John Wood Group PLC

Good morning everyone and thank you for joining our half year results presentation. I'm optimistic by the time it comes to delivering our full year results we'll be able to meet again in person but until then I hope everyone remains safe and well. As always I'll take you through some opening remarks before passing over to David who'll take you through their financial performance for the first half of the year. I'll then close the presentation with a focus on two areas. the steps we've taken to ensure that we're fighting fit for the future, and the impact this has already had in unlocking growth opportunities this year. So by the end of today, I hope you'll be encouraged by our margin delivery and the demonstrable growth momentum underpinning a healthy medium and long-term outlook for the business. Firstly, some brief reflections on the first half performance. Whilst the pandemic did continue to cast a shadow in the early months of the year, actions we took to ensure our business was as efficient and effective as possible have been successful in offsetting the impact of lower activity on our margins. The resilience our people have shown throughout this period has also been absolutely outstanding. A low revenue of $3.2 billion was down around 23% on the first half of 2020, We've actually delivered margin improvements across all our business units. Overall, our EBITDA margin of 8.3% is 80 basis points up compared to the first half last year, equating to earnings of $262 million. Looking ahead, we see an improving picture in the second half and beyond. A large part of our optimism stems from the strong growth in our order book, which is up 18% compared to the end of last year with around $3 billion worth of work due for delivery in the second half and recent multi-year awards and operations given us visibility of revenue in 2022 and beyond. Growth in our order book has been led by consulting and operations and we're seeing encouraging signs that we're also now passing the inflection point for our projects business. Finally, We've made significant early progress on our future FIT programme. We're seeing the benefits of an optimised organisational design, improvements in our operating model and have already achieved $20 million worth of efficiency savings year to date, with a further $20 million anticipated in the second half. Before passing to David to go through our financial performance in detail, I'll take a quick look back at the journey we've been on and how this has shaped some of our current focus areas. This time last year, we were approaching the end of a three-year integration programme following the AMEC Foster Wheeler transaction. We took stock of where we were as a business and drew several conclusions. Firstly, our strategy to broaden the business across different end markets has proven to be the correct one, de-risking the business's over-reliance on the upstream market and priming us for future growth and value delivery built upon a highly skilled employee base across the globe. Secondly, we recognised latent opportunity to further unlock the power of the platform we built and to build upon our green-to-green capabilities that enable us to partner with clients across the entire asset lifecycle. Thirdly, we recognised the need to invest again in specific areas to accelerate growth. And lastly, we acknowledged the need to be even more disciplined around operational excellence and narrow the range of delivery outcomes as we completed the legacy projects portfolio process. This prompted us to take two important steps to help accelerate delivery of our strategy and to unlock sustainable growth in the future. We reinforced our focus on energy transition and sustainable infrastructure as primary growth areas and in doing so placed ESG at the very heart of our business strategy by committing to a stronger set of sustainability goals. We also launched Future Fit, our 18-month programme to transform our operating model, deliver near-term efficiencies, accelerate future skills development and secure medium and long-term growth in the markets where we see the greatest opportunities for wood. My focus in the second half of today's presentation will be to show you how these steps have enabled us to enhance efficiency and performance today and put us on the path to sustainable growth. Firstly, however, I'll pass over to David to take you through our financial results in some more detail.

Thank you, Robin, and good morning, everyone. Our H1 results reflect improving momentum and activity and good margin performance across the business. Revenue of £3.2 billion was down around 23% as the ongoing impacts of COVID-19 continued to create challenging market conditions. Around half of the reduction was in process and chemicals, as major projects completed. We saw strength in the built environment, relatively robust activity in renewables, and although conventional energy activity was down, revenue reflects improving market conditions. In Q2, we saw improving momentum and activity with a return to growth in both consultancy and operations, and we expect that momentum to continue in the second half as the group as a whole returns to growth. We delivered EBITDA of 262 million and strong margin improvement with EBITDA margin up 80 basis points to 8.3% with a significant improvement in our projects business. Our focus on high utilization, delivering efficiencies, including those from our future fit program and improved project execution have been key to delivering stronger margins in all three business units. Group margins are also benefiting from improving business mix, with a greater proportion of revenue from higher margin consulting activities. Overall, against the backdrop of challenging activity levels, we are pleased with the improving momentum in the business and delivery of increased margins. Revenue has reduced by 23% compared to the prior period, with COVID-19 impacting activity. Obviously, the first quarter of 2020 was largely unaffected by the pandemic. The main driver of lower volumes in the first half was our projects business. We complete a number of large projects in the first half. The impact of the pandemic on new awards during 2020 and 2021 has resulted in them being replaced with smaller earlier phase scopes. Additionally, our lower risk appetite in being selective over the EPC scopes that we bid has contributed. After accounting for the 61 million revenue impact of the disposal of our nuclear business in Q1 2020, consulting activity was robust. We saw growth in built environment activity, which accounts for over 65% of consulting revenue. Activity was robust in renewables and other energy, including assessments and studies in renewables and decarbonisation, which positions us well as these projects advance. Consulting activity grew in the second quarter compared to 2020, reflecting improving momentum. Revenue in our operations business was relatively resilient after adjusting for a reduction of £12 million related to the disposal of our industrial service business. In operations, we have seen reduced activity in Q1 2021, but growth in Q2 as market conditions and conventional energy improve. Against the backdrop of challenging market conditions, we've made strong progress towards our medium term strategic margin target of 9.6%. Group margins increased by 80 basis points with improved margins in all of our three BUs. The EBITDA impact of businesses disposed during 2020 principally nuclear and industrial services, was £9 million. In addition, EBITDA and investment services reflects benefits from closing out legacy issues in 2020 and additional costs in 2021 towards the completion of the AGES project. The earnings impact of lower volumes was largely offset by improved margin performance in all three business units. This was driven by cost efficiencies, including £20 million from our Future Fit programme and improved project performance. Group margins have improved 80 basis points despite challenging activity levels. Projects margins have improved significantly up 220 basis points benefiting from efficiencies as well as improved execution and a lower risk portfolio. We've been very focused on replicating the exceptional execution we have in large parts of our business across everything we do. Our recently established operating committee is embedding standardised project delivery frameworks and enhanced project governance throughout our organisation. We are already seeing the benefits of this in terms of improved execution. In addition to this, we have continued to focus on ensuring the appropriate level of risk and reward in our portfolio. As we've worked off a number of fixed price projects, we focused on securing new work that is in line with our measured risk appetite, which will also be beneficial in delivering more consistent outcomes. Although the most significant margin improvement was in projects, we have delivered improvements in all three business units in the first half. In consulting, we have built on an already strong margin, delivering a substantial increase of around 100 basis points through our focus on maintaining high utilization and efficiency improvements. Operations margin also improved reflecting continued good execution and efficiencies. The impact of higher margins at business unit levels is amplifying the impact of our improving business mix as we deliver against our strategy. Our actions to better position our high value consulting capabilities into a more efficient global and industry leading offering are reflected in our revenue portfolio. In the first half of 2021, 28% of our revenue was from highest margin activities in consulting compared to 24% in the prior period. Our flexible asset-like commercial model is fundamental to our investment case. Our track record of leveraging our cost base was crucial to our ability to respond quickly and decisively to the unique market conditions in 2020 as a result of the impacts of COVID and oil price volatility. In April 2020, we initiated a number of actions which reduced our overhead costs by £230 million in 2020. In 2021, the additional full year benefits of actions taken in 2020 is offset by the unwind of some temporary measures. However, the 230 million will be supplemented by efficiencies we anticipate from our future FIT programme of 40 million. Although we see market conditions improving, our ability to drive efficiency through our cost base and maintain utilisation at high levels is one of the key drivers of margin improvement in H1 and creates a platform for further margin expansion in line with our medium-term margin target of 9.6%. Turning to the cash flow, net debt has increased by 261 million, largely driven by a working capital outflow of 237 million, which I will cover in detail in the next slide. Cash from operations is an outflow of 107 million and is stated after provisions of 59 million. The impact of provisions is lower than in H1 2020 due to the closeout of legacy issues. Cash exceptions of 46 million include payments in respect of the settlement of legacy investigations and costs related to the delivery of our future fit programme and costs related to prior period onerous leases. Payments for CAPEX and intangibles includes investment in our digital capability, and the resumption of our ERP programme. Overall, expenditure was lower than H1 last year as our disciplined approach to discretionary spend continues. Overall, our net debt was around £100 million higher than expected, with working capital outflows higher than anticipated. This was principally due to receipts due in June being received in July. Overall, we had a working capital outflow of £237 million in the first half, Receipts were lower than anticipated with an outflow of payables in line with reduced project activity. Working capital was also impacted by the expected unwind of advance payments of 61 million as large EPC projects completed. Looking at the full year expectations for net debt, we are confident of delivering a reduction in H2 with a significantly improved working capital performance and improved profitability offsetting the impact of exceptional items in the second half. Exceptional items in the second half will include 60 million of further investigation settlements and future fit costs of 15 million. Working capital will benefit from our typical H2 inflow, the impact of timing of receipts reversing in H2, and an advances build in line with project awards. Improving activity levels and momentum in our order book give us confidence of delivering stronger profitability in the second half. The effect of this and lower net debt is anticipated to deliver a reduction in net debt to EBITDA from the current level of 2.9 times. As we look forward beyond 2021, leverage will continue to benefit from the growth in profitability, lower exceptional cost and the resolution of legacy issues improving cash generation. Our confidence in delivering a stronger H2 and returning to growth is underpinned by positive momentum in our order book. We have seen good growth in order book, which is up around 18% on December 2020. New contract awards and positive scope variations have more than replaced order book delivered as revenue in the first half, giving a book to bill ratio of around 1.4 times. Momentum in Orderbook reflects improving conditions in our core markets. Good growth in consulting, up around 15%, has been driven by strength in the built environment and momentum in energy. Projects Orderbook is down around 3% compared to December 20, but we are encouraged by both recent awards across all our markets and projected second half awards. Operations Orderbook reflects improving demand in conventional energy. with recent growth in order book reflecting the renewal of a number of multi-year contracts and new wins. And these include significant contract awards, such as our five-year specialist engineering contract for a major oil field in Iraq and a late-life asset solutions contract at a UK gas field. Our current order book reflects a lower risk profile in our portfolio, As we have completed larger EPC contracts, particularly in process and chemicals, we have continued to be selective in our bidding for new work. We are focused on ensuring new work is in line with our measured risk appetite, and combined with our focus on execution excellence, will deliver predictable margin outcomes. Around 78% of our order book is now reimbursable, with only 3% from fixed price work over 100 million. Order book of 7.7 billion at 30th of June is up 18% since December 20. Around 3 billion of the order book is due for delivery in the second half, giving us good visibility over 2021 full year revenues. Around 4.7 billion relates to activity beyond 21, laying strong foundations for 2022 and beyond. The building works secured for delivery in 2022 and onwards includes a number of EBC awards and projects secured during June. Early phase activity on these will commence in H2 with the majority of the work to be delivered in 2022. It also includes renewals of multi-year contracts and operations across the Americas, Europe and Asia Pacific. Looking in more detail at projects, we believe we have seen the inflection point in Orderbook. In our projects business, H1 Orderbook reflects the impact of large fixed price contracts in our portfolio completing. However, this has been offset by improving momentum in awards throughout the first half, such that Orderbook is now broadly in line with December 2020. We're encouraged by the mix in our order intake, These include early stage concept and feasibility scopes, which position us well for follow on work as the projects advance and EPC scopes aligned to our measured risk appetite. New awards in the first half have been spread relatively evenly across our core energy markets. We are seeing awards from growing investment in both hydrogen and decarbonisation of assets. In addition, early stage feed scopes in conventional energy are an indicator of activity increasing in anticipation of growing global demand. Looking ahead, we are seeing encouraging trends in bidding and opportunities and expect momentum in awards to continue into the third quarter. In summary, we have a high quality and improving projects order book that reflects a lower risk profile. Looking to the full year, improving activity levels in Q2 and growth in our order book is giving us confidence in delivering a stronger second half, which will represent growth compared to the second half of 2020 and to the first half of this year. Overall, our outlook is unchanged. Activity and projects will be lower due to the completion of large process and chemicals projects. This will be offset by growth in consulting as built environment activity continues to be strong. In addition, we expect growth in operations as activity levels in conventional energy improve. EBITDA margin in the second half is expected to be up on the first half, reflecting increased utilization in some parts of consulting due to seasonal business, as is typical, and a further 20 million of future fit efficiencies. We expect to make further progress towards our medium-term target of 9.6% and anticipate full-year EBITDA margin to be strong, up around 50 basis points on 2020, reflecting high levels of utilization, improved project execution, efficiency improvements, including 40 million of savings from future fit, and our business mix weighted towards higher margin consulting. Looking further ahead, improving momentum in our activity levels and strong growth in order book are laying strong foundations for activity levels and operational cash generation into 2022. In summary, although the ongoing impacts of COVID-19 have continued to create challenging market conditions and impact on our revenue in H1, we're encouraged by improving momentum in activity in Q2 and good growth in order book. We're really pleased with our improved margin performance. Our strong focus on delivering efficiencies, improved project execution, and maintaining high utilization, together with improving business mix, has more than offset the impact of lower activity. Strong growth in order book reflects good momentum in awards, which is delivering a lower risk profile, as new awards, in line with our risk appetite, replace large fixed price contracts completing in H1. Positive momentum in Q2 activity and order book underpins our confidence in returning to growth in the second half relative to both the first half of 21 and the second half of 2020. The order book momentum also lays strong foundations for 2022. Full-year EBITDA margin will reflect further progress towards our medium-term target of 9.6% and we're confident of delivering a net debt reduction in the second half. And we'll now hand over to Robin. Thank you, David.

I'll start with a brief recap of our FutureFit programme. At its core, it has got three primary components. Firstly, unlocking stronger medium-term growth through a simpler organisational design and a concentrated focus on select markets where we believe wood has a differentiated offer. Secondly, driving efficiency savings through operational excellence. And thirdly, value creation through investment in digital solutions and future skills. I'm very pleased with the progress we've made so far. The programme is already delivering benefits with $20 million worth of EBITDA efficiencies in the first half of 2021 and more to come in the second half, and it will deliver value across a range of areas in the medium term. Over the next few slides, I'll touch on some of the outcomes FutureFit has helped to deliver and how they relate to our growth agenda. We prioritised a select number of markets to pursue accelerated growth and have seen excellent progress in each area. And I'd like to call out a few examples. In the first half, we secured over 30 distinct hydrogen contracts. For me, the two exciting elements here are the breadth of the different scopes that we've delivered and the future opportunity that we can see building. We're actively tracking over $600 million worth of hydrogen-related opportunities in our unfathomable pipeline and recently signed as a steering member of the Hydrogen Council, which puts us at the heart of industry-led debate and thinking in the role of hydrogen and how it will play in the net zero future. We've also signed an extremely exciting teaming agreement with Honeywell UOP to combine our respective technologies to deliver carbon-neutral aviation fuel. That will allow the aviation industry to decarbonize. We're hugely excited about this. Just think about it. Jet one spec fuel with zero carbon footprint. Similarly, on carbon capture and storage, we secured over 20 distinct awards in the first half of the year. We've got over 80 opportunities at Unfettered Pipeline, and that's valued at $500 million. The projects we're working on are industry-leading, including the world's largest carbon capture and storage project covering multiple studies in the US that's potentially capturing up to 10 million tonnes of carbon annually. In renewables, we doubled the size of our business in 2020 and see good opportunities in our order book. In our solar and wind business in the US, we've developed a new proposition based on standard block design and lean execution methods, which is already differentiating us and opening up new markets and wins like the Nevada Gold contract that I'll touch on later. The integration of renewable energy and industrial projects is also emerging as a strong growth theme within our future pipeline. With a strong track record in this space, as evidenced by our work in Oman with Shell, where we delivered the first utility-scale PV solar project in the Middle East to cut emissions from an industrial facility. Based on what we continue to observe in the market, we're confident that this carbon reduction trend is a generational shift and a multi-decade growth opportunity. The exciting bit is we're already right at the heart of it, providing the solutions that will deliver this low-carbon future. We're also building some valuable partnerships in the digital and technology space. I'd like to share a couple of great examples that showcase how an investment in digital solutions is driving added value for wood and for our clients. Earlier this year, we formed a new alliance with Aviva, a global leader in industrial software, to develop a connected build solution that uses digital twin technology to drive improvement in design, work, and industrial sectors. We're applying this in projects today, including EPC work and a chemical project in Texas where it's helping to reduce operational costs, energy consumption levels, and wastewater volumes. The other example I'll reference is a collaborative agreement we've signed with Microsoft to give 7,000 of our field workers access to their suite of connected worker apps. These are delivering a range of benefits. For example, the technology allows field technicians to connect to the right experts across a global business so they can discuss life challenges and projects and real-life decisions. This saves both time and money and crucially allows us to bring our very best insights to our clients where it's needed most. Another factor that will be fundamental to our future growth is the breadth of our capabilities. Our ability to provide solutions that span decarbonisation, energy transition and sustainable infrastructure is an offering that few other companies can match. Many of our projects represent the world's firsts or largest or cutting edge solutions. Tell you straight my points, here's a quick snapshot of just some of our contract wins in the first half of this year. Owners engineer in Europe's largest single site onshore wind farm. Reducing the carbon footprint of offshore activities for clients like Equinor and Spirit Energy. Shaping decommissioning strategies in Australia. Cutting edge blue hydrogen production in the Middle East. Delivering the UK's largest waste to energy project in London. And finally, building resilient and future-proofed infrastructure across the US. I could go on, but suffice to say I'm very proud of the diversity of work we're delivering across the globe, and it really differentiates the Wood proposition. As I highlighted earlier, ESG is at the very heart of our business. Earlier this year, we committed to a stronger set of targets to measure our performance against our sustainability strategy, and we're making good early progress. In 2020, we delivered an 8% reduction in our scope one and two carbon emissions, a strong start towards our goal of a 40% reduction by 2030. We currently have over 30% of female representation in senior leadership roles compared to our target of 40% in the same timeframe. More recently, we've also taken strategic steps aligned to the delivery of our purpose. A good example is the work we are doing with Global Goals to engage with stakeholders to promote the importance of achieving UN Sustainable Development Goal number seven around clean and affordable energy. And that's as part of the wider commitment to accelerate the energy transition. I'll now step through each BU in a bit more detail and provide some colour to the near and medium term growth prospects we're seeing. Before doing that, this slide provides a helpful reminder of the shape of our business today. In very simple terms, it's a balanced and well-diversified portfolio. We've got four end markets across energy and the built environment. We've got three complementary business lines that offer green-to-green solutions across the lifecycle of a project. Starting with consulting, in the first half, this business delivered nearly $1 billion worth of revenue and a very strong EBITDA margin of 12.1%. In many aspects, it already reflects the strategic direction of Wood. Premium reputation, differentiated capabilities, high margin returns and solutions for clients across all of energy and the built environment markets. Our order book is strong, up 15% compared to December 2020, with about $1 billion worth of revenue due to be delivered in the second half. Our activities in both energy transition and the built environment markets have been strong, and we expect this to continue. And book to build in June was 1.3 times, giving us confidence of delivering further growth in the second half. We've secured some great wins today. In 2021, which aligns squarely with our strategic focus areas in our consultant growth plan, we already have strategically important senior appointments aligned to key growth areas, including our Vice President of Hydrogen and a Global Director of Decarbonisation. Moving on to projects, this is a part of the business that really has been most impacted by the uncertainties created by the pandemic. But there were still some strong positives to take in the first half of the year. We delivered revenue of $1.2 billion and, as David highlighted, a significantly improved EBITDA margin of 7.5%. This is a full 220 basis points margin improvement on the first half of 2020. From an order book perspective, the early months of the year were relatively quiet as investment decisions continued to be delayed. But through Q2, we've observed encouraging signs of growth and we anticipate this to continue in the third quarter and in 2022. And in line with improving order intake, we're seeing improvement in our book to bill, which has steadily grown through the end of the first quarter into Q2 and is now just before one. We're also pleased with the level of diversification in our order book, reflecting the balance of exposure in our projects business across renewable and other energy, processing chemicals and, of course, conventional energy. As with consulting, we're pleased with the quality of projects we've secured this year and how well they align with our strategic priorities. And finally, operations. This delivered circa a billion dollars worth of revenue in the first half of the year and an adjusted EBITDA margin of 10.7%. Our operations business is typically characterized by long-term contracts with clients who hold enduring relationships with us. This means it delivers stable, predictable returns, largely OPEX-orientated in origin, that provide a helpful counterbalance to some of the more cyclical parts of our business. The order book on operations is excellent, up 34% compared with December 2020, with about $1 billion worth of revenue due to be delivered in the second half. Our strong book-to-bill rate of almost two times reflect our excellent customer relationships and market position, enabling us to secure renewables and multi-year contracts and very encouragingly to continue to win work from our competitor set. This has also given us good visibility over future revenues with the majority of order booked due to be delivered from 2022 onwards. While the majority of revenues and operations still come from conventional energy projects, we are making good progress in diversifying this business with new ones in power generation and activities related to reducing the carbon intensity of conventional energy assets as well as late-life asset solutions. I'll now talk a little bit more about the key themes in our end markets which link to our BU growth plans. For consulting, in energy transition, industrial decarbonisation and the integration of renewable energy into industrial facilities is a key near-term focus area and we're already winning significant work in this space. In sustainable infrastructure, we're recognised as a leader in climate resilience consultancy in North America, And we will continue to capitalise on the stimulus spending with around $900 billion worth of US infrastructure bill well aligned to core areas of our expertise. In projects, investment in renewables will continue. As mentioned earlier, we're investing in standard block design and lean execution capabilities building on our early market entry and strong positions. Economic recovery will be positive for downstream investments and we see significant opportunities in biofuels and biorefining. This development of more sustainable fuel solutions will be vital for a range of industries to meet their net zero targets. Energy transition will impact capital investment in developing new assets, but we're already seeing significant opportunities around decarbonising conventional energy and industrial activities as well as on process and chemical facilities. Finally, in operations, conventional energy will remain a material part of the energy mix for some time to come, and returning demand will see an uptick in activity levels. The type of work will continue to evolve with a strong focus on cost optimisation, emissions reduction, digital solutions, late-life management and decommissioning of mature fields. Our long-term relationships means that we will be a partner of choice in helping IOCs as they evolve into IECs that work across the conventional and low-carbon energy markets and projects. Where IECs divest their interest in the mature basis to independent operators, we also expect to see more demand for integrated asset management services, industrial and power facility modifications across the energy market will focus on both carbon emission reduction and modernisation, creating opportunities for our operations business. I've just spent a bit of time walking through the outlook for HBU, but for me, the real power comes when we collaborate. Let me share a few examples of collaboration wins in the first half of the year. In the US, our projects and consultant team have worked together to win Nevada Gold, where we will deliver a 100 megawatt solar plant, and that will result in a zero emissions mining project. In Asia Pacific, our operations team have opened the door for our consulting team to carry out asset integrity and decarbonisation studies to help an operator client reduce their emissions associated with offshore activities. And finally, in the Middle East, our consulting and projects teams have worked with ADNOC to deliver the pre-feed-in design for a cutting-edge blue ammonia project. This ability to cross-pollinate opportunities and pool expertise will continue to be a differentiator and a foundation for future growth. To close, I'll just reiterate the key highlights. In the first half, we were pleased to have delivered strong margin improvements across all parts of our business. We're very encouraged by the growth we're seeing in our order book and are confident to returning to full growth in the second half of this year. We're reaping the benefits of future fit. It's delivering exactly what we wanted it to, and there's more to come in the second half of 2021 and into 2022. We have an increasingly strong ESG position, and our breadth of capabilities means this will grow even further in the future. It's been an unprecedented last 12 to 18 months of challenge, but we've come through it well. We're energized about the future as we enter a compelling growth phase. With that, I'll now close and invite any questions you may have.