“Our resilient financial performance in 2020 was underpinned by our strategic positioning across broad end markets and flexible business model. We saw growth in renewables activity, strength in the built environment and relatively robust revenue in process & chemicals and we continued to win work, against the challenging backdrop of Covid-19 and oil price volatility. Our decisive actions, focused on the health & safety of our people, delivering for our clients, reducing cost, protecting the balance sheet and generating strong cashflow, underpinned delivery of strong margins and a significant reduction in net debt.
Looking ahead, we are pleased to be nearing resolution of the legacy investigations so that we will be able to draw a line under them and while nearterm headwinds remain in 2021, we saw improving momentum in awards in late Q4 and are encouraged by the medium-term outlook for our markets. To ensure our business is fit for the accelerating pace of energy transition and the drive towards more sustainable infrastructure, we are today announcing programmes to unlock stronger medium-term growth, deliver efficiency and create value.”
Robin Watson, Chief Executive
Resilient performance from strategic broadening across energy and built environment markets
Actions to reduce cost, protect the balance sheet & generate strong cashflow enabled margin protection and net debt reduction. Financial focus in 2021 on margins and cash generation.
23.5% $7,564m (2019: $9,890m)
Revenue (on a like for like basis)1
20.2% $7,488m (2019: $9,386m)
26.3% $630m (2019: $855m)
Adjusted EBITDA margin
0.3% 8.3% (2019: 8.6%)
Adjusted EBITDA (on a like for like basis)1
22.5% $616m (2019: $795m)
Adjusted EBITDA margin (on a like for like basis)
0.3% 8.2% (2019: 8.5%)
Operating profit before exceptional items
47.9% $214m (2019: $411m)
movement: n/a $(33)m (2019: $303m)
(Loss)/profit for the year
movement: n/a $(228)m (2019: $73m)
movement: n/a (34.1)cents (2019: 10.7 cents)
Adjusted diluted EPS3
49.6% 23.2cents (2019: 46.0 cents)
Net debt excluding leases4
28.8% $1,014m (2019: $1,424m)
17.4% $6,524m (2019: $7,898m)
Strategic broadening benefitting revenue resilience
- Resilient performance in unprecedented trading conditions underpinned by breadth of exposure across energy and built environment markets
- Revenue of $7.6bn down 23.5% (Revenue on a like for like basis of $7.5bn, down 20.2%)
- Significant reduction in conventional energy activity mitigated by strength in built environment, growth in renewables and relatively robust revenues in process & chemicals
Successfully protected margin through early action on cost
- Strong EBITDA margin delivery; adjusted EBITDA margin 8.3% (2019: 8.6%) reflecting strong operational delivery in ASEAAA and TCS offset by substantially lower margins in ASA
- Leveraged flexible model to take early and decisive action to protect margin; improved operational utilisation and delivered c$230m overhead savings with an exceptional cost to achieve of c$100m
- Adjusted EBITDA of $630m and operating profit before exceptionals of $214m in line with January trading update
Delivering a significant reduction in net debt
- Net debt excluding leases reduced by $410m to $1.01bn at 31 December 2020 (31 December 2019: $1.42bn and 30 June 2020: $1.22bn), benefitting from disposal proceeds from portfolio optimisation, steps taken to protect cashflow and improved working capital performance
- Net debt excluding leases : adjusted EBITDA (excluding IFRS 16) of 2.1x4 (31 December 2019: 2.0x and 30 June 2020: 2.0x). Covenants at 3.5x
- Considerable financial headroom: undrawn facilities of $1.74bn and revolving credit facility extended to May 2023
- Prioritising balance sheet strength; no dividends proposed in respect of FY 2020
Differentiated ESG and sustainability approach to maintain sector leading position
- Committed to maintaining our position as leaders in our field on ESG matters
- New targets announced for the delivery of our purpose, sustainability, inclusion & diversity, fair working practices and community and environmental impact
- Committed to reduce scope 1 and 2 emissions by 40% by 2030, on our journey to net-zero
- Strong third-party recognition: awarded AA “Leader” rating from MSCI for sixth consecutive year
- Delivering innovative solutions for energy transition and sustainable infrastructure: recently awarded evaluation scopes for the decarbonisation of industrial clusters and the supply of domestic hydrogen
- Leadership incentivisation aligned to delivery of future ESG & sustainability targets
Accelerating our medium-term strategy: the Future Fit programme
- 18 month programme of initiatives to unlock stronger medium-term growth, deliver efficiency and create value
- Optimising our operating model - simplifying to three global business units; Consulting, Projects and Operations
- Efficiency savings of c$40m in 2021, with costs to deliver of c$30m
- Organising our business to deliver solutions for a net-zero future and a more sustainable, resilient and liveable world
- New Chief Operating Officer role, established to drive consistent global predictable execution outcomes, commercial innovation and digital delivery
Approaching resolution on legacy investigations
- Discussions concerning the resolution of investigations by the SFO and authorities in the US, Brazil & Scotland are at an advanced stage
- Anticipation that all matters will be settled at an aggregate cost of $197m, including $46m provided in 2019. Additional provision of $151m booked in 2020. Cash settlement expected over the period of 2021-2024
Order book reflects macro conditions & tendering approach with improving award momentum in late Q4
- Order book at 31 December $6.5bn; 67% to be delivered in 2021, typical at this point in the year
- Order book down c17% on 2019 reflecting macro conditions and discerning bidder approach
- Progression in order book reflects expectations of strength in built environment, robustness in renewables and lower project awards in conventional energy and process & chemicals
- Improving momentum in new awards in late Q4 2020; December order book up c5% on November
- Short cycle order book combined with opportunity pipeline at pre-Covid 19 levels, supporting expectation of swift acceleration in awards as markets recover
Order book evolution; evolving towards lower risk, higher margin consultancy
- Strategic positioning, differentiation and strong client relationships key to winning work
- Increasing proportion of order book from consultancy work, particularly in built environment
2021 financial focus: EBITDA margin improvement & cashflow
- Expectation of lower activity and a continued focus on improving margin
- Margin improvement will be driven by maintaining high utilisation, improved project execution and operational and efficiency improvements, including $40m from Future Fit, to offset lower activity. Reversal of temporary savings will be offset by the FY impact of 2020 savings. Business mix more orientated towards consultancy will also benefit margin
- Cash generation to benefit from unwind of customer advances not repeating, partly offset by some investigation settlements and increased capex related to investment in digitalisation
See the full list of footnotes referenced above
- Revenue on a like-for-like basis is calculated as revenue less revenue from disposals executed in 2020 and adjusted EBITDA on a like-for-like basis is calculated as adjusted EBITDA less the adjusted EBITDA from those disposals. In 2020 executed disposals consisted of our nuclear and industrial services businesses, YKK and our interest in TransCanada Turbines. Comparative figures also exclude revenue and adjusted EBITDA from the disposal of TNT, completed in 2019. These amounts are presented as a measure of underlying business performance excluding businesses disposed. These disposals accounted for $76m of revenue in 2020 (2019: $504m) and Adjusted EBITDA of $14m (2019: $60m).
- A reconciliation of adjusted EBITDA to operating profit (pre-exceptional items) is shown in note 1 to the financial statements.
- A reconciliation of adjusted diluted earnings per share to basic earnings per share is shown in note 8 to the financial statements.
- 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, term loans, overdrafts and unsecured senior loan notes issued in the US private placement market. Borrowings do not include obligations relating to leases. Cash and cash equivalents include cash at bank and in hand and short term bank deposits. Borrowings, cash and cash equivalents contained within assets classified as held for sale are also included in net debt. The net debt: adjusted EBITDA ratio is calculated on the existing basis prior to the adoption of IFRS 16 in 2019 and is based on net debt excluding leases. These measures are presented as they closely aligned to the measure used in our financing covenants. A reconciliation of net debt excluding leases to net debt including leases is show in note 29 to the financial statements.
- Order book comprises revenue that is supported by a signed contract or written purchase order for work secured under a single contract award or frame agreements. Work under multi-year agreements is recognised in order book according to anticipated activity supported by purchase orders, customer plans or management estimates. Where contracts have optional extension periods, only the confirmed term is included. Order book disclosure is aligned with the IFRS definition of revenue and does not include Wood’s proportional share of joint venture order book. Order book is presented as an indicator of the visibility of future revenue.
Key performance indicators
Measuring our performance
To help the Group assess its performance, our leadership team sets KPI targets and monitors and assesses performance against these targets on a regular basis.
Measuring our sustainability performance
Our goal is to be leaders in our field in environmental, social and governance (ESG) matters and sustainability.
Through our purpose of unlocking solutions to the world’s most critical challenges and our actions to embed a culture which retains talent, develops trusted business relationships and ensures we make a positive impact on the environment and communities we share, we believe we are building a sustainable and responsible business. In 2020, Wood committed to a set of targets to measure our performance against our sustainability strategy and our goal to be leaders in our field. Our sustainability targets are aligned to certain of the UN Sustainable Development Goals as indicated in the table.
We have an optimised operating model that is service defined. We deliver three principal services:
Across two broad end markets:
Our business model
We create value by delivering differentiated consultancy and engineering solutions throughout the asset life cycle across energy and built environment markets.
Performance driven and innovative solutions
Capabilities levered to structural growth in energy transition and sustainable infrastructure
Talented, flexible and motivated workforce
Operating structure optimised for sustainability, cross-service line opportunities and future growth
Efficient capital structure and allocation
Flexible commercial model with a balanced risk appetite
Robust risk governance and operations assurance policies and processes
Sustainability strategy aligned with UN goals
Our strategy is to be a premium, differentiated high margin consulting and engineering business delivering exceptional results for our clients, our team, the communities in which we work and our investors.
unlocking solutions to the world’s most critical challenges.
Four primary trends shape our markets and drive our strategy:
Engineering solutions for a net-zero future
Capabilities to enable more sustainable and resilient living, including the planning, design, build and operation of connected and resilient infrastructure
Developing inclusive, agile and high-performing teams to accelerate value for Wood and our clients
Technology & digitisation
Utilising technology to create future-ready industry through optimising asset performance and digital innovation
Creating value through our differentiated model
Our strategic enablers:
We deploy our most talented people with agility to deliver the right solutions now and in the future. Our ability to adapt keeps us relevant and offers great opportunities for our people.
We are differentiated by our shared commitment to consistently delivering exceptional outcomes that add value and build trust. We have around 90% repeat business and have developed leading market positions from our long track record of delivering safe and best-in-class projects.
We employ an asset light, flexible model allowing us to respond quickly to changes in market conditions and allocate capital where it impacts most. Our contracting structures are largely reimbursable with a range of specific contracting structures to align with client needs within our measured risk appetite. We have a broad client base with a wide mix across sectors giving us low individual client dependency.
We deliver greater efficiencies and create new solutions through combining our unique know-how with leading-edge, enabling technology. We provide solutions to some of the world's most complex projects and draw on our extensive expertise and know-how to bring new perspectives on the challenges these projects present.
Our five medium-term priorities
Targeting margin improvement to accelerate growth
Optimise and standardise service delivery model to achieve exceptional execution
Rationalisation and positioning of portfolio to optimise our service and market mix aligned to our strategic objectives
Technology differentiation through internal R&D, strategic partnerships and scaleable solutions
Improved risk/reward on contracts in line with balanced risk appetite
- Share price appreciation
- Reduced cyclicality through broad industry exposure
For our people
- Rewarding careers and focus on retention
- Creating a workplace where the different backgrounds, experience and expertise are welcomed and celebrated
- Best-in-class delivery, consistently
- Global reach with balanced portfolio of long-term partner relationships with clients
- Leading technical services and smarter, more sustainable solutions
- Track record on industry-leading projects
Significant contribution to local employment and communities
Employee matched funding & community support
Our culture, defined by our vision, values and behaviours, underpins our business modelFind out more
Effective engagement with our stakeholders
In order to successfully deliver our strategy and create value for our stakeholders it is important to understand what matters to them.
We build strong, constructive relationships through regular stakeholder engagement. We welcome the different perspectives of our diverse stakeholders, who often represent competing interests. Considering their insights and opinions enables robust and sustainable decision making at both executive and Board level.