate brokers
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
28 March 2023
Annual General Meeting
11 May 2023
The Group's Investor Relations website can be accessed at:
woodplc.com/investors
John Wood Group PLC
Annual Report and Accounts 2022
258
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John Wood Group PLC
15 Justice Mill Lane
Aberdeen
AB11 6EQ
UK
Tel +44 1224 851000
Visit our website at:
woodplc.com