John Wood Group PLC (WG.L) Earnings Call Transcript & Summary

Well, good morning, everyone. Thank you for coming along, and welcome to our 2019 annual results presentation. I'm joined today, as ever, by Mr. Kemp, our CFO; our Investor Relations and Communications teams. I am particularly pleased to see you here today as we reflect on the very real effects of COVID-19 and the phenomenon that has had on us. So on that, it does provide risk and uncertainty on not only health grounds, but also as regard to global economy and the financial markets, which support it, as it become very evident in the past couple of weeks. I'm sure we'll all agree on that. We inevitably have significant focus on ourselves in relation to our people, our customers, our business continuity planning, our supply chain effects and our opportunity pipeline. I guess COVID-19 is further compounded by the recent OPEC discussions and outcome. And whilst midstream oil and gas only accounts for about 1/3 of our activities, this impasse has introduced further uncertainty to that specific market. As you know, however, at Wood, we continue to control what we can control and to be flexible, agile and responsive to any changes around us. So whilst the direct impact on the businesses of these events to date has been minimal, we are focused on its potential impact and the degree of uncertainty and concern it introduced to market behaviors and practicalities, which have been significant. So we remain vigilant in our response, and we'll touch on the potential effects as we discuss the 2020 outlook. All of that being said, it is worth reminding ourselves that the presentation is centered around our 2019 performance, and we feel there are many highlights, which have been achieved during this reporting period. At our Capital Markets Day in November, we outlined our strategy to create a premium, differentiated, higher-margin business with an enduring position aligned to the opportunities presented by a rapid evolution to a healthier planet. We've made good progress on optimizing our operating platform while delivering earnings growth, margin improvement and strong cash generation. We delivered synergies, reduced the level of cash exceptionals and structurally improved working capital management. Our 2019 results reflected this focus. Operating profits were up 15% and EBITDA margins are up 40 basis points. Strong cash generation resulted in reduction in net debt. And together with the proceeds of the nuclear and industrial services disposals in the first quarter of this year, delivered our leverage target of 1.5x. In a rapidly changing world, our clear purpose helped guide our actions. And later in the presentation, you'll see some great examples of the work we're doing on industry-leading engineering and consultancy projects across the globe and the progress we're making against our key strategic priorities that we outlined in November. I'll now hand you over to David, and he'll take you through our financial performance for 2019.

Thank you, Robin, and good morning, everyone. As Robin noted, our full year results demonstrate good earnings growth, margin improvement and strong operational cash generation. Revenue of $9.9 billion reflected generally robust activity across energy and built environment markets. Our revenue also reflected our selective bidding approach and improved tender governance. We delivered EBITDA of $855 million and operating profit pre-exceptional items of $411 million. The comparable trends in our business are best understood looking at like-for-like figures, which exclude the impact of IFRS 16 and the contribution from disposals executed in the year. On that like-for-like basis, EBITDA of $704 million is up 5.4%, with margin up 40 basis points to 7.1%. Growth in EBITDA was led by organic growth in the Asset Solutions EAAA and E&IS, and that was partly offset by performance in Asset Solutions Americas. We also retained our focus on cost and efficiency, delivering cost synergies of around $60 million. The Board has recommended a final dividend of $0.239 per share, which makes a total distribution for the year of $0.353, representing an increase of 1% on the total distribution for 2018. Looking at performance across the business units on a like-for-like basis. Overall, we have delivered growth in both EBITDA and margin. In the Americas, revenue was up 6%, benefiting from increased capital projects activity in midstream and downstream and chemicals, which was partly offset by lower activity in renewables and other energy. EBITDA was down 12%. Strong earnings growth in downstream and chemicals was more than offset by cost overruns on the energy projects of $53 million. These overruns included issues at the start of the year in pipelines and overruns and other energy projects in the second half. Asset Solutions EAAA was the biggest contributor to EBITDA growth. We saw growth in operation solutions work in Asia Pacific and the Middle East. This was offset by lower procurement revenues in capital projects. EBITDA was up 14%, reflecting excellent execution across the portfolio, and growth in operations work in the Middle East and Asia Pacific. Capital projects remained robust, with reduced levels of low-margin procurement activity contributing to higher achieved margins. Performance in turbine joint ventures, including EthosEnergy, also improved. In TCS, through environment and infrastructure revenues, we're in line with 2018. Overall, revenue reduced, primarily due to lower volumes in the automation service line. EBITDA margin in TCS was up 0.4%, benefiting from improved execution in environment and infrastructure, margin improvement initiatives and changes in sales mix as TCS -- TCO automation contract rolled off. It's helpful to bridge 2018 to 2019 EBITDA. Despite the impact of project overruns in the Americas, which are mostly behind us, we delivered organic growth of $55 million and synergies of around $60 million. Costs and foreign exchange and asbestos increased, which was a credit in 2018. The asbestos charge relates to movements in bond rates and provision discounting. Disposals made in 2019, including TNT and Voreas, contributed $26 million in the prior year. The accounting impact of the adoption of IFRS 16 on EBITDA was $151 million. As a result, 2019 adjusted EBITDA was $855 million, representing a margin of 8.6%. Turning to the cash flow. Our strong focus on operating cash flow generated better-than-anticipated cash generation in the second half, resulting in a reduction in net debt of $89 million to $1.424 billion, and that was below January guidance of less than $1.5 billion. Our net debt-to-EBITDA ratio reduced from 2.2x to 2x. Cash generated preworking capital of $461 million is stated after provisions of $216 million, which includes Aegis. As we discussed at the Capital Markets Day in November, 2019 has been a transition year, and we see the impact of legacy projects decreasing significantly in the future. The working capital inflow of $204 million reflects the continued focus on working capital initiatives, and I'll discuss this in a bit more detail on the following slide. Exceptional costs reduced significantly to $74 million, which includes investigation support, integration and onerous lease costs. Cash conversion for the year was very strong at 96% post exceptionals, and this was ahead of guidance of 80% to 85%. CapEx and intangibles increased due to the renewal of engineering and other software licenses. We continue to maintain a progressive dividend policy and paid out $236 million in 2019. The significant working capital inflows in 2018 and 2019 reflect our continued focus on working capital initiatives. The main driver of the improved performance in 2019 has been an inflow of $200 million from receivables, with a reduction in DSO of 8 days. Our receivables facility was utilized up to $198 million. This is in line with June 2019 and up $44 million from December 2018. We have also increased the focus on securing advanced payments in our EPC lump sum work, and that generated an inflow of $128 million. Future movements will depend on our success in securing advanced payments on new EPC work to be awarded and the phasing of the work-off on the existing backlog. There was no change to our core payment terms. The outflow reflect the timing of payments and procurement-related activities. We made the excellent progress on our portfolio optimization strategy and completed the disposals of industrial services and nuclear in the first quarter of 2020, achieving good multiples on both. Strong cash generation, together with the impact of those disposals, delivers our target leverage of 1.5x net debt-to-EBITDA on a pro forma basis. We've improved the quality of our order book and consistently applied our measured risk appetite. As Robin has noted throughout 2019, we're a discerning contractor and we aren't seduced by revenue at the expense of margin. Order book at December 31, 2019, was $7.9 billion. The reduction of 7% reflects the work-off of legacy fixed-price contracts as we derisked our portfolio and our short-cycle model. This is most evident in Asset Solutions Americas, where we're working off larger downstream and chemicals projects. Overall, the proportion of fixed price work has reduced, particularly on larger scopes greater than $100 million, which has reduced from 9% to 7%. Backlog to be delivered in 2020 has increased to $5.8 billion from a comparable figure of $5.7 billion last year. Backlog to be delivered beyond 12 months has reduced, reflecting lower levels of multiyear lump sum work. Currently, we have around 60% of forecast 2020 revenue secured, and that's pretty much in line with the prior year. Looking to 2020, our existing forecast do not take account of the impact of COVID-19 and the recent oil price movement on customer activity levels. Equally, they do not reflect the actions we will take to mitigate their impact. As you would expect, it's too early to quantify both the impact and our mitigation. Our existing forecast expects cash flow to benefit from a significant reduction in provision movements relating to projects, asbestos and disposed businesses, particularly as larger contracts, including Aegis, approach completion. On working capital, the significant 2019 inflow reflects the work we have done to structurally improve working capital management and reduce DSO, and we expect to maintain these benefits. The 2019 inflow also included advances on the EPC work, which we currently expect to unwind in 2020. So that will depend on the level of new EPC work secured. We've seen a significant reduction in exceptional items in 2019 of $68 million and anticipate some further reduction in 2020 as cost to deliver AFW synergies roll off and outflows and onerous leases continue to come down. Achieving our margin improvement target for 100 basis points by 2023 is a key component of our strategy, and exceptional costs in 2020 will reflect actions taken towards achieving this. The timing of any settlement on regulatory investigations is uncertain, and this could impact the outlook on exceptionals. CapEx will reflect ongoing costs in engineering software licenses and the next phase of our ERP implementation. Despite this, we do expect a reduction in our capital expenditure overall next year. Tax will be broadly in line with 2019. Throughout 2019, we've continued to assist the relevant authorities in relation to historic use of agents. Discussions concerning possible resolutions of the investigations by the authorities in U.S., Brazil and Scotland have progressed to the point where we believe it's likely to be able to settle these with the authorities. As a result, we have recorded a provision of $46 million in 2019. Achieving resolution of these investigations will involve negotiations with authorities in 3 separate jurisdictions. As such, the timing of any settlement is uncertain, although it's possible that it could be in 2020. We're also continuing to assist the SFO with their investigation, but this is at a different stage and remains a contingent liability. We will continue to update and progress on each of these processes as appropriate. Our capital allocation policy is unchanged and is focused on maintaining a strong balance sheet. Our dividend policy aims to deliver progressive growth subject to earnings growth and cash requirements. Our portfolio optimization activities are ongoing, and we are relatively mature on the disposal of our interest in a turbine joint venture. Other portfolio optimization activities are immature. Further disposals will support both our balance sheet and investment, including a return to bolt-on acquisitions in line with our strategic objectives, which Robin will cover shortly. With Q1 disposals of our nuclear and industrial services, which generated revenue of $0.5 billion and EBITDA of $50 million in 2019, existing forecast and order book support modest underlying growth in revenue and growth in EBITDA underpinned by margin improvement initiatives, and that's as set out in our January trading update. Margin improvement initiatives are well underway and include further efficiency and cost-reduction measures and synergies relating to the formation of TCS. Order book and visibility of our revenue is typical for this point in the year with 60% of 2020 forecast revenue secured. However, these forecasts do not reflect the recent and very dynamic impact of COVID-19 and recent oil price movements on customer activity or actions we'll take to mitigate the impact. To date, we have experienced no direct material impact from COVID-19. However, we would anticipate that given the uncertainty created by COVID-19 and recent oil price movements, this would impact on our customers' future activity, although it's too early to actually quantify this. As we assess the impact, we would anticipate leveraging our flexible, asset-light model in response to changing market conditions. Over the last 5 years, we have strategically repositioned across energy and built environment markets to reduce volatility, such that up and midstream oil and gas represents only 35% of our revenue. At the Capital Markets Day, we set a specific medium-term goal for margin expansion, which is supported by our focus on portfolio optimization and execution excellence, ultimately driving earnings growth and margin improvement. We're targeting a 100 basis point EBITDA margin improvement by 2023 compared to 2019. These targets will be delivered by controlling what we can control and are not dependent on an improved pricing environment. We have a number of levers in our control to improve margin, and that will be our focus. We'll achieve increased margin by being in the right markets, winning work at the right margin that reflects the value we add, delivering exceptional execution consistently and by being more efficient. In summary, our strategic and financial focus in 2019 has delivered full year results that demonstrate good earnings growth, margin improvement and strong operational cash generation. We delivered earnings growth in line with expectations with EBITDA on a like-for-like basis up 5% and margins up 40 basis points. We increased the dividend in line with our progressive policy, and we delivered strong cash flows and made good progress on portfolio rationalization to achieve our target leverage on a pro forma basis. Looking to 2020 and to reiterate, current forecast and backlog support modest underlying growth in revenue and growth in EBITDA underpinned by margin improvement initiatives as set out in our January trading update. However, these forecasts do not reflect the impact of COVID-19 and recent oil price movements on our customers' activity or our actions to mitigate as it's too early to quantify. I'll now hand over to Robin.

Good. Thank you, David. I'll pick up on some of the strategic priorities and add some color to the variety and type of work we're doing in some more detail before we move into Q&A. So our strategic objective is clear and underpins everything that we do. We've created a premium differentiated business, and from this, we intend to enhance both our earnings and margin delivery with a primary focus on profitability. We'll make the most of the opportunities we can see before us, especially in an energy transition and in the delivery of sustainable infrastructure. Our enduring investment platform is well established, and some of the foundations of this model will be key in our ability to navigate the emerging challenges we see at macro level. We've been successful in strategically repositioning across broader energy and built environment markets. Not only does this position us well for the emerging opportunities in energy transition and sustainable infrastructure, it also helps reduce the volatility and minimize the risk of overdependence on oil and gas, particularly upstream. We retain a flexible, asset-light model, which is key to managing overhead costs and utilization and in our ability to remain agile and positioned for success. We feel we've got an unrivaled track record in controlling what we can control. We delivered, just to remind you, over $250 million worth of cost savings in 2005 going into 2016 -- '15 going into '16 as Wood Group as we navigated that downturn in oil and gas prices. As David noted in his commentary, this flexibility is also reflected in the margin improvement initiatives that we already have underway. So where we are and what we do is pretty simple and clear. We offer 3 core service lines: consulting, projects and operations. This is offered across 2 end markets: energy and built environment. And we've got our focus on 2 significant emergent megatrends: energy transition and the drive towards sustainable infrastructure. We're also clear about who we are. We're one of the world's leading engineering and consultancy companies. Organizationally, we've got 2 reportable segments in our business: Asset Solutions and Technical Consulting Solutions, taken each in turn. Our consulting offering in TCS is some of the most talented and respectable people in their fields, generating high margins and the delivery of best-in-class consulting solutions. TCS comprises specialist engineering, infrastructure development and environmental consulting, together with differentiated offerings in process and technical consulting, automation and control, subsea remediation and studies. It's 80% non-oil and gas. Stand-alone, our consultant business is one of the largest and most successful companies of its type, competing with the likes of AECOM, Tetra Tech and Arcadis. We delivered our projects and operation services in Asset Solutions. This is a global offering which we've structured to manage in a geographic basis. It accounts for about 70% of revenue across 2 regions, the Americas and EAAA. We're organized this way to deliver for our clients where a variety of our services and solutions are actually sector-agnostic. What really differentiates us is the range of complementary service lines and integrated solutions we can now draw on to generate new business from existing customers and win new work. You may recall from our Capital Markets Day, we're also clear about our priorities, and that is simply to be future-ready now. When I talk of the future, I'm of course referring to the unstoppable momentum we're seeing today in addressing climate change and the impact that this has on the world we live in. That includes the need for an enduring, sustainable living and the -- with right infrastructure to support it as well as a measured transition to new sources of energy and alternative uses of existing sources. But these aren't the only major trend that will affect how we work. We're also adapting to the digital revolution and its interaction with future skills requirements. The way in which we've repositioned our business and the breadth of our portfolio and reach across a wide range of markets across the whole of the energy and built environment puts us in a different position to our competitors. Our position is well placed to meet the needs of society based on these megatrends, which together form a powerful catalyst for change. And we see change as a significant opportunity for us, opportunity that's already converting to new work and a few examples of which I'd like to share with you now. As I said often, we're well positioned to respond to opportunity as presented by energy transition, and our renewable business is performing very well. In wind, we've supported projects totaling 64 gigawatts across 640 developments, and that's 10% of the installed global capacity, to put it in some context. Our solar business in North America alone generated revenues of over $250 million last year and is set to deliver over $500 million of revenue in 2020. We're also delivering novel solutions to help our clients transition their assets to more renewable sources. In Europe, we've supported major projects like Shell's Moerdijk polar (sic) [ solar ] PV plant, which at 76,000 solar panels is one of the largest of its kind in The Netherlands. And we're also working and modifying 2 of Equinor's Snorre and Gullfaks installations in the North Sea to be powered by offshore wind-generated power. In hydrogen, we're actively advising several clients on opportunities to utilize hydrogen to address the broader needs of energy transition, and we view the opportunities of the transition to be more than growing our renewables business. It's also, of course, about helping our clients, traditional clients to get ready for their future as well. With that in mind, that includes our own decarbonization journey. A good example of this is the work we're doing with the oil and gas climate initiative, which is a voluntary initiative, led by the CEOs of 13 oil and gas majors. The multimillion-dollar project has been underway for some time now and it's to provide conceptual engineering for its gas power and industrial carbon capture conceptual design work. It's the first full chain carbon capture transport and storage project in the U.K. and one we've been engaged in for a number of years. When complete, it will establish a best practice carbon capture and storage model for the industry, and we're at the technological center of it. We also continue to capture and grow market share and sustainable infrastructure development, including planning, design, build and operation of connected and resilient infrastructure across the world. This includes a variety and range of projects that help improve the performance and sustainability of urban habitats, including transportation, designing a new solution to improve traffic flow in Washington State; support Metrolinx in Toronto's transit system expansion and upgrade; and for the city of York, and a first for the U.K., we're delivering a live digital model of the city's transport network to improve traffic management and safety, reducing congestion and emissions; and supporting vulnerable existing infrastructure with our flood risk management solutions are helping coastal urban areas in the British Virgin Islands to be stronger, greener and more resilient as well as the Southeast Florida where we're helping authorities plan and respond to rising sea levels that will have a major impact on existing roads and communities; and in numerous projects, environmental planning and part assessments and remediation. As the momentum to a cleaner planet continues at pace, we see even greater opportunity in the high-margin consultancy work in this field. This work, largely undertaken by our TCS business, remains a core focus of our efforts in 2020. We're also at the forefront of deploying the latest innovations in technology, establishing and unlocking the right digital platforms to usefully release and leverage our unique domain knowledge and deploying this through partnerships alongside the likes of Honeywell, IBM and Microsoft, to name but a few. Some of the most recent advancements include digital twinning for connected design, build and operate; harnessing the wealth of asset data at our fingertips, analyzing using data analytics, machine learning and artificial intelligence; utilizing too our extended reality capabilities in automation, control and robotics. Our command and control centers are providing customers with more effective, safer and efficient methods of managing remote assets across both conventional and renewable sites. Automating pipeline design is a great example of how we're harnessing deep domain knowledge and technological innovation to help our customers optimize cost, improve performance and maximize value from assets. We're very excited with the digital projects and operations we deliver; the partnerships we've established; the prioritized activities we are working on and the value proposition they represent; building on our established digital offerings, which we have shared previously such as e-working, virtual reality and the e-worker. And of course, we're still very much out there in our traditional existing markets, including in EAAA business where we are engineering and program managing one of the world's largest petrochemical Olefins investment for INEOS in Antwerp, Belgium. We're not only creating predictability in a competitive and sustainable cost proposition for the client, we're also driving sustainability through a highly energy-efficient design, innovative program approach and the integration of cutting-edge technologies on a significant scale. You'll be aware of 2 of our work delivering Chevron's Anchor project, and this is a multimillion-dollar milestone project, which marks the industry's first high-pressure deepwater development to achieve FID in the Gulf. It's quite simply one of the most cutting-edge, largest and complex programs of work in the industry today, and there are a few organizations who could have delivered it. Our capability and knowledge of such projects ensure we're best placed to respond to the increasingly complex challenges our customers face, and essentially, our capability as an organization as an engineering complex solutions to complex challenges across our end markets. In the Middle East, we're supporting the development of Saudi Aramco's Jafurah gas field. This is the largest unconventional, nonassociated gas field in the Kingdom. The volume of gas resources is estimated at 200 trillion cubic feet of rich raw gas, which is a vast quantity in any global benchmark and is one of the largest fields in the world. The work we're doing in Jafurah is a good example of both the highly differentiated position we have in executing projects of this complexity and scale, which we have been doing for decades and for which we remain globally renowned. So it's worth walking through themes we're seeing in each of our markets in both the short term and also in the medium to longer term. Clearly, there are risks to this outlook, as David touched on, given the impact of COVID-19 to the global economy and energy and infrastructure markets. And the oil market reaction to the OPEC meeting last Friday is a stark reminder to that level of uncertainty. However, again, as David noted, we do expect an impact on near-term activity, but it's too early to actually quantify what that will be. Over the last 5 years, the group diversified its end markets such that upstream and midstream oil and gas represents only 35% of revenue. That's just about 1/3. And that market capital discipline remains a theme with growth in oil and gas supply expected to be fairly modest near term. Headwinds that contributed to the slowdown in shale in the second half of last year are expected to continue. From a Wood perspective, growth will come from early-stage FEED work in Asia Pacific and operations work in the Middle East and the U.K. spending increases. Looking further ahead, we see a more positive outlook. Modest near-term growth in downstream and chemicals will be led by petrochemicals. We see a stronger outlook in Asset Solutions EAAA, where we expect increased capital projects activity in Europe and also in Asia Pacific. We expect to see stronger growth in the medium term, again, led by petrochemicals rather than traditional refining. And in the longer term, the change in usage for feedstock as a result of energy transition should generate opportunities for refinery modifications and/or additional petrochemicals capacity. As the energy transition gathers pace, we expect to see good growth in the short term driven by solar and wind capacity additions, and this will impact positively in our renewable activities in the Americas in 2020. We'd expect higher rates of growth over the medium to longer term as the cost of renewable energies reduce, technology advances and government support increases. Demand for sustainable infrastructure will be robust near term, and that's reflected in our outlook for TCS. The investment required to meet global infrastructure needs will increase over the next 10 years, potentially by over 20%. Commencements to achieving the UN Sustainable Development Goals should be supportive to growth in good quality infrastructure through the longer term. And it's clear the trends in energy transition and the sustainable infrastructure are having a real impact in the markets in which we operate. With our medium-term strategy aligned to these trends, we'll be well positioned for growth opportunities. And that said, we're very aware of the risk of this outlook, albeit the near-term end part once again is hard to quantify at present. By way of reminder, at Wood, we've been adapting to change in our markets for some time. Agility is actually in the company's DNA from a fishing fleet to marine engineering to the North Sea to global oilfield services, now to a world-leading engineering and consultancy company. Our ability to predict and align the business within the appropriate markets has really stood us in good stead for many, many years. Frankly, everything we've done, such as moving into shale in 2012, to transforming Wood Group in '15, to the 2017 Amec Foster Wheeler acquisition, to the launch of our Technical Consulting Solutions business has been about that alignment. We are very much ready for the future, and our focus now is on making these opportunities real and unlocking growth as a result. The market commentary and project examples I've shared with you will, I would hope, go some way to put real color into what we're currently doing and where we're doing it. This journey, along with our asset-light investment platform, stands us in good stead to respond to any challenges that present themselves. We've done this before. Building on it, I'd like to conclude and adding a little detail as to our tactical focus areas over and above this operational delivery. So my leadership team has 4 principal areas of focus aligned with our strategic priorities. The first is sustainability. We don't inherit the earth from our ancestors, we borrow it from our children. Not a bad outlook to have. We are part of the UN Global Compact, and our sustainability strategy aligns with their Sustainable Development Goals as well as our own ESG goals. We've established specific target areas to address: safety, which is always at top of our agenda, and we've placed continued focus and improved safety performance and the right working conditions, whatever we operate across the globe. Climate change, adopting realistic, achievable climate change targets for our own carbon emissions. Diverse inclusion and fairness, building on a strong position with our executive teams recognizing there's always more to be done. Secondly, portfolio optimization. This is in achieving our strategic goal of becoming a premium differentiated, higher-margin business, having a laser focus on ensuring we're in the right markets with the right return, and that will have a primary focus on profitability. It will mean the disposal of businesses, which don't meet our benchmarks and profitability or strategic fit and further investment as we look to rebuild a bolt-on M&A opportunity pipeline through 2020 with a principal focus on our consulting activity in the built environment market. The third is margin improvement. To achieve our strategic goal of 100 basis point margin improvement by 2023, we're working on initiatives which leverage our commercial versatility and improve our price point. This includes the launch of our TCS business, which positions us well for attracting even -- an even greater share of the high-value, high-margin consulting market. It also involves leveraging further efficiency and cost-reduction measures, including synergies relating to the formation of TCs and ongoing operational efficiency across the entire organization. The fourth is execution excellence. Achieving consistent, predictable, best-in-class delivery across all projects is key to maintaining long-term business. We start from a strong position, and our unique heritage gives us broad capabilities and a strong track record where we already enjoy over 90% repeat business. Our high-value engineering centers enable us to drive -- excuse me. That's better, but early for gin. This is water. Our high-value engineering centers help us to drive flexibility in our pricing model and further improve our margin. So as we continue to standardize, optimize and digitize our solutions, we see benefits in cost efficiency, predictability and safety of delivery. Further explanation of new solutions with our technology partners to create the best support ecosystem whilst further differentiating our offering will also support margin improvement, strategic delivery elements. So what does it achieve in our strategy actually mean for us and for those who invest in us? Well, it's a company that's premium with a high-quality derisked order book and the balance sheet strength for the investment in future growth, including when the time is right for further acquisitions. Differentiated, a unique capability amongst our peers in delivering the services and solutions in the most relevant growth markets. And higher margins, lower earnings volatility and more predictable cash generation and high-value consultancy solutions with balanced risk and reward structures, with a strong growth platform and an enduring market position with a business that's very much future-ready now. Since our Capital Markets Day, the world has become an even more volatile than any of us could have envisaged. The unstoppable momentum to a cleaner planet continues at pace, and we're very well positioned to benefit from the opportunities that, that creates for us. Closer to home in the very short term, the emerging end part of the COVID-19 phenomenon on the global financial market is evident and how this continues to reveal itself remains somewhat to be seen. This is further compounded by the recent OPEC discussions and outcome, as we touched on earlier. And whilst upstream and midstream oil and gas only accounts for around 1/3 of our activities, this impasse is inevitably unhelpful and accurately predicting on activity levels and how they will cascade across our business in that particular market segment. As you well know, however, at Wood, we continue to control what we can control and be flexible, agile and responsive to the changes around us. And we're seeing the benefits of this proactive approach. So in summary, in 2019, we've delivered earnings growth, margin improvement and strong cash generation. We've delivered synergies, reduced the level of cash exceptionals and structurally improved working capital management. Our 2019 results reflect this focus with operating profit up 15% and EBITDA margins up 40 basis points. Strong cash generation resulted in a reduction in net debt, and together with the proceeds of nuclear and industrial services disposals has delivered our target leverage of 1.5x. With that, we will now take questions.

Just the format, one we take questions from the floor, we are also going to take ultimately questions from the webcast as well. And Andrew will ask them. Do you want to start, Amy?

It's Amy Wong from UBS. A couple of questions for me, please. The first one is, could you just talk about, since you've acquired Amec Foster Wheeler and we think about your kind of 2 sides of your book, which is the oil and gas, upstream, midstream, downstream, chemicals, and then you've got your new energy transition renewables, other sustainable infrastructure side of your order book, can you talk about how those 2 sides of your order book have evolved? And is the pipeline growing? How -- are they growing differently? Are they diverging? What's the pace of growth and compare and contrast those in your -- the characteristics of that order book for us, please?

Yes. I mean, as you know, Amy, the strategic rationale was to reduce volatility, so we went from 90% from upstream oil and gas orientated. Actually, that's seen some peak activities in shale, and 2019 is a good example of, over the last couple of years, within upstream oil and gas there have been good, healthy markets. Shale has been one, the Middle East has been one and Asia Pacific has been one, even in upstream oil and gas. The good thing is, as we said here today, that we are not 90% orientated to it because you see that commodity price shift over the course of 3 or 4 days. Actually, it will have a limited effect to these individual markets. I think across that piece, it's worth just reminding ourselves as well as it's been toned down as a -- from an upstream proposition. We've also got a good mix of OpEx and CapEx to drive revenue streams. So actually, a good chunk of that business is quite enduring. It tends to be about lower margin, but more predictable and less variable to the fluctuations of capital investment. So I think that's an important thing. It's all asset-light. We don't have any exposure to vessel fleets, as you know. We don't have any exposure to oilfield equipment, as you know. So that's a bit more limited. And a number of the projects we have, they're already in flight. Do we see shale coming off through 2020? We do because we think 2019 was a bit of a peak set of activities. If we then look at downstream and chemicals, it really has been a very solid part of the performance ever since we acquired Amec Foster Wheeler and it's a good, healthy part of our order book moving forward, particularly in the East, particularly in petrochemicals and refinery upgrades. So that's been a very healthy part of the journey. And moving forward, again, feedstock prices reduce, which may well be actually quite positive from a petrochemical perspective. If we look at the broader energy footprint, I think there's been dual fuel work that we've been doing, which has now moved in solar work. So again, part of the sector-agnostic aspect of the business we've created is we can redeploy craft labor as shale has come off, and they are now working in solar projects because we're doubling the size of our solar footprint through 2020 and we see lots of opportunities in that space. So I think that's a real good example of a shift of resource and capability that you can then deploy and unlock it. So from a renewables perspective, wind, it's largely consultancy; solar, it's consultancy and a blend of that EPC work that we do in the U.S. So the -- and then the built environment market is really driven by -- it's probably GDP plus type of growth. And we've seen consistent growth year-on-year. And actually, pre-acquisition, we've seen consistent growth in what was the original environment and infrastructure business within AFW. When we formed TCS as a technical consultant business, firstly, it's $2.5 billion worth of revenue. So it's a very significant business, and it can compete on its own 2 feet globally in that regard. And secondly, it's been a real driver of the kind of underlying growth on high margins. Tends to be a shorter cycle order book just with the nature of it, but it's one that we've got real confidence in.

Maybe just add a couple of points, Amy, just bringing some of the numbers side of it. I think in terms of, firstly, we don't track AFW separately now because it is fully integrated into our business. I think the broader theme around the backlog that we talked about for the group applies to AFW. So if you look at our backlog, you really got 2 different things happening there. So actually, the backlog relating to the short-term 2020 actually increased. But the backlog related to those 2 years decreased. And so what's actually happened there? So if you took in environment and infrastructure, which was a big AFW business, so we've really focused on the core. That is the profitable course. So this year, we've had excellent margins in that business. And we've stopped doing the bigger legacy projects. We're not bidding on an Aegis and Guam and these things, so they're tailing off. So the bigger EPC part is becoming less. And equally, in downstream and chemicals, the bigger projects that we have there, we're successfully executing YCI and it's going very well, but that has been burnt off. And our risk appetite is not adding those sort of larger EPC projects. So that's broadly the shape of how the backlog has moved and that applies to AFW and to Wood.

James Hubbard from Numis. Just 2 questions. On working capital, I think, last year, the first half, we had a big outflow and looks as though we had an even bigger inflow in the second half. I think that was broadly the dynamic. And so net debt kind of disappointed at midyear compared to some expectations. And I'm wondering, is there anything you can say with any degree of certainty on the profile you expect this year? I mean net debt EBITDA now 1.5x as of today. Is there a chance that actually creeps up into the second half if some of these customer advances go into the other direction, for example? And then secondly, I think you mentioned bolt-on acquisitions there in consultancy, are you explicitly focusing on non-oil -- the non-oil activities of consulting? Or are you still open to things in the upstream oil sector?

If I start with the working capital, so you're right, we did -- the shape of it has been a big inflow really driven in the second half. If you remember, what we flagged in the first half, we had a couple of bigger payments that came in just after July. Actually, one of those was related to advances. And so, yes, we did have the shape of the profile that you're talking about, a big inflow in the second half. But that was accentuated because of that payment. We had expected it to come in, in the first half. If you look at the shape of our business, we do typically expect to have more of an inflow in the second half than we do in the first half and that's really around the shape of our activity. So activity tails off as we get to the end of the year, particularly around construction-related activity, and so that releases working capital. And there's also more of a settling up impact that we see in December with customers, so we get a bigger inflow from customers. And this year, we had a bigger inflow than we'd anticipated, so the cash collection in the business was really good at the end of the year and we saw that big inflow. But that's broadly the shape of our business. We do expect better working capital in the second half than we do in the first half. In terms of the advances, we -- again, we had sort of 2 competing things there. We've put a lot more focus on getting advances on EPC activity. I think we've previously talked around driving a culture around cash in the business, whether it's cash collection or whether it's advances. And so we're seeing some of the fruits of that in terms of successful in -- this year in terms of advances and in terms of the cash collection. But equally, we've had this derisking impact in terms of the portfolio. So there is less EPC work that we are booking into our business. And so just now we expect an unwind of that advances as we go into 2020.

As regards -- I mean the short answer is, yes, it will be nonoil and gas acquisitions that are most attractive to us; white collar, differentiated and a very clear position around either energy transition or the built environment world around sustainable infrastructure. I think the only qualification out of that, we do get -- tech business is put to it. So there's a tech business that was sector-agnostic that could work in oil and gas and others. I think it would be something that we would certainly be open-minded to if we felt it gave us a value proposition.

Next question. Andrew, do you want to ask your question?

There's nobody who want a handle on mic with COVID.

Sorry, David?

Where did you go, Andrew?

David?

David Farrell from Crédit Suisse. A couple of questions for me. Could you just talk us through the provisions, there were some reclassifications in there, so could you just elaborate a little bit more on those, please? You mentioned you're back progressing the disposal of the JV business, is that just Ethos? Or is that Ethos and WG? And could you give us some color in terms of where they're valued on the balance sheet currently? And what kind of value you might expect to get in the disposal? And then finally, are you seeing an increase in focus from operators with regards to asking you to help them reduce their emissions at their upstream activities? And I guess, following on from that, to what extent is there an opportunity in the U.S. to reduce the emissions -- the gas emissions from the production wells?

Let me start with that one first, David.

You start with that one.

I think we have -- David, we have seen operators looking to us to help them reduce their emissions. A good example I use was Equinor in Snorre and Gullfaks fields where they're actually using wind generator -- offshore floating wind to provide them with power. So it's an adjacent floating wind facility that will provide economic power rather than using fuel gas. So that's a fascinating shift there, and there are some real innovative stuff that we are seeing with a number of operator -- customers looking at that. And the Shell project [indiscernible] the solar projects actually, really it's a process facility that Shell operate. So we are definitely seeing that trend. We've probably seen a bit more activity in broad brush terms where the European majors are probably slightly ahead of that or doing slightly different things than perhaps the North American majors in that regard. And I think I was assisting and it's really a key part of the capability we have. The carbon capture and storage project I talked about, which is a kind of, Teesside physically, is Teesside orientated. It's largely technology and technical skills that we bring, the consultant skills that we bring to that. If we can unlock carbon capture and storage, then it can be scaled up for industrial use. I do feel carbon capture and storage is a huge part of the energy transition. And I'm glad you make the observation because you do look at the flare volumes in the shale, and actually, we have a capability and we've spent a number of years building gas processing facilities on pipelines because actually, we really feel that the business, as we've positioned it, is in a very unique position where we're actually able to provide technical solutions to these issues. And you do much less impact to the environment, obviously, by capturing gas rather than flaring gas, put it in pipelines and making use of it, making purpose of it. So we do think that will be something that will become increasingly relevant as the volumes of shale gas to atmosphere becomes increasingly intolerable over the coming years.

Just to walk through your other questions, in terms of provisions, and a word to say, first thing, our provisions has come down by roughly about $200 million, just under $200 million. In terms of the categorization of those and what we've got in there, so we've got just under $800 million sitting in provisions. Over $400 million of that is asbestos. Then you'll see in the note, we've got a category called insurance. That largely relates to our captive insurance, so we maintain a captive insurance and we make provisions for effectively claims in that captive insurance. And as those claims pan out, it either release -- it either release us something to the P&L or we have to make further provisions. It's essentially -- the captive is essentially us recycling profit in the group because the actual premiums are coming from the BUs effectively. The next element is litigation, and we've got just over $100 million in litigation. The bigger elements of that are the regulatory. So we talked about -- we've got a $46 million provision relating to regulatory matters, the DOJ, SEC and the Crown Office in Scotland. And then we have a provision -- a small provision relating to enterprise. And then the final one is project provisions, and that's where we've seen the biggest fall in value. So we're about $150 million, I think, in terms of the overall project provisions. The bigger elements are in there, and there's a lot of smaller stuff in there because that is the main operational part. We still have Aegis in there. We have mountaintop which is a long 30-year environmental provision. So that's what we've got in there. I think if you take the step back, I think when we talked at the Capital Markets Day, 2019 has been a major transition year. And so you've seen a lot of things: one, us closing out legacy projects, closing out legacy liabilities and working our way through that legacy portfolio. As we look forward to 2020, we flagged that we expect an impact on provisions of about $100 million. And so where does that come from? About $36 million is asbestos and about $65 million is effectively the closure of other legacy liabilities. So we are a project business, so we're always going to have an element of provisioning. We make provisions on projects and we then try to manage these liabilities and get good outcomes on them. 2019 has seen a lot more of that and that's related to that sort of legacy book that we have. In terms of the disposals, it's not EthosEnergy that we're actually talking about. We've not named where we are. We're relatively mature in the disposal, but I think -- I say this every time. A disposal is not done until it's actually done. At the point where we're ready to sign an SPA, we would talk about valuations, et cetera. If you look in our accounts, it is held as an asset held for sale, so you can see the book value of the business there. There's one here for Amy as well.

Just a follow-up question in terms of thinking about your tendering pipeline right now. Can you talk about the negotiations, maybe focus a little bit on the non-oil and gas client discussions? Like, I mean you're obviously focusing on margin expansion, but just talk about the dynamics in terms of how you get potentially better pricing or not, in terms of just how those negotiations are going, please?

Yes. I mean it's -- so the non-oil and gas part of the business is largely consultancy, Amy. So the tender process, firstly as ever, we're the discerning contractors, so there are only 2, 3, 4 companies that can do the type of work that we're actually positioned for. It tends to be by negotiation quite often. And it does tend to be on the basis of your playbook. So you do -- Metrolinx is a good example. If you got a good reputation for real transportation efficiency improvements, then you're very much sought after as either a client engineer, we're quite often a client engineer, or the primary consultant on a project, minimizing the environmental impact, making the solutions as sustainable as is possible. So we do feel it's quite a differentiated part of the business. We've tended to find that, firstly, if you're well positioned, you can get good quality margins to do what you do. If you're not well positioned, we tend not to bid it. We feel if it's a state where we don't have a good footprint or a good track record in doing some very localized specific piece of work. But equally, you start looking at some of the transportation work we do, some of the larger transportation projects, an individual country, an individual state, an individual city, they do them every generation, every 2 generations. So what we do find is some of that global unlocking or you've done transportation work here that affected 1 million drivers, actually, that's what we need in this part of the world. We're seeing that more and more, actually, since bringing the business together. That's one of the reasons we made TCS a global proposition. It was just to unlock that because in reality, a Manchester, a Birmingham, a Glasgow, they just don't do big transportation projects regularly. So using contractors or using people like us that have done 1 recently in Washington State, in Paris or wherever, there's much more desire to have our expertise. And often, as in the customer side, so you are often the adviser to -- I mean you see it with Aegis, too, we've add up and these sorts of companies are providing advice to the government from a government -- from an expenditure perspective. So it's a really good part of the pipeline, is differentiated and it has been differentiated for 30-plus years now. It's a really, really attractive business for us. And we feel that making it global has really kind of blossomed it, if you like, in terms of the global connect that it has with a broader business.

Andrew, do you want to...

There's quite a few coming through on the webcast. So from James at JPMC. It's clearly a rapidly changing market, but can you talk about some of the levers you might be able to pull at this point if customers do change activity levels given you've already made substantial structural improvements in your cost base during the last downturn?

Yes. I mean it's -- firstly, I think it's about contextualizing it. So if the question is around just kind of oil price, again, then I think the fact that it is only 1/3 of our business is helpful. I think we've got a lot of projects already in-flight is helpful. It's unusual to switch a project off halfway through its maturity. The fact we have the agility, we have always been asset-light, we remain asset-light and that's a key factor for us. And we've got a good mix of OpEx and CapEx-derived activities. So I think all of these things are mitigations in themselves. Sadly, as we all know, we've been at $30 oil before and we reacted very quickly to that. And we always take a fine balance between the macro dynamic, the utilization levels that we have across our business locally and globally and retaining the capability that we have. And that triangulation is something that we'll be doing this time around as it evolves. Too early to say, I think, is the honest answer as to what did the weekend shift in oil price do to 1/3 of your business. It's just too early to say. It's very much emergent.

I think the thing I would add to that is one of the things we flagged at our Capital Markets Day is our focus on margin. And actually, it was around that theme of controlling what we can control. So over the last 3 months, we've been looking at the efficiency of all parts of our business. And so we are well progressed with those plans and actually implementing these plans. So we feel, given some of the challenges we face, albeit the oil price is related to 1/3 of our business, we've done a lot of work and we've identified a lot of opportunities to make ourselves more efficient. And so we're not starting with a blank sheet of paper relative to this. And I think, as Robin said in his presentation, unfortunately, we've had a lot of experience of this in the past. Back in 2015, '16, we took substantial amounts of overhead out of our business. But equally important was managing the utilization as projects rolled off. As we stated just now, it is important to emphasize upstream and midstream is 1/3 of our business. It's not 90% as it was in 2015, '16.

I want to maybe extend on that. Andrew, I'll just make reference to COVID-19. Just to give you some of the practical details of what we're doing now. We have a specific team focused on that. And we've got a steering group that I chair with ELT where we're very focused on it, and we've been in discussions every kind of week or 2 as regards to that kind of emergent risk to the business. Firstly, people are the primary focus, keeping them safe and making sure we're not doing any discretionary travel, any nonessential travel as a business. As you can imagine, we're in 60 countries, and some of the countries on the watch list are countries that we've got solid operations within. We actually have some people working from home just now, that they have kind of a direct impact and hasn't changed activity levels, as there's no material impact in that regard. We've got, like I as well said, we've got well-established continuity plans -- business continuity plans, as you can imagine. And actually, the investment we made in our back office has actually allowed us to make sure we don't have the concentration that we once had, and the U.K. and the U.S. as to our back offices and like, so we've got that kind of global network. And it's largely digitally connected. So I think that's hugely helpful. And a lot of the work we do, of course, we take the work to the people because of white collar and it's transferable work rather than we need to take the people to the work. That is part of our business and we're very thoughtful on that in terms of our people that rotate in and out. We're well engaged with both our customers and our suppliers. So how will it unfold? I don't think any of us fully understand. But we do feel, from a COVID-19 perspective, we've taken very sensible, practical action plans and putting them in place.

Andrew?

Another question from Lillian Starke at Morgan Stanley. The first one is, can you provide some detail on which end market has contributed most to the 2020 backlog? And the second question is around, if you could share some of the actions that are being taken to reduce the impact from cost overruns or improve execution in ASA where the margins were impacted in 2019?

Yes. I think, what do I start with -- I guess, the execution issues. So in Americas, we really had 2 tranches of execution issues at the start of the year. Well, it was the back end of '14 and start of '19, we'd flagged we'd had some challenges in our pipelines business. And then at the back end of the year, I think we flagged in November, it's either in August or November, we first flagged we'd had some challenges around some projects in ASA around the energy space, the broader energy space. I think since -- so in terms of the projects, the pipelines projects are long in the rearview mirror. The other energy projects are largely in the rearview mirror. There still is some that are being executed. They're all due for completion before the end of the first half. So I'd say they're largely in the rearview mirror. In terms of what we've done about it, a lot -- there's been some very practical steps around -- we've enhanced the functional governance in this business, so more commercial resources, more resources around execution, and actually, there's been some leadership changes in the micro businesses that looked after those as well. So we've sort of enhanced the -- almost the functional governance in those businesses to improve their execution and to get some more solid foundations as we go forward. What was the other part, backlog?

In terms of the order book, it's probably about just contextualizing again. It has good revenue coverage as we come into 2020. We do have 60% revenue coverage from the backlog, which is committed activity levels. We've improved the quality of the pipeline as well. It's 75% reimbursable, which is up a bit. And to David's point, we've really been bundling off some of the legacy EPC stuff, and some of that is the Asset Solutions Americas question. A proportion of that was legacy-related projects. We've had an encouraging book-to-bill also in January and February. So notwithstanding the kind of immediacy of OPEC and COVID-19, the book-to-bill in January and February has been really quite encouraging for us. And the win rates are holding up well. So actually, our position in our markets, we see as something that's very solid. Driving 2020, we've obviously touched on a few of the wins that we have here. We've got some -- even from an upstream perspective, we've got Chevron Anchor. We've got the [ Willow ] pipeline we've touched on before. We've got the Saudi's unconventionals that will grow. We touched on the scale of that project, that field and that activity set will increase over 2020, we're quite sure. In terms of our downstream projects, we're well positioned in the U.S. with some cracker opportunities there. We touched on INEOS. Again, that's a project, the Olefins project in Belgium. We do see some good pipeline activity in downstream and petrochemical in particular. And actually, one of the big drivers is the solar activities, in particular, that gives us real volume and scale. And actually, we're quite thoughtful, as you can imagine. Even over the weekend, we were talking about that redeployment of craft labor from shale and to solar because they're a very mobile workforce, loyal to the organization. From an MMO perspective, there are some good opportunities in Australia. There are some good opportunities in Kuwait as well, just broadening that capabilities. And the Middle East and Asia Pac are quite a component part -- healthy component parts of the pipeline. And from a consultancy perspective, again, it makes a pipeline probably short of a term, it's kind of nature in construct, but better quality. We're seeing good process activities in automation and control. We're seeing some continuingly attractive E&I opportunities in the built environment and environmental consultancy. We're seeing a bit of a pickup in our subsea business as well in terms of the opportunities that are out there that may well be impact over the course of the weekend and transportation wind from a consultancy perspective. So I think the encouraging thing for us is there is quite a good spread of the range of services, quite a good spread of the range of sectors, and it's a good quality pipeline. We do think the pipeline, though smaller than it was this time last year, is of better quality. And a chunk of that is the fact that we're not taking on some of the volume work that perhaps in the past Amec Foster Wheeler would have taken on.

I'll just come back to the execution, Andrew. So I think there's a focus on the ASA, and we've highlighted the ASA, but I probably wouldn't want it to pass without highlighting that actually in environment and infrastructure and EAAA, we had excellent execution. So the margins that we've achieved in EAAA have been great. And actually, I know I got a reputation for being miserable, so if I don't mention the good parts of our business and only focus on the bad parts or not -- the bits that have gone less well this year, then it just encourages that reputation. So we've had really excellent execution in those 2 parts of the business, in particular. As we look forward, you'll see one of the things we've talked a lot about is exceptional execution, and that for us is getting that consistently across our business. So actually, we're investing in that in terms of a project around getting that consistent excellence.

I mean I think -- not to extend it too much, but even in the Americas, we've had phenomenal delivery on YCI [indiscernible] and our downstream business and beside them, there is a P&E business [indiscernible] issues. We have changed leadership out very rapidly and got better quality leadership into the business, which has been part of it. And to David's point, put the same quality of functional controls around that as we already had in the downstream and petrochemical business. So it'd be wrong to point the entire Americas business also.

Andrew? Oh, sorry, there was a question here.

It's Henry Tarr from Berenberg. Two questions really. One, just to pick back up on something you talked about, which I think was the transferability of personnel. So I mean, as your business shifts a little bit more towards the renewables and the non-oil and gas business, how easy is it to transfer personnel across? Or is there a sort of an inflow and outflow, if you like? And then the other question was just around the receivables facility, if you could remind me where we are with that? So why you're using it and what you've got left, et cetera?

Why don't I start with the receivables facility. So the receivables facility hasn't changed since June, so it's still $198 million. That was $44 million increase from the end of December. In terms of the receivables facility, again, why do we use it? It's a small part of our overall financing package. It's about 5%. It's typically a lower cost of finance in some of our core facilities. I think, as I said, a number of times, we've no plan to increase it beyond the $200 million. It's a helpful facility in terms of a very small part of our overall financing.

In terms of the transfer of personnel, I think there's one aspect. There's a physical thing where you get craft labor. You're working in shale or you go work in solar facilities. It's kind of quite an obvious as electricians, it's mechanical engineers, that -- the type of people you would expect, civils, those are civils work, et cetera. So it's very similar work and pretty much sector agnostic. I think the other thing is almost a transfer of work. So an upstream engineer and a downstream engineer are kind of the same thing, particularly in the disciplines around electrical, mechanical, instrumentation, automation, control. And it's probably just the process engineers that there's no difference. So actually, we've been doing that for a number of years, actually just transferring in that respect because it's process order intake and engineers. I think another factor in the business is that we've really focused on HVAC. So with our high-value engineering centers, we're able to increase the margin that we make and also make ourselves more cost competitive. So there's a bit of a win-win there. And we are consolidating where we go for a high-value engineering support of our core businesses. Again, I think that's another helpful, if you like, transfer of work option that we've got. A couple of anecdotal ones, just to give you a kind of feel for it. I wouldn't want you to think that kind of you're either in built environment or you're in energy or you're in oil and gas. Some of the geotechnical work we do, for example, will be geotechnical work for groundwork that's related to shale; in the same way, it's related to solar; in the same way, it will be related to locating a wind farm. So it's a great example, and it was one of the reasons we created TCS. It was just to kind of unlock that skill set globally and be really quite sector-agnostic buyer and get some pull-through opportunities as well.

Andrew?

Questions from Erwan of RBC on response of business to various oil prices. Knowing that the folks of our impact assessment right now is honoring 35% of the business, namely upstream, is looking for an idea of the potential impact, positive or negative, of the oil price environment on our other businesses such as consulting and renewables?

I think it's probably too early to quantify that just now in terms of the impact of feedstock prices on petrochems and refinery. I think it's just too early to quantify that. I think in terms of our built environment business, that -- we've talked about that being much more geared to GDP growth. Because our business is largely in the Americas, it's quite heavily geared to American GDP growth. It's too early to comment on what quantification that -- the extent and a stimulus package as an investment in infrastructure is likely to be helpful, but I think it's too difficult to say at this point.

A question from Mark at Jefferies on the structure of the business. The presentation emphasized 3 business lines; consulting, projects and operations. Can I ask if there's any plan to restructure reporting lines and move away from the geographic Asset Solutions setup?

I mean I think the only answer we can give, we constantly look at the organization we have and make sure it's optimum and efficient and effective and delivering the services that we've got.

Mick Pickup of Barclays is asking on the hydrogen front, noting that Foster Wheeler had a historically strong position in steam methane reforming. Are we seeing signs of increased early work on broader hydrogen shift or are projects like the Teesside project still required as a proof of concept?

Yes. I think hydrogen, it's a really interesting one because it's a really good point. There is some heritage there. I think the hydrogen discussion, to some degree, has moved on -- as our own blue and green hydrogen. I think to -- in our view, there's a lot of activity in that space, but it has a lot of -- in terms of materiality to the business from an earnings perspective, it's very limited. Just now in terms of actually the position that it does allow us to take, we do get a lot of people coming to us because of that Foster Wheeler heritage, and it's largely conceptual consultancy-oriented activities at this stage. We do, however, see hydrogen as a key part of energy transition.

Okay. And then I'll just wrap up with the last 2 into one. I think it's effectively around capital structure and uses of capital. Now that we have reached our target leverage, how should we think about the delivery of shareholder returns from this point? A specific follow-up in terms of the areas of focus for bolt-on M&A.

Yes. I think we've been probably quite consistent around the capital structure. We -- our dividend policy is to maintain a progressive dividend subject to earnings and cash. We expect that dividend to grow modestly as we try and build cover. I think the step back just around the deleveraging is we are pleased to get to that 1.5x on a pro forma basis. We've achieved that both organically and through disposals. This year, we generated $90 million of organic cash in the end of the first quarter. We've obviously had the nuclear and the industrial services disposals. That's delivered another $430 million. So that's given us a strong balance sheet foundation. That is the fundamentals, a strong balance sheet foundation. As we look towards the short, medium term, we've been clear, and Robin mentioned earlier, we are looking to move back to bolt-on acquisitions. And we flagged that that's likely to be around built environment. Okay. As there's no other questions, maybe just to summarize it in terms of probably 3 key points for us. One, this is about 2019 results. We are very pleased with our results in terms of the growth in profitability, and particularly around the growth in margin given it's our strategic target. We're also very pleased with the deleveraging and getting to that 1.5x net debt to EBITDA. I guess, as we look forward, there certainly is challenges, but there's also opportunities. If we look to where we're positioned, we're pleased with our diversification strategy and where it actually positions us in terms of markets. We actually are an asset-light company and that is our model and that's consistent across all of our end market. And we think that, together with the experience we have, positions us well to deal with the challenges that we're actually facing just now.

Good. Thank you.

Thanks, guys.