Wood Group’s chief executive Robin Watson has advised the board of his intention to retire following the company’s annual results, which saw a 19% increase in its order books and the firm restructure for $78m.
The Aberdeen based North Sea Oil and gas consultancy and engineering firm reported its annual results ending 31 December 2021 had been delayed to let an external investigation be undertaken on its historic contract around Aegis Poland.
The group has since revealed it had a write down of $99m for its Aegis Poland contract, which was part of its exceptional items that included a $78m restructure that totalled $160m in exceptional items.
Wood Group has advised the process to find a successor with Watson remaining in the role until the successful candidate is in place.
He was appointed chief executive in January 2016, having previously joined the board in January 2013 as chief executive at Wood's PSN division. He also served as chief operating officer.
Under Watson's leadership, the company has transformed into one of the leading consulting and engineering firms across the global energy market.
The Wood Group saw its orders grow to $7.7bn in the last year of Watson’s reign with consulting up 24% and operations up 27%.
It experienced a 2% increase in contracts following its move away from “higher risk lump sum” contracts with the trend improving as the year progressed.
It noted a strong recovery in its order book for the conventional energy market up by 45% both in consulting and operations including several multi-year renewals.
As of December 2021, the company’s revenue was $4.6bn compared to last December when it was $4.4bn.
However, it reported a 14% decrease in its revenue on a like-for-like basis with the growth offset by a “significant decline “ in projects.
The group's performance was better in the second half of the year with revenue up 4% and projects stabilising with growth across consulting up 4% and operations up 10%.
The company is predicting higher revenue across its business supported by the growth in its order books.
It added that the sale of its build environment business will have a “significant impact” on its reported results, which the group has not provided the financial guidance at this stage.
It reported its cash performance will be impacted by ongoing "exceptional cash drags" including Serious Fraud Office payments, restructuring costs, “onerous leases" and outflows on its Aegis Poland contract.
It revealed this is expected to be offset by the sale of Built Environment with any improvement in its net debt coming from that, which is expected to “deliver '' significant value to its shareholders and strengthen the balance sheet.
The Group also revealed it started to move operations from Russia in March 2022, which accounted for about 1% to its balance sheet.
The Wood Group will provide an update on the medium term growth prospects at a later date.
Robin Watson, chief executive at John Wood Group, said: "2021 was a challenging year for the Group, with the ongoing pressures of the pandemic, mixed market conditions across our businesses and continued challenges in projects impacting our performance. Despite this, we ended the year with positive momentum and a growing order book (up 19% on last year) which gives us confidence that activity levels will be higher in 2022.
"The sale process of our Built Environment business is progressing well and we continue to expect to announce a sale agreement in the second quarter of this year. A sale will deliver significant value for our shareholders and help move the group onto its next chapter.
"We are now focused on the future for Wood beyond this sale - to ensure we can fully capitalise on our deep engineering knowledge and expertise to capture the growth opportunities ahead across both energy security and sustainability, as we help clients move towards net zero.
"I have shared with the Board that I consider the sale of our Built Environment business as marking the start of the next strategic phase for Wood and an appropriate time for me to step down as Chief Executive. I look forward to continuing to serve on the Board until my successor is in place and I remain fully committed to our business delivery and enabling a smooth transition."
Roy Franklin, chairman at Wood Group, said: "On behalf of the Board, I thank Robin for his years of service to the company. Under his leadership, Wood has transformed into a global consulting and engineering business that operates across a wide range of energy and industrial markets worldwide. Robin has built a strong leadership team around him and a solid portfolio that provides us great opportunities as we look ahead.
"A search process is now underway, with both internal and external candidates, and we are confident a smooth transition will follow later this year."
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