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Amec Foster Wheeler plc Annual report and accounts 2014 Connected excellence Welcome to Amec Foster Wheeler Strategic report: overview Governance Amec Foster Wheeler’s vision is to be 01 Performance highlights 44 Chairman’s governance overview 02 Amec Foster Wheeler at a glance 45 Our board of directors the most trusted partner for our 06 Chairman’s statement 48 Governance overview customers by consistently delivering 08 Chief Executive’s statement 50 Audit committee 55 Nominations committee excellence – bringing together the 57 Health, safety, security, Strategic report: strategic review environmental and ethics knowledge, expertise and skills of our 14 Our business model committee 16 Delivering excellence 59 Remuneration committee people from across our global network. 20 Principal risks and uncertainties 61 Directors’ remuneration report 24 Sustainability 75 Our Group Leadership Team 25 Global market trends 76 Management committees 26 Our markets 77 Leadership 80 Effectiveness Strategic report: 81 Accountability performance review 82 Engagement 30 Financial review 83 Directors’ report 40 Our business units 86 Responsibility statements of the directors Financials 87 Independent auditors’ report (UK) 95 Report of independent public accounting firm (US) 96 Consolidated income statement 97 Consolidated statement of comprehensive income 98 Consolidated balance sheet 99 Consolidated statement of changes in equity 102 Consolidated cash flow statement 103 Notes to the consolidated accounts 156 Company balance sheet 157 Notes to the company balance sheet Additional information 163 History and development 164 Risk factors 169 Performance measures 173 Prior year operating results 176 Information for shareholders 177 Other information 188 Cross-reference to Form 20-F 190 Principal subsidiaries and joint ventures 192 Five-year record 193 Glossary 194 Forward-looking statements Performance highlights 2014 was a year of resilient delivery for us, both financially and operationally – despite the challenging backdrop of difficult markets, reducing capex and falling commodity prices. Strategic report: overview report: Strategic Revenue1 Adjusted profit before tax1, 2, 3 4,088 3,993 327 332 £m 3,974 £m 323 317 286 3,133 2,786 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Profit before tax1, 2 Adjusted diluted EPS1, 2, 4 261 264 87. 2 £m 254 255 p 78.6 79.5 73.2 63.3 Governance 155 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 1 Continuing operations. Dividend per share 43.3 p 42.0 2 Figures for 2012, 2011 and 2010 have been restated to reflect the reclassification in 2013 of the UK conventional power business as 36.5 a discontinued operation and the adoption of IAS 19 (Revised 2011) 30.5 ‘Employee Benefits’. 26.5 3 Adjusted profit before tax represents profit before tax before exceptional items, the amortisation of intangible assets, asbestos-related costs and interest expense (net of insurance recoveries), and the group’s share of tax on the results of joint ventures. 4 Adjusted diluted earnings per share represents profit for the year before 2010 2011 2012 2013 2014 exceptional items, the amortisation of intangible assets, asbestos-related Financials costs and interest expense (net of insurance recoveries), and the tax effect of those items, divided by the diluted number of ordinary shares. Key performance indicators We use a variety of other key performance indicators to track our progress towards our goals. These relate to the elements of our business model and can be found in the strategic report on pages 14 and 15. Adjusted performance measures used by the Group are explained and reconciled to the equivalent IFRS measures in the section entitled Performance measures on pages 169 to 172. Additional information Additional Amec Foster Wheeler Annual report and accounts 2014 01 Amec Foster Wheeler at a glance With revenues of £5.5bn and over 40,000 Percentage split of revenue 8 % 17 employees in more than 50 countries, Americas N. Europe & CIS Amec Foster Wheeler operates across the AMEA & S. Europe Global Power Group whole of the oil and gas industry – from 28 production through to refining, processing and distribution of derivative products 47 – and in the mining, clean energy and environment and infrastructure markets. Total pro forma scope revenue 2014 £5.5bn Office locations Percentage split of average aggregate employees 7 Aggregate employees 2014 % 23 Americas N. Europe & CIS AMEA & S. Europe 40k Global Power Group 29 41 Amec Foster Wheeler 02 Annual report and accounts 2014 From 2015, our operations are structured into four business units. Our operations From 1 January 2015, our operations are structured into the four business units described here. Compared to 2014, only the Americas business unit has the same geographical remit as there were previously three AMEC divisions (Americas, Europe and Growth Regions) and two Foster Wheeler divisions (Engineering & Construction and Global Power Group). The new company structure has been designed to further enable collaboration and promote greater growth opportunities. Strategic report: overview report: Strategic Americas Northern Europe & CIS The largest of our business units, with around 16,000 Northern Europe & the Commonwealth of Independent States employees and approximately 150 offices in 10 countries, has around 12,000 employees operating in more than 120 across the two continents. locations across 15 countries, with its expertise extending into many more. Our business is balanced across our markets and we have a growing mid/downstream Oil & Gas business in North The unit has broad-based customer reach across three of America; a presence in the Gulf of Mexico and Brazil upstream our markets, in Environment & Infrastructure; Clean Energy offshore and we are the market leader in mineable oil sands. – notably in the nuclear industry, including asset support, We are the leading mining consultant in the region and have decommissioning and new-build programmes; and Oil & Gas good solar and bioprocess positions in the US, nuclear and – across the value chain and lifecycle for projects on and off wind positions in Canada, and we are a leading environmental shore, from pre-feasibility consulting to late-life management consultancy. and decommissioning. Governance AMEA & Southern Europe Global Power Group The Asia, Middle East, Africa & Southern Europe (AMEASE) Operating four manufacturing facilities, two cogeneration unit has over 9,000 employees, spread across more than plants, 11 engineering and service centres in eight countries 40 locations with strong capabilities and customer reach and employing around 2,600 employees, this business unit across each of our Oil & Gas, Environment & Infrastructure designs, supplies and erects boilers, auxiliary steam and and Mining markets. In addition we have our Consultancy and air pollution control equipment, as well as a wide range of Special Construction group which is focused on infrastructure aftermarket products and services. planning, design and construction serving government, Delivering projects and services virtually anywhere in the Oil & Gas, and Mining customers across key geographies world, we enable utilities, independent power producers and in and beyond the AMEASE region. industrial customers to achieve their power, process steam and environmental goals. Financials Collaboration and leveraging of skills around the world. Additional information Additional Amec Foster Wheeler Annual report and accounts 2014 03 Amec Foster Wheeler at a glance continued Our customers include Our four markets BG Honeywell We have positioned our operations across four markets because we believe a diversified approach minimises risk BP KNPC and maximises opportunity over the long term. In Oil & Gas, Canadian Natural Resources Ltd National Grid Mining, Clean Energy and Environment & Infrastructure, ConocoPhillips Newmont we provide similar services, winning work through strong Dow Chemical Novartis customer relationships and our proven ability to deliver projects successfully. Many of the services we provide to our customers EDF Energy Pemex are transferable across markets. Enterprise Products Royal Dutch Shell Oil & Gas ExxonMobil Saudi Aramco We are involved in every part of the project delivery phase Freeport-McMoRan Sempra Energy across the oil and gas value chain, but we specifically do not GDF Suez US Government operate in early cycle exploration or drilling. Clean Energy Order book 6 In renewables we provide a full service engineering, % 25 procurement and construction solution on wind, solar, biomass Americas and biofuels projects. We also support the full lifecycle of N. Europe & CIS nuclear energy and are a respected leader in the design and AMEA & S. Europe Global Power Group supply of combustion and steam generation equipment. 32 Mining 37 We offer mining consultancy (including ore resource estimation, mine planning and feasibility studies), design, project and construction management services. Environment & Infrastructure (E&I) Order book We are a leading consulting, engineering and project management firm with strong market positions, especially in the water, transportation and infrastructure, government £6.3bn services and industrial sectors. Providing safe and sustainable project solutions for our customers. Amec Foster Wheeler 04 Annual report and accounts 2014 Our sectors Upstream Midstream Delivering challenging Providing transportation and complex upstream for the midstream oil and oil and gas projects gas industry Strategic