John Wood Group plc – Aegis Poland update and delayed results publication
21st February 2022
This announcement contains inside information
John Wood Group PLC (“Wood” or “the Company”)
Update re: Aegis Poland provision and delayed announcement of FY21 results
- Exceptional charge of c. $100m in relation to Aegis Poland expected with full year results
- The charge mainly relates to the assessment of future customer recoveries and involves additional cash outflow of c.$20m with the balance being non-cash
- FY21 results announcement delayed due to external review
- Expected underlying results for FY21 unchanged
Aegis Poland provision update
Wood announces that, following a review of the carrying value of contracts as part of its year-end processes, it expects to report an exceptional charge of c. $100m in respect of the legacy Amec Foster Wheeler project, Aegis Poland, to reflect management’s latest estimate of the expected loss at completion. This reflects an updated assessment of expected recovery from the customer and the legal costs needed to achieve such recovery, together with increased cash costs of c.$20m to complete the project.
The project is expected to be operationally complete in H2 2022. Further details relating to the Aegis Poland contract are set out in the Notes section at the end of this announcement.
Delayed full year results
Separately, in order to finalise the Company’s reported results and to conclude the year-end audit process with the Company’s auditor, KPMG LLP, external investigation and review is being undertaken, principally in relation to the historical carrying value of the Aegis Poland project contract. This work supplements an internal review initiated following concerns raised internally in relation to the Aegis Poland project.
The additional investigation and review, which is underway, will necessitate a delay to the announcement of Wood’s FY21 results, previously scheduled for 8 March 2022. A further announcement will be made when the results announcement date is confirmed.
FY21 financial performance and outlook for FY22
Underlying results for FY21 are expected to remain unchanged from our trading update on 13 January 2022.
The outlook for FY22, as given in our trading update on 13 January 2022, remains unchanged. We expect to provide further commentary at our full year results announcement.
This legacy Amec Foster Wheeler project involves the construction of various buildings to house the Aegis Ashore anti-missile defence facility for the United States Army Corps of Engineers. The original contract for this project was signed in 2016 and is a fixed price EPC contract.
The project was around 90% complete by value at 31 December 2021 and around 93% complete by physical progress and is expected to be operationally complete in H2 2022.
Management’s latest estimate is that the loss at completion will be $222m representing the expected loss to complete less estimated revenue to be earned (revised from the estimate at the half-year of $133m). In reaching its assessment of this loss, management have made certain estimates and assumptions relating to the date of completion, the costs to complete and net recoveries from the client. If the actual outcome differs from these estimates and assumptions, the ultimate loss will be different.
At 31 December 2021, net contract assets of $35.7m are expected to be included in the balance sheet (30 June 2021: $114.3m).
- Ends -
For further information:
Simon McGough – President, Investor Relations
+44 (0)7850 978 741
Citigate Dewe Rogerson
+44 (0)20 7638 9571
The person responsible for arranging the release of this announcement on behalf of Wood is Martin McIntyre, Group General Counsel and Company Secretary.