TIDMWG.
RNS Number : 3854U
Wood Group (John) PLC
28 March 2023
Profit forecasts
28 March 2023
1. Wood Profit Forecasts
1.1 On 29 November 2022 in its Capital Markets Day announcement,
John Wood Group PLC (" Wood ") provided the following guidance in
relation to medium term EBITDA targets (the " CMD Statements "),
which for the purposes of the City Code on Takeovers and Mergers
(the " Code ") constitute a profit forecast:
" Medium term financial targets
The combination of these should result in Wood's revenue
outperforming the combined market CAGR or around 5% over the medium
term(1)
(1) Estimated total growth rate across our addressable markets
in Energy and Materials from 2022 to 2025."
----
"We expect adjusted EBITDA margins to be flat in the nearer
term, partly as we reinvest in the business to secure growth. In
the medium term, we see opportunity for some margin
improvement."
----
"We expect adjusted EBITDA to grow at mid to high single digit
CAGR over the medium term, with momentum building over time as our
strategy delivers."
1.2 On 12 January 2023 in its trading update announcement in
respect of its full-year results for the financial year ended 31
December 2022, Wood provided the following guidance in relation to
FY23 EBITDA (the " Trading Update Statement "). The Trading Update
Statement constitutes a profit forecast under the Code:
"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.
1.3 The following statements, originally made as part of the CMD
Statements or the Trading Update Statements (as applicable) and
included in Wood's preliminary results announcement in respect of
the financial year ended 31 December 2022 on 28 March 2023
(together with the CMD Statements and the Trading Update Statement,
the " Profit Forecasts "), constitute profit forecasts for the
purposes of the Code:
"Our strategy is already delivering. We started 2023 with good
momentum - our order book for delivery in 2023 is up 10%, headcount
is up 8% and financial guidance for 2023 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."
---
"Our medium-term financial targets
Our strategy will deliver returns for our shareholders and at
our Capital Markets Day we set out new financial targets:
-- Adjusted EBITDA margins to be flat in the nearer term, partly
as we reinvest in the business to secure growth. In the medium
term, we see opportunity for margin improvement
-- Adjusted EBITDA to grow at mid to high single digit CAGR over
the medium term, with momentum building over time as our strategy
delivers
---
"We expect to expand our margin in the medium term..."
---
"Outlook
-- While mindful of the uncertain economic outlook, our
expectations for 2023 remain unchanged.
-- We expect our performance in FY23 to be line with our medium-term targets:
o Adjusted EBITDA margins to be flat in the nearer term, partly
as we reinvest in the business to secure growth. In the medium
term, we continue to see opportunity for margin improvement
o Adjusted EBITDA to grow at mid to high single digit CAGR over
the medium term, with momentum building over time as our strategy
delivers"
2. Basis of preparation
2.1 The Profit Forecasts are based on the current internal
forecasts for the remainder of the year ending 31 December 2023 and
the financial period from and including 1 January 2023 to and
including 31 December 2025 (as applicable) in respect of John Wood
Group PLC and its subsidiaries (the " Group ").
2.2 The basis of accounting used for the Profit Forecasts is
consistent with the Group's existing accounting policies, which are
in accordance with UK adopted International Accounting Standards,
International Financial Reporting Standards (" IFRS ") as adopted
by the European Union and IFRS as issued by the International
Accounting Standards Board, the accounting policies which were
applied in the preparation of the Group's financial statements for
the year ended 31 December 2022 and the accounting policies which
are expected to be applied in the preparation of the Group's
financial statements for the year ending 31 December 2023.
2.3 The Profit Forecasts have been prepared on the basis
referred to above and subject to the principal assumptions set out
below. The Profit Forecasts are inherently uncertain and there can
be no guarantee that any of the factors referred to under paragraph
3 (Principal Assumptions) will not occur and/or, if they do, their
effect on the Group's results of operations, financial condition or
financial performance, may be material. The Profit Forecasts should
therefore be read in this context and construed accordingly.
3. Principal assumptions
In confirming the Profit Forecasts remain valid, the directors
of Wood (the "Wood Directors") have made the following principal
assumptions in respect of the financial year ending 31 December
2023 and the financial period from and including 1 January 2023 to
and including 31 December 2025:
Factors outside the influence or control of the Wood
Directors:
-- no material change to the Group's assumptions in the forecast
period for growth of the Group's business;
-- no material change to the Group's assumptions in the forecast
period in relation to the Group's ability to access addressable
markets through its capabilities, business locations and
relationships with its key customers;
-- no material change to the Group's assumptions in the forecast
period in relation to the Group's current cost savings plan related
to rationalisation of the property portfolio, IT spend from licence
rationalisation and other efficiency measures;
-- achieving anticipated annualized savings of $15 million to
$20 million by the end of 2025, with benefits accruing from 2024
and EBIT to benefit by $10 million to $15 million per year;
-- achieving anticipated IT cost savings of $10 million to $15
million from licence rationalization and other efficiency measures,
with material benefit accruing 2024 onwards;
-- no material change to the Group's historic levels of
performance, business improvement initiatives, and market
positioning;
-- no material adverse events which would have a significant
impact on the operating results or financial position of the
Group;
-- no material change in market conditions over the forecast
period in relation to the Group's customers or competitive
environment;
-- no change to average time taken by customers to pay the Group;
-- no adverse change to current prevailing global macroeconomic
and political conditions (including geopolitical tension, further
escalation of conflict or war in or affecting areas where the Group
operates or intends to operate (or any sanctions imposed in
response to any such events)) which is material in the context of
the Profit Forecasts;
-- no change in legislation, taxation or regulatory requirements
relating to the Group or the legislative or regulatory environment
within which the Group operates;
-- no change in general sentiment towards the Group and/or its
operations which has an impact on its ability to attract customers
and to operate its business;
-- no business disruption affecting the Group, its customers or
other stakeholders (including, but without limitation, any pandemic
related lockdowns and restrictions or similar, natural disasters,
severe adverse weather, acts of terrorism, cyberattacks, workforce
shortage or labour disputes);
-- no litigation or contractual disputes which are material in
the context of the Group, other than the ones already disclosed to
the market and no material adverse outcome from any ongoing or
future disputes with any customer, competitor, supplier, regulator
or tax authority;
-- no material movements in inflation, interest rates, tax rates
and foreign exchange rates compared with the Group's estimates;
-- no change in the Group's existing debt arrangements, or its
ability to access external financing; and
-- no change in the accounting standards or policies which were used for the Profit Forecasts.
Factors within the influence or control of the Wood
Directors:
-- no material change to the strategy, budget or operation of the Group's business;
-- no material change to the Group's current cost savings plan
related to rationalisation of the property portfolio, IT spend from
licence rationalisation and other efficiency measures;
-- no material change in the Group's relationship with its key customers;
-- no material health and safety issues experienced by the Group;
-- no major regulatory investigation into the Group
-- no material change in capital policies of the Group;
-- no unplanned capital expenditure or significant acquisitions,
disposals, developments, partnership or joint venture agreements
being entered into by the Group which would have an adverse impact
on the Group's income, expenditure or cashflow which is material in
the context of the Profit Forecast;
-- no significant acquisition, disposals, developments,
partnerships or joint venture agreements will be entered into by
the Group and no existing partnerships or joint venture agreements
will be terminated or amended, in each case, which would have an
adverse impact on the Group's income, expenditure or cashflow which
is material in the context of the Profit Forecast;
-- no material changes in key management of the Group; and
-- consistent application of the Group's accounting policies in
the period to 31 December 2025.
4. Directors' confirmation
The Wood Directors confirm that the Profit Forecasts remain
valid and that they have been properly compiled on the basis of the
principal assumptions stated above and that the basis of accounting
used is consistent with Wood's accounting policies set out
above.
For further information:
Simon McGough, President, Investor Relations +44 (0)7850 978 741
Alex Le May / Ariadna Peretz, FTI Consulting +44 (0)20 3727 1340
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