Full year trading update

12 January 2023

2022 Trading In Line With Expectations

John Wood Group PLC ('Wood' or 'the Group') announces a trading update for the year ended 31 December 2022 ('FY22'), including the headline draft financial results.

Highlights

FY22 financial highlights

Outlook for FY23

As usual, we will give financial guidance for FY23 alongside our full year results on 28 March 2023. We expect guidance for FY23 to be in line with our medium-term financial targets of adjusted EBITDA growth at mid to high single digit CAGR, with momentum building as our strategy delivers.

As previously set out, we anticipate a material improvement in underlying operating cash flows in 2023 which will be outweighed in the short term by defined payments on legacy liabilities, before a return to positive free cash flow in 2024.

Ken Gilmartin, CEO, said:

"We are pleased to have delivered a result for 2022 in line with our expectations at the half year, including a return to revenue growth and a balance sheet position that reflects the strengthened Group.

"We are focused on growth in energy and materials, both with structural growth drivers - energy security, energy transition, net zero and the circular economy - which create long term growth opportunities for Wood. Our leading positions in these markets, long-term client relationships and expertise in decarbonisation and digitalisation is enabling us to win additional market share.

"Significant contracts won in the second half of the year include a five-year engineering services contract renewal with bp, a three-year contract renewal with Shell in the UK North Sea, and a four-year contract with INEOS to deliver a state-of-the-art petrochemicals complex in Belgium.

"This is a new Wood, led by a new team, and the strategy we recently shared at our Capital Markets Day will 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're focused on designing a strong future for Wood and enter this New Year with positive momentum."

Trading across businesses

Consulting saw revenue growth of around 4% to around $0.6 billion with continued growth in our solutions across both conventional energy and energy transition.

Adjusted EBITDA was around 9% lower at around $70 million. This reflects a lower margin of c.11.3% compared to c.13% last year, reflecting a weaker performance in Applied Intelligence, the impact of exiting high-margin work in Russia and some cost pressures from staff retention and recruitment.

Projects saw a decline in revenue of around 7% over the year to around $2.2 billion. The business returned to revenue growth in the second half of the year, with growth coming from our services-led approach following our strategic decision to move away from riskier LSTK work.

Adjusted EBITDA was slightly higher at around $170 million with a strong margin improvement of c.0.7 percentage points as overall project performance improved.

Operations saw revenue growth of around 14% to around $2.4 billion, partly reflecting continued higher activity from 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.

As expected, adjusted EBITDA was lower year-on-year, down around 12% to around $150 million, given a lower level of contract close-out benefits in the year.

Investment Services revenue of around $200 million was broadly flat compared to last year, with adjusted EBITDA (now including our Turbines joint ventures in all periods⁴) slightly higher at around $70 million.

As expected, central costs were broadly flat year-on-year at around $75 million.

Other financial information

The sale of the Built Environment Consulting business resulted in a significant exceptional gain on sale of around $600 million in the period.

As guided at our Capital Markets Day in November 2022, there is an impairment risk around goodwill and intangibles on our balance sheet given the sale of Built Environment Consulting and movement in discount rates. Our impairment review will conclude for the full year results.

FURTHER DETAILS

Conference call

A webcast and conference call will be held today at 8:00am (UK time) with Ken Gilmartin (CEO) and David Kemp (CFO). The webcast will be live at https://edge.media-server.com/mmc/p/3vcwn9b2.

To join the conference call, and to ask any questions, please register via:

https://register.vevent.com/register/BI5c6decc0dabf4babb86e8cdb242af650

The webcast and transcript will be available after the event on our website, www.woodplc.com/investors.

Full year results

We will publish our full year results in full on 28 March 2023.

For further information:

Notes