WET News

8 LEADERS 2018 THE LEADERS 2018 AFW set for change with Wood takeover Gross profit £M Amec 588.0 J Murphy & Sons 310.2 Kier Group 288.7 Balfour Beatty 284.0 Mott MacDonald 257.4 Morgan Sindall 243.7 Mace 118.0 Skanska UK 112.9 Amey 112.8 Costain 76.0 A berdeen-headquartered global engineering giant Wood Group acquired Amec Foster Wheeler (AFW) in October, with Wood chief executive Robin Watson saying the deal created "a global leader in the delivery of project, engineering and technical services to energy and industrial markets". The combined firm has a revenue of about £7 billion, operates in over 60 countries and employs more than 55,000 people; however, AFW's results remain separate in this year's Leaders database. AFW's revenue from continuing opera- tions had dropped by 18 per cent in the first half of 2017. It stood at £2.33 billion in the six months to 30 June last year, compared with £2.84 billion in the same period the prior year. The firm posted a pre-tax profit of £77 mil- lion for H1 2017, however, a–er a £446 million pre-tax loss a year earlier. AFW chief executive Jon Lewis said as the results were announced that he was "encouraged" to see evidence of the "first wave of benefits" of the firm's trans- formation programme. He added: "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 per cent increase in the order book since the year end." Underlying revenue in AFW's environ- ment and infrastructure division increased 7 per cent to £522 million in the first six months of 2017. The firm said it continued "to execute Amec Foster Wheeler 4th Floor, Old Change House, 128 Queen Victoria Street, London EC4V 4BJ. Tel: 020 7429 7500. www.amecfw.com well across a wide-ranging portfolio of pro- jects in our chosen sectors" and that expan- sion in the UK and continental Europe "remains a focus". The firm secured a spot on the UK govern- ment's Crown Commercial Services project and programme management framework, which supports the delivery of construction and infrastructure work. Wood Group said its new-look Environment & Infrastructure Solutions (E&IS) division – which provides consulting, engineering, project and construction management services in the water sector and elsewhere – was focused 60 per cent on capex-driven schemes and 40 per cent on opex-driven services. This division had a proforma revenue of about £900 million, according to the 2017 annual report, and employed about 7,300 people. Watson added that in the first few months a–er the AFW acquisition completed, detailed business unit reviews had been undertaken. These "confirmed the strategic rationale for the deal, the depth of capability in Amec Fos- ter Wheeler and the unique growth opportu- nities for the combined business" he added. Wood said it expected "further growth" in its E&IS arm in 2018: "Government represents the largest sector for our E&IS business and we are well positioned to benefit from increased environmental and infrastructure investment, particularly in the US. In Europe we will also benefit from EPCM work for Glax- oSmithKline in Germany secured in the sec- ond half. Due to the multi-sector nature of our capabilities in E&IS we see strong opportuni- ties for revenue synergies across complemen- tary sectors in our Asset Solutions and Spe- cialist Technical Solutions businesses." Wood Group said its acquisition of AFW had "broadened" its environmental expertise. Its E&IS business provided environmental consulting services such as land remediation and industrial water management services, according to the group's latest annual report. "Combined with our existing clean energy business, Wood provides comprehensive solu- tions across the life cycle of our customers' assets to improve operations, reduce risks and liabilities and shape a sustainable future." A partnership of Wood Group and fellow UK infrastructure firm Biwater was created last year to work to address water shortages in Iraq. The arrangement will being with supply of water to Basrah. Meanwhile, Wood has expanded the scope of a deal it has with Melbourne Water in Australia. THE NUMBERS 2012 2013 2014 2015 2016 % change Sales £m 4,088.0 3,974.0 3,993.0 5,455.0 5,440.0 -0 Gross profit £m 532.0 543.0 518.0 668.0 588.0 -12 Operating profit £m 243.0 243.0 148.0 -205.0 -482.0 n/a Pre-tax profit £m 254.0 255.0 155.0 -235.0 -542.0 n/a Staff 23,379 23,572 24,225 34,013 30,900 -9 Net assets £m 1,079.0 1,122.0 1,974.0 1,599.0 1,014.0 -37 THE RATIOS 2012 2013 2014 2015 2016 % change Return on capital % 23.5 22.7 7.9 -14.7 -53.5 n/a Gross margin % 13.0 13.7 13.0 12.2 10.8 -12 Operating margin % 5.9 6.1 3.7 -3.8 -8.9 n/a Net margin % 6.2 6.4 3.9 -4.3 -10.0 n/a Sales/employee £k 174.9 168.6 164.8 160.4 176.1 10 Wood chief executive Robin Watson

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