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

Great. Welcome, everyone. About to start. Perfect. Right. Good afternoon, everyone. I'm Simon McGough, the President of Investor Relations here at Wood. So I'd like to start by thanking everyone who's joined us in the room here today at London for our Capital Markets Day. I'd also like to welcome everyone attending virtually online today. So we start of our usual disclaimer slides that's printed in your packs. It's also available online. And then we'll move on. So before passing to our executive leadership team, who will present to you today, I'll start quickly by outlining the agenda for us. First up, Ken Gilmartin, our CEO, will talk about the new chapter for Wood and outline our strategy. Then Jennifer Richmond, our Executive President for Strategy and Development, will talk about our markets and the growth opportunities ahead. Following Jennifer, we're here from Azad Hessamodini, our Executive President of Consulting, and then we'll take a short break. Then we'll come back to the second half. You'll hear from Mike Collins and Craig Shanaghey, the Executive President of our Projects and Operations businesses. And then David Kemp, our CFO, will talk through our financial framework. Ken will then come back for some concluding remarks and then we'll do a Q&A at the very end. But to start with, we're going to have a video for you, and then Ken will kick things off. [Presentation]

All right. So thank you, Simon, and thanks for the introduction. And just let me also start by echoing my own warm welcome to everybody here attending in person as well as all of you attending online virtually. So it really is a privilege to be here today, to share our refreshed strategy and set out a strong future direction for Wood. At the very outset, let me walk you through the key points that we're going to cover in today's presentation, which also underpins the confidence that we have in the business. Firstly, we have transformed the group. The sale of the built environment consulting business has restored our financial strength. It's reset our balance sheet, it's given us greater financial flexibility. This is a new Wood. We have a new leadership team. We're refreshing our culture and actively addressing the reasons for historical underperformance. We're much more selective on the projects that we take on, with a focus on reimbursable and low-risk work. Our legacy issues have been addressed. Our strong balance sheet will allow us to manage a clear and a defined schedule of cash outflows. Secondly, we're very well positioned for growth. Our markets provide attractive opportunities for growth. There are structural growth prospects across energy and materials, and we are very well positioned to capitalize on them. We're a global leader in our markets. We have outstanding talent providing complex solutions in critical industries to long-term clients. They view us as partners and value us ahead of their peers. We're an enabler of net zero. We provide solutions across decarbonization, across energy transition and materials for a net zero world. 22% of our revenue today is from sustainable solutions. And finally, we will deliver improved financial returns. We expect revenue above market CAGR of around 5% over the medium term. Our EBITDA margin will be flat in the near term. However, there is opportunity for improvement over the medium term. And we will grow our adjusted EBITDA, and we expect to grow at mid-to-high single-digit CAGR with momentum building as our strategy starts to deliver. Our underlying business is highly cash generative, and we have a clear path to sustainable free cash flow with EBITDA growth, normalized working capital and a gradual reduction in exceptional cash outflows. Over the last year, we've taken a series of steps to turn around the business. So I'm really proud of the progress that we've made in the 15 months since I joined Wood. I do want to touch on some of the examples here. We have delivered the financial reset to the sale of our built environment business for $1.8 billion. We have put in place a new leadership team with retained experienced key leaders. You'll hear from several of them here today. And we have developed a new strategy, which is built on very clear priority end markets that will put us on the path to growth. Jennifer will share more details on this. We've also derisked our contract portfolio. We've built a higher quality pipeline. We've closed out legacy issues, including the enterprise litigation case. Finally, we now have that clear path to sustainable cash flow. And David is going to share more detail on that with you here today. We still have some challenges. And we still have some challenges that we really need to work on. But we are going to be very clear and very focused on the way forward. We're in a very different place to the company that I joined last September. But the great opportunity that I saw then remains with us today. And we're excited to share our vision for the future and how we will be focusing on delivering this in the coming years. So this turnaround story is being driven by a new leadership team. So they're pictured here, and you'll see the new leaders and the level of change in the executive team since I've joined. I appointed 5 of my 7 executive colleagues, and I'm delighted with the way that we've all come together. There's new collective energy and there's an abundance of insight and experience in this team to deliver a stronger future for Wood. We do appreciate that some attendees may have a baseline understanding of Wood's business. So in this opening section, I'll be providing a little bit more color before introducing the key elements of our new strategy. So let's start with what we do. So in simple terms, we're an engineering and a consulting business providing solutions to energy and industrial clients at any point across the life cycle of their projects. So this can range from the very outset of the project when clients are looking to test the feasibility of their plans all the way through to the detailed design, the detailed engineering, the project delivery and then into the long-term operational optimization of assets to maximize the value they deliver. Now while we have crossed life cycle expertise, we're particularly focused on specific areas: front-end advisory, complex engineering design, select project management services and optimization solutions for that existing asset base. So if we turn to the financial split of the group. So we have 3 primary business units. We have consulting, we have projects, and we have operations. And to illustrate this, we've used the HY '22 figures to highlight revenue and the EBITDA breakdown across the business units. So with 3 strong business units that are exposed to both CapEx and OpEx spend. So the next slide shows our revenue breakdown from an end market perspective. So as you can see from the pie chart on the left, energy accounts for 65% of our revenue today and materials is 30% of our business. The chart on the right shows how this breaks down across sectors. Let me touch on a few points here. So oil and gas remains our biggest market, and it's continuing to grow because of the world's need for energy security. We also hold strong positions in the refining and chemical sectors as well as mineral processing. Hydrogen, carbon capture, life sciences, they're smaller markets for Wood today, but they are growing rapidly. And they all offer excellent future growth opportunities for the business. So we move on. This slide shows our revenue split across our 3 business units. Again, a few points here to highlight. So following the sale of the built environment business in September, consulting is now the smallest part of the group. However, it is extremely well positioned across the energy and the material markets and is the spearhead of many of our digital and decarbonization solutions. In projects, we already have excellent scale across both energy as well as materials. Materials growth is driven largely by mineral processing projects, life sciences as well as in our chemicals sector. Our work in operations is largely in the oil and gas sector. But there's a fast-growing number of decarbonization and digital scopes of work with their long-term energy clients. So our business leaders. So Azad, Mike and Craig are going to provide some more in-depth insight into each of our business units later on. But I do hope that this illustrates that we have a good balance of end market revenue across the entirety of the wider group. So as a business, we are doing an increasing amount of ESG-focused work. So in categorizing our portfolio, we set a deliberately high bar. They're based on the principles set out in the EU taxonomy guidelines. But using this approach, we see that almost 1/4 of our current revenue is from sustainable solutions. Now based on the breadth of our work, we're confident that this figure is going to continue to grow and rise over the coming years. What is not always captured in this figure, it is worth noting that reducing carbon intensity is something we do in almost all of the contracts we are currently delivering today. Our business leaders are going to highlight some of the examples of our sustainable solutions later on today. But as the slide indicates, it includes our work in the low-carbon energy and decarbonization in materials for net zero as well as on circular economy projects. So I mentioned earlier that we have made significant progress in derisking our contract portfolio and a moving away from lump sum turnkey, higher-risk project work. So this slide is developed for us by our advisers. It highlights how we compare against our wider competitive set in this regard. And as you can see, we score very favorably, but over 80% of our revenue now coming from reimbursable contracts. And indeed, if we compare our service offering against this same peer set, there really is only one true peer who can match the breadth of our offering. And of course, we would argue that our teams are a little bit better and stronger than them. So one particular area where we really stand out from the competition is the strength of our client portfolio and the strength of our client relationships. And this is positively reflected in the higher regard that is felt by our clients towards Wood. So as part of our whole strategy development process, we got an independent third party to carry out over 500 focused interviews with representatives from a whole range of our clients across our end markets. And what it showed is that we have an excellent and enduring relationship with our blue chip clients, who highly value us as a trusted partner. So a few of the highlights on the survey. So in energy, our clients rate us really highly with an NPS score that's 20% higher than the market average. Overall, we ranked first when assessed against 9 of our closest peers. And we have long-term clients with high levels of repeat work. So for example, since 2015, we've delivered almost 2,000 projects with BP, almost 800 with Shell. So clients view us as differentiated on a whole series of factors. But the ones that really stand out for me, it is the strength of our technical expertise. It is our partnership approach, and it is our commitment to safety. So the next slide pretty much speaks for ourself. These are real quotes from some of our current clients from the survey that we had conducted. And again, you will see some of the strengths that our clients really value coming through in these quotes, our professionalism, our commitment to safety, our market-leading solutions and our ability to work where they need us the most. It is our remarkable people who keep our clients coming back for more. And we're very clear and we're very proud of the fact that everything in Wood and everything that we achieve starts with our people, their skills, their commitment. So we've -- 36,500 of the most sought-after experts in prized intellect, all around the world. So to remain that employer of choice, we're investing a significant amount of time and resource in shaping our culture, creating career development opportunities and building a diverse and inclusive workplace. That enables us to retain as well as attract the best and brightest people and talent at Wood and ensure that we remain that #1 partner of choice to our clients. So look, let me to provide a little bit of context on Wood, let me look forward and share some of the detail on our strategy, our end market focus as well as our medium-term targets. So at the start of this presentation, I said that we were very well positioned for growth. And so to put this in some context, our market analysis shows that over the next 3 years, there's over $1 trillion worth of capital being spent in our core markets. When we look through a lens of what's addressable to Wood, there's around about $230 billion. That's fully addressable in the space that we play. This means spend in areas where we can continue to differentiate ourselves, where the contracting model is attractive with the right clients and in the geographies where we want to operate. We face markets with structural growth drivers, energy security, energy transition, net zero, the circular economy. These are trends that are going to live well beyond this strategy cycle. And we define the future of our planet. All of these are exciting opportunities for Wood. So from a portfolio perspective, what does this look like? So this slide is a summary of where we're going to focus our efforts as we move forward. So we've crystallized our end markets around 2: energy and materials. Chose them for these 2 primary reasons. One, there is very attractive market dynamics and strong growth trajectories. And the second one is that we already have a strong position in them and have the ability to outperform the competition. Jennifer is going to cover this in more detail as we move forward, but I'm going to give you a little bit of a summary here. So within energy, the dual drivers of energy security and energy transition will create the enduring opportunities for Wood. We are going to be primarily focused on the oil and gas on hydrogen and carbon capture sectors for our growth. Within materials, meeting rising demand as well as delivering these materials in a sustainable manner is also going to drive strong growth prospects for us. From a sector perspective, we will be focused on minerals, on chemicals as well as life sciences. But we've also identified 2 solutions that drive opportunities across all of our markets. And that's decarbonization, and that's digitalization. So net zero as well as data-driven performance are very important to our clients. So we have leading solutions in both areas and are really well positioned to deliver these for our clients. Again, Azad, Mike and Craig are going to share some examples of the work that we're delivering today in these end markets and the cross-cutting solutions that we have. So now I'd like to focus on the 3 pillars that we have for this strategy. So the first one is going to be profitable growth. Second, is going to be the inspire culture. The third one would be performance excellence. So if we start with profitable growth, which is probably the most important one for this audience. We are going to focus on priority markets and geographies where we can lead and gain higher reward for the work that we deliver. We need to continue to align our solutions as well as our portfolio towards these growth markets and have them underpinned by our corporate development strategy. The second priority is that absolute focus on cash and driving operating cash flow across our business. We know this is very important to our shareholders and to the health of our business. And we can see that pathway to sustainable free cash flow. And finally, we're going to continue to build a high-quality, low-risk pipeline. The focus is going to be on reimbursable work. We've already made great progress here, and we're not going to divert from this path, and we're always going to prioritize EBITDA over revenue. So if we move to the inspired culture. So this is really about accelerating the work that we've already started, to build a great place to work. Like many companies, we have faced challenges in the pandemic and the rapid shift to remote working did have an impact. But we have made good progress in rebuilding engagement across all of our business. This has been a personal focus of mine over the last year since I joined the company. And this pillar, we're going to focus on 4 main areas: empowerment and ownership. So we have to drive improved employee engagement, which will result in a consistently improving Net Promoter Score, reducing the levels of volumes we turn over. And with that comes that great sense of ownership. All of these factors are going to support the improved performance, both for our clients, but also in the career opportunities we create for our people in the long term. Safety and well-being. Our safety performance is very good. It's market-leading here, but our work here can never stop. We have to continue to drive that reduction in our total recordable incident rates. But we also need to strengthen our focus on mental health as well as well-being. Ethics and sustainability. We're going to maintain a top quartile ESG rating and we're going to continually ensure that ethical behaviors are embedded in our culture across our entirety of our global business. That's going to make us a stronger investment proposition. Diversity and inclusion. So we are committed to driving greater diversity in our business. We've included a target for women comprising -- I won't say compromising, comprising 40% of leadership roles here before 2030. This is extremely important for us to drive because we know that a more diverse and a more inclusive workplace outperforms all of our competitors. It's fundamental to what we're trying to do here. Finally, we're going to talk about here a little bit about performance excellence. And this is all about simplifying and improving how we operate and then in turn, deliver for our clients, means that relentless focus on exceeding clients' expectations, ensuring that we remain the leaders in providing technical solutions. And that internally, our systems and processes support our teams to deliver effectively. Focus on 3 main areas here: predictable performance because that require strong leadership, strong commercial governance and efficient ways of working. During every project delivers a return and high client satisfaction scores across all of our key accounts. We're also going to increase the use of our global execution centers to differentiate the offer to our clients as well as to improve and drive improving the margins. We do see an untapped combined power in the business. We can capitalize on this by improving our sales effectiveness. We're going to focus on improving collaboration and cross-selling across the business, which in turn, should drive an increased backlog. Finally, innovation in delivery. This is going to be key to our future success. In practical terms, we're going to ensure that our core digital solutions become embedded in our client delivery. And we expect to see our percentage of revenue coming from sustainable solutions to grow each year. So now let me move on to our medium-term financial targets. So from a revenue standpoint, we expect to outperform the market CAGR of 5% over the medium term. We anticipate that our EBITDA margin will be flat in the near term. However, we do see the opportunity for improvement over the medium term. We expect adjusted EBITDA to grow at mid-to-single -- at mid to high single-digit CAGR. And with momentum building as our strategy starts to deliver, we're confident that these targets are achievable. And that we're going to be able to put in place the foundations on which to build further from 2025 and onwards. So as I mentioned earlier, improving our cash position is one of our top priorities. Fundamentally, we are a highly cash-generative business. Now in recent years, however, our free cash flow has been impacted by high levels of exceptionals as well as legacy liabilities. But as this slide shows, these drags will disappear over time. And with EBITDA growth, normalization and our working capital and improved operating cash conversion, we expect to see sustainable cash flow -- free cash flow in 2024. Now David is going to cover this journey in more detail later on, but it does give me confidence in our proposition that Wood is a value-accretive investment, both today and over the medium term. So by way of conclusion, let me just close by repeating a few of the messages that I shared at the outset. We have transformed the group, and now we have a more sustainable business model. We are well positioned for growth. We're in the right markets and geographies and have excellent client relationships. And finally, we are on track to deliver more predictable financial returns. So look, my slides are firmly fixed and focused on the future. I'm very excited by the prospect of building a stronger Wood. So with that, let me pass on to Jennifer who's going to provide some more color on our markets and growth prospects. So Jennifer, over to you.

All right. Good afternoon. Thanks, Ken. My name is Jennifer Richmond, and I am the Executive President of Strategy and Development here at Wood. So as some of you know, I joined the company in April this year. I actually came from Jacobs, where I had the privilege of leading a $1.5 billion business and delivering critical solutions to clients there. I was also proud -- proudly part of that leadership team at Jacobs that helped to drive the firm's successful transformation over the last 8 years. And I'm truly excited to do the same thing here at Wood. So since joining 9 months ago, I've had the privilege of shaping our company's strategy to drive growth, will deliver shareholder value and create opportunities for our people, and I am confident of what we can achieve going forward. There are 5 key things I want to share with you today. We have a strong platform to build on. We will be disciplined about what we focus on, who we work with and where we work. We will pursue the best opportunities to ensure we hold a leading position across our markets. Our markets have long-term growth trends as the world needs energy security, energy transition and prioritizes net zero and a circular economy. The strong relationships we have with clients who trust us is a differentiator and something that we are really proud of. And we are enabling our growth ambitions by hiring world-class experts, enhancing our solutions and leveraging our partnerships. So when I joined Wood, I was struck by the depth of our expertise and the breadth of our markets we work in. However, focus and selectivity is an important part of the strategy going forward. So we reviewed the entire portfolio and identified priority markets based on 3 things: market attractiveness. What's the size of the market, what are the growth opportunities, what kind of margins can we achieve, and are there clients that we can partner with. We also looked at our ability to win. But not only win, hold a leading position. This is based on our capabilities, our competitive offering and our geographic footprint. And third, we looked at the contracting dynamics. We wanted to make sure that those dynamics were our preferred -- met our preferred risk profile and contracting model. We then put an additional lens on everything. We wanted to make sure we were favoring the complex because here at Wood, we excel in the complex. We will also deprioritize markets that do not meet these priorities. Let me now talk a little bit about the markets we will focus on in more detail. So Ken shared this slide a little earlier. But what we're focusing on are 2 end markets: energy and materials. These growth markets are driven by global trends. In energy, it's the forces of energy transition and energy security. In materials, it's driven by demand, circular economy and reshoring of life sciences. We will also deliver decarbonization and digital solutions across all of our end markets. We believe these 2 cross-cutting drivers are critical to our clients' ambitions and our offering. Now let's look at the size of the opportunity in these markets. We have a significant addressable opportunity within our priority markets. There are macro trends delivering tailwinds and driving growth. Today, 65% of our portfolio is in energy, both energy security and energy transition. And 30% of our portfolio is aligned with materials. Our priority markets are growing. As Ken said, the total addressable market opportunity in these markets is close to $1 trillion. However, in the spirit of focus and selectivity, we believe there's a total addressable market opportunity of approximately $230 billion specifically for Wood. These are opportunities we are confident we can take a share in. So breaking that down just a little further. In the short term, there is upside in oil and gas with an estimated addressable market of almost $125 billion to 2025. We see particularly strong growth spikes in new energy sectors and high growth CAGRs in both hydrogen and carbon capture, which are highly attractive markets for us. As you can see here, we also see strong growth CAGRs between 6% and 7% in life sciences and minerals. And despite a lower CAGR, there is a large addressable market of $50 billion to 2025 in chemicals. Given our position as one of the top 3 engineering design firms, we are confident of seizing our share of these growth markets. Our ability to win in energy is defined by a strong and compelling value proposition. We believe we will be global leaders in energy, ensuring energy security today and delivering the transition to a net zero future. What differentiates us is the fact that we have more than 100 years experience in all energy markets. And we enjoy decades-long trusted client relationships. Our expert consultancy business enables us to bring the front-end knowledge solutions to complement the design, delivery and operational capability like no other. And with 36,000 of the most in-demand skills in the world, we have an unrivaled pool of technical and engineering talent, which we can mobilize wherever and whenever our clients need it. All of this is enabled by our deep domain expertise, things like process engineering, delayed coker techniques, advanced manufacturing and detailed design for complex assets. And of course, with our global execution center, we actually can engineer with the [sun]. Now let's talk a little more on where we're going to focus in energy. In energy, we advise, design, engineer and deliver sustainable smart facilities, assets and infrastructure to secure energy, all while reducing carbon intensity of production at every turn. We also integrate new energy solutions to drive the energy transition. So let's start with oil and gas. Of course, our strategy centers on high-grading our oil and gas portfolio. And we will take advantage of the short-term growth cycles by -- we will take advantage of the short-term growth cycles driven by energy security and higher oil prices. Each sector has different dynamics and opportunities. Maximum energy and minimum emissions is the driver of energy production in the Middle East, where governments are continuing to invest heavily and where we have strong relationships with IOCs and NOCs. Underinvestment in the U.K. basin has resulted in aging assets and we already have a strong position here in extending their life, all while decreasing their carbon footprint. We are a critical player in midstream today. Our software is currently monitoring 10% of the world's pipeline. And we see opportunities for growth here as infrastructure investment rebounds post Russia, Ukraine. Longer term, we expect the energy transition to further drive investment in new build and repurposing infrastructure. Moving on to hydrogen and carbon capture, where we are early movers and emerging leaders in new energy infrastructure. In hydrogen, our focus is on low carbon hydrogen as we believe it will be an important part of the hydrogen mix to 2050. We expect increased spend for new build and retrofit facilities further incentivized by the U.S. Inflation Reduction Act. As technology matures, we expect to see increased spend in green hydrogen. Complementary to all of this, we have a strong heritage and hydrogen technology licensing. In carbon capture, our core focus is on oil and natural gas facilities and carbon dioxide distribution and storage. We also see longer-term emerging opportunities to apply our expertise to iron, steel, cement and waste facilities. Importantly, we have strong relationships with major carbon capture licensors. And we believe there is a large untapped potential in our existing customer base for carbon capture retrofits. Now turning to materials. Our value proposition centers on taking our place as global leaders in materials, processing and production by applying circular economy practices. We will do this sustainably and responsibly as we strive for net zero. Like energy, we will be a leader in materials transition. This is because we have deep domain expertise, particularly in process solutions. We also have decades-long relationships with clients who again trust us. We have leading technologies in industrial solutions for decarbonization. This is all enabled by our world-class subject matter experts and our ability to deliver the complex. Our growth focus in materials is all about minerals, chemicals and life sciences. I'll start with minerals. Our focus is primarily on minerals for net zero and the clean energy transition. For example, copper, nickel and lithium. The growth in clean mineral processing is expected to increase sixfold by 2040 to meet net zero targets. This is absolutely driving an increased demand for engineering services. We also see further opportunity in precious metals such as gold and silver. And we have a strong history in mineral processing and a strong geographical presence in areas like Latin America, which are expected to boom. We have recently completed work on one of the world's largest lithium processing facilities in Australia. And we are currently working on projects in gold, copper, and rare earth minerals. When it comes to chemicals, we have designed some of the world's most complex petrochemical facilities. And we are enabling a cleaner, greener industry as we develop solutions for a circular economy. So market context, I think, is worth noting here. The specialty chemicals market is growing quickly. This is because of a focus on eco-friendly products and advanced materials. Refining and petrochemical facility integration is causing a shift, resulting in increased modifications and asset repurposing. We are also seeing an evolving customer landscape with private equity developers entering the plastic recycling market. In terms of our focus, we are prioritizing complex integrated petrochemical facilities and selected specialty chemicals for which market attractiveness is high, and we are well positioned to win. We are investing in capabilities to deliver alternative feedstock, particularly biofuels. And focusing on plastics recycling, green ammonia and methanol in the Middle East and Southeast Asia specifically. Now life sciences. This is a breakout growth market for us. We will capitalize on facility onshoring trends in North America. This is because 45% of the over $110 billion of annual market spend is expected in the U.S. Our strong engineering and major project delivery capability, coupled with our digital solutions, offers a differentiated approach and an opportunity for us to take a leading position in a rapidly growing market. This is an area we know well with our work in Europe. And we've recently strengthened our team in the U.S. with several critical key hires. So this slide provides you with a snapshot of what this all means. I won't go into detail here, but in summary, we have significant growth opportunities across the select markets we're focusing on. We see hydrogen, carbon capture, minerals and life sciences as future breakout growth opportunities. Now let's talk about our 2 growth drivers. The first is decarbonization. We are solution designers that reduce the carbon footprint across the value chain for the future of net zero. We are able to drive decarbonization solutions across all of our end markets because of our cross-sector expertise and our life cycle expertise. So some of our solutions include utilizing our advisory experts early in any design process to help clients reduce their carbon footprint from the onset. We design for the use of fuel and feedstock substitutions to offset emissions. And we partner with our clients to improve asset performance while reducing emissions from things like flaring to methane abatements. Last, we help maximize energy efficiency through solutions like electrification. Now I'd like to talk about our second cross-cutting driver, digitalization. We are the partner of choice delivering digital transformation underpinned by our domain knowledge and leading industrial talent. We have 5 key digital solutions we will be focusing on. First, automation and system integration. We are already the largest independent industrial systems integrator. With our knowledge and assets process and information technology, we see an opportunity for Wood to be a market leader in digital twin. Our decarbonization software enables clients to monitor and analyze the need for impact and results of decarbonization monitoring. Asset management includes integrity solutions to maximize productivity, minimize disruption and promote reliability. Finally, we have digital solutions to optimize process design and flow assurance. Over the next 3 years, our focus will be embedding these digital solutions into everything we do for our clients. Let me bring this all back together. This means we have a prioritized portfolio to grow profitably. We are focused on 2 end markets, energy and materials with 2 cross-cutting solutions of decarbonization and digital. Let me summarize why I am incredibly excited about the opportunities in front of us. This strategy is about selectivity. Knowing we have a strong platform to build on, we are focused. Our markets have long-term growth opportunities, our clients trust us and we are investing in our growth ambitions. To conclude, there has never been a better time to invest in Wood, work for Wood, partner with Wood. And I am confident we will transform and advance the world for a sustainable future. Thank you. Now I will pass over to consulting, where we will start with a short video. [Presentation]

The expertise that underpins the cross-cutting growth drivers that Jennifer talked about, they're housed within Consulting. So we look to leverage those as we grow. Now it's worth highlighting that consulting isn't a linear offer, where we only add value at the start of the capital investment. Rather, we touch the clients' investment throughout the life cycle from the front end through execute and operations. That enables us the flexibility to work standalone or in partnership with my colleagues in projects and operations, enhancing the value for Wood and for our clients alike. Put simply, Consulting is a platform for growth and a source of differentiation for Wood. Now let's talk about our markets. About 70% of our work is currently in energy, which is growing, as our clients navigate the trilemma of providing sustainable, affordable and secure energy. Most of our work is in oil and gas with a small footprint in renewables, where we provide owners engineering and advisory services. We have a growing footprint in the emerging hydrogen and carbon capture. And in materials, most of our work is in refining and chemicals. We're extending our decarbonization and digitalization expertise to the growing mineral processing market and about 10% of our business comes from automotive and manufacturing where our digitalization and automation solutions are in high demand. What we do in consulting can be broadly grouped into 2 categories. Technical Consulting represents around 55% of our revenue. And here, our experts act as the extension of our clients' engineering teams. We provide a unique combination of advisory with tangible engineering solutions, and we fill the gap between management consultants and engineering providers. We create value through early phase studies through execution and operational phases. We maximize our clients' return on investment by improving throughput, lowering operational costs, extending the asset life and improving safety. Technical consulting is home to our carbon capture center of excellence and new energies, which includes renewables and hydrogen. We also have a portfolio of proprietary technologies covering low-carbon hydrogen, methanation, delayed coking, and we also have partnerships for other technologies such as sustainable aviation fuel and plastics recycling. The other part of our business, which is about 45% of revenue, is on digital advisory and implementation. Here, our consultants deliver a range of proven solutions to help clients collect, store and analyze data to maximize the performance of their assets. We automate facilities, we optimize assets and we reduce emissions through our digital solutions. Now when I look at our clients, it's a stellar portfolio of clients built on many years of delivering deep technical expertise. In energy, we have long-standing, deep relationships with international oil companies such as Shell, BP and Chevron. And we have a strong foothold in national energy companies such as Aramco, ADNOC and Qatar Energy. In materials, there are several blue-chip clients, such as Rio Tinto in Mineral Processing; OMV and Phillips 66 in Refining and Chemicals; and CSL and Pfizer in Life Sciences. We also work with Ford and GM, where our digital and automation solutions are in high demand. So let's talk about the characteristics of consulting. Consulting is typically based on engagements around 5 months in length and about $100,000 to $200,000 per assignment. About 60% of our revenue is reimbursable and 85% is repeat business, which highlights the deep trusted relationship that Jennifer talked about and we're really proud of. Consulting is highly cash generative with 90% cash conversion. And geographically speaking, Americas is our largest market, followed by Europe, Asia Pacific and the Middle East. Around 27% of our revenue comes from fully sustainable solutions, although in practice, most of what we do has an element of sustainability in it. So the headline here is that consulting is a low-risk specialized consultancy commanding premium margins with a loyal client base. Now we believe consulting is differentiated in several areas. In tech consulting, we have deep domain knowledge, which is a combination of advisory and tangible engineering solutions that fill the gap between management consultancy and conventional engineering. We've earned the trust of a strong portfolio of long-term blue-chip clients, which is predicated on our expertise and proven track record. We seamlessly integrate our capability to ensure that we bring the best of Wood to our clients. And we're market leading -- we have market-leading expertise in carbon-reduction solutions, which helps our clients achieve their net zero goals. On the digital side, we boast a strong digital consultancy to automate facilities, optimize assets and reduce emissions. We have global scale in a fragmented market, especially as clients seek to harmonize and have a consistent system across their assets globally. We're technology-agnostic where we offer independent advice on our clients' decisions to implement digital operational technology. And this will only become more critical as we shift to open architecture and open platforms. Our peer group is varied, with few spanning across both sides of what we do which makes our offering attractive to clients who seek integrated specialist solutions from one provider. Now let's talk about growth opportunities, which is what I'm really passionate about. In line with overall Wood growth strategy, we see attractive opportunities in Energy & Materials. In energy, we will be capitalizing on the dual imperative of energy securities and we help drive decarbonization solutions to minimize emissions and the impact on the environment. And increasingly, what we see is energy security and energy transition go together. A great example of that is in the North Sea, where we're working with a consortium of operators to enable net 0 production using power from shore. This is technically challenging and cutting-edge work that will set the benchmark for producing energy whilst minimizing emissions. Now earlier, we saw that hydrogen and CCS are forecast to grow at 65% and 30% CAGR, respectively. And here, we're well positioned because we've got our steam methane reformer technologies widely used. We have over 30 years' experience in this space. And over the past 18 months, we've delivered over 300 studies in this space. We also see that new policy measures such as the inflation Reduction Act will ramp up investments in the United States. And that will bring further opportunities for consulting and technology selection, advisory and implementation. Our materials portfolio has significant potential to grow. In refining and chemical, we see circular economy as an attractive space. And earlier this month, we announced a memorandum of understanding with OMV for their reoil technology for plastic recycling. This is a real-world complex challenge that the world is facing and we're here to help. In minerals, we're working on innovative projects to source critical minerals needed for the net 0 future. For example, we're working with a client to decarbonize their operations using green hydrogen infrastructure to fuel their mega trucks and make their operations more sustainable. We're also helping another client to enable safe and economically viable operation of their heart to reach remote facilities using our digitally enabled automation solutions. And in life sciences, we're going to grow our modest footprint with over 150 subject matter experts. A great example of the piece of work we're doing is for CSL where we're working with them on their cutting-edge and research and testing facility in Melbourne, Australia. Now we're going to be doubling down on both decarbonization and digitalization as the key drivers for our growth. Already, as Jennifer mentioned, we are the largest independent system integrator in the world, driving digitalization of production assets. Our experts help clients select and implement proven technologies that improve production and safety whilst minimizing costs. We also have proprietary software solutions, for example, our Virtuoso platform is used to monitor and control around 10% of world's natural gas supply. We also had significant success in implementing digital twin technology with my colleagues in projects and operations. We have outstanding technical expertise in carbon capture hydrogen and digital applications to measure and reduce emissions. We have a proven methodology to enable clients take a master planning approach to decarbonization of their facilities. Currently, we're working on 25 such engagements around the world. And a great example of that is right here in the U.K., where we are partnering with BP, National Grid, Equinor, Shell and Total to support the decarbonization of the teesside industrial cluster. This demonstrates that we can be the master planners in our industry. Now throughout this presentation, I have talked about the opportunity to work in partnership with projects and operations. By way of illustration, I wanted to highlight a project where the combined power of wood is being applied to improve energy security in Europe. We're currently working with Turkish Petroleum as their owners' engineer and the integrated delivery partner on the Sakarya gas field, which is Turkey's largest gas reserve. Our consulting team provided the concept review of the deepwater subsea developments and the associated pipelines. Our projects team then delivered FEED review and design verification for the onshore facilities. We shaped the digital strategy for the project and created digital twins. And our technical consultants delivered further operational readiness support and most recently, our operations colleagues were engaged to ensure a smooth transition to start-up. This example really demonstrates the value we can deliver for our clients when we bring the full power of wood. So in summary, we have created a premium focused global energy and materials consultancy. We're a trusted partner with deep relationships with our clients, and we have over 3,000 leading technical consultants working to solve complex problems, and we fill the gap between management consultants and conventional engineers. We're providing innovative solutions in digitalization and decarbonization. And in doing so, we help to differentiate Wood and contribute to the overall growth of the business. I'm really excited about the future and the opportunities that are in front of us. Thank you. With that, I'll pass you to Simon.

Thanks, Azad. So we're now going to take a very quick, one-off quick break, a 30-minute break. For guests online, we'll be back on again in about 30 minutes' time. And for those of you who are in the room, if you go back downstairs to the Benjamin Franklin room, refreshments will be served, and we'll come back in 30. [Break]

Perfect. Okay. Welcome back. So now ready for the second part of today's presentations. So now I'm going to pass to Mike Collins, who will talk you through our projects business.

Good afternoon, everyone. My name is Mike Collins, and it's my privilege to lead the project's business at Wood. We formed the projects business in late 2020 and with a simple remit to create a business that delivered consistently, predictably and profitably with a balanced portfolio across our end markets. Today, I'm delighted to say that we have transformed and we have achieved that ambition. Ken talked earlier about the new Wood and the transformed Projects business is a key part of that. The 3 fundamentals of the organization we've created are strong governance, measured risk and delivery excellence. We now have a clean portfolio closing out historically challenged projects and have taken the right decision to exit large-scale lump sum turnkey work. We have been deliberate in focusing the projects business in 4 areas: the right clients, the right markets, the right type of work and the right type of contracts. In projects, we thrive on managing complexity, be at scale, technical technology, logistics or supply chain. The greater the complexity, the greater our differentiation. In fact, there are a few who can compete with us there, especially on a global scale. Today, we already have a balanced portfolio across energy and materials and ideally placed to turbocharge the Woods' strategic cycle presented earlier. A third of our projects, we deliver are focused on sustainable solutions, and we see that growing significantly. All of this is delivered through a new projects operating model, which draws on global expertise and allows us to scale as demand increases. At the heart of this model is our global execution center in India, which currently boasts more than 2,000 skilled engineers. That's an increase of around 55% in the last 18 months. This, combined with our common digital platform facilitates effective global workshare driving value for our clients and making Wood more competitive. To give you an insight into the business, let me show you a quick video. [Presentation]

It really is so much to be proud of in that video, and it paints a great picture of the transformed Projects business unit. Over the past 2 years, we've taken a significant transformation journey. This slide illustrates the change from our point of departure in late 2020 to the transformed consistent, predictable and profitable business we have today. At the start of our journey, there was just simply too much variance in the business. We had challenges with inconsistency in processes, governance, and contracting discipline and project outturn performance. We address this through a series of key steps. First, we established a truly global business, led by a world-class leadership team. We drove consistency through common processes and governance. We maximize the use of work share, utilizing global subject matter expertise and the capacity we had. And we're selective in the work we pursue in terms of clients, scope and risk. We continually track the performance of our top 100 projects, and today, at the point of arrival, all these projects are performing in line with expectation, proving the success of the transformation. Turning now to our markets. Our portfolio is very evenly balanced between energy and materials. 47% of our portfolio is with energy, with the majority of that in oil and gas. Hydrogen and CCUS are a growing part of the portfolio. Renewables will decrease over time, linked to the decision to exit large-scale lump sum turnkey work which is prevalent in this sector. To materials, you might be surprised that materials make up over half of the project's portfolio, you shouldn't be. As we have a rich history of delivery in this area. Our involvement is spread between refining, chemicals, minerals and life sciences. All of these markets are attractive growth areas for projects and are core to the strategic direction of Wood. Now let's look at what we do. We provide services through the whole project life cycle from early phase studies and concept for commissioning support. Our breadth of capability enables us to take a holistic view, supporting our customers to drive value from their investment decisions. We are also very selective in what we choose not to do. As previously mentioned, we will no longer take on large-scale lump-sum EPC scopes in the execution phase, thereby reducing construction risk. Turning now to our client base. Our principal client base is best categorized as a diverse portfolio of long-term trust-based relationships across all of our target end markets. With nearly every one of the companies listed, we have strategic framework agreements in place, often dating back multiple decades. For example, we've been working continuously with Exxon since 1937 and have been involved in most of Saudi Aramco's major projects for the past 25 years. A recent example is the 10-year master services agreement we signed with Chevron. Here, we are only 1 of 2 companies selected as trusted partner to drive and deliver their future global capital investments. And by partnering in this way, we shift the focus from lowest cost to value contribution, and it also increases the amount of sole-source negotiated work we are able to be awarded. From a characteristics perspective, let me highlight a few points. Our average contract engagement is between 12 to 18 months, which gives us good line of sight to our forecast backlog. 92% of our revenue comes from low-risk reimbursable or fixed price services work with minimal exposure to construction risk. That will increase further as we close our existing lump sum turnkey projects, which won't be replaced with similar awards. We've also improved quality and volume of the order book. It's built on the right type of work in the right markets with the right clients. Our order book-to-bill ratio is now around 1.3. Geographically, we have an optimum footprint within key regions and our operating model allows us to scale up or down in response to market opportunities. And finally, 1/3 of our revenue comes from work in sustainable projects. In reality, almost every project we deliver has an ESG driver as our clients seek ways to reduce the scope emissions across the investment life cycle. So why do our clients want to work with us? We thrive in complexity and our clients actively seek us out for their most complex challenges. Globally, we have 14,000 project delivery professionals connected through our global projects operating model. We have decarbonization and digital solutions embedded in our offering from the outset. And our holistic approach means we are experts in optimizing cost and schedule to deliver value to our clients. And we bring together expertise that differentiates us from the competitors. Few can apply front-end consulting capability from Azad and real-world operations from Craig to project delivery. By way of orientation, our main peer group is listed in each market. Let me now outline why I believe we are ideally placed in our chosen end markets. Firstly, in energy. I recently attended ADIPEC, the world's largest Energy Conference in Abu Dhabi. And the topic of energy security is firmly back on the agenda. Population growth and increases in global living standards means that by 2050, energy demand would increase by 30%. This means significant capital investment across the next decade and beyond. Today, our addressable market in oil and gas is around $125 billion, and we are extremely well placed to capitalize on that. A good example of the work we are doing here the Safaniya and Manifa mega projects we are currently executing for Saudi Aramco. These are the world's largest upstream developments, and we're providing concept studies, FEED and project management services. These projects are characterized by complexity and scale, and this is exactly where we're differentiated twin. Finally, we see significant growth in energy transition and decarbonization. Carbon capture, hydrogen and biofuels will all experience significant growth. We are currently working with clients on projects that will increase the global capacity of carbon capture by over 25%. Hydrogen with an estimated compound annual growth rate of 67%, we are supporting projects to produce ammonia and hydrogen at scale and are well placed to ride this growth wave. And we see significant opportunities in refinery conversions to biofuels. An example is the biofuel expansion project we're delivering for REG in Louisiana that will increase the plants renewable diesel capacity by over 350%. And that to materials. We see ongoing demand for chemicals, especially specialty chemicals and petrochemical feedstocks, a more responsible approach to plastics is driving for renewable plastics and plastics recycling, and we are working on multiple projects including new, high-performance polymer facility for Evonik in Germany. In minerals, global demand for future-facing commodities is radically increasing, particularly in minerals like lithium and copper, which are absolutely key to net 0 future. It's anticipated that global demand for copper will double by 2035. And for lithium, the figure is even starker with a 40-fold increase required by 2040. Our mining teams are already world leaders in lithium and copper processing. We are currently delivering the world's largest copper concentrator in Uzbekistan and the world's largest lithium processing plant in Western Australia. The life sciences have come to [indiscernible] in the post-pandemic world with a particular focus on reshoring and security of supply. We have a rich experience in this area and are currently closing out delivery of one of Europe's largest biotech facilities. In the life sciences, we will be selective in what we pursue. We're choosing to prioritize our efforts towards EPCM opportunities with Tier 1 clients in the Americas. Integral to the project's value proposition is our decarbonization and digitalization offering for which we already have a strong track record. Let me give you a couple of examples. For one of the world's largest energy companies, we're jointly developing the digital strategy, including the digital twin, which has been adopted as the blueprint for all of their future capital investments. And for one client in North Africa, we were able to reduce carbon emissions by 4 million tonnes per year through elimination of flaring. This one project on one field eliminated 1% of the global flaring. I've mentioned on a couple of occasions that we deliver complex projects, and I want to share with you 1 example, which epitomizes the value proposition. In 2019, Wood was selected by Lenzing as delivery partner for a lyocell fiber production facility in Thailand. This is a EUR 400 million investment producing a sustainable wood-based fiber for the fashion industry, producing 100,000 tonnes per year. Wood deliver the FEED and EPCM for this greenfield development, which at peaks of 4,000 workers at site under Wood's management. All of this delivered during a global pandemic. The Lenzing project exemplifies the kind of work we do in the transformed projects business, a trust-based partnership with a top-tier client equitable contracting and commercial terms and a successful delivery leading to repeat business. So in conclusion, we have transformed projects and created a globally consistent, predictable and profitable business. We've derisked the portfolio with a focused approach on the type of work we pursue. We have enduring trust-based client relationships, allowing us to jointly address some of the world's most pressing challenges. We have a differentiated value proposition with embedded digitalization and decarbonization solutions, and we are perfectly positioned across the energy and materials end markets, to capitalize on the growth cycles, especially when leveraging the full Wood offering. Simply put, we are superbly placed to turbocharge this wood strategic cycle. Thank you. I'd like to now hand over to Craig.

Thanks, Mike. Good afternoon, everyone. My name is Craig Shanaghey, and I'm the Executive President of Wood's operating business unit. It's good to be here today, and it's great to have the opportunity to profile our operations business. Not only what we do for the future growth opportunities that we see. Firstly, let me introduce operations. We're part of the fabric of Wood. We are market leading and delivering highly skilled, technically integrated operating solutions that support critical infrastructure across the energy sector. We have decades of experience at doing just that, and we are rightly recognized by our customers as the best at what we do. We have got an extensive portfolio of blue-chip clients, all with long-standing trusting relationships. That provides not only great stability in our business, but also great order book visibility. We're a highly cost reimbursable business, and that delivers strong operating cash flow to the group as well as predictable outcomes. We will follow our growth supporting those customers as we look to maximize energy and minimize emissions across the energy asset portfolio. And we will do so by delivering solutions which are focused on near-term energy security, most evolving digital and decarbonization solutions, which create a sustainable energy transition. Fundamentally, we have a stable and mature business with an enduring relevance in critical markets. Before I go into any more detail, let me show you a video of what we do because as I say, a picture paints a thousand words. [Presentation]

So hopefully, you can see from the video, the solutions that we provide are essential for critical industries. Let's turn to our markets. We have an extensive track record and delivering oilfield services. Therefore, our portfolio is largely dominated by upstream and midstream oil and gas opportunities. We will grow using that footprint in conventional energy and supporting our customers as they increase their spend to deal with near-term energy security in the face of the increase in global demand. Our portfolio will continue to reflect the journey our customers are on. As we look to maximize the energy supplies of today, while decarbonizing their assets and developing the digital and low-carbon energy solutions of the future as these markets continue to evolve and grow in the medium to long term. We will not only be focused on energy. However, we see opportunities also in the materials market where we'll be more selective in the opportunities we pursue, focusing on where we can add value and differentiate our services. So if we move on to services, as I said earlier on, our services are essential for keeping critical infrastructure and critical industries performing. And those services include modifications where we enhance, upgrade and modernize our clients' facilities through the provision of brownfield engineering and EPC services. In operations, we deliver highly skilled operating technicians to support the safe and sustainable production of our clients' facilities. In maintenance solutions, we deliver planned and unplanned maintenance solutions, repairs and asset reliability services covering the broad spectrum from labor supply to full system optimization. And in asset management, we increase our responsibility where we manage and operate facilities on our clients' behalf. It's that breathe which has allowed us to develop relationships with some of the world's largest energy producers, as you see in the graphic here. That delivers long-term recurring revenues. Albeit historically, that has been through traditional transactional working models. But through our predictable delivery, we've been able to maintain and deepen customer trust that's allowed us to evolve those working models to more enduring partnerships where we co-create solutions and we can co-create value. And that delivers a fantastic foundation for growth. Let me give you a couple of examples. We have an opportunities pipeline that sits at $20 billion out to 2030 because we understand our customers. We understand the needs. We understand the market, and we can deliver the solutions that they need. Additionally, we've been working with 9 out of the top 10 operating companies for operating expenditure over the last 2 years. Again, a fantastic foundation for growth. So how we will leverage that growth to support the growth, not only in operations but across Wood. Let's build from the message of predictable and reliable delivery, and let's look at the characteristics of our business. First of all, our geographic balance, we have a well-balanced revenue portfolio with key positions in key markets right across the globe, again, a strong foundation for growth. We have long-term recurring revenue and that's supported by an excellent track record, the contract extension and renewal, that sets in excess of 95% over the last 2 years. As I said earlier on, we've got a high degree of cost reimbursable work in our portfolio, and that delivers strong operating cash flow conversion for the group. And lastly, we have just under 10% of sustainable work within our portfolio. That would suggest that, that's more how we categorize that -- other assets and deliver sustainable solutions. So let's look at differentiators, we've got a market-leading client value proposition that sets us up for success. If I look at what our clients need the most, we're looking for a [ fuller ] service offering with reduced interfaces that improve predictability and delivery. They're looking to access global talent to improve certainty and reliability and more trust in delivery. If I look at what Wood provide, we've got an extensive track record of leveraging global capability to deliver best-in-class regional solutions for our customers. We've got decades of experience in digital and decarbonization. As I said, that helps customers reduce the carbon intensity of their assets and supports a sustainable energy transition. And as I said earlier on, our ability to seamlessly integrate and layer our capability gives us a differentiator in the market, makes us market leaders at what we do. So how will we leverage those differentiators to create sustainable and profitable growth, not only for operations but for Wood. First of all, we will grow from our market position, our leading market position in conventional energy. And we'll grow with those customers in growth regions where we're well positioned and have an opportunity to grow market share. regions such as the U.S., the Middle East and Australia. Firstly, in the Middle East, billions of dollars will be spent on energy infrastructure over the coming years. A region where we have a strong footprint and excellent client relationships. So we, therefore, have the ability -- opportunity to grow a brownfield engineering and modifications business, building from the recent win with Chevron. And in the U.S., we will take advantage of the upswing in shale to grow our maintenance market share, at the same time, growing our brownfield engineering and modifications market share as our customers look to maximize energy and minimize emissions. If I turn to decarbonization. Our top 5 customers have already committed to spending $100 billion over the coming years to decarbonize their assets. Of that same 5 customers, -- we command 10% market share of their operational expenditure. Therefore, we know we have an opportunity to access and improve our market share in decarbonization. And that allows us, as you've heard earlier on, to deploy decades of experience in decarbonization solutions such as flare recovery, electrification, carbon capture and asset repurposing. And we're already delivering those solutions now. If I could give you a couple of examples. In Iraq, we're delivering a flare gas recovery project where the energy created will be used to power local communities. In Norway with Equinor, we're delivering the top size modifications of an offshore oil and gas platform to provide electrification from offshore wind, a world's first. And there are many other opportunities like that in our portfolio now and in the pipeline for the future. As I said earlier on, we also see opportunities in the materials market, but we'll be selective in what we pursue, ensuring we can add value and differentiate. One example, as such, we're working with Mike and the projects team, stitching together with capability to deliver a mineral processing facility for Pincanna and the U.K. So continuing the theme of making deliberate choices, deliberate choices to maximize profitability and deliberate choices in order to maintain sustainable profitable growth. We are layering digital and decarbonization solutions over our existing energy services to support those customers as they look to decarbonize their assets -- we're working with as ads team in consulting to deploy digital maintenance solutions, supporting our customers to reduce their maintenance burden and at the same time, reduced our operational expenditure through the use of data and predictive analytics. An example of such as with bp in the U.K., we worked with them in the North Sea asset portfolio. Using digital solutions, we've been able to reduce the maintenance backlog by tens of thousands of hours. At the same time, reducing offshore mobilizations by 50%. That not only reduces bp's operational expenditure. It frees up cash and resources for bp to add value right across our portfolio. With the global focus on reduced carbon emissions, particularly in the U.S., where we see methane linked penalties introduced from 2024. It's never been so critical for our customers to analyze, detect and mitigate methane emissions and asset leakage. We're deploying our award-winning methane leakage and detection technology to support those customers to reduce carbon emissions. That normally supports our customers, but it gives Wood a leading edge in the market. So before I close, let me pull together all of our differentiators that I've discussed today, our capability, our trusting client relations, our decarbonization and digitization expertise. An example I would like to use is Kellas in the U.K. Kellas is a private equity-owned organization, and they own the CATS terminal in the northeast of England. And the CATS terminal is critical gas infrastructure in the U.K., delivering 15% of the U.K.'s gas supply. Kellas appointed Wood in 2017 to be the duty holder. That means that we manage and operate the facility on behalf of Kellas. And through our predictable delivery, we've been able to maintain and deepen customer trust with Kellas and that provides a great platform for growth. We've delivered highly scaled operations technicians to operate the plant safely. We've delivered digital and decarbonization solutions, which improves the efficiency and reliability of the plant and produce safely and sustainably, and that has led to an excellent platform for growth. Kellas are at the forefront of the energy transition in the U.K. We are looking to spend $750 million [indiscernible] a blue hygiene facility on the site and they want Wood to help them realize that. I'm excited to work with Azad and Mike as we pull together the capability that sits right across Wood to deliver an integrated green-to-green solution to help Kellas realize their ambition. A perfect example of following our customer's journey as they maximize energy for today, decarbonize our assets and develop the low-carbon energy systems of the future. So let me recap. We are market leaders in delivering highly scaled, technically integrated operating solutions for critical industries and our customers recognize us as the best at what we do. We've got an extensive portfolio of blue chip customers, all with long-standing trusting relationships, providing stability and great order book visibility. Our predictability and delivery and our large proportion of cost reimbursable business allows us to deliver strong operating cash flow conversion to the group. And lastly and more importantly, we have a fantastic opportunity to go on a journey with our customers and energy transition journey, supporting them to supply the energy of today, but with decarbonizing their assets and developing the low-carbon energy solutions of the future. That's an exciting journey, and we couldn't be better placed to go in that journey. Thanks for your time today, and I'm going to hand over to David to cover the financials. Thank you.

So thank you, Craig, and good afternoon, everyone. With the steps we've taken on the strategy, Ken and our team have outlined today, it's clear that Wood has a strong investment case. With the sale of the built environment business, we've reset the balance sheet, addressed our leverage and restored financial strength. We have addressed our legacy issues and now have a clear schedule of cash outflows that will reduce significantly over the next couple of years. We have derisked our contract pipeline by minimizing the lump sum turnkey activity. And today, we're predominantly a reimbursable services business. As you have seen, we have attractive growth opportunities across a range of energy and materials end markets, and that underpins our strategy and our targets for EBITDA growth. And our business has strong underlying cash generation, which helps us put a clear pathway to sustainable free cash flow, which will be positive in 2024 and reached significant levels from 2025 onwards. The sale of the built environment business, which completed in September and attractive 16x multiple has allowed us to reset the balance sheet and achieve financial litigation case and normalize our working capital. And that's going to see us ending the period with net debt of around $350 million to $400 million. The Board carefully considered all of our options and consulted extensively with shareholders. Although not originally in our base case scenario, the opportunity arose to settle the enterprise litigation. And we felt that was the best option, given uncertainty around U.S. litigation and amounts claimed. We'd also flagged our intention to normalize our working capital at period ends. And given these choices and our medium-term leverage target, we decided not to pursue other options at this stage. Our capital allocation policy is relatively straightforward and starts with having a strong balance sheet. We articulate this in our medium-term target leverage range of around 0.5x to 1.5x. This is the broad zone that we're targeting rather than a yearly red line, and this sits comfortably below our debt covenants of 3.5x. This allows us to invest in our business, people and systems and fund the rundown of our legacy liabilities, which is covered in the next slide. Ultimately, this will allow returns to our shareholders or for attractive M&A once we are generating sustainable free cash flow. Our legacy issues are now addressed with a clear and defined schedule of payments. We have 2 further SFO payments to be made totaling $65 million. These will be made in '23 and '24. On asbestos, this is a longer-term liability with payments reducing each year. In 2023, this will be around $35 million. Aegis Poland is moving towards the commercial settlement phase, and the losses from our historic lump sum turnkey work, which were significant in previous periods are now small and will roll off in '23. We expect an unwind of advances from closing these contracts in 2023 of around $25 million, which will be included in our exceptional cash line. And finally, as you know, we settled the enterprise litigation case for $115 million earlier this month. As we said at half year, we've taken steps to reduce the level of risk in our pipeline. -- by minimizing the amount of lump sum turnkey work. It's now only a small part of what we do and will trend down over time. You can see that both our revenue and order book are mostly cost reimbursable contracts and services. And that demonstrates the discipline we now have across the group. Ken touched on this, and you heard Mike talk to it in detail, improved discipline is one of the major differences with the new wood. Not only have we derisked the projects business, but the mix shift will also improve cash conversion going forward. This slide pulls together what you've heard earlier from Azad, Mike and Craig. You can see 3 business units that complement each other, but have different characteristics. Contract lengths and sizes are smaller in consulting, larger in projects and the largest in operations. The contract mix also differs. Consulting has a mix of cost reimbursable and fixed price work and operations is nearly all cost reimbursable. Projects has transformed, as Mike outlined, and today has very little lump sum turnkey. A key strength is the high level of repeat business. This very clearly demonstrates the strength of our client relationships and differentiation. Another enduring feature of the business is our exposure to CapEx and OpEx cycles, and that provides balance across the group. You can see then how these characteristics turn into the financials. Consulting is high margin, high cash generative business. Projects has a lower margin profile, a pathway to expand this. Cash conversion has been weak in recent years in projects, but with the steps Mike and the team have taken, we can now see projects operating cash conversion go beyond 90% by 2024. West in operations, we achieved margins around 6.5% and very high and consistent cash conversion. The strength of these businesses, combined with the roll-off of the group's cash drags is our main message today. We now see a clear pathway to sustainable free cash flow for the group. As you've heard today, we see attractive end markets across our business, driven by energy security, energy transition, life sciences and the circular economy. These markets, together with greater focus and building our life sciences business will drive top line growth. We expect to grow our margin over the medium term, driven by operational gearing, improved margin, project margins and clear market focus. In the short term, we expect EBITDA margins to be flat as we reinvest in our business to secure future growth. From the table, you can see the position today and the drivers for each business. Our expectation is that these margins will be higher quality with a lower level of exceptional costs and provisions, leading to higher cash conversions. This slide gives a breakdown of our income statement for '22 and is a useful way to run through how we show our adjusted results. So you have our adjusted EBITDA guidance and below that, you take off depreciation, which includes IFRS 16 leases depreciation and a share of JVs and PPE depreciation. This gives you our adjusted EBITDA, then take off amortization of software of around $90 million, and this reflects the importance of engineering and design software to what we do, plus our ERP rollout. We are now excluding the amortization of acquired intangibles from our adjusted results, and that's in line with the treatment across many other companies. And this gives you our adjusted EBIT of around $160 million to $190 million. We've also included a slide that goes down to adjusted EPS in the appendix as well. As highlighted earlier, our turbine JVs will now be reported together with investment services and not as part of operations. We account for JVs in our adjusted EBITDA, but not in revenue. Our 2 most significant JVs are EthosEnergy, which provides a range of turbine services and RWG, which provides MRO services. Both of these generate about $25 million of EBITDA each year. Following on from an earlier slide, Here, we've outlined in detail the items creating a drag in our cash and how they're expected to play out over the coming years. Aegis is moving to the commercial phase with concluding payments and commercial recovery costs of around $20 million in '23. We're at the very early stage of commercial discussions, and at this point, it's difficult to predict when those will be concluded. But ultimately, we expect these to be a cash inflow. As best is longer term with payments tapering off. The final payment for the SFO of $30 million will be paid in 24 million, and we're not anticipating any significant restructuring costs, while onerous leases will reduce to 0 after 2024. On enterprise, we settled for $115 million, and it's now behind us. And finally, we're concluding our remaining U.S. LSTK contracts and the advances runoff will be about $25 million. Running through our cash flow in the same detail I did for our P&L. We've shown here the view for '23. We have our adjusted EBITDA, and you need to take away the IFRS 16 benefit and the gap between JV EBITDA and the dividends we receive. You then have provisions and working capital. Provisions will be around $10 million to $20 million and working capital will be an outflow next year, in line with activity growth. We then add back some of the noncash P&L items. Continuing down our cash flows. We have CapEx, and this is mostly software, which will be around $110 million. We expect this to trend down over the coming years as we complete our ERP rollout. You then have interest paid, and that's going to be about $45 million, given the level of gross debt we have. Then the tax payable. Note that this doesn't include the tax due from the disposal of BE of around $60 million. And this gives free cash flow pre exceptionals and we expect to be broadly around breakeven for this next year. The exceptionals, I covered a few slides ago, and we do expect them to come down significantly in 2024. And that leaves our free cash flow negative next year, clearly, but positive from 2024 onwards and significantly so from 2025 onwards. Now I'd like to take a look at our balance sheet across 4 key areas. On goodwill and intangibles, we had $4.9 billion at the half year, and that mainly related to the AFW acquisition. This will reduce significantly with the BE sale. Additionally, as part of our year-end process, we will be reviewing for impairment given the sale of the BE business and movement in discount rates. We expect our leases to reduce partly from the sale of BE along with the ongoing rationalization of our property portfolio. Our provisions balance is made up of investors of around $300 million, which will reduce over time. Insurance and property, which relates to our captive insurance and property portfolio, and we also have $65 million of normal course of business project provisions. Litigation will reduce significantly following the settlement of the enterprise litigation. And finally, pensions. We will have a net surplus at the end of the year on an accounting basis and in our principal U.K. scheme on an actuarial basis. Following the sale of the built environment business, we retired around $600 million of facilities. At present, we have $2 billion of liquidity with the majority maturing in 2026 and beyond. Our UKEF and USPP facilities are fully drawn. Looking forward, we'd expect to retire further debt in 2023. So bringing all of this together, I'd like to take you through the outlook for the group over the medium term, reflecting the strong growth drivers in the markets we choose to operate in. The momentum in our top line growth and the shift away from lump sum work, and of course, being mindful of the potential limiting factors for margin growth. So we expect over the medium term revenue to grow faster than the market growth of 5% per year. flat EBITDA margins in the near term with opportunities for some improvement in the medium term and adjusted EBITDA to grow at mid- to high single-digit CAGR with momentum building over time as our strategy delivers. As Ken discussed earlier, the key message of today is that we have a clear pathway back to sustainable free cash flow. You can see our EBITDA growth and the faster growth in operating cash flow. Our businesses produced good cash flow day in and day out. Our operations and consulting businesses have a track record of consistently high operating cash. And with the changes we made in projects, we expect a significantly improved picture. The legacy liabilities shown in orange have dragged overall cash down. But as they roll off, alongside improving operational momentum, you get the inflection in free cash flow, which we expect in 2024. Thereafter, we expect significant free cash flow. So to finish on our attractive investment case, we have reset our balance sheet and restored financial strength. Our legacy issues have been addressed. We now have a clear schedule of cash outflows. I -- looking forward, we see good EBITDA growth underpinned by our attractive end markets and our high-quality, low-risk pipeline. And with this and our strong operating cash flow, we see a clear pathway to significant sustainable free cash flow. So thank you. And with that, I'll pass it back to Ken for some concluding remarks.

All right. Good job there. All right. Thanks very much, David. So look, we've covered a lot of ground today, so I'll do a brief recap with a couple of slides before we break for a final question-and-answer session. So first of all, as the title of the slide indicates, this is a strategy for a new year with Wood, strategy that's going to be built on 3 pillars that are going to underpin every -- that do underpin every successful business. It's profitable growth, it's performance excellence, and it's an inspired culture. It's a strategy where focus is going to be our superpower. We've been rigorous in studying our markets as well as assessing our portfolio, and we are crystal clear on how and where can grow to come from 2 end markets, each of them with 3 priority sectors and 2 cross-cutting drivers that will create opportunities across each of our end markets. Our forward direction is clear. And as our analysis shows, there's $230 billion worth of goods opportunities from Wood to get after over the next 3-year strategic cycle. It's on that basis that I stand here before you all today, confident as well as energized by the journey that we have in front of us. We have transformed, we are well positioned for growth, and we will deliver improved financial returns. So along with the rest of the executive team that you've met today, look, I'm really excited to lead the company that has remarkable people, that are trusted by our clients to design, build and advance the world. So with that, let me pass it back to Simon.

Thanks, Ken. So we're now going to move to our Q&A session. For everyone joining us online, there is a Q&A functionality, which some of you have been using. So we will get to those as well. But we'll start with questions in the room. So the usual thing, you guys know what you're doing, Wait for the microphone, state who you are and where you're from. But while we set up the stage with some chairs and do a bit of the backstage stuff, we're going to play a video from a recent leadership conference we held 2 weeks ago. [Presentation]

Can everybody hear me? Well good. Yes. I'm just actually looking at the video. It feels like a long time ago, it was only 2 weeks. So now over to you. So for the questions and answers. And this kind of Simon had said at the outset, raise your hands. Please wait for the microphone, and then just state who you are as well as where you come from. And trying -- well, we'll try and moderate all the questions through me as well because we know we've got a lot of people. So with that, first, over here, Mick.

It's Mick Pickup here from Barclays. Can I just address that, obviously, a bit disappointment this morning in reaction from your share price. And we just listened to 5 presentations, which we got growth, growth, growth. And the answer is our core markets are growing at 5% per annum, which, from an iron gas standpoint, looks like error, certainly not growth. And you haven't mentioned underinvestment at any stage in oil and gas. And you did mention, I think, we'll try and take advantage of security. But why do you think oil and gas market is growing so slow, given the messages we're getting from everywhere else in the market?

Yes. Look, I think we spent a lot of work, Mick, as we went through the strategy, trying to look and look at those markets and look at it over 3 years and look at it over a 5-year and beyond, right? And I think we provide some backup to that. There has been some material change once we started into this. I mean the one thing we do know is that the CAGRs do change, and they do change over a period of time. Look, I think it is clear that there has been a certain amount of underinvestment in oil and gas, but I think the important thing for us from a Wood standpoint is if you look at those CAGRs and you look at where the strategy is focused on, it is about us being selective. It is about us being focused on where we play. And it is about us making sure that we're playing in the places where we can provide the best differentiated solutions to our clients. So I think -- but when you put it in around in terms of the areas that we're looking at, strong markets, strong drivers, strong growth, different between energy security, and you see some of the energy transitions where we're showing much higher growth in the short term as well as in the long term. I think on the balance, the message that we do want you all to hear is that we're picking where to play. We have a lot of market opportunities ahead of us, and that's going to differentiate us going forward and making sure we get to that predictability of that performance as well being really clear on where to play.

Okay. Next question. Hang on 1 second.

It's Mark Wilson, Jefferies. And I think it follows on from something mix saying here because in terms of the addressable markets, you're looking at oil and gas $124 billion addressable market and growing at about the same rate as smaller markets like life sciences. Now David mentioned that a return to shareholder returns and M&A could be foreseen once you get to sustainable free cash flow. So from that point of view, it sounds like M&A ahead of that isn't something you're looking at in the coming year. Could I ask if that's the truth and whether you don't see a reason of inorganically addressing or targeting that huge addressable market in oil and gas via M&A?

Yes. So look -- let me start with that, then maybe I'll hand it over to David as well. So I think, look, Mark, yes, good question. Where we are and what is it we're trying to do? The strategy that we showed and we've outlined to all of you today is an organic growth strategy. Look, the one thing that we're also saying is that we are investing organically in growth. So through our -- all of our various different tiger teams, all the various different markets -- end markets that we have, there's a certain amount of 2023 that we're going to invest in our own people. That's in subject matter expertise. That's making sure that we've got the right people in the right position in order to create and gain that momentum that we need. I'd say in the short term or in the near term, yes, we are looking at it as an organic growth strategy. We have very clear that, that path to sustainable free cash flow is something that's going to underpin and be very much a focus of where we want to get to. When we revisit this and we start looking later on, maybe next year, back in next year, maybe the next -- and the year after that, we will revise that. I think that's been our focus, and I think that's a fair assumption to make. David, anything to add?

No. Not much to add to that, Mark. Beyond -- we've set out the capital strategy. Once we get to that sustainable free cash flow, we'll evaluate the alternatives that we have, whether it's share buybacks, shareholder distributions or M&A, if it's attractive.

Okay. Then just as a follow-up. I'd like to ask sometimes between things like projects and consulting, there seems to be an overlap between different project announcements. And I was reminding myself there, consulting shows front-end studies and projects shows FEEDs and pre-FEEDs. Could you just remind us how you differentiate between those? Who does which type of project for what?

Yes. Good question, Mark. Look, we did try to do it. If you remember the one slide where we have the wheel, we see that overlap in terms of where it is and try to just to make that clear to everybody as well. But look, I'll hand it over to -- I'll start with Mike. Mike, do you want to take that?

Yes. I mean the fact of it is, what we do is we work as one organization. So if you look at our global execution centers, we've shared resource space, and we share subject matter expertise. We very much see as the consulting group from a project perspective is the shop window. So getting in very, very early on in terms of the investment life cycle, working with the customers in terms of looking at the investment viability, and then we see pull-through into the later stages. So consulting very much to the front end and then pull through. But what we do use is a resource base. So if you look at what we're doing out of all of our centers of excellence around the world, it's -- that's the model. And it's been a successful model we've been deploying for over a decade.

James Thompson from JPMorgan. You painted a picture really about growth, selectivity, wanting to do more complex projects, which, in theory, should be less competition, more pricing power and yet, your kind of medium-term guidance is, obviously, not very aggressive, should we say, in terms of your kind of margin expectations. So I was just wondering, could you kind of detail how much it's going to cost us investing in the business to get the expertise? To allow you to get to that place, how long will that take? How much is it going to cost you?

Look, I'll start, James, good question. Maybe I'll hand over to David as well to give some more flavor to that. As I said kind of at the outset, really when you look at delineate Dave's talked about CapEx as well. But really from an OpEx standpoint, what are we going to invest? We are looking at somewhere in the region of $10 million to $20 million between -- as we move into next year, in order to be able to build that momentum as well. So that's the kind of scale, and that's where we're trying to plug some of the subject matter expertise gaps and provide some additional resources in order to make sure that we're continuing to be the technical provider of choice for our clients. David, do you want to add?

James, I think Ken mentioned some of the areas before. It's subject matter experts, BD people. There's developing process technology as well as an area. That's on the OpEx side. On the CapEx side, principal investments in our engineering software. Beyond that, we're implementing our cloud ERP, and also things like Engineer Everywhere, which connects all our engineering workforce across the world. So those are the sort of investments that we're doing, and all of that allows us to secure the growth going forward. And as we said, we do see that momentum building over time. We've set out a medium-term strategy of mid- to high single digits.

Talk about $230 billion over next 3 years. If I take your revenue CAGR guidance is looking like probably $18-or-so billion over that period, sort of 6-ish percent market share. So where do you think that can potentially get to a number of the slides that talked about opportunities to take market share? But how fast can you potentially push that going forward?

I think, again, another good question. I go on back to kind of the guidance that we have here as well, James. What's important for us is picking where to play. That is the most important piece. Our best sales tool, and I think you saw it as you went through which do that strategic overlay. And where you have and where you will have a resource constrained market, we have 36,500 of the brightest and the best. It's picking where we play and picking where we're differentiated and picking, quite frankly, where we can provide that value to our end clients as well is really the super power, and that's the journey that we're on. David, do you want to add?

A little bit to that, James. If you remember in the presentation, there was really 3 buckets of top line growth. That bottom bucket was where we expect to grow significant market share, and that was in Minerals and Life Sciences. In Minerals, we've got a significant business already, but we see the opportunity there. In Life Sciences, we've got a relatively small business. We've been investing. It's been part of the subject matter experts investment that we made this year, and we'll make next year. And that's where we see the ability to grow a relatively significant business for our scale.

Okay. More questions?

Kevin Roger from Kepler Cheuvreux. As a kind of follow-up on the margin side and the development that we should expect in the coming years, you clearly mentioned during the presentation that you were mostly oil and gas, and that growth will be driven notably by decarbonization and digital business in the coming years. For you, what does it mean in terms of margin? Should we assume that basically over the next 10 years, more and more you'll be digital, more and more you would be decarbonized in terms of business? It means that you will be able to generate more margin outside of oil and gas or it would be roughly the same for you?

Yes. Look, I think it's a good question, and it's actually a complex answer. Because when you look at those cross drivers, and you look at decarbonization, you look at digitalization, it means something a little bit different in each of our markets. So the ability to create that different kind of revenue or margin associated with that is a little bit different. So maybe just to answer that, maybe this will be a good one for Azad, for Mike, and for Craig because there is a nuance to each of the business markets to answer that. Maybe Azad?

Yes. Digitalization certainly means -- brings different values to different parts of the business. In consulting, certainly, we see significant opportunities for digitalizing the clients' need. And as they seek to sweat the assets more digital and digitalizing their assets is the driver that allows us to help clients to win more work, and as Ken talked about, to grow that part of our business. And decarbonization, same story. And actually there are very much interlinked. A big chunk of value creation for decarbonization comes from digitalization. Without digitalization, you're not able to measure emissions, you're not able to control the flow and the asset as accurately for -- as much dependent on data-driven decision-making. So those 2 interplays from, certainly a consulting perspective, drive a good opportunity for us, which translates into projects and operations.

Mike, on build?

Yes. Yes. From a projects perspective, if you think about both digitalization and decarbonization, and everything we do is an integral component of the projects we undertake now. But there is tremendous upsell opportunity within that. So I talked earlier around the digital strategy, digital twin we're developing with one-off, if not the largest, energy company in the world. And that enables us to get continuity of service through the life cycle. So as we come from the consulting, we jointly work with consulting and developing that into projects and then we become the custodian through the project life cycle and then into operations. So all of that great capability, which you saw today, is the opportunity to upsell along the way. And then from a decarbonization perspective, again, we work really closely with the consulting team to come up with our score methodology, which looks at not only new assets, but existing assets to make sure that we're creating a more efficient asset. And so we can go in and a lot of the revamp work, which we'll do in projects, will be around energy efficiency, will be around decarbonization. And I think it's a tremendous platform for growth for us because all of these assets, which we're looking at, we were involved in the original design and original build. So it gives us a good position.

Craig, maybe?

It's always difficult going last. But just building from what Mike and Azad said, I think from an operations perspective, as I said earlier on, we've got a fantastic portfolio of long-term customers for positions across the market that plays into decarbonization and digitization. So a platform for growth, not only for operations, but for projects and consulting as well. And as well as being I guess a ticket for the game in terms of entry into the market and stability in the market. It also gives us an opportunity to layer on top of our existing services, those digitization and decarbonization solutions, which allows us to enhance our margins across long-term recurring revenues.

And maybe a completely different subject. Can we touch a bit about the competitive landscape environment? Because over the past 5 years or even 10 years, we have heard a number of E&C companies mentioning early collaboration, early involvement, the fact that they see contract on FEED, front-end engineering design, that they want to be engaged in a very early stage. So how does it impact the business that you have with those clients and maybe your job as a kind of backup for the design of projects, notably on the consulting business, if they are involved very early compared to usually before?

Yes. Maybe I'll start with that. Maybe I'll hand it on to Jennifer as well. But look, I think we've done a lot of work over the last 6 months, really looking at the market, looking at how our clients buy, looking at who our competitors are and looking at what differentiates us. So when you go back to that $1 trillion of capital spend, and we cut that down to the $230 billion, we've already put that lens. We've put that lens on that to say, is this amenable spend in areas with clients? But we know where we are differentiated and where we can perform predictably and excellently. So we've already done that. We don't want to get into the trap, and I think we've shown this before of chasing revenue. I said it in my slides, right? This is going to be -- and this strategy is about really focusing on where we can get EBA. And we don't want to make a mistake of which we've done in the past of chasing revenue, of chasing lump-sum turnkey, of doing things that we're not particularly good at. So we've been very deliberate to make sure that the numbers that we're showing here today are backed up with as much data as we and we're confident that we're going to be able to get our market share and grow within that space with that connectivity that we have. Jennifer?

So you covered most of it, Ken. I'll just add a couple of other things there. And I mentioned it in my slides as well, we did put those 3 component lenses on every part of the data that we looked at across the market. So we looked at the clients partner with the margin capability, the growth of those markets. We looked whether or not we could pay a leading position and winning position in those markets as again, being focused and selective there. And I think the third compound to that, which is important for us as an organization, is making sure that those contracting dynamics were there, right? The dynamics in which that work for us, it reduces risk at the end of the day. And then the very last thing, which you heard every single person talk about on this stage, is that we will focus on those complex projects and kind of stay away from lump sum turnkey opportunities that are out there and stay focused.

At the back.

Alex Brooks with Canaccord. Can I ask the margin question in a slightly different way because what I've heard from everybody today is an answer on margin that's really focused on selectivity. And if I was if I was being a little unkind to suggestion you might be growing slower than the market in order to deliver that selectivity. But what I've also heard is lots of talk about digitization and decarbonation capability, all things which sound like they should capture a lot more of the value that you bring to the relationship that should show up in sustainable higher margin. So could you sort of talk to that dynamic a bit?

Yes. Look, I think -- look, it's fair -- at the risk of sounding boring, I'll probably answer it in the same way I answered it before. And maybe I'll just hand it over to the group. But really, what we're looking at and when we look at our guidance and what we said out there, we did say that from a margin perspective, in the near term, it's going to be flat. Part of that story is that we understand that we need to invest from an OpEx standpoint back into the business. We need to create the foundation. One thing I do want everybody to take away from here is that the strategy that we're outlining at the moment is a 3-year strategy. It's a strategy to gain momentum. It's a strategy that's going to put us in a position to go growth. When we our next strategic cycle, we are going to be in a position to capitalize on that. So really, when you look at it in that these now we do say with momentum and as we start to generate momentum. And as we get into the medium term, we do see some room for improvement in that. On the digitization piece and the decarbonization piece, as we've outlined here, one of the big things that we do from a digitalization standpoint. And think of that as I've said is that we are the integrator of choice in terms of not developing the but understanding what's the best technology that's out there and understanding how that gets plugged in to delivery for a client. We have some of our own technology. But really, it is that ability to integrate to come up with what is the best solution for our clients, deploy it and stitches together. I give everybody the sense of take away the bit that as I said, which was -- it's where managing consulting meets, really meets design. And that ability to plug that in here to become that please. That's real differentiator for us. Now we do have software and we do have software applications as well. But on that digitalization piece, I'm just take everybody to have that as a kind of a picture in their mind about where we play. I don't know, David?

No, I'd probably just to emphasize your starting point there, Ken. And actually, we agree with you, Alex. That's the core of the strategy. The difference is the time -- in the short term, we need to invest in the business, and that's going to hold back margins. As our strategy delivers, we expect it to deliver in terms of our margin, and we highlight a margin opportunity. So actually, the thesis that you put forward is one we would agree with. It just takes time to get to that point.

Question here in the middle, Rachel.

Rachel Fletcher from Morgan Stanley. I just wanted to come back to some of the questions we've had on capital allocation priorities and potential selective M&A. So consulting is a much smaller contribution to total revenues at present and fossil fuels has a much larger contribution. When you're thinking about selective M&A, I know it's a few years off. Would you be seeking to address this change or are you happy with that split within the business?

Yes. Look, I think maybe just address it. I mean we do see consulting as being an area that we will see significant growth in. And we do see that as an area where we can continue to differentiate. And as we go on the journey and again, as we're talking about a 3-year cycle here, there will be opportunity, and there probably will be an organic opportunity in the consulting space where definitely on that journey to energy and energy transition for the there may be opportunity for us to take a look at that. Again, near-term priority, not now. But as we move forward, yes, absolutely. Any more questions in the room? That one here. Go ahead, Mark.

It's Mark again from Jefferies. Can I cover on the removal of turbine JVs to investment services? Why are we doing this?

Do you want me to take that one? Go ahead. Really to make our operations margin clearer, as you'll know, we -- maybe for the benefit of the whole room and anyone watching in. And we consolidated our turbine JVs in operations because of the joint venture, the EBITDA came in without the revenue. It made the operations margin slightly more opaque. So we thought it would provide more clarity with the -- effectively the EBITDA from the joint ventures sitting in investment services.

Okay. So that is still a core part of the business. Those turbines haven't been talked about as disposal candidates in the past. And also, is that -- is the JV? Is that where the steam methane reformers are?

No. No. No.

No. Where are they?

So the SMR Technologies would have that?

So in terms of the first part of your question there around turbines, we're not trying to flag any potential disposal the turbine JVs produced about $50 million of EBITDA. As we said there. They've had a mixed view, the RWG turbine joint venture is a really high business, very strong margins. It has been less so, but I know you follow the turbine story for mark. We've seen a very good recovery in that business over the last couple of years. So previously, I think 2 years ago, probably did about $10 million of EBITDA. So actually, the turnaround program that we with so has come as born for it.

Okay. And then so last point, I guess, that the first half will be restated then?

Yes. You'll actually see that in the pitch, you'll see the restated numbers.

All right. Mike over here. SP-7 It's Mick from Barclays. Can I just ask a question about it that not in the presentation. Every board presentation for the last 3 years the wind turbine picture in it. One of the fastest-growing markets out there and your own as operators and you are low risk at that. So why not wind and solar? Yes. I mean I think, look, the answer to that is both wind and solar are still strong portion of what we're doing. What we're not doing make and just to be clear is that we're going to do lump sum turn in that space. But we are the consultants of choice. We are the engineers of choice. We're going to continue to deploy our expertise, what we're good at, and that's providing those solutions and really looking at understanding where our clients need to deploy that capital, but also how we engineer the solutions that are -- it's the lump sum turnkey piece for that, where we just don't find it not differentiated. And again, back to selectivity and back to where we need to focus on, that's why you don't see as much of that, but it is core and it is in consulting. It isn't projects, it is in operations as well. Good. Any more questions in the room? There's been a few online. So I think there's a kind of repeat on some of them. So maybe just the ones I don't think we've covered, and it's going to put this 1 to you, Mike, right? So the new build of hydrogen plants are expected EPC lump sum turnkey. How does this fit with your strategy to exit from these type of projects? I mean, it's a similar theme to what Mike just so.

Yes. I mean we're not actually how the customers are going to come to market. The early stage, what we've seen is much around the EPC lump sum turnkey, but we actually think that over time, because of supply and demand that they'll look at different contracting models. And we are in no rush to dive actually get into EPC lump sum and we've been invited for a number of these and declined. But we are still supporting from a consultancy perspective, from an integrated project management team perspective. And so we see that we've got a position and we've clearly got the technical capability for no rush to get into lump sum turnkey on those jobs. I can assure you.

All right. Another one in a similar vein. -- what investment are we making into capturing opportunities that will come from blue and green hydrogen projects. As a Jewish, do you want to start with that one? Yes. So actually related to Mike's comment, there is opportunities in low-carbon hydrogen revamp as there is a lot of old technology in the field. And in fact, we published a piece on future ready heaters, which will demonstrate how we could reduce the emissions on the existing SMR units out in the field. So that's an area that we're very active in, and we're talking to clients right now about the program of potentially upgrading these old hydrogen units to lower carbon emitting units. And in green, there is a significant interest, and that's where we come in, in the early asset allocation. what's the best way to design and approach these projects. As we see the scale-up of the implementation tilted towards the back end of the decade. So in the early phases, this is where we play. And if I might just add previous question, we also see opportunities in wind as they integrate into green hydrogen, that is to the area that we talked about, complexity in sort they're probably less complex. But when they are integrated into units to produce e-fuels, whether it's green ammonia or e-methanol, that's where we come to R4, and we see great potential there.

Good. One more here. Maybe just one for you, Jennifer, do you expect to take share in some key markets over the coming years? And if so, how do you plan to do that cross-selling or other factors?

Great. So of course, right? Of course, we plan to take share. I think you heard on the stage how we play as one would and one team, and those are true differentiators for us in our organization. You saw the market CAGRs up on the stage earlier. And if we didn't think we could share, we wouldn't have aligned our strategy in that direction. Again, it goes back to market focus, selectivity -- we picked where we could play. We did our work -- our homework on it, and we're going to stay focused on it. So absolutely.

Good. Any more questions in the room? No, I think that's pretty much it. I think we've covered most of the other questions that have been online. So listen, I'd like to thank you all again for attending or for those of you that watching the presentation online and virtually. We're looking forward to meeting some of you face-to-face in person over the next few weeks. And for those of you that look like to wish you all a very happy holiday season and look forward to connecting again in early 2023. So to all my co-presenters as well, very much. Thank you so much for everything today.