Summary:
- Challenging conditions continue in some key markets (primarily upstream oil and gas and solar)
- underlying revenue down 24%
- E&I underlying revenue up 7%
- Offset by better operational performance and contract close outs
- trading margin up 80bp, and up 180bp for retained operations
- Retained operations order book up 2% to £5.5bn
- Efficiency and cost saving programme delivering greater benefits ahead of schedule
- £159m proceeds from non core disposal programme in H1, £229m in total since Q4
- Offer from John Wood Group remains on track to complete in Q4
I am encouraged that the first wave of benefits of the transformation programme we began last year is now evident.
Operational discipline has improved, we have more than delivered on our cost saving targets and we have also seen the first tangible signs of sustainable growth: in the retained operations, trading margin is up 180 basis points compared to H1 last year with a 2% increase in the order book since the year end.
Although, as expected, some of our end markets remain challenging, I am pleased that we are making progress across the business – reinforcing the value of a multi-discipline and multi-market customer offering.
Looking forward, I am confident Amec Foster Wheeler is now moving in the right direction, and I believe that our people and shareholders will have an exciting future as part of the Wood Group, once the deal closes in the fourth quarter.
Headlines
Reported under IFRS
| £m unless stated | 2017 | 2016 |
|---|---|---|
| Continuing operations | ||
| Revenue | 2,333 | 2,842 |
| Profit/(loss) before net financing expense | 116 | (414) |
| Profit/(loss) before tax | 77 | (446) |
| Cash flow from operations | (50) | 21 |
| Diluted earnings/(loss) per share | 14.6p | (112.7)p |
| Dividend per share | - | 7.4p |
Adjusted measures
| £m unless stated, for 6 months ended 30 June | 2017 | 2016 | Change | Underlying change |
|---|---|---|---|---|
| Continuing operations | ||||
| Revenue | 2,333 | 2.842 | -18% | -24% |
| Trading profit1 | 162 | 177 | -8% | -14% |
| Trading margin2 | 7.0% | 6.2% | +80bps | |
| Adjusted profit before tax3 | 123 | 140 | -12% | |
| Trading cash flow4 | 81 | 125 | -35% | |
| Cash conversion5 | 50% | 71% | ||
| Adjusted diluted earnings per share6 | 24.8p | 28.2p | -12% |
Notes:
- 1 Trading profit represents profit before net financing expense before the amortisation and impairment of intangible assets, asbestos-related costs (net of insurance recoveries) and exceptional items, but including the Group’s share of the trading profit of joint ventures.2 Trading margin represents trading profit expressed as a percentage of revenue.3 Adjusted profit before tax represents profit before tax before exceptional items, the amortisation and impairment of intangible assets, asbestos-related costs and interest expense (net of insurance recoveries), and the Group’s share of tax on the results of joint ventures.4 Trading cash flow represents cash generated from operations before cash flows arising from exceptional items, asbestos-related payments (net of insurance recoveries), the difference between retirement benefit contributions and amounts recognised in trading profit, legacy settlements and discontinued operations, and currency translation differences on working capital, but including dividends received from joint ventures.5 Cash conversion represents trading cash flow expressed as a percentage of trading profit.6 Adjusted diluted earnings per share represents profit for the year from continuing operations before exceptional items, the amortisation and impairment of intangible assets, asbestos-related costs and interest expense (net of insurance recoveries), and the tax effect of those items, divided by the diluted number of ordinary shares.7 Underlying change excludes the effect of acquisitions and disposals of businesses and currency exchange rate movements.