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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

 

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**FORM 20-F**

 

**(Mark One)**

 

| **o**      | **REGISTRATION STATEMENT PURSUANT   TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934**                                      |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** **                                                                                                                                               |
| **OR**     |
| ** ** | ** **                                                                                                                                               |
| **x**      | **ANNUAL REPORT PURSUANT TO   SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the fiscal year ended: December 31, 2014** |
| ** ** | ** **                                                                                                                                               |
| **OR**     |
| ** ** | ** **                                                                                                                                               |
| **o**      | **TRANSITION REPORT PURSUANT TO   SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                                 |
| ** ** | ** **                                                                                                                                               |
| **OR**     |
| ** ** | ** **                                                                                                                                               |
| **o**      | **SHELL COMPANY REPORT PURSUANT   TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**                                              |

 

Date of event requiring this shell company report: . . . . . . . . . . . . . . . . . . .

 

**For the transition period from                       to                        **

 

Commission file number 001-36723

 
| **AMEC FOSTER WHEELER PLC**

**(formerly AMEC plc)**                                                                                                                                                                                                 |
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| (Exact name of Registrant as specified in its charter)                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                 |
| **England and Wales**                                                                                                                                                                                                                                |
| (Jurisdiction of incorporation or organization)                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                 |
| **Amec Foster Wheeler plc, Old Change House, 128   Queen Victoria Street**

**London EC4V 4BJ, United Kingdom**                                                                                                                                      |
| (Address of principal executive offices)                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                 |
| **Alison Yapp**

**General Counsel & Company Secretary**

**Amec Foster Wheeler plc, 4th Floor, Old Change   House, 128 Queen Victoria Street**

**London EC4V 4BJ, United Kingdom**

**Tel +44 (0) 20 7429 7500**

**Fax +44 (0) 20 7429 7550** |
| (Name, Telephone, E-mail and/or Facsimile number and Address of   Company Contact Person)                                                                                                                                                            |

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

| Title of each   class                                                                                                                                               |   | Name of each   exchange on which registered |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|
| American Depositary Shares evidenced by American Depositary Receipts,   each American Depositary Share representing one ordinary share of Amec Foster   Wheeler plc |   | New York Stock Exchange, Inc.               |
|                                                                                                                                                                |   |                                        |
| Ordinary shares, nominal value £0.50 per share*                                                                                                                |   | New York Stock Exchange, Inc.*              |

 

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*Not for trading, but only in connection with the listing of the American Depositary Shares on the New York Stock Exchange, Inc.

 

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

 

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Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

 
| Ordinary   shares | 388,875,843 |
|-------------------|-------------|

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes   x No

 

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

o Yes   x No

 

Note — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes   o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

x Yes   o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer x |
|---------------------------|--------|---------------------|--------|-------------------------|

 

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

| U.S. GAAP o |   | International Financial Reporting Standards as issued   by the International Accounting Standards Board x |   | Other o |
|-------------|--------|-----------------------------------------------------------------------------------------------------------|--------|---------|

 

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17   o Item 18

 

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes   x No

 

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|  | Amec Foster Wheeler plc Annual report and accounts 2014  Connected excellence |
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Welcome to Amec Foster Wheeler

 

 

 

 
|                                                                                                                                                                                                                                         |                                       | ** **                     |                                                                          | ** **     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|--------------------------------|-------------------------------------------------------------------------------|----------------|
| Amec Foster Wheeler’s   vision is to be the most trusted partner for our customers by consistently   delivering excellence – bringing together the knowledge, expertise and skills   of our people from across our global network. |                                       | **Strategic report: overview** |                                                                          | **Governance** |
|                                                                                                                                                                                                                                         | 01  Performance highlights            |                           | 44   Chairman’s governance overview                            |
|                                                                                                                                                                                                                                         | 02  Amec Foster Wheeler at a glance   |                           | 45   Our board of directors                                         |
|                                                                                                                                                                                                                                         | 06  Chairman’s statement         |                           | 48   Governance overview                                            |
|                                                                                                                                                                                                                                         | 08  Chief Executive’s statement  |                           | 50   Audit committee                                                |
|                                                                                                                                                                                                                                         |                                       |                           | 55   Nominations committee                                          |
|                                                                                                                                                                                                                                         |                                       |                           | 57   Health, safety, security, environmental and   ethics committee |
|                                                                                                                                                                                                                                         | **Strategic   report: strategic review**   |                           | 59   Remuneration committee                                         |
|                                                                                                                                                                                                                                         | 14  Our business model                |                           | 61   Directors’ remuneration report                            |
|                                                                                                                                                                                                                                         | 16  Delivering excellence             |                           | 75   Our Group Leadership Team                                      |
|                                                                                                                                                                                                                                         | 20  Principal risks and uncertainties |                           | 76   Management committees                                          |
|                                                                                                                                                                                                                                         | 24  Sustainability                    |                           | 77   Leadership                                                     |
|                                                                                                                                                                                                                                         | 25  Global market trends              |                           | 80   Effectiveness                                                  |
|                                                                                                                                                                                                                                         | 26  Our markets                       |                           | 81   Accountability                                                 |
|                                                                                                                                                                                                                                         |                                       |                           | 82   Engagement                                                     |
|                                                                                                                                                                                                                                         |                                       |                           | 83   Directors’ report                                         |
|                                                                                                                                                                                                                                         | **Strategic   report:**                    |                           | 86   Responsibility statements of the directors                     |
|                                                                                                                                                                                                                                         | **performance   review**                   |                           |                                                                          |
|                                                                                                                                                                                                                                         | 30  Financial review                  |                           | ** **                                                                    |
|                                                                                                                                                                                                                                         | 40  Our business units                |                           | **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                                                |

 

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|  | Financials Governance Strategic  report: overview 01 Amec Foster Wheeler Annual report and accounts 2014  Additional information 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. Performance highlights  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. 1 Continuing operations. 2  Figures for 2012, 2011 and 2010 have been restated to reflect the  reclassification in 2013 of the UK conventional power business as a  discontinued operation and the adoption of IAS 19 (Revised 2011) ‘Employee  Benefits’. 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 exceptional items, the  amortisation of intangible assets, asbestos-related costs and interest  expense (net of insurance recoveries), and the tax effect of those items,  divided by the diluted number of ordinary shares. Revenue1 £m 3,993 2014  3,974 2013 4,088 2012 3,133 2011 2,786 2010 Adjusted profit before tax1, 2, 3  £m 317 2014 332 2013 327 2012 323 2011 286 2010 Dividend per share p 43.3  2014 42.0 2013 36.5 2012 30.5 2011 26.5 2010 Adjusted diluted EPS1, 2, 4 p  79.5 2014 87.2 2013 78.6 2012 73.2 2011 63.3 2010 Profit before tax1, 2 £m  155 2014 255 2013 254 2012 264 2011 261 2010 |
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|  | 02 Amec Foster Wheeler Annual  report and accounts 2014 Amec Foster Wheeler at a glance Aggregate employees  2014 40k Total pro forma scope revenue 2014 £5.5bn With revenues of £5.5bn  and over 40,000 employees in more than 50 countries, Amec Foster Wheeler  operates across the whole of the oil and gas industry – from production through  to refining, processing and distribution of derivative products – and in the  mining, clean energy and environment and infrastructure markets. Percentage  split of average aggregate employees % Americas N. Europe & CIS AMEA  & S. Europe Global Power Group 41 23 29 7 Percentage split of revenue %  Americas N. Europe & CIS AMEA & S. Europe Global Power Group 47 17 28  8 Office locations |
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|  | Financials  Governance Strategic report: overview 03 Amec Foster Wheeler Annual report  and accounts 2014 Additional information Collaboration and leveraging of  skills around the world. 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. Global Power Group  Operating four manufacturing facilities, two cogeneration plants, 11  engineering and service centres in eight countries and employing around 2,600  employees, this business unit designs, supplies and erects boilers, auxiliary  steam and air pollution control equipment, as well as a wide range of aftermarket  products and services. Delivering projects and services virtually anywhere in  the world, we enable utilities, independent power producers and industrial  customers to achieve their power, process steam and environmental goals.  Northern Europe & CIS Northern Europe & the Commonwealth of  Independent States has around 12,000 employees operating in more than 120  locations across 15 countries, with its expertise extending into many more.  The unit has broad-based customer reach across three of our markets, in  Environment & Infrastructure; Clean Energy – notably in the nuclear  industry, including asset support, decommissioning and new-build programmes;  and Oil & Gas – across the value chain and lifecycle for projects on and  off shore, from pre-feasibility consulting to late-life management and  decommissioning. AMEA & Southern Europe The Asia, Middle East, Africa  & Southern Europe (AMEASE) unit has over 9,000 employees, spread across  more than 40 locations with strong capabilities and customer reach across  each of our Oil & Gas, Environment & Infrastructure and Mining  markets. In addition we have our Consultancy and Special Construction group  which is focused on infrastructure planning, design and construction serving  government, Oil & Gas, and Mining customers across key geographies in and  beyond the AMEASE region. Americas The largest of our business units, with  around 16,000 employees and approximately 150 offices in 10 countries, across  the two continents. Our business is balanced across our markets and we have a  growing mid/downstream Oil & Gas business in North America; a presence in  the Gulf of Mexico and Brazil upstream offshore and we are the market leader  in mineable oil sands. We are the leading mining consultant in the region and  have good solar and bioprocess positions in the US, nuclear and wind  positions in Canada, and we are a leading environmental consultancy. From  2015, our operations are structured into four business units. |
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|  | 04 Amec Foster  Wheeler Annual report and accounts 2014 Our four markets We have positioned  our operations across four markets because we believe a diversified approach  minimises risk and maximises opportunity over the long term. In Oil &  Gas, Mining, Clean Energy and Environment & Infrastructure, we provide  similar services, winning work through strong customer relationships and our  proven ability to deliver projects successfully. Many of the services we  provide to our customers are transferable across markets. Oil & Gas We  are involved in every part of the project delivery phase across the oil and  gas value chain, but we specifically do not operate in early cycle exploration  or drilling. Clean Energy In renewables we provide a full service  engineering, procurement and construction solution on wind, solar, biomass  and biofuels projects. We also support the full lifecycle of nuclear energy  and are a respected leader in the design and supply of combustion and steam  generation equipment. Mining We offer mining consultancy (including ore  resource estimation, mine planning and feasibility studies), design, project  and construction management services. Environment & Infrastructure (E&I)  We are a leading consulting, engineering and project management firm with  strong market positions, especially in the water, transportation and  infrastructure, government services and industrial sectors. Amec Foster  Wheeler at a glance continued Our customers include Providing safe and  sustainable project solutions for our customers. BG BP Canadian Natural  Resources Ltd ConocoPhillips Dow Chemical EDF Energy Enterprise Products  ExxonMobil Freeport-McMoRan GDF Suez Honeywell KNPC National Grid Newmont Novartis  Pemex Royal Dutch Shell Saudi Aramco Sempra Energy US Government Order book  £6.3bn Order book % Americas N. Europe & CIS AMEA & S. Europe Global  Power Group 32 25 37 6 |
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|  | Financials  Governance Strategic report: overview 05 Amec Foster Wheeler Annual report  and accounts 2014 Additional information Our sectors Government Comprehensive  engineering services and solutions Water Global expertise in every aspect of  water, from source to ocean Transmission & Distribution Innovative and  high value added solutions Mining & Metals Expertise and delivery from  concept to closure Industrial/Pharmaceutical Offering a whole world of  technical expertise Transportation & Infrastructure Innovative solutions  for complex transportation needs Power Shaping the future of clean energy  Renewables/Bioprocess A century of experience supporting today’s renewable  energy Nuclear Expertise spanning the entire lifecycle of complex nuclear  assets Downstream Pre-eminent provider of services to the oil and gas  industry Midstream Providing transportation for the midstream oil and gas  industry Upstream Delivering challenging and complex upstream oil and gas  projects |
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|  | 06 Amec Foster Wheeler Annual  report and accounts 2014 Chairman’s statement In the closing months of 2014  we saw a fundamental change in our business with the completion of the  transformational Foster Wheeler deal. It brings greater strength and depth  across many markets and provides your Company with access throughout the oil  & gas value chain. The dramatic drop in global oil prices will prove an  unfortunately-timed testing ground for our new business proposition over the  coming years – however, I and your board retain complete confidence in your  Company’s potential. We begin 2015 with a new name, reflecting the power of  both brands; a new identity, which encapsulates the depth and breadth of our  potential; and a new culture, which meshes the best of both breeds and will  provide the bedrock of our future operational success. These are covered in  more detail in the Chief Executive’s statement. Your board The board of  directors is responsible for governing the organisation by establishing broad  policies and objectives, monitoring the performance of the management team, ensuring  the availability of adequate financial resources, and being held accountable  to you, the shareholders, for the Company’s performance and longer term  potential. We support the UK Corporate Governance Code (the Code) and believe  we have complied with the provisions of the September 2012 edition throughout  the year ended 31 December 2014. We continue to focus on diversity within our  business. Not just the diversity of human characteristics and skills, but  also diversity of thought – as we believe that part of our role is to  constantly challenge the business to ensure we are at the top of our game. We  must, of course, continue to deliver the highest possible standards in  safety, collaboration and value creation. We must also ensure that we nurture  an environment where new thinking and creative solutions can thrive for our  customers. The complementary merging of our operations with those of Foster  Wheeler not only enhances this potential, but it also provides greater  resilience to market cyclicality. In November, upon the closing of the Foster  Wheeler offer, we appointed Stephanie Newby to the board and to the company’s  audit and health, safety, security, environmental and ethics committees.  Stephanie was an independent non-executive director of Foster Wheeler and she  brings a wealth of boardroom expertise and experience of being a director of  a company listed on a US stock exchange – as your Company now has a listing  of its American Depositary Shares on the New York Stock Exchange. John  Connolly Chairman 2014 was a year of quantum change for our business. |
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|  | Financials  Governance Strategic report: overview 07 Amec Foster Wheeler Annual report  and accounts 2014 Additional information Since the year-end we have announced  other board changes. In February Kent Masters joined the board. Kent was the  CEO and a board director of Foster Wheeler. In February we also announced  that Simon Thompson will step down from the board at the upcoming annual  general meeting after serving six years as a director of the Company. Simon  also holds the important roles of Senior Independent Director and chairman of  the remuneration committee. I am very grateful for Simon’s contribution to  the board during a period of significant change in your company. Neil Carson  will assume the roles of senior independent director and chairman of the  remuneration committee at the conclusion of the annual general meeting on 14  May 2015. The board has commenced a process to recruit one or two new  non-executive directors. Announcements on the new directors will be made in  the next few months. Our priorities Each of your directors has been actively engaged  in our board meetings and has contributed to debates on future strategy and  direction. In 2015 the board will continue with a programme of regular  engagements with management teams across the group. Our priorities going  forward include monitoring the execution of the integration plans and the  implementation of the new operating model referred to in the Chief  Executive’s statement. Recognising the enlargement and changes in the group,  combined with the challenging markets in our sector, a significant priority  for the board is working with the Group Leadership Team to set the strategy  and medium-term business plan for the Group. Your Company’s performance  Across our four markets we have seen a full range of conditions in 2014,  ranging from tough and challenging, to robust, stable and growing. In these  markets our trading profit1 was £321m. A further indication of our belief in  the model and your company’s potential is the proposed final dividend of  28.5p, making a total of 43.3p per share for the year – a 3% increase on 2013  and dividend cover1 of 1.8 times. If approved at the Company’s annual general  meeting on 14 May 2015, it will be paid on 2 July 2015 to those shareholders  on the register at 29 May 2015. It remains the board’s intention to continue  with a progressive dividend policy. Conclusion I and my fellow directors  remain strongly convinced of the potential for your company. We believe that  Amec Foster Wheeler has the right strategy, a strong customer base, an  improved customer proposition and the right skills for it to achieve its true  potential. On your behalf I would like to thank Samir Brikho and his  management team and all of the 40,000 people in Amec Foster Wheeler for their  valued contribution to date and their future potential. John Connolly  Chairman 26 March 2015 1 Non-IFRS measure (see Performance measures on pages  169 to 172) Dividend per share for the year 43.3p Adjusted diluted EPS for  20141 79.5p Amec Foster Wheeler has in place a strong, highly competent board  that performs well. |
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|  | 08 Amec Foster Wheeler Annual  report and accounts 2014 Chief Executive’s statement This annual report  reflects on 2014 – a year in which the fourth quarter saw everything change.  We completed the acquisition of Foster Wheeler, created a new operating model  for our business – designed for the future – and we created a new  organisation with a clear vision, a strong identity and a culture hungry for  success. Our vision is clear. We want to be the most trusted partner for our  customers by consistently delivering excellence – bringing together the  knowledge, expertise and skills of our people from across our network. Whilst  I will cover the recent performance of the business, much of my statement  will look forward as we seek to create sustainable, stable growth and to  deliver the potential which I believe we have at Amec Foster Wheeler. 2014  results 2014 was a year of resilient delivery for us, both financially and  operationally – despite the challenging backdrop of economic uncertainty,  reducing capex and falling commodity prices. We have delivered a Trading  Profit1 of £321m, on flat revenues of £3,993m, and we have delivered our 19th  year of dividend growth. Our cash conversion rate1 was 88% and adjusted  earnings per share1 of 79.5p. Ian McHoul, our Chief Financial Officer,  discusses our financial performance in more depth on page 30. Our will to win  Ahead of the deal closing we were able to prepare for ‘day one’. So we were  really able to hit the ground running – announcing several contract wins in  the first few weeks, some of which are detailed below. We have created a  skilled and experienced team of around 40,000 people. These colleagues are  our greatest asset, and we will continue to focus on their development,  mobility and our new employer brand, as we want to be the company for whom  people want to work. We have to deliver for our customers. Our good customer  relations and execution skills have won some contract awards and we have  further nurtured and enhanced relationships with our existing and potential  clients. A great example is our recently announced Anagold Madencilik  contract win in Turkey, where we are contracted to provide front-end  engineering services for the expansion of the Çöpler Gold Mine. This  perfectly demonstrates the power of our combination, leveraging the proven  gold processing expertise of the AMEC team and Foster Wheeler’s highly regarded  Turkish operation and successful project delivery track record in the  country. Samir Brikho Chief Executive We have the will to win, the desire to  succeed and, in the newly created Amec Foster Wheeler, the right combination  to achieve our true potential. 1 Non-IFRS measure (see Performance measures  on pages 169 to 172) |
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|  | Financials  Governance Strategic report: overview 09 Amec Foster Wheeler Annual report  and accounts 2014 Additional information Strong cash conversion,  demonstrating our continuing financial discipline. We have deliberately  diversified our business across energy and power markets and this remains our  strategy. The desire to succeed Success for any company is not just about the  numbers. For Amec Foster Wheeler, it also means we have to be recognised as a  company that listens to its customers, understands market challenges and is  prepared to change. We have to propose new ways of thinking, better quality  of delivery, and offer higher predictability of project delivery, on time and  on budget. We operate in complex arenas, designing, delivering and  maintaining strategic and complex assets for a wide range of customers  throughout the global energy and related sectors. Our largest market remains  Oil & Gas, and we are operating across the whole value chain from  production through to refining, processing and distribution of derivative products.  This significantly enhances our capability to service customers and – if we  make the most of our new platform by working collaboratively, partnering  effectively, and providing the best possible skills to deliver for our  customers – this puts us in the frame for projects that neither AMEC nor  Foster Wheeler would have won as separate companies. We have long recognised  the benefits of diversity. We encourage it in our workforce, in our thinking  when solving customers’ problems, and in our strategy. All our end markets  have long-term growth potential – but they are also all cyclical. That is why  we deliberately maintain strong and established positions in mining, clean  energy, power generation, environment and infrastructure alongside the oil  and gas market. And as an employer, success is to see our employees being  engaged, inspired, committed and accountable. Our people need to be excited  about our future, living our values, fostering a culture of collaboration,  transparency and honesty, helping each other with the client being the focal  point. And our customers need to see that in the way we operate on their  behalf. Amec Foster Wheeler is proud to be delivering the Engineering,  Procurement, Construction Management (EPCM) contract for Swakop Uranium’s  Husab Project in Namibia in joint venture with Tenova Bateman. We have  deployed a highly-skilled project team, who have amassed over 10 million  man-hours working on the mine. Once completed, Husab will be the second  largest uranium mine in the world. The right combination Amec Foster Wheeler  has three main stakeholders – our shareholders, our customers and our  employees – and we have to deliver excellence to all of them by creating the  right environment for success. We have identified increased deal synergies  from $75m to $125m and our newly introduced operating model (see page 16) is  already bearing fruit. With more intelligent use of our High Value Execution  Centres we can further support the businesses whilst recognising and managing  the project risks through our Identify, Acquire, Deliver process (see below).  £6.3bn order book. |
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|  | 10 Amec Foster  Wheeler Annual report and accounts 2014 We are also not compromising on  safety. This remains our paramount focus and we have again run a company-wide  Safety First campaign at the start of the year. An illustration of our  dedication here can be seen in the work we are doing for a new rubber plant  on Jurong Island, Singapore. This complex project, the largest of its kind in  the world, involves state-of-art technologies and compact design that demands  a highly committed and collaborative project team to embrace the challenges  and deliver excellence, with approximately six million safe man-hours.  Achieving our potential 2014 saw our Global Power Group rated the number one  global market position for the supply of Circulating Fluidised Bed (CFB)  boilers and Heat Recovery Steam Generators. Add to this industry plaudits for  our work in solar and nuclear energy, oil & gas and mining and you can  see we have a firm foundation from which to build. However, understanding and  managing our project performance is a prerequisite of delivering excellence  to our customers and providing governance. So the Group Project Review  Committee meets quarterly to better understand the performance of key  projects within Amec Foster Wheeler and to ensure they are meeting our  clients’ expectations. The Group Leadership Team (see page 75) has been  expanded to incorporate the new functions of Strategy and Business  Development and Project Delivery. We have changed the way we win work, and  Business Development has an increased prominence throughout our business. We  have created a consistent structure throughout the business units which will  aid understanding and global collaboration between the regions, units and  functions. Emphasising our quality controls, we have introduced our new  Identify, Acquire, and Deliver process, with clear decision rights and roles  for Strategy and Business Development, Operations, and the functions in  winning and executing work. There are three key decision gates: X pursue/not  pursue – to prioritise leads and opportunities with good strategic fit and to  align on optimal resourcing solutions early in the process; X bid/no bid – to  ensure all requirements of responding to a tender are understood and can be  met; and X permission to submit – to ensure that a fully defined and approved  proposal is formally issued to the customer. We have a new sense of purpose  and intend to build to achieve our true potential. Chief Executive’s  statement continued 2014 saw our Global Power Group rated the number one  global market position for the supply of Circulating Fluidised Bed (CFB)  boilers and Heat Recovery Steam Generators. My aim is for Amec Foster Wheeler  to emerge from the current economic situation stronger than our industry  peers. Our largest market remains Oil & Gas, and we are operating across  the whole value chain from production through to refining, processing and  distribution of derivative products. |
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|  | Financials  Governance Strategic report: overview 11 Amec Foster Wheeler Annual report  and accounts 2014 Additional information Outlook Commodity price falls are  impacting both our Oil & Gas and Mining businesses. We have seen price  decreases of up to 60% impact several of our projects and customers adjust  their capital expenditure, even deferring some projects. Current economic  conditions are undoubtedly challenging and an unclear pricing outlook implies  further difficult times ahead in some of our key markets. However, I believe  that the winners in our industry will be those who add value to their  clients, in good times and in bad. Despite being a new company, Amec Foster  Wheeler’s heritage goes back over 150 years and our customer service model  has been built to operate through such fluctuations. Undoubtedly customers  will seek reduced engineering project costs and refined proposals; we have to  continue to engage with our customers to satisfy these needs. We will need to  provide greater simplicity in our innovative solutions and focus on more  standardised delivery alongside specific bespoke offerings to ensure projects  are sanctioned by our customers. We understand the challenges, we have  reinvented ourselves and we are ready and capable of proposing such  solutions, to partner with our customers and make money despite the economic  pressures. And my aim is for Amec Foster Wheeler to emerge from the current  economic situation stronger than our industry peers, with a business that is  based on a more cost-effective, stable and sustainable growth platform, as  the partner of choice for our customers. Samir Brikho Chief Executive 26  March 2015 I believe that the winners in our industry will be those who add  value to their clients, in good times and in bad. |
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|  | The Samcheok  green power project marks a significant development in clean coal power. After  a comprehensive study and evaluation of the technology options, Korean  Southern Power chose us due to our advanced technology experience, coupled  with our capability and track record to deliver a large-scale quality  product. 12 By 2016, four of our 550 megawatt CFB boilers will produce 2,100  megawatts of electricity from coal, biomass and recycled materials, setting a  new standard for clean, large-scale power generation. |
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|  | Connected  excellence Additional information Financials Governance Strategic report:  overview 13 through engineering innovations |
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|  | 14 Amec Foster Wheeler Annual  report and accounts 2014 We convert the talents of our people and their  customer relationships into a low-risk, cash-generative business. To succeed  we need to deliver excellence to our customers. Our business model What this  means People are our principal asset Read more on page 16 Our employees are  clever people. Their skills are a scarce resource. Our highly skilled engineers,  project managers, consultants and scientists deliver for our customers,  creating long-term customer relationships and a strong reputation for  excellence. We are customer focused Read more on page 17 We have a wide range  of customers around the world. They include some of the largest international  oil companies such as ExxonMobil and BP, chemical companies such as Dow,  miners such as Rio Tinto, utility companies such as EDF and government bodies  such as US DoD. Customers rely on our services and solutions Read more on  page 18 We provide high-value services – consulting, engineering, project and  construction management, and supply chain management. These skills are  critical to the successful development and operation of our customers’ assets  – right across their lifecycle. We have a particularly strong reputation for  delivering engineering solutions for complex projects. We have a flexible and  low-risk business model Read more on page 19 The majority of our contracts  reimburse us for our people’s time. We often also get additional payments by  achieving pre-agreed performance measures. Many of these are long-term  contracts. In selected circumstances we take on fixed-price work. The breadth  of our market and customer exposure gives us great growth opportunities, and  reduces the impact during lower levels of activity in one market. Delivering  excellence |
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|  | Strategic  report: strategic review 15 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Managing the challenges Our  future success relies on attracting, developing and retaining the best  people. We need to be flexible, using our skills on those projects which  bring greatest advantage. We maintain the highest standards of safety and  ethics. We win business because of our reputation for delivery and the  strength of our long-term customer relationships. Our diversified customer  base limits our dependence on any one customer. We are adaptable to ensure we  offer our customers the right services when and where they need them. We must  be able to deliver these services in a cost-effective way. We work across a range  of cyclical markets, which can impact demand for our services. Our reputation  for delivery is very important to our continued success. We take fixed-price  work when we know the customer and the project well. We have a good track  record predicting earnings from each project and contract. How we measure  success We look at the utilisation rate of employees, gender diversity and  employee-instigated turnover. We measure the engagement of our people and the  development activity that has taken place and a number of safety measures.  Read more on page 16 We track levels of customer satisfaction and look to  improve our win-to-bid ratio. Read more on page 17 We track our revenue  growth and our margin progression. We also look at the mix of services we  provide and where they sit in the lifecycle of our customers’ assets. Read  more on page 18 Our profit margin and cash conversion reflect the quality of  project delivery. We also have a range of non-financial measures, including  greenhouse gas emissions and completion of project and peer reviews. Read  more on page 19 X We listen, understand and respond X We agree on clear  expectations X We aspire to consistent excellence X We invest in our people X  We embrace diversity and inclusion X We connect globally as one team X We put  safety first X We act ethically and with integrity X We care about our  communities Delivering on promises Developing full potential Doing the right  thing |
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|  | 16 Amec Foster Wheeler Annual  report and accounts 2014 Delivering excellence Our success depends upon our  people delivering projects successfully for our customers. To foster the  right culture in which our people can succeed, our values (see page 15) are  entrenched throughout our business. We perpetuate the very highest standards  of safety, mutual respect and ethical behaviour that we can and this,  combined with caring for the environment in which we operate, underpins our  approach to being a sustainable people business (read more about our  commitment to sustainability on page 24 and on our dedicated sustainability  microsite to be launched on amecfw.com). New leadership and integration AMEC  and Foster Wheeler both employed highly skilled, customer focused workforces  providing high value services, such as engineering, design and project  management to their customers. Now, as one team, we have more than 40,000  employees and the increased scale is expected to provide efficiencies, such  as increased workflow between offices, known as multi-office delivery. The  Group Leadership Team itself reflects this integration and combines the best  talents from both organisations (see page 75 for more details). Around 23,500  of our people met at least one of the new Group Leadership Team through an  extensive roadshow around our offices in the first three weeks following the  creation of Amec Foster Wheeler on 13 November. The extended leadership team,  of 100 people (85% male, 15% female), met in London to ensure we were  thoroughly prepared for the launch of the new operating model. New operating  model On 1 January 2015, we introduced our new operating model. The early  signs are very encouraging, with changes to the way we identify, acquire and  deliver work and also how we assure each part of this process. Key principles  include global standards for execution of projects, creating centres of  excellence and multi-office delivery. Investing in talent We have developed both  technical and leadership training to ensure we maintain a pipeline of skilled  talent to meet our growth aspirations. Group-wide training is led by The  Academy, our in-house development programme. Adapting to dynamic markets  Delivering a project for our customers requires us to put together teams of  people to match the needs of the project and the customer. During 2014 we  recruited 9,425 people into project teams. Of these new hires, more than 95%  were recruited directly. We have also seen 2,997 people leave as projects  finish, or their roles change. Together this means that our utilisation rates  remain very high. Diversity and inclusion The business case is clear. An  organisation that enjoys diversity enjoys a richness of ideas that leads to  better solutions for the customer. Gender is just one part of this and women  now make up 24%, or 8,823 members of our directly employed workforce; 12% (50  people) of our executive grade employees; 10% (one person) of our Group  Leadership Team and 22% (two people) of our board. Age, gender, ethnicity,  etc., are all important and assessed, but diversity of thought, for instance,  cannot be measured as accurately. Our approach is to survey our employees, to  ask how they feel and feed the findings into the Group Leadership Team. We  are committed to providing a safe and secure workplace, where people are free  from harassment and where diversity and inclusion are the norm, with equal  opportunities for progression and development for all. Our Code of Business  Conduct highlights our commitment to human rights and we respect those of any  individual, or community, with whom we are involved and we support the  elimination of child labour. Incentivisation We have completely refreshed our  approach. The top layers of management are now all rewarded against one set  of common group-wide incentives. Please see page 67 for more detail.  Priorities for 2015 As usual, the most important priority remains that our  people are safe at work and that we continue to attract, develop and retain  skilled employees. People are our principal asset Split of employees %  Americas N. Europe and CIS AMEA and S. Europe Global Power Group 41 29 23 7 |
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|  | Strategic  report: strategic review 17 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information We have a wide range of  customers and work for some of the world’s largest corporations and  government bodies, designing and maintaining critical assets. Our customers  expect us to deliver excellence every day. We are very proud of the high  proportion of repeat business we generate. Our customers include some of the  largest international oil companies such as ExxonMobil and BP, chemical  companies such as Dow, miners such as Rio Tinto, utility companies such as  EDF, and government bodies, such as the US Department of Defense. Our top 10  customers accounted for approximately 30% of revenue. Strategic customer  management Developing long term and worldwide relationships with key  customers is a priority. With additional service offerings and new customers  across a broader geographic footprint, there are much greater opportunities  to cross-sell and a strategic approach to managing our customer relationships  is no longer a nice-to-have – it is a necessity. We now have three tiers of  customer relationship: global, regional and local. Global accounts will be  managed centrally by the business development team. We expect to expand this  over the coming years. By utilising strategic account management and global  accounts, we are ‘upping our game’ to expand and deepen our relationships  with our most significant customers. Our goal is to get closer to our  customers and be their trusted partner. Regional and local account management  will remain an important component. Achievements in 2014 We are pleased that  in the first few weeks after the merger was completed, several contracts with  customers highlighted the benefits of our new approach. In November we were  awarded a front-end engineering contract with Alacer on the Çöpler Gold Mine  project in Turkey, combining the gold-processing expertise of the AMEC team  in North America and Foster Wheeler’s highly regarded Turkish operation. And  earlier this year we had more success with new combinations of heritage  expertise, winning a feasibility study in Chile that combined Power &  Process Americas, our Milan team and the ports experts in our E&I team. Priorities  for 2015 The development of long term and worldwide customer relationships  will continue to be our key priority. Integrating the former AMEC and Foster  Wheeler relationships will provide us with significant new opportunities,  particularly in the mid- and downstream Oil & Gas market. For example, we  will be able to offer enhanced project delivery to the combined upstream and  downstream customer across new-build and brownfield projects. We will be  offering environmental services to former Foster Wheeler customers for the  first time too. We are also planning to expand the geographic reach of our  services, for instance by offering brownfield services in countries where  AMEC did not have a major presence, and where Foster Wheeler did not serve  the upstream market. We are customer focused Diversified customer base % Top  10 11-20 Others 9 61 30 |
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|  | 18 Amec Foster  Wheeler Annual report and accounts 2014 Delivering excellence continued In  each market or sector, the range of services provided to our customers is  similar. We are experts in designing, delivering and maintaining strategic  and complex assets, offering total life of asset support from feasibility  planning right through to decommissioning. Our diversified service offering  partially offsets the cyclical nature of our customers’ capital expenditure  plans, and reduces our dependence on any one part of the energy mix. Core  services Our core services include: engineering, project management, construction  and construction management, hook-up and commissioning, decommissioning, and  related consultancy work. We have a reputation for delivering engineering  solutions for complex projects and operating in remote and harsh locations.  Our Clean Energy offering also now includes Circulating Fluidised Bed (CFB)  and heat recovery steam generators, condensers and emission control equipment  for improved environmental performance. Working through the lifecycle We  provide high value services across the life-cycle of our customers’ assets  and the range of services we are able to provide is similar in each of our  four markets. Many of our services are provided through long-term contracts,  giving us the opportunity to provide critical services in partnership with our  customers. For instance, we have been supporting the current fleet of UK  nuclear reactors for more than 50 years. Some of these contracts have been  renewed several times. Project delivery team Our new operating model has an  enhanced project delivery function with responsibility for ensuring the  identification and management of project risks, driving the use of common  systems and tools, supporting the development and mobilisation of our teams  and ultimately helping us to deliver excellence on all our projects.  Achievements in 2014 Contract wins announced in 2014 include: XAustralia:  Early stage project support for Hillside copper project (Rex Minerals);  XAustria/Germany: 5-year integrated project management framework for  refineries (OMV); X Azerbaijan: EPCM for Shah Deniz 2 topsides (BP); X  Bulgaria: Design and supply 50 MWe CFB boiler (Solvay Sodi); X Canada: FEED  for Canada LNG project (Shell); X Chile: Engineering and design for secondary  ore processing facility (Codelco); X China: MOU for JV to establish nuclear  decommissioning and life extension services (CNNC); X Finland: Design, supply  and erection of SCR at Naantali unit 3 (TSE); XKuwait: FEED for onshore LNG  import and regasification terminal (KNPC); X Libya: FEED for onshore oil  field development in Area 47 (Nafusah); XMexico: EPC for delayed coking  facilities at two refineries (Pemex); XPoland: Owners engineer role for  nuclear new build programme (PGE Polska); XTurkey: Design and supply two CFBs  and flue gas scrubbers (Harbin Electric); XUK North Sea: FEED for Captain  expansion (Chevron); XUS: Design and construction of specialist facilities  for DoD program (US Space Fence); and XVietnam: Design and supply two  pulverised coal steam generators (Vietnam Electricity). Priorities in 2015  Our main priority is to implement the new operating model and show customers  the strength of our platform and people. Customers rely on our services and  solutions Core services % Design & supply Consulting Engineering EPCM/PMC  Other Project delivery 12 5 16 8 31 28 |
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|  | Strategic  report: strategic review 19 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information We have a flexible and  low-risk business model; the majority of our contracts are on a cost-plus  basis. When we agree fixed-price work we take the time to get to know the  customer and the project first. By using common systems we can deliver work  consistently and share work across offices and time zones. As a result, our  business is more flexible and sustainable, and our financial performance less  volatile than others. In the majority of our contracts, our customers reimburse  us for our people’s time and any materials we consume. We often arrange to  get additional payments if we achieve pre-agreed performance measures. In  selected circumstances we take on fixed-price work. Typically, we will do  this where we know the customer and the project well. Where this is not  possible, we may look to partner with others to gain access to projects which  would otherwise be unavailable to us. Each year we do work on numerous  contracts – some of which are multi-year – this, together with the breadth of  our market and customer exposure, reduces the impact of lower levels of  activity in any one area of our business. Flexibility The Global Power Group  has a different business model to our engineering and project management  business. In addition to engineering and project delivery, it includes  fabrication in its typical scope of activities. Enhanced risk management This  plays a vital role in ensuring that we win projects with the greatest  possible opportunity for success: maximising the value we get for our  resources and addressing risks that are part of contracting in our industry.  We use a detailed workflow system which addresses the risks associated with  tenders (for both lump sum and reimbursable contracts) in areas such as  technical challenges, financial and pricing terms, joint venture/partner  risks; as well as a full range of governance issues, such as human rights,  safety and environmental risks. Achievements in 2014 Our order book grew from  £4.1bn to £6.3bn during the year. On a like-for-like basis it was flat. We  completed our fixed-price detailed design and engineering services for Roy  Hill’s iron ore processing plant and bulk ore handling facility at the Port  Landside works for Samsung C&T – the EPC contractor on the project. We transferred  key staff from the upstream project team in Houston to work in the downstream  propane dehydrogenation project for Enterprise in Texas. Priorities for 2015  Despite some tough market conditions, we want to win new contracts which will  maintain our low-risk and flexible business model. We will continue to  increase collaboration across the group – between teams from different  sectors and countries, as well as substantially increasing the share of work  carried out through multi-office delivery. Revenue by contract style %  Reimbursable Fixed price Technology We have a flexible and low-risk business  model 72 2 26 |
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|  | 20 Amec Foster Wheeler Annual  report and accounts 2014 Principal risks and uncertainties Amec Foster  Wheeler operates in more than 50 countries, serving a broad range of markets  and customers. As such, the Group is subject to certain general and industry  specific risks. Where practicable, the Group seeks to mitigate exposure to  all forms of risk through effective risk management and risk transfer  practices. Risk management process The acquisition of Foster Wheeler was  completed in the fourth quarter of 2014 and we are currently reviewing the  control framework and integrating the risk and control systems with those of  the wider group. A mandatory procedure detailing the risk management process  is used at project, operating unit, business unit and group levels to  identify the key risks that could have a significant impact on Amec Foster  Wheeler’s ability to achieve its objectives. These are recorded in risk  registers and evaluated to determine the likely impact and probability of  occurring. Control actions are developed to mitigate or eliminate risks that  are considered unacceptable. Risk owners are identified and given  responsibility for ensuring actions are implemented with appropriate review  dates. The risk registers are reviewed and updated at least quarterly with  the relevant risk owners. Reporting and monitoring Reporting to the board,  the risk committee is chaired by the Chief Executive and meets at least twice  each year to: X review risk management policies, procedures and processes; X  review the Amec Foster Wheeler plc risk register and make recommendations as  appropriate; X review, approve and make recommendations in respect of those  risks which Amec Foster Wheeler is willing to accept or assume in the  ordinary course of business (risk appetite); X review any issues raised by  other committees of the board that impact on the risk profile of Amec Foster  Wheeler; X review any emerging risks and any potential impact they may have  on risk appetite; X review and consider reports on key risk issues such as  new business and geographical locations for operations or projects; and X  issue risk reports and make recommendations to the board. We acknowledge  ‘Guidance on Risk Management, Internal Control and Related Financial and  Business Reporting’ issued by the Financial Reporting Council in September  2014, and the terms of reference of the risk committee have been amended  accordingly. Roles and responsibilities Business unit presidents Chief  Executive/ risk committee Project manager Operating unit heads Group function  heads Leadership teams/ function heads Leadership teams/ function heads  Project team Head of Risk Management Business Unit Head of Commercial/ Head  of Project Delivery Operating Unit Head of Commercial/ Head of Project  Delivery Project risk owners Risk oversight X ensure appropriate risk  management processes are in place X ensure management is positioned to  identify and respond to risk X ensure relevant information is raised to the  appropriate level Risk owner/risk manager X participate in the identification  of risk X participate in the identification of risk management action plans X  ensure action plans are implemented X monitor and report on risk status Risk  co-ordinator X ensure risk management process is followed X facilitate risk  management reviews X collate and issue risk management reports/registers X  promote learning and consistency Group internal audit Projects Operating unit  Business units Board plc |
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|  | Strategic  report: strategic review 21 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Principal business and  strategic risks The table below shows Amec Foster Wheeler’s principal  business and strategic risks. Each is specific to the Group and could have a  material impact on it. Actions have been taken to mitigate these risks and  these are also shown. Other financial risks that may impact the Group are  shown on pages 134 to 139 – note 19 Capital and financial risk management.  Risk Mitigation Geopolitical and economic conditions Amec Foster Wheeler  expects to derive the majority of its revenues from Europe, the US and Canada  and is therefore particularly affected by political and economic conditions  in those markets. Changes in general economic conditions may influence  customers’ decisions on capital investment and/or asset maintenance, which  could lead to volatility in the development of Amec Foster Wheeler’s order  intake. These may also lead to change in the customer base, competition and  in the way customers procure the services we provide. An increase in  competition for new contracts may lead to different, less favourable contract  terms and conditions. Continuing and escalating unrest in the Middle East may  have a negative impact on existing and future opportunities in the region.  Amec Foster Wheeler seeks to maintain a balanced geographic presence and,  through acquisitions and organic growth, will continue to increase its  exposure to other attractive regions of the world. The risk associated with  economic conditions resulting in a downturn and affecting the demand for Amec  Foster Wheeler’s services has been addressed, as far as practicable, by  seeking to maintain a balanced business portfolio in terms of geographies,  markets, clients and service offering/business model. In light of continuing  global economic uncertainties, steps have been taken to assess and monitor  any potential impact on Amec Foster Wheeler’s business opportunities and  address potential increased supply chain and, more broadly, counterparty  risk. The introduction of a new focused Strategy and Business Development  function to realise the synergies across our customers, markets, geographies,  service offerings and relationships. Changes in commodity prices A sustained  and significant reduction in oil and gas or commodity prices would have an  adverse impact on the level of customer spending in Amec Foster Wheeler’s  markets and consequently represents a risk to organic growth. The fall in oil  prices has had an impact on the investment behaviour of Amec Foster Wheeler  customers in this sector, with pressure on capital expenditure now leading to  a greater focus on smaller projects and operating expenditure. This risk is  mitigated by maintaining a balanced business portfolio of geographies,  markets, clients and service offerings. Improved efficiencies through  increased workflow between offices and the effective use of centres of excellence  and High Value Execution Centres. Integration of the AMEC and Foster Wheeler  businesses Amec Foster Wheeler may fail to extract value from the successful  integration of the AMEC and Foster Wheeler businesses. This may result from a  number of factors, including a continuing deterioration in market conditions,  management time being focused on the integration of the businesses which  could distract management from delivering on base businesses to the detriment  of safety performance, project delivery, insufficient engagement between the  AMEC and Foster Wheeler businesses at various levels and/or poor  communication with customers. Amec Foster Wheeler has mitigated this risk  with: X detailed planning for cost and revenue synergies; X continuing  prioritisation of plans to ensure delivery of critical items; X plans to  ensure clear allocations of resource to integration management, whilst  focusing remaining resources and efforts on the base businesses; X the launch  of a new operating model on schedule; X timely and ongoing communication with  customers; and X detailed integration planning and success factors with  regular progress reports against them. Project delivery Failing to maintain  discipline and meet customer expectations on project delivery could result in  damage to reputation, loss of repeat business and potentially lead to  litigation and/or claims against Amec Foster Wheeler. Amec Foster Wheeler has  created a new focused and prominent Project Delivery function including a  Group Project Delivery Director reporting directly to the Chief Executive.  The role of the Project Delivery function is to assure and drive project  execution and to support the development, training and mobilisation of  personnel to enhance execution competencies. In addition the system of globally  applied policies and procedures, combined with comprehensive management  oversight, the risk management process, project reviews, internal audit, peer  reviews and customer feedback, mitigate the risk to successful project  delivery. |
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|  | 22 Amec Foster  Wheeler Annual report and accounts 2014 Principal risks and uncertainties  continued Risk Mitigation Lump sum contracts Lump sum contracts carry  different risks than reimbursable contracts, with the contractor agreeing the  contract price at the start of the contract and accepting the risk of cost  overruns in completing the project. This risk is mitigated by having skills  and competencies fully aligned with the project scope. It is further  mitigated by having a clear, delegated authority structure in place, combined  with the formal global mandatory procedures relating to contracting  principles and the contract review process. In addition, the Project Delivery  function referred to in the project delivery risk above will perform reviews,  provide assurance and drive project execution. Staff recruitment and  retention An inability to attract and retain sufficient high-calibre  employees could become a barrier to the continued success and growth of Amec  Foster Wheeler. Senior management departures or prolonged absences could also  adversely affect our ability to implement our strategy and manage our  operations efficiently. This risk is mitigated with a clear Human Resources  (HR) strategy, which is aligned to the business strategy and focused on  attracting, developing and retaining the best people for the Group with  succession planning as appropriate. It is underpinned by an employee  framework which describes how we manage our people consistently. In addition,  there is a continual review of compensation and benefits to ensure sector and  geographic competitiveness and there are localised recruitment teams capable  of recruiting large numbers into Amec Foster Wheeler. Amec Foster Wheeler  Academy delivers development activities to enhance delivery and prepare  employees for more advanced roles. Health, safety, security and environment  Amec Foster Wheeler is involved in activities and environments that have the  potential to cause serious injury to personnel or damage to property or the  environment and damage to our reputation. These activities may involve  operations such as design, construction, commissioning and decommissioning,  which have potential to cause serious environmental damage, pollution and  habitat destruction. In order to control risk and prevent harm, Amec Foster  Wheeler is focused on achieving the highest standards of health, safety and  security management. This is achieved through setting of an effective policy  and putting in place clear standards which underpin our health, safety,  security and environmental management systems. We have put in place processes  to assure that our systems work effectively throughout the organisation and  health and safety performance is regularly reviewed against agreed targets to  facilitate continual improvement. Amec Foster Wheeler employs environmental  and engineering specialists to support projects in implementing comprehensive  project management planning at all stages of a project. These processes are  governed by appropriate quality management systems and are supported by risk  identification tools aimed at identifying and managing all aspects of project  environmental risk. Environmental licences Amec Foster Wheeler’s  build/own/operate facilities and fabrication/manufacturing sites rely on  maintaining environmental licences to operate, which includes protecting the  environment and achieving legally enforceable operating parameters. Failure  to maintain these standards may result in the revocation of all or part of  the licence and the suspension of operation, resulting in criminal or civil  action and/or financial risk to the business. Failure to maintain assets  and/or pollution abatement equipment may result in a failure to meet  legally-binding objectives and targets for the operation. Environmental  management systems are in place to monitor and mitigate this risk.  Information technology (IT) Amec Foster Wheeler is exposed to the risk that  the IT systems on which it relies fail and/or that sensitive data held by the  Group is lost due to ineffective data governance or as a result of  unauthorised access to Amec Foster Wheeler systems or malware attacks.  Appropriate controls are in place to mitigate the risk of systems failure and  data loss, including systems back-up procedures, data security breach  response plan, disaster recovery plans and globally distributed data centres  providing a secure and reliable environment for hosting critical applications.  There is also appropriate virus protection, malware detection and  remediation, network security controls and penetration testing and encryption  of mobile devices. |
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|  | Strategic  report: strategic review 23 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Risk Mitigation Ethical  breach A substantive ethical breach and/or non-compliance with laws or  regulations could potentially lead to damage to Amec Foster Wheeler’s  reputation, fines, litigation and claims for compensation. This risk is  heightened as we transition from two Codes of Business Conduct and two  systems for raising ethical concerns to a single Code of Business Conduct and  a single system for raising ethical concerns for the combined group.  Confusion could arise amongst employees and give rise to an increased risk of  substantive non-compliance with the Codes of Business Conduct. In addition  personnel could engage in activities which could be in substantive breach of  laws and regulations. Amec Foster Wheeler has a number of measures in place  in the two legacy businesses to mitigate the risk of a substantive ethical  breach and/or non-compliance with laws or regulations, including: X embedded  policies and procedures; XCodes of Business Conduct; X segregation of duties;  Xmanagement oversight; X financial and operational controls; X independent  whistle-blowing mechanism; X appointment of ethics and compliance officers; X  anti-fraud and other internal audits; X legal team advice; X ethics training  programme; and X oversight by the ethics committee of the board (now the  HSSEE committee – see page 57). Work is underway to establish a single  combined Code of Business Conduct, revised global mandatory policies and  procedures and provide further appropriate training in 2015. Pensions Amec  Foster Wheeler operates a number of defined benefits pension schemes, where  careful judgement is required in determining the assumptions for future  salary and pension increases, discount rate, inflation, investment returns  and member longevity. There is a risk of underestimating this liability. This  risk to Amec Foster Wheeler’s pension schemes is mitigated by: X maintaining  a relatively strong funding position over time; X taking advice from  independent qualified actuaries and other professional advisers; X agreeing  appropriate investment policies with the trustees; and X close monitoring of  changes in the funding position, with reparatory action agreed with the  trustees in the event that a sustained deficit emerges. See note 14 on page  126 for further details on our pension schemes. Legacy risks Litigation and  business claims from divested and non-core businesses remain a risk to Amec  Foster Wheeler. Managing non-core legacy assets until divestment may require  skills that are not common to the rest of the Company. Ground contaminants  remain at some former Amec Foster Wheeler operational localities where the  pollutant may have been as a result of the Company’s operations, or the  Company is responsible for its clean-up. There is a risk that pollution may  result in a risk to human health or the environment. There is potential for  civil and/or criminal action against the Company for such pollutants. The  established legacy team manages these claims with internal and external legal  advice. The aim is to seek cost-effective management of litigation and  promote commercially sensible settlements where appropriate. Amec Foster  Wheeler has made provisions for the legacy issues that are believed to be  adequate and is not aware of any other current issues relating to disposed  businesses which are likely to have a material impact. Specialist teams with  the appropriate knowledge are brought in as required. In the case of any  historical contaminated land, strategies have been developed to minimise the  risk posed by such contaminated land, including asset management and land  remediation projects and they remain under continuing review. Asbestos  liability The legacy Foster Wheeler business is exposed to significant  numbers of claims relating to alleged exposure to asbestos. The quantum of  these claims is actuarially forecast each year and provisions are held  against these loss projections. However there is a risk that these loss  projections will be exceeded and the provisions could be inadequate to meet  the liabilities. There is a dedicated in-house finance and legal resource  comprising a team of specialist asbestos lawyers who manage the claims,  assisted by National Co-ordinating Counsel (NCC) and local counsel. A claims  strategy has been developed with the NCC and regular reviews are undertaken.  The team monitors legal developments in these claims and the strategy to deal  with them on a regular basis. The quantum of these claims is actuarially  forecast each year and provisions are held against the ultimate loss  projections. |
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|  | 24 Amec Foster Wheeler Annual  report and accounts 2014 Sustainability Sustainable development is shaping  our business every day. It is at the heart of our values. Greenhouse gas  emissions Year ended 30 September 2014 CO2e emissions in tonnes 2013 CO2e  emissions in tonnes Combustion of fuel and operation of facilities 24,126  28,863 Electricity, heat, steam and cooling purchased for own use 34,397  32,226 Per employee 2.16 2.13 Per £1m revenue* 15.74 15.37 *Based on AMEC  revenue only for 2014. The figures show scope one and two emissions* from our  global business where we have operational control. The 12-month period to 30  September (the carbon reporting year), rather than the calendar year, has  been used. This ensures actual data can be reported, even for those regions  where energy/fuel usage is more difficult to access. By reducing reliance on  estimation, a more accurate footprint can be provided in a timely manner. In  our figures, we use accepted methods of calculation based on the Greenhouse  Gas Protocol: A Corporate Accounting and Reporting Standard (revised  edition). We first adopted our operational control approach in 2001. We have  used national conversion factor guidelines (e.g. Environmental Protection  Agency, Environment Canada) where appropriate. We have restated our reported  2013 carbon data following the discovery that some project diesel fuel use  had not been included in the figure previously stated and through improvement  in company car data reporting within the Americas. Our figures for 2013 and  2014 are based on the AMEC business, as the Amec Foster Wheeler business did  not come into effect until after the carbon reporting year had ended. It is  our intention to report carbon emissions for the whole Amec Foster Wheeler  business for the 2015 carbon reporting year and beyond – and launch a  real-time microsite for public accountability. *Scope 1 emissions – all  direct greenhouse gas emissions from owned or controlled sources. Scope 2  emissions – indirect greenhouse gas emissions from consumption of purchased  electricity, heat or steam. Scope 3 emissions – other indirect emissions,  such as transport in vehicles not owned or controlled by the Company. Our  approach to sustainable business Our growth aspirations will only be achieved  by focusing on our customers and how we deliver our projects safely and  sustainably. We believe sustainable business is about integrating social,  environmental and economic concerns into core values and operations in a  transparent and accountable manner. Our customers face increasing legislative  and other pressures to operate in a sustainable way and we aim to support  them, working with our partners and supply chain. We are working with them to  provide innovative solutions to minimize resource use (water, materials,  energy), consider the long-term social requirements on projects (utilising  local workforce and suppliers, supporting the local communities in which we  work, etc.) and ensuring the delivery of safe projects (inherent within the  design, on site during delivery and onwards during the operation). In each of  these areas, we utilise our internal programmes and tools, along with our  technical and scientific expertise, to ensure consistent excellence. For us,  sustainability is integrated into the very core of our business and within  our decision making processes. We want to be recognised as a leader in  sustainable business practice, continually validating our social license to  operate by ensuring employees’ behaviours and actions are in line with our  values. In 2015 we will be developing and launching a new sustainability  strategy for Amec Foster Wheeler which will support the business and our  customers in delivering in these areas. Further details can be found in the  2014 sustainability report, to be issued via the new microsite in May 2015.  Additionally: Xwe continue to support SOS Children as our global strategic  charity and during 2014 our employees held events to raise monies to fully fund  a water project in the SOS village in Callao, Peru, to which the Company  donated £69,069; Xwe provided expertise to the International Federation of  Red Cross and Red Crescent Societies, designing transitional shelters to be  used in disaster situations; Xwe made additional payments of £384,694 to 274  charities, for which employees raised £530,591; X our total carbon footprint  reduced by 3,579 tonnes in 2014 to 84,154 tonnes in comparison to 2013,  however our carbon per person remained the same over the period; XAMEC was  awarded industry leader in the Dow Jones Sustainability Index for 2014/15 and  were given a gold class sustainability award by RobecoSAM Global  Sustainability Index; and X following the acquisition of Foster Wheeler, we  began an extensive stakeholder engagement process to identify and prioritise  the most material sustainability issues on which we will focus our attention  moving forwards. This results of this exercise will form the basis of a new  sustainability strategy for the business which will be published mid-2015.  Carbon emissions Tonnes CO2e per employees, scope 1, 2 and 3 3.1 2014 3.1  2013 3.2 2012 |
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|  | Strategic report: strategic  review 25 Amec Foster Wheeler Annual report and accounts 2014 Financials  Governance Additional information Global market trends Our markets are all  cyclical and we are not immune to the recent falls in key commodity prices –  such as oil, gas, copper and iron ore – which are all at five-year lows. Each  of our markets is expected to grow in the long term. We are positioned across  sectors so as to benefit whatever the relative weighting in the energy mix.  This diversity means we are not dependent on any one part of the energy mix.  Positive long-term trends At the time of writing in early 2015 the full  impact of the recent oil price decline is not yet clear. The early consensus  appears to be that global economic activity may receive a small boost from  lower fuel costs – but this will largely be offset by negative consequences  from lower levels of investment in the energy sector. Despite the current  volatility, long-term forecasts for global energy demand and supply have not  changed significantly over the past year. The International Energy Agency  (IEA) World Energy Outlook 2014 predicts a 37% increase by 2040. Long-term  oil demand is expected to increase more than 20% from just over 90 to 110  million barrels of oil per day by 2035. Changing hydrocarbon production mix A  change from today’s production mix is still expected, with crude oil falling  and a greater share being taken by natural gas liquids and unconventional  sources. In recent years the rapid increase in tight oil production – mainly  from the oil sands in Canada and shale oil in the US – together with huge  investments in liquefied natural gas projects has changed the nature of the  energy market, and created regional trade imbalances. In 2005 the US imported  more than 12 million barrels of oil per day, and it is now forecast to be  self-sufficient during the 2030s. Over the same period, China is expected to  import more than 13 million barrels per day, and to become the largest  importer. Changing energy mix Concerns around resource depletion, dangerous  emissions, stricter regulation and consumer preference are driving renewable  forms of energy, including nuclear, to increase their share of total energy  production. Amongst fossil fuels, gas is expected to grow its share, with oil  and coal reducing. The nuclear industry remains a fragmented market with a  consequence that our opportunities vary significantly. We expect to see new  build in the UK, Eastern Europe and in some countries in Asia; reactor life  extensions in the UK, Europe and North America; and decommissioning work in  the UK, Europe and North America. Overall, the IEA forecasts nuclear will be  used to generate around 12% of electricity in 2035, slightly above today’s  level. Emissions controls and the need for greater efficiency are also  driving change. Today, many renewable technologies benefit from local and  regional subsidies, which is currently supporting their growth. Strong  resource fundamentals remain More than 1.5bn people in emerging markets are  expected to become urbanised in the period to 2035, a key underlying driver  of long-term growth for the mining industry. However, lower commodity prices  and general economic uncertainty have caused the postponement or cancellation  of some projects in the near term. In addition, a number of major mining  companies have announced delays to projects and cost reduction programmes in  order to increase returns to their shareholders. Solid growth in  environmental consultancy The global environmental consultancy market is  expected to grow consistently in line with GDP, with services related to  climate change, energy and contaminated land/remediation expected to grow  particularly strongly. Energy mix % Oil & Gas Coal Renewable Nuclear  Other 56 30 3 4 7 Oil price At year end $ per barrel Source: Bloomberg, Brent  (USD/barrel) 57.33 2014 110.80 2013 111.11 2012 107.38 2011 94.75 2010 |
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|  | 26 Amec Foster Wheeler Annual  report and accounts 2014 Our markets We provide similar services in each of  our markets. We win work through strong customer relationships and our proven  ability to deliver projects successfully. Many of our services are  transferable across markets. We have positioned our operations across four  markets because we believe a diversified approach minimises risk and  maximises opportunities over the long term. We are always on the look-out for  strategic opportunities to enhance our position in our chosen markets. For  example, our January 2015 acquisition of Scopus complements our existing Oil  & Gas position by adding further cost-effective services across the whole  lifecycle of a project. In particular, the enhanced lean engineering  capability will allow us to provide a low-cost solution at the late-life  stage of a facility prior to decommissioning. Competitive environment There  is no one competitor operating in all the same markets, with the same  geographic footprint and with a similar approach to risk as Amec Foster  Wheeler. Oil & Gas The combination of AMEC and Foster Wheeler transformed  our market offering. We do not operate in early cycle exploration or  drilling, but we are now involved in every part of the project delivery phase  across the oil and gas value chain. In the upstream market, the majority of  our activity is for offshore assets, where we support fixed platforms and  floating production units, largely above the waterline. We are a market  leader in UK North Sea brownfield services and provide integrated solutions  to new entrant operators in the region. We also support onshore oil and gas  fields, booster stations, gathering centres, tank farms, gas-oil separation  plants and pipelines. Recent advances in the extraction of gas reserves in  onshore locations around the world have made gas monetisation one of the  fastest growing sectors in the global oil and gas industry, where we hope to  build on extensive experience. In the downstream market we work on new-builds  and major expansions and revamps, including clean fuels projects to meet new  legislation and residue upgrading to produce higher-value products. We have  more than 60 years of experience in the chemicals industry, encompassing  plants producing olefins, aromatics, fertilizers and a wide range of  specialty and fine chemicals. We operate in more than 50 countries, focusing  on four markets X Oil & Gas X Clean Energy X Mining X Environment &  Infrastructure 2014 scope revenue1 by end market % Oil & Gas Mining Clean  Energy Environment & Infrastructure 54 28 8 10 Oil & Gas scope  revenue1 % Upstream Midstream Downstream 7 41 52 1 Non-IFRS measure (see  Performance measures on pages 169 to 172) |
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|  | Strategic  report: strategic review 27 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Clean Energy In renewables,  our focus is on delivering projects for our customers, most of which are  local utilities. We provide a full service engineering, procurement and  construction (EPC) solution on wind, solar, biomass and biofuels projects.  This is mostly in North America, however we also plan to expand our positions  in the Middle East. Over the past three years we have seen strong growth in  the US for solar power, spurred on by subsidies which are due to be reviewed  in 2017. Our nuclear capability has been developed over 60 years, positioning  us to support the full lifecycle of nuclear energy, from new build and  reactor support (including lifetime extension) to nuclear decommissioning and  waste management. We have experience of a wide range of nuclear technology.  Our nuclear customers include major utilities, governments, national  regulators, reactor suppliers and other significant stakeholders. We have a  particularly strong presence in the UK and Canada, a growing business in the  US, a good presence in Central and Eastern Europe and South Africa, and  nascent propositions in Asia. We also have a long-standing relationship in  the UK and a growing presence in Canada with the transmission and  distribution system owners. We offer a full range of steam generator  equipment, clean air technologies, aftermarket products and services to the  power, industrial, and waste-to-energy sectors. In addition to engineering  and procurement, we offer fabrication facilities located in Europe and Asia  to deliver our products. Our experience comes from designing, servicing and  improving fossil generating plants that come from over 200 million hours of  successfully and reliably logged operation. Mining We support our customers’  projects in a diverse range of commodities, including potash, iron ore,  copper and gold. We offer mining consultancy (including ore resource  estimation, mine planning and feasibility studies), design, project and  construction management services and have whole-life service capabilities. We  are a leading international consultancy, with a leading position in the North  and South American engineering, procurement and construction management  (EPCM) markets. In addition to our established position in Australia, we are  growing our African business. Environment & Infrastructure (E&I) The environmental  consulting and engineering market includes services provided to all four of  our markets, with skills that are easily transferable across customers. By  positioning ourselves as a trusted partner right at the beginning of a  project – often the early site development and permitting stage – we can  deliver comprehensive solutions across the lifecycle of our customers’  assets. We are currently operating predominantly in the US, Canada and the  UK, with an emerging presence in the Middle East, Africa and Australasia. Our  E&I market alone consists of four sectors: Water Our primary areas of  focus are water resource management, water policy, coastal management, asset  planning and management, and wastewater collection and treatment. Water  services are also commonly provided to customers in our other markets,  including Mining & Metals and Oil & Gas.  Transportation/infrastructure We provide programme management, planning and  design, project and construction management, asset development and long-term  asset support. Our customers include government transportation agencies,  national and local customers and private developers in Canada and the US. We  have over 50 years’ experience in the sector. Government services We provide  a broad range of services to various clients, including the US Federal  Government, which is the largest procurer of environmental services in the  world. Customers also include various branches of the military and state/  provincial agencies. Services range from remediation programmes to design and  delivery of infrastructure facilities, including airfield facilities, housing  and site improvements at installations globally. Industrial/commercial We  provide compliance and due diligence services, ranging from geotechnical and  environmental to materials and water resources consulting. |
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|  | Connected  excellence 28 through customer insight Previously capable of tracking  approximately 23,000 basketball-sized objects in space, the new system will  be capable of tracking up to 200,000 such objects. |
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|  | Strategic  report: strategic review 29 Financials Governance Additional information The  Space Fence Program will enhance US detection and tracking of space objects  to help prevent space-based collisions. Our customer insight will enable us  to deliver facilities and infrastructure, including radar array buildings,  mechanical and operations buildings, power generation plants and site work to  create the largest ground-based radar of its type ever constructed. |
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|  | 30 Amec Foster Wheeler Annual  report and accounts 2014 Financial review Reported under IFRS £m unless  stated 2014 2013 Change Continuing operations Revenue 3,993 3,974 0% Profit  before net financing expense 148 243 -39% Profit before tax 155 255 -39% Cash  flow from operations 200 292 -32% Diluted earnings per share 35.1p 62.5p -44%  Dividend per share 43.3p1 42.0p +3% 1 Includes the proposed final dividend  for 2014 of 28.5p per ordinary share. Adjusted measures £m unless stated 2014  2013 Change Underlying change8 Continuing operations Scope revenue1 3,920  3,854 +2% +1% Trading profit2 321 343 -6% Trading margin3 8.2% 8.9% -70bps  Adjusted profit before tax4 317 332 -5% Trading cash flow5 283 341 -17% Cash  conversion6 88% 99% -110ps Adjusted diluted earnings per share7 79.5p 87.2p  -9% 1 Scope revenue represents reported revenue less flow-through procurement  revenue. 2 Trading profit represents profit before net financing expense  before the amortisation of intangible assets, asbestos-related costs (net of  insurance recoveries) and exceptional items, but including the Group’s share  of the trading profit of joint ventures. 3 Trading margin represents trading  profit expressed as a percentage of scope revenue. 4 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. 5 Trading cash flow represents cash generated from operations  before cash flows arising from exceptional items, asbestos-related payments  (net of insurance recoveries), the difference between retirement benefit  contributions and the current service cost, legacy settlements and  discontinued operations, and currency translation differences on working  capital, but including dividends received from joint ventures. 6 Cash  conversion represents trading cash flow expressed as a percentage of trading  profit. 7 Adjusted diluted earnings per share represents profit for the year  from continuing operations before exceptional items, the amortisation of  intangible assets, asbestos-related costs and interest expense (net of  insurance recoveries), and the tax effect of those items, divided by the  diluted number of ordinary shares. 8 Underlying change excludes the effect of  flow-through procurement, acquisitions and disposals of businesses and  currency exchange rate movements. Ian McHoul Chief Financial Officer |
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|  | Strategic  report: performance review 31 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Basis of preparation  Accounting policies The Group’s consolidated financial statements for the  year ended 31 December 2014 have been prepared in accordance with IFRS as  adopted for use in the EU and those parts of the Companies Act 2006 that are  applicable to companies reporting under IFRS. From the Group’s perspective,  there are no differences between IFRS as adopted for use in the EU and IFRS  as issued by the IASB. The Group’s principal accounting policies during 2014  were unchanged compared with 2013. Critical accounting estimates and  judgements As outlined in note 1 to the consolidated financial statements,  management considers that the most significant areas of judgement and  estimation made in preparing the consolidated financial statements arise in  relation to the accounting for long-term contracts, business combinations,  defined benefit pensions and other retirement benefits and provisions  (including asbestos-related liabilities), and in assessing the recoverability  of goodwill and other intangible assets. Adjusted performance measures We  report adjusted performance measures because they provide both management and  investors with useful additional information about the underlying trading  performance of the business. Before we acquired Foster Wheeler, the adjusted  performance measures that we reported excluded the amortisation of intangible  assets and exceptional items and, where relevant, the tax effects of those  items. On the acquisition of Foster Wheeler, we assumed significant  additional asbestos-related obligations in relation to claims for damages  made or expected to be made by individuals who allege that they have suffered  personal injury from exposure to asbestos primarily in connection with  equipment allegedly manufactured by Foster Wheeler’s subsidiaries during the  1970s and earlier. When Foster Wheeler’s obligations are added to AMEC’s  existing, though much less significant, asbestos-related obligations, there  is the possibility in the future that the Group’s results and cash flows will  be materially affected by changes in these asbestos-related obligations or  our provisions for these obligations. We have therefore additionally excluded  from the adjusted performance measures the asbestos-related costs and  interest expense (net of insurance recoveries) and, where relevant, the tax  effect of those items. In previous years, asbestos-related costs incurred by  AMEC were not material to the Group’s trading performance and therefore there  has been no restatement of the adjusted performance measures presented for  2013 and 2012. 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. Continuing operations Revenue Revenue for the  year was broadly unchanged compared with last year at £3,993m (2013:  £3,974m). Revenue declined by £175m in the Americas and by £108m Europe, but  increased by £54m in the Growth Regions. Revenue from Oil & Gas was down  13%, Mining was down 14% and E&I down 3%, but revenue from Clean Energy  was up 11%. Revenue in all markets was adversely affected by the strength of  sterling, particularly against the US dollar. Overall, currency exchange rate  movements reduced revenue by £238m in 2014 compared with 2013. Foster Wheeler  contributed £274m to the Group’s revenue during the last seven weeks of the  year following its acquisition in November 2014. Flow-through procurement  decreased by £47m to £73m (2013: £120m). Excluding flow-through procurement,  the effect of acquisitions and currency movements, underlying revenue  increased by 1%. Underlying revenue from Oil & Gas was down 5% and that  from Mining down 6%, but Clean Energy was up 16% and E&I was up 5%.  Seasonality The Group’s revenue is generally higher in the second half of the  year, principally because weather conditions in the northern hemisphere are  typically more conducive to project activity. Administrative expenses Administrative  expenses were £354m (2013: £293m), including exceptional items, intangibles  amortisation and asbestos-related costs (net of insurance recoveries)  totalling £135m (2013: £65m). Administrative expenses before intangibles  amortisation, exceptional items and net asbestos-related costs declined by 4%  to £219m (2013: £228m), principally due to the impact of currency movements  and reduced share-based payment charges. Also determined on this basis,  Foster Wheeler’s administrative expenses following its acquisition were £26m.  Corporate costs, which comprise the costs of operating central corporate  functions and certain regional overheads, were £4m lower at £31m (2013:  £35m). Profit before net financing expense Profit before net financing  expense was significantly lower at £148m (2013: £243m), largely due to  exceptional costs incurred during 2014 in relation to the acquisition of  Foster Wheeler. |
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|  | 32 Amec Foster  Wheeler Annual report and accounts 2014 Trading profit and trading margin £m  unless stated 2014 2013 Change Underlying change1 Revenue 3,993 3,974 0%  Flow-through procurement (73) (120) Scope revenue1 3,920 3,854 +2% +1% Profit  before net financing expense 148 243 – Intangibles amortisation 49 47 – Net  asbestosrelated costs 8 – – Exceptional items 94 25 – Share of trading profit  of joint ventures 22 28 Trading profit1 321 343 -6% Trading margin1 8.2% 8.9%  -70 bps Order book £6.3bn £4.1bn +55% 1 Non-IFRS measure (see Performance  measures on pages 169 to 172). Trading profit decreased by 6% to £321m (2013:  £343m). Trading margin decreased by 70 basis points to 8.2% (2013: 8.9%). In  Americas, trading profit fell due to the impact of currency translation and  lower levels of activity in Oil & Gas and Mining, being partially offset  by increased work in Clean Energy. Trading margin declined partially due to  this change in market mix towards lower margin Clean Energy and because of  the timing of large contract close-outs, which were particularly favourable  in 2013. In Europe, trading profit and trading margin both increased compared  with 2013, largely as a result of the nonrecurrence of the losses from the Teesside  Gas Processing Plant contract. In the Growth Regions, trading profit fell due  to the impact of currency translation and a lower contribution from Clean  Energy and E&I. Compared with 2013, Growth Regions trading margin fell  due to pricing pressure from customers and investment for growth. Currency  exchange rate movements reduced trading profit by £22m in 2014 compared with  2013. Financial review continued Amortisation and impairment of intangible  assets Intangible assets principally comprise goodwill and identifiable  intangible assets that were recognised in relation to acquired businesses.  Goodwill is not amortised but is subject to an annual impairment test. No  impairment was recognised in either 2014 or 2013. Intangibles amortisation  was £49m (2013: £47m). Whilst an additional amortisation expense of £11m was  recognised on the intangible assets acquired with Foster Wheeler and there  was the full-year amortisation of intangible assets recognised in  acquisitions completed in 2013, the year-on-year change was reduced because  the amortisation expense in 2013 included the accelerated amortisation of  certain intangible assets. We expect the full-year impact of the amortisation  of intangible assets acquired with Foster Wheeler to be approximately £85m.  Asbestos-related costs (net of insurance recoveries) During 2014, the Group  recognised net asbestos-related costs of £8m (2013: £nil) in profit before  net financing expense, which largely related to the reduction between the  acquisition date and the year-end date in the discount rate applied to the  net asbestos-related liabilities assumed on the acquisition of Foster  Wheeler. In addition, the Group recognised an asbestos-related interest  expense of £1m (2013: £nil). Exceptional items Net exceptional costs totalling  £98m (2013: £25m) were recognised in arriving at profit before tax from  continuing operations, as follows: X costs of £41m in relation to the  acquisition of Foster Wheeler (including transaction costs of £37m within  administrative expenses and acquisition-related facility fees amortisation of  £4m within net financing expense); X costs of £35m relating to the  integration of AMEC and Foster Wheeler (including internal staff costs  associated with identifying and achieving cost synergies); X costs of £6m incurred  in completing the restructuring of AMEC’s business onto a geographical basis;  and X a net loss of £16m on the exit of businesses, comprising a loss of £21m  on businesses sold in the year (principally the reverse premium payable on  exit from the Group’s investment in the Lancashire Waste project), which was  partially offset by a gain of £5m on the release of a provision no longer  required in respect of a business closed in a previous year. |
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|  | Strategic  report: performance review 33 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Net financing expense Net  financing expense was £5m (2013: £2m), including net bank interest payable of  £7m (2013: £2m), net foreign exchange losses of £nil (2013: £1m), and net  interest income on pension assets and liabilities of £2m (2013: £1m). In  2014, net financing expense also included a net expense of £1m (2013: £nil)  due to the unwinding of the discount on asbestos-related liabilities (net of  insurance recoveries). A net currency exchange loss of £4m (2013: loss of  £1m) was recognised in the translation reserve in respect of foreign currency  borrowings and derivatives held in designated net investment hedging  relationships. Share of results of joint ventures The Group’s share of joint  ventures’ profit for the year was £12m (2013: £14m). Profit before tax Profit  before tax was £155m (2013: £255m) after intangibles amortisation of £49m  (2013: £47m), net asbestos-related costs and interest expense of £9m (2013:  £nil), exceptional items of £98m (2013: £25m) and the Group’s share of joint  ventures’ tax expense of £6m (2013: £5m). Adjusted profit before tax was 5%  lower at £317m (2013: £332m), reflecting the overall decline in the Group’s  trading performance in 2014 compared with 2013. Taxation Our tax policy is to  manage our obligations in compliance with all relevant tax laws, disclosure  requirements and regulations. We seek to ensure that our approach to tax and  the tax payments that we make in all territories in which we have operations  are fully consistent with local requirements, taking into account available  tax incentives and allowances, and are aligned with the Group’s wider  business strategy. We seek to develop good, open working relationships with  tax authorities and to engage with them proactively, recognising that tax  legislation can be complex and may be subject to differing interpretations.  During 2014, there was a tax credit on exceptional items of £6m (2013: tax  charge of £6m), and a tax credit of £12m on intangibles amortisation (2013:  £20m). In addition, there was an exceptional tax charge of £16m in 2013. The  Group’s share of joint ventures’ income tax expense was £6m (2013: £5m). The  Group’s effective tax rate on continuing operations (including its share of  joint ventures’ income tax expense but before exceptional items, intangibles  amortisation and asbestos-related items) increased to 23.0% (2013: 21.9%).  The increase principally reflected reduced prior period credits which result  from agreement of historical items with various tax authorities. In addition,  2013 included a credit following a reduction in the tax rate applied to the  UK pension surplus which was not repeated in 2014. Profit for the year from  continuing operations Profit for the year from continuing operations was  £106m (2013: £186m) after intangibles amortisation of £49m (2013: £47m), the  net asbestos-related expense of £9m (2013: £nil), net exceptional items of  £98m (2013: £25m), and an income tax credit on those items of £18m (2013:  charge of £2m). Adjusted profit for the year from continuing operations was  6% lower at £244m (2013: £260m). Non-controlling interests During 2014, there  was a loss of £3m attributable to noncontrolling interests (2013: loss of  £1m). Earnings per share Diluted EPS was 26.5p (2013: 59.8p), comprising  earnings per share of 35.1p (2013: 62.5p) from continuing operations and a  loss of 8.6p (2013: 2.7p) from discontinued operations. Adjusted diluted EPS  from continuing operations was lower at 79.5p (2013: 87.2p), due to the  decline in the profit for the year from continuing operations and the  increase in the number of shares in issue as a consequence of the acquisition  of Foster Wheeler. Dividend The board recommends a final dividend of 28.5p  per share, which, together with the interim dividend of 14.8p per share,  results in a total dividend of 43.3p per share (2013: 42.0p), an increase of  3%. Subject to approval by shareholders at the AGM on 14 May 2015, the final  dividend will be payable on 2 July 2015 to shareholders on the register at  the close of business on 29 May 2015. Dividend cover for 2014 is 1.8 times  (2013: 2.1 times) based on adjusted diluted EPS from continuing operations.  Going forward, the board expects to maintain a progressive dividend policy  whilst maintaining dividend cover at around two times adjusted diluted EPS  from continuing operations. |
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|  | 34 Amec Foster  Wheeler Annual report and accounts 2014 Financial review continued Europe £m  unless stated 2014 2013 Change Underlying change1 Revenue 1,119 1,227 -9% -8%  Profit before net financing expense 70 63 – Intangibles amortisation 17 17 –  Exceptional items 3 1 – Share of trading profit of joint ventures 11 12  Trading profit1 101 93 +9% Trading margin1 9.1% 7.6% +150bps Order book  £1.8bn £1.7bn +3% 1 Non-IFRS measure (see Performance measures on pages 169  to 172). Revenue in Europe fell by 9% to £1,119m (2013: £1,227m), primarily  due to the reduced level of Oil & Gas activity in the North Sea.  Underlying revenue declined by 8%. Trading profit increased by 9% to £101m  (2013: £93m). Trading margin was 9.1%, up 150 basis points compared with  2013, largely as a result of the non-recurrence of losses from the Teesside  Gas Processing Plant. Growth Regions £m unless stated 2014 2013 Change  Underlying change1 Revenue £m 590 536 +10% +18% Profit before net financing  expense 20 10 – Intangibles amortisation 4 12 – Exceptional items 2 7 – Share  of trading profit of joint ventures 4 4 Trading profit1 30 33 -9% Trading margin1  5.1% 6.2% -110ps Order book £0.9bn £0.9bn 1 Non-IFRS measure (see Performance  measures on pages 169 to 172). Revenue in Growth Regions improved by 10% to  £590m (2013: £536m), primarily driven by increased revenue from Oil & Gas  activities in the Middle East and a partial recovery in Mining revenue in  Australia. Underlying revenue increased by 18%, principally due to the  exclusion of adverse currency exchange rate movements. Trading profit fell by  9% to £30m (2013: £33m), reflecting lower contributions from Clean Energy and  E&I. Trading margin was 5.1%, down 110 basis points compared with 2013,  due to pricing pressure from customers and investment for growth. Results by  operating segment Americas £m unless stated 2014 2013 Change Underlying  change1 Revenue 2,072 2,247 -8% Flow-through procurement (73) (120) Scope  revenue1 1,999 2,127 -6% +4% Profit before net financing expense 195 211 –  Intangibles amortisation 17 18 – Exceptional items (6) 10 – Share of trading  profit of joint ventures 1 2 Trading profit1 207 241 -14% Trading margin1  10.2% 11.3% -110bps Order book £1.2bn £1.4bn -14% 1 Non-IFRS measure (see  Performance measures on pages 169 to 172). Revenue in Americas was £2,072m  (2013: £2,247m), a decline of 8%. Excluding flow-through procurement, the effect  of acquisitions and currency movements, underlying revenue was up 4%. Growth  in underlying revenue in Clean Energy and E&I was partially offset by  declines in Oil & Gas and Mining. Trading profit fell by 14% to £207m  (2013: £241m), largely as a result of the reduced levels of activities in Oil  & Gas and Mining. Trading margin was 10.2%, down by 110 basis points  compared with 2013. Trading margin declined principally due to increased  weighting of lower-margin Clean Energy in the product mix and due to the  timing of large contract close-outs, which were particularly favourable in  2013. |
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|  | Strategic report:  performance review 35 Amec Foster Wheeler Annual report and accounts 2014  Financials Governance Additional information Acquisitions Acquisition of  Foster Wheeler On 13 November 2014, the Group acquired a 95.3% interest in  Foster Wheeler AG by way of a public tender offer. Consideration payable for  the interest acquired totalled £1,915m, of which £979m was settled in cash,  £919m was settled by the issue of approximately 85m of the Company’s ordinary  shares and ADSs and £17m was settled by the grant of replacement share  options and awards. Management’s preliminary assessment shows that the net  identifiable assets of Foster Wheeler amounted to £362m at the acquisition  date. Adjustments made in the purchase price allocation included the  recognition of identifiable intangible assets of £738m, an increase in net  asbestos-related liabilities of £178m, additional provisions for project  litigation of £66m and provisions for unfavourable property leases of £70m.  As at 31 December 2014, provisional goodwill of £1,583m was recognised on the  acquisition of Foster Wheeler. Acquisition costs relating to Foster Wheeler  totalling £37m were recognised within administrative expenses during 2014. In  January 2015, the Group acquired the remaining 4.7% interest in Foster Wheeler  AG by way of a ‘squeeze-out merger’ under Swiss law for consideration of  £85m, of which £51m was paid in cash and £34m was settled by the issue of 4.3  million of the Company’s ordinary shares and ADSs. Further details of the  acquisition of Foster Wheeler are set out in note 24 to the consolidated  financial statements. Acquisition of Scopus On 15 December 2014, the Group  acquired the entire issued share capital of Scopus Group (Holdings) Limited  for £68m in cash (of which payment of £1m is deferred until the first  anniversary of the acquisition). Management’s preliminary assessment shows  that the net identifiable assets of Scopus amounted to £34m at the  acquisition date. As at 31 December 2014, provisional goodwill of £34m was  recognised on the acquisition of Scopus. Liquidity and capital resources Cash  flow Trading cash flow Trading cash flow was lower at £283m (2013: £341m),  principally due to the reduction in trading profit and an increase in working  capital of £31m. Cash conversion fell back to 88% (2013: 99%). Cash generated  from operations Cash generated from operations was £200m (2013: £292m), a  decrease of £92m which was largely due to the £58m decline in trading cash  flow and the increase of £37m in the cash outflow on exceptional items  (principally acquisition-related costs). E&C Services and Global Power  Group E&C Services and Global Power Group are Foster Wheeler business  units and therefore contributed to the Group’s performance only for the final  seven weeks of the year following the acquisition of Foster Wheeler in  November 2014. E&C Services contributed revenue of £221m and a trading  profit of £4m (before intangibles amortisation of £7m). As at 31 December  2014, the value of E&C Services’ order book was £2.0bn. Global Power  Group contributed revenue of £53m and a trading profit of £2m (before  intangibles amortisation of £4m). As at 31 December 2014, the value of Global  Power Group’s order book was £0.4bn. Investment Services During the periods  under review, Investment Services principally comprised the Incheon Bridge  PPP project in Korea and the Lancashire Waste project (which the Group exited  in 2014), the Group’s insurance captive, the Group’s wind development  activities and a range of other non-core activities. Revenue in Investment  Services was £6m (2013: £6m). Investment Services incurred a loss before net  financing expense of £16m (2013: £3m), after deducting an exceptional loss on  disposals of businesses of £21m (2013: £nil). Trading profit was £8m (2013:  £11m), of which £3m (2013: £7m) was derived from joint ventures. Discontinued  operations Discontinued operations represent the residual assets and retained  obligations of businesses sold in prior years, together with the UK  conventional power business that was classified as a discontinued operation  during 2013. Discontinued operations generated a trading loss before tax of  £10m (2013: loss of £10m) and after a tax credit of £2m (2013: £2m) generated  a loss for the year of £8m (2013: loss of £8m). During 2014, negative revenue  of £13m was recognised due to the settlement of final accounts and additional  provisions on certain contracts within the UK conventional power business.  Discontinued operations included a loss on disposals of £23m (2013: loss £6m)  arising from additional indemnity provisions and costs associated with  businesses sold in prior years. In 2014, the loss on disposals included a  provision of £11m in respect of a new claim received in the year related to a  contract completed by the Built Environment business which was sold in 2007.  Discontinued operations generated an overall loss for the year of £27m (2012:  £8m). |
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|  | 36 Amec Foster  Wheeler Annual report and accounts 2014 Net (debt)/cash comprised: As at 31  December 2014 £m 2013 £m Cash balances 516 250 Bank overdrafts – (9) Bank  loans (net of facility fees) (1,258) (120) Finance lease obligations (61) –  Net (debt)/cash (803) 121 Cash balances We manage our cash balances such that  there is no significant concentration of risk in any one bank or other  financial institution. We monitor closely the credit quality of the  institutions that hold the Group’s deposits. Similar consideration is given  to the Group’s portfolio of derivative financial instruments. As at 31  December 2014, the Group had cash balances totalling £516m (2013: £250m), of  which 85% was held in institutions with a long term credit rating of at least  A- (or equivalent) by at least two of Standard & Poor’s, Moody’s or  Fitch. Borrowings Borrowing facilities We seek to maintain a balanced capital  structure comprising a mix of debt and equity, which is determined by  considering the Group’s business profile and strategy, financial policies and  the availability and cost of funding. We expect the Group’s long-term net  debt to be no more than two times trading profit. Whilst we may choose to  exceed this limit if required, we would expect any such increases to be  temporary given the Group’s net trading cash inflows. As at 31 December 2014,  the Group had committed banking facilities of £1,863m (2013: £477m). In  February 2014, the Group entered into a US$2,160m credit facility agreement  with a syndicate of lenders. In July 2014, the facility agreement was amended  to, among other things, increase the financing available under the facility  to US$2,260m. As at 31 December 2014, the facilities available under the  agreement were as follows: X Facility A, a US$250m bridge to cash facility  maturing August 2015; X Facility B, a US$830m bridge facility maturing  February 2015 (with two six-month extensions available at the Group’s  option); X Facility C, a US$830m term loan maturing in equal instalments in  2017, 2018 and 2019; and X Facility D, a US$350m revolving credit facility  maturing May 2016. Financial review continued Capital expenditure Capital  expenditure was £31m (2013: £23m). Additionally, in 2014, purchases of  computer software amounting to £33m were financed using deferred payment  arrangements. Acquisitions and disposals Cash consideration paid on the  acquisition of business was £1,049m, which comprised £982m for Foster Wheeler  (including a currency hedging loss of £3m) and £67m for Scopus. During 2014,  the net cash outflow on acquisitions was £781m (2013: £21m), after deducting  cash and cash equivalents of £268m (2013: £nil) held by the acquired  businesses. Also, during 2014, there was a cash outflow of £23m (2013:  outflow of £4m) in relation to businesses sold, which principally related to  the reverse premium paid to exit Lancashire Waste. After taking into account  debt owed by acquired businesses, the effect of acquisitions and disposals  was to increase the Group’s net debt by £876m (2013: £31m). Movement in net  (debt)/cash The movement in net (debt)/cash may be analysed as follows: Year  ended 31 December 2014 £m 2013 £m Trading cash flow 283 341 Net  asbestos-related payments (5) – Excess of retirement benefit contributions  over current service cost (2) – Cash outflow on exceptional items (58) (21)  Legacy settlements and discontinued operations (9) (14) Dividends received  from joint ventures (14) (8) Exchange rate movements 5 (6) Cash generated  from operations 200 292 Income taxes paid (net) (54) (52) Interest paid (net)  (3) (2) Capital expenditure (net of disposals) (31) (22) Acquisitions and  disposals (net) (876) (31) Ordinary dividends (124) (108) Net share movements  6 (40) Exchange and other movements 7 5 Cash movement in net (debt)/cash  (875) 42 Non-cash movements (49) (20) Movement in net (debt)/cash (924) 22  Opening net (debt)/cash 121 99 Closing net (debt)/cash (803) 121 |
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|  | Strategic  report: performance review 37 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Facilities A, B and C were  for the purpose of financing the acquisition of Foster Wheeler, including the  payment of all fees, costs and expenses associated with the acquisition and  the repayment of the Group’s £100m 12-month term loan that matured in April  2014. Facility D is available for general corporate purposes but may not be  used for the same purposes as Facilities A, B and C. Facility D is currently  utilised only for providing bank guarantees. We extended Facility B for six  months in February 2015 and intend to refinance this facility in the capital  markets during 2015. We also have a five-year £377m multi-currency revolving  credit facility that matures in July 2017. As at 31 December 2014, the Group  had committed borrowing headroom of £440m (in addition to cash balances of  £516m): Facility £m Drawings £m Headroom £m Credit facility agreement –  Facility A 160 (70) 90 – Facility B 532 (532) – – Facility C 532 (532) – –  Facility D 225 (157) 68 Revolving credit facility 377 (95) 282 Project debt  37 (37) – Finance leases 61 (61) – Committed facilities 1,924 (1,484) 440  Uncommitted facilities 30 – 30 Total facilities 1,954 (1,484) 470 Interest  rate profile The majority of the Group’s borrowings are denominated in US  dollars and bear interest at floating rates. Our policy is to maintain  between 30% and 70% of the Group’s borrowings at fixed rates of interest. We  achieve this by using interest rate swaps and other interest rate  derivatives. As at 31 December 2014, only 23% of the Group’s borrowings were  effectively at fixed interest rates but we increased this proportion above  30% in January 2015. As at 31 December 2014, the weighted average effective  cost of the Group’s outstanding borrowings was 2.0% and the effective  interest maturity was 19 months. Borrowing covenants We are subject to  customary covenants, representations and warranties in relation to our  borrowing facilities. Our debt financing facility contains certain financial  covenants as defined in the facility agreement including: X the ratio of  consolidated net total borrowings to adjusted consolidated EBITDA must not  exceed 3.25 times EBITDA; and X the ratio of consolidated EBITDA to  consolidated net finance costs must not be less than 3.0 times. We satisfied  these financial covenants by a comfortable margin for the year ended 31  December 2014. Currency profile of debt We aim to maintain the currency of  the Group’s debt in proportion to the currencies in which the net assets of  the Group’s businesses are denominated. We achieve the desired currency  profile of the Group’s debt by entering currency derivative contracts. As at  31 December 2014, the effect of our hedging activity on the currency profile  of the Group’s debt was as follows: Debt before hedges £m Effect of hedges £m  Debt after hedges £m Currency: – Sterling 116 71 187 – US dollar 1,161 (494)  667 – Euro 42 192 234 – Canadian dollar – 231 231 1,319 – 1,319 Other assets  and liabilities Goodwill and other intangibles As at 31 December 2014, the  carrying amount of goodwill was £2,390m (2013: £757m), with the increase  during the year principally due to the addition of the goodwill recognised on  the acquisition of Foster Wheeler (£1,583m) and Scopus (£34m). As at 31  December 2014, the carrying amount of other intangibles was £929m (2013:  £150m), which comprised acquired identifiable intangible assets of £851m  (2013: £113m) and computer software of £78m (2013: £37m). We recognised  identifiable intangible assets amounting to £738m on the acquisition of  Foster Wheeler and £31m on the acquisition of Scopus, which principally  comprised customer relationships, brands and trademarks and their respective  order backlogs. Whilst additions to other intangible assets were significant,  the amortisation expense increased only slightly to £49m (2013: £47m) because  both Foster Wheeler and Scopus were acquired late in 2014. Research and  development Our engineering, project management and consultancy businesses  seek to develop advanced engineering solutions for our customers targeted  towards the achievement of new or improved functions and performance of their  assets. Our businesses are involved in front-end and detailed engineering design  and implementation and testing activities across a broad range of markets  including the Oil & Gas, Mining and Clean Energy sectors. GPG also  conducts research and development activities in the areas of combustion;  solid, fluid and gas dynamics; heat transfer; materials; and solid mechanics.  GPG licenses its technology to a limited number of third parties in select  countries or markets. In the UK, the US and Canada, the Group claims research  and development government credits. Research and development expenditure net  of amounts recoverable from customers and government credits claimed is not  material to the Group’s operating results. |
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|  | 38 Amec Foster  Wheeler Annual report and accounts 2014 Property, plant and equipment As at  31 December 2014, property, plant and equipment amounted to £157m (2013:  £39m), with the increase during the year largely due to property amounting to  £84m and plant and equipment amounting to £34m acquired with Foster Wheeler  and Scopus. We hold the majority of the properties through which the Group  operates under operating leases which are for varying periods and on  differing terms. The Group has a network of over 350 offices worldwide, which  range from regional hubs, with a headcount of between 1,000 and 2,500 employees,  to smaller offices with more local focus. It is expected that the number of  properties that are occupied by the Group will be reduced following the  integration of Foster Wheeler’s businesses. Due to the geographical spread of  the Group’s operations, there is no individual facility the loss of which  would have a material adverse impact on the Group’s operations. Equally,  there are no plans to construct, expand or improve facilities that would, on  completion or cancellation, significantly affect the Group’s operations.  Post-retirement benefits The Group has a number of defined benefit pension  plans in a number of countries. Following the acquisition of Foster Wheeler,  there are three principal plans: two in the UK and one in the US. Each of  these plans is closed to new entrants and the two Foster Wheeler plans are  also closed to future service accruals. As at 31 December 2014, the net  deficit on the Group’s defined benefit pension plans amounted to £86m (2013:  net surplus of £40m). During 2014, the Group contributed £32m (2013: £29m) to  defined benefit pension plans and expects to contribute £33m in 2015,  including special contributions of £6m. Further information on the Group’s  retirement benefit plans is provided in note 14 to the consolidated financial  statements. Asbestos-related obligations Both AMEC and Foster Wheeler are  subject to claims by individuals who allege that they have suffered personal  injury from exposure to asbestos primarily in connection with equipment  allegedly manufactured by certain of their subsidiaries during the 1970s and  earlier. As at 31 December 2014, the Group recognised: X asbestos-related  liabilities of £407m (after the effect of discounting of £76m), which  included estimates of indemnity amounts and defence costs for open and yet to  be asserted claims expected to be incurred in each year in the period to  2050; and X insurance recoveries of £107m (after discounting of £4m).  Provisions Provisions held at 31 December 2014 amounted to £696m (2013:  £163m), with the substantial increase during the year arising principally due  to the recognition of obligations assumed on the acquisition of Foster  Wheeler. Otherwise, additional provisions of £20m were recognised in relation  to businesses sold in prior years and additional provisions of £5m were  recognised in relation to the Group’s insurance captive. Unutilised  provisions amounting to £11m were released during 2014. Provisions may be  summarised as follows: As at 31 December 2014 £m 2013 £m Asbestos-related  litigation 372 12 Project litigation 120 37 Obligations relating to disposed  businesses 87 71 Property-related provisions 85 8 Other provisions 32 35 696  163 Details of the provisions held by the Group are set out in note 21 to the  consolidated financial statements. Non-controlling interests As at 31  December 2014, non-controlling interests in equity amounted to £29m (2013:  £2m), with the increase during the year being principally due to the addition  of the 4.7% noncontrolling interest in Foster Wheeler AG that existed when  the Group took control of Foster Wheeler in November 2014 and was  subsequently acquired by the Group in January 2015. Distributable reserves As  at 31 December 2014, the Company’s distributable reserves stood at £726m  (2013: £842m). £m As at 31 December 2013 842 Dividends paid during 2014 (124)  Dividends received from subsidiaries 75 Transaction and integration costs  (50) Other costs (17) As at 31 December 2014 726 During 2012, the Company  generated a significant profit from a group restructuring which becomes distributable  as qualifying consideration is received by the Company in settlement of the  associated loan. During 2014, the Company received £nil (2013: £163m).  Financial review continued |
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|  | Strategic  report: performance review 39 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information Contractual obligations As at  31 December 2014, the Group’s contractual obligations were as follows:  Earliest period in which payment due Total £m Less than one year £m Between  one and two years £m Between two and five years £m After more than five years  £m Bank and other loans – Principal 1,267 706 5 545 11 – Interest1 57 11 13  22 11 Derivative financial instruments1, 2 19 15 2 2 – Finance leases 80 12  12 35 21 Operating leases 472 99 108 141 124 Post-retirement benefits3 33 33  – – – Total4 1,928 876 140 745 167 1 Floating rate interest payments and  payments on the floating rate legs of interest rate derivatives are estimated  based on market interest rates as at 31 December 2014. 2 Payments on foreign  currency derivatives are estimated based on market exchange rates as at 31  December 2014. 3 Post-employment benefit obligations represent contributions  to which the Group is committed and are not subject to potential future  adjustment to reflect investment performance and other actuarial factors. 4  Future payments relating to the Group’s uncertain tax positions are not  included because it is not practicable to estimate reliably the timing of  these cash outflows. Off-balance sheet arrangements At 31 December 2014, the  Group had no off-balance sheet arrangements that have or are reasonably likely  to have a current or future effect on the Group’s financial condition,  revenues or expenses, results of operations, liquidity, capital expenditures  or capital resources that is material to investors. Details of the Group’s  operating lease commitments are set out in note 25 to the consolidated  financial statements. Outlook for 2015 During the remainder of 2015, we  expect to see a continuation of recent trends – with growth in Clean Energy,  downstream and Middle Eastern Oil & Gas markets offsetting tougher  conditions elsewhere. We expect this mix of performance, together with the  increased customer pricing pressure and cost saving plans, to lead to a  modest reduction in like-for-like trading margins. On current market  forecasts, the reversal of the currency headwinds we experienced in 2014 will  add approximately £150m to the Group’s scope revenue in 2015. Going concern  Based on internal forecasts and projections that take into account reasonably  possible changes in the Group’s trading performance, the directors consider  that the Company and the Group have adequate financial resources to continue  in operation for the foreseeable future. Accordingly, the directors continue  to adopt the going concern basis in preparing the Company’s and the Group’s  financial statements. We outline on pages 21 to 23 the principal risks and  uncertainties that may affect the Group’s results, cash flows and financial  position. |
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|  | 40 Amec Foster Wheeler Annual  report and accounts 2014 The Americas is the largest business unit, with  material market positions in each of our four core markets: Oil & Gas,  Mining, Clean Energy, and Environment & Infrastructure. Our business  units from 1 January 2015 Northern Europe and CIS Americas 2014 Scope  Revenue1 % Oil & Gas Mining Clean Energy Environment & Infrastructure  41 13 30 16 Our 12,000 people focus on three key markets: Oil & Gas, Clean  Energy, and Environment & Infrastructure. Our newly combined capabilities  give us real opportunities to deliver new and existing services for our  customers in all these markets. We have around 16,000 expert employees in  over 150 offices; geographically our region covers northern Canada to  southern Chile and from Vancouver Island to Newfoundland. Our experts support  our customers in consulting, through the EPC project lifecycle (including  engineering, procurement, project management and construction), into  operations & maintenance, and remediation and reinstatement. Key Oil  & Gas projects currently underway include oil sands work for Imperial  Oil, Syncrude, CNRL, Suncor and Shell among others, and the provision of  consulting and project services in US shale gas. In downstream, we continue  to work on the Propane Dehydrogenation project in Texas for Enterprise  Products and projects for Lyondell Bassell and Dow. In Latin America we  continue to build our relationship through project activity with PEMEX in Mexico  and Ecopetrol in Colombia. Mining activity in project delivery include a  number of copper, gold and potash EPCM projects for Codelco, Newmont,  Thompson Creek, PotashCorp and K+S Potash. In E&I site remediation  programme for Honeywell and Duke. Contracts won in the past 12 months include  the speciality construction contract for the US Space Fence Program, EPCM for  Rainy River Gold project in Canada and engineering and design work for the  secondary ore processing facility at Chuquicamata copper concentrator. Key  projects worked on during the year include BP’s Clair Ridge, GDF Suez Cygnus  fields in the North Sea, continuing work on long-term brownfield engineering  contracts with Talisman and Shell ONEgas. New projects included an EPCM award  for the Shah Deniz 2 topsides for BP in Azerbaijan, and front-end engineering  and design for Chevron’s Captain expansion six-year brownfield contract with  Nexen for the UK North Sea. Beyond oil & gas projects, on-going clean  energy projects include reactor services support work for EDF’s nuclear power  stations in the UK. New projects include the owner’s engineer role for PGE  Polska on its potential nuclear new build programme in Poland, environmental  impact assessments for Nugen for its nuclear new build programme in the UK,  and an EPC contract with Sellafield for the Box encapsulation project. We  also signed a specialist technical services framework for the UK MoD and a  framework agreement with National Grid for high voltage cables. 2014 Scope  Revenue1 % Oil & Gas Clean Energy Environment & Infrastructure 74 22  4 1 Non-IFRS measure (see Performance measures on pages 169 to 172) |
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|  | Strategic  report: performance review 41 Amec Foster Wheeler Annual report and accounts  2014 Financials Governance Additional information AMEA and Southern Europe  Global Power Group We now have enhanced capabilities and significantly  increased customer reach which positions us well for growth across all of our  four markets – Oil & Gas, Mining, Clean Energy, and Environment &  Infrastructure. We have world class capabilities in the design, supply and  erection of boilers, auxiliary steam and air pollution control equipment,  including a wide range of aftermarket products and services. Customers  include utilities, independent power producers, and industrial concerns. This  is a diverse region with over 9,000 employees spread across more than 40  locations. Key projects include providing asset support for ConocoPhillips’  Bayu-Undan gas facilities in East Timor Sea, operational readiness services  for Chevron’s Wheatstone facility offshore Australia, and onshore turnaround  and maintenance support to ENI’s onshore gas treatment plant and offshore  unmanned wellhead platform, also in Australia. In the Middle East, we are  providing support to KNPC’s new oil refinery at Al Zour and KOC’s major  projects programme. New projects this year in Australia include: EPCM work on  Arrow’s expansion of its Daandine, and front end engineering for the Surat  coal seam gas projects and early stage project work with Rex Minerals at the  Hillside copper project. In China we have worked on a new pipe rack project  at the Zhongtian Hechuang coal to gas plant and signed a memorandum of  understanding with the China National Nuclear Corporation to work with them  on life extension and decommissioning. Our 2,600 people are spread across 11  engineering and service centres and four manufacturing facilities in eight  countries. We have a record of competitively delivering projects virtually  anywhere in the world. We have world-class capabilities in the design, supply  and erection of boilers, auxiliary steam and air pollution control equipment  (APC) including a wide range of aftermarket products and services. Our  products and services enable utilities, independent power producers (IPP),  and industrial clients achieve their power, process steam and environmental  goals. Significant projects include the Samcheok green power project in South  Korea and the Lagisza power plant in Poland. We see growth in several areas  of our served markets including opportunities to expand our Circulating  Fluidised Bed (CFB) into the large supercritical utility sectors in Asia and  the Middle East (petroleum coke), the industrial boiler sectors in North  America and new natural gas power gas generation globally. 2014 Scope  Revenue1 % Oil & Gas Mining Environment & Infrastructure 80 12 8  Director’s approval statement The strategic report, as set out on pages 1 to  41, has been reviewed and approved by our board of directors. Samir Brikho  Chief Executive 26 March 2015 1 Non-IFRS measure (see Performance measures on  pages 169 to 172) |
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|  | To be  successful we need to ensure we have global reach and long-standing  relationships with our customers. Today, ours span all forms of oil company  and we operate in some 50 countries, with 40,000 employees covering around  100 nationalities. Our strong partnership with BP sees Amec Foster Wheeler  engaged in the second phase of the Clair Ridge oilfield off the Shetland  Islands in North East Scotland, UK. 42 |
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|  | Financials  Governance Additional information Strategic report: performance review 43  Connected excellence through global capabilities Our scope of work includes  engineering and project management services for detail design, procurement  supply chain, hook-up and commissioning for topside installations and a  bridge link between the two new platforms. |
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|  | 44 Amec Foster Wheeler Annual  report and accounts 2014 Effective governance is the mainstay of all  successful companies, and your board takes its responsibilities very  seriously, carefully outlining its goals and agenda at the start of the year  and then measuring its performance against these as the year progresses. Dear  shareholder, It is important that the right tone is set by the board and  equally important that strong governance frameworks are applied throughout  the group. This report explains how the Amec Foster Wheeler group is governed  by setting out details of the work of the board over the last year and the  processes adopted by the board. It is considered best practice for boards to  engage an external specialist to review their activity every three years. In  2014 we engaged Lintstock to assist us in this. We utilise their services on  an annual basis and this year the board effectiveness review was facilitated  by way of a number of detailed questionnaires. In 2015 the process will be  more in-depth and will also involve externally facilitated face-to-face  interviews. In 2014 your board undertook reviews of the terms of reference of  the board and management committees, including the membership of each, to  ensure that the most effective use was being made of each of the  non-executive directors’ time. This takes into account the additional  requirements following the completion of our acquisition of Foster Wheeler  AG, and has included the creation of a disclosure committee (see page 76).  Such continual appraisal of the constitution of your board has resulted in  more diverse discussions and expertise from which to draw and I have been  pleased to welcome Stephanie Newby and Kent Masters to our ranks. Your board  has also continued its practice of formally reviewing the company’s strategy  on an annual basis. This not only provides appropriate context in which  corporate transactions, such as that of Foster Wheeler, can be assessed and  approved, but it also ensures that we benefit from the full range of skills  and insight afforded us by each board member. Such assessment provides your  board with a consistent and clear view of long-term value creation  opportunities for our shareholders whilst closely monitoring potential areas  of risk – for which we have further specific assessment criteria. Our  approach to risk management can be found on page 20 and our key business  risks can be found in each relevant section of the business model, to give  you a clearer, more germane perspective on them. In my letter to you last  year, I spoke about our approach to diversity and inclusion and I am pleased  to report that the new operating model adopted by your company, following the  inclusion of Foster Wheeler’s businesses, reinforces that approach from top  down and bottom up – throughout the organisation. Embracing diversity and  inclusion is one of our core values, for which everyone in the company is  accountable. And, rest assured, we are not merely looking at gender diversity  – where we continue to support the objectives of the Davies Report on Women  on Boards. For your company it is just as important to welcome diversity of  thought and inclusion as natural elements of the business matrix. Chairman’s  governance overview Our health, safety, security, environmental and ethics  (HSSEE) committee has an increasingly key role as the business continues to  expand. In 2014 we expanded the remit of the ethics committee to include  health, safety, security and environmental matters and the committee terms of  reference were revised. We have taken the opportunity through the Foster  Wheeler transaction to further assess our global policies and global  mandatory procedures, ensuring that we benefit from best in class approach,  which is clear for English and non-English speaking colleagues alike. They  continue to be an important part of our governance framework and you can see  this displayed in pictorial format on page 48. Your company has retained its  focus on investor relations and I and senior management are all engaged in  meeting regularly with and talking to our major shareholders. Having  incorporated a number of suggestions made by you at last year’s annual  general meeting (AGM), this year’s report is somewhat different to previous  years. We now also have to adhere to the reporting requirements of the  Securities and Exchange Commission (SEC) – following the successful listing  of our shares in the form of American Depositary Shares on the New York Stock  Exchange (NYSE) at the end of 2014. We continue to strive to make the annual  report an informative guide with relevant information to assist you on your  own investment deliberations, providing not only the information you need to  understand our business model and strategy for growth, but also the ability  to assess our performance towards our goals. I and my fellow directors  believe the 2014 annual report and accounts offers you a fair, balanced and  understandable presentation of your company, as we confirm in the directors’  responsibility statements on page 86. I mentioned in my statement at the  front of this report and repeat here for reference that as a board, we  completely support the UK Corporate Governance Code* (the Code) and believe  we have complied with the provisions of the September 2012 edition throughout  the year ended 31 December 2014. We are required to file an annual report in  the UK, which complies with the Code, and to also file our annual report in  the US on Form 20-F, which complies with the rules of the NYSE, US securities  laws and the rules of the SEC applicable to foreign private issuers. We have  produced a combined annual report and annual report on Form 20-F to ensure  consistency in the information provided to our UK and US investors. As  required by the SEC, a summary outlining the significant differences between  the company’s corporate governance practices as a UK listed company and those  followed by US companies can be found on page 187. Finally, may I take this  opportunity of firstly reminding you that you can find additional and more  in-depth information on your company’s website (amecfw.com) and that,  secondly, our AGM is to be held in London, on Thursday, 14 May 2015, where I  hope to see many of you in person. John Connolly Chairman 26 March 2015 *  Printed copies of the Code can be obtained from www.frcpublications.com |
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|  | 45 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Our board of directors Our board members are selected to ensure a  good mix of skills and experience. They have particular expertise in the  areas in which Amec Foster Wheeler operates and in the duties and  responsibilities associated with being a director of a listed company. In  accordance with the recommendations of the UK Corporate Governance Code, all  directors are subject to re-election at each annual general meeting of the  company. John Connolly Chairman of the board, Chairman of the nominations  committee and a member of the remuneration committee A chartered accountant, John  spent his career until May 2011 with global professional services firm  Deloitte. John joined the firm in 1980, serving in various roles of  increasing responsibility. During his time at Deloitte, he held a wide range  of senior leadership positions in the United Kingdom and internationally. He  was Global Chairman between 2007 and 2011 and Global Managing Director from  2003 to 2007. He was Senior Partner and CEO of the UK Partnership from 1999  until his retirement from the Partnership in 2011. John is chairman of G4S  plc and also of a number of private companies. Beyond commercial business  roles, John is on the Board of Governors of London Business School, is  Chairman of the Board of Trustees of Great Ormond Street Hospital Charity and  a member of the CBI President’s Advisory Council. Term of office John was  appointed as non-executive Chairman on 1 June 2011 and was considered to be  independent on appointment in accordance with the requirements of the Code.  His term of office was extended in March 2015 for a second three-year term to  the date of the 2018 AGM. Samir Brikho Chief Executive Prior to joining Amec  Foster Wheeler, Samir served in various capacities at ABB Ltd., including as  a member of the group executive committee, Head of the Power Systems Division  and Chairman of ABB Lummus Global, Switzerland, ABB’s international projects  and services business, from 2005 to 2006, and chief executive from 2003 to  2005. Between 1999 and 2003, he was employed by Alstom S.A. in Germany,  Belgium and France, first as Chief Executive Officer of ABB Alstom Kraftwerke  and then as Senior Vice President, International Business and Chief  International Operations Officer, leading all of Alstom’s operations abroad.  He began his career in 1983 and held various senior management positions in  sales and project management with ABB Ltd, culminating in the role of Senior  Vice President & Managing Director of ABB Kraftwerke AG. Samir holds an  engineering degree, a Master of Science in Thermal Technology from the Royal  Institute of Technology in Stockholm, Sweden, and completed the Young  Managers Programme at INSEAD in France in 1991. In 2000, Samir also completed  a senior executive programme at Stanford University, US. Term of office Samir  was appointed Chief Executive on 1 October 2006 and has no fixed term of  office. His service contract is terminable on six and twelve months’ notice  by him and the company respectively. External appointments Samir has been an  independent non-executive director of Skandinaviska Enskilda Banken AB (SEB)  since March 2013 and a member of the advisory board of Stena AB since  February 2011. He is a UK Business Ambassador, co-chairman of both the UAE-UK  Business Council and the UK-Korea CEO Forum, and is a director of the  UK–Japan 21st Century Group. He is chairman of the Step Change Charity and  co-chair of the World Economic Forum’s Infrastructure & Urban Development  Industries Committee. |
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|  | 46 Amec Foster  Wheeler Annual report and accounts 2014 Our board of directors continued Ian  McHoul Chief Financial Officer Ian qualified as a Chartered Accountant with  KPMG in 1984. His early career was spent in the brewing industry. Between  1985 and 1995 he held various positions with the Foster’s Brewing Group,  including General Manager, Strategy. He was Finance & Strategy Director  of the Inntrepreneur Pub Company Limited from 1995 to 1998 and then served at  Scottish & Newcastle plc from 1998 to 2008, first as Finance Director of  Scottish Courage and later as Group Finance Director of Scottish &  Newcastle plc. Ian holds a BSc in Mathematics from the University of Bristol.  Term of office Ian was appointed Chief Financial Officer on 8 September 2008  and has no fixed term of office. His service contract is terminable on six  and twelve months’ notice by him and the company respectively. External  appointments Ian has been a non-executive director of Britvic plc since March  2014 and was a non-executive director of Premier Foods plc from July 2004 to  April 2013. Linda Adamany Non-executive Director, Chairman of the health,  safety, security, environmental and ethics (HSSEE) committee and a member of  the audit and nominations committees Linda has over 35 years’ business  experience, with 27 in the international energy sector. Between 1980 and 2007  Linda held a number of executive positions at BP plc in the UK and the US.  During that time, she held various executive roles in refining and marketing,  exploration and production and petrochemicals, including Chief Executive of  BP Shipping and Group Vice President and Commercial Director, BP Refining  & Marketing. In March 2013, Linda was appointed a non-executive director  of Coeur Mining, Inc., a US based publicly quoted primary silver producer,  where she serves as chairman of the audit committee and is a member of the  environmental, health, safety and social responsibility committee. In March  2014, Linda was appointed to the board of directors of Leucadia National  Corporation, a US based, NYSE listed, diversified holding company engaged  through its consolidated subsidiaries in a variety of businesses, where she  is a member of the audit and the nominating and corporate governance committees.  From 2006 to 2012, prior to joining Amec Foster Wheeler, Linda was a  non-executive director of National Grid plc and a member of their audit,  nominations and safety, environment and health committees. Linda is a  qualified accountant (CPA) with a BSc in Business Administration from John  Carroll University, Ohio, and has also undertaken post-graduate, non-degree  executive programmes at Harvard, Cambridge and Tsinghua universities. Term of  office Linda was appointed a non-executive director on 1 October 2012 for an  initial term of three years, which will end at the 2016 AGM. Neil Carson  Non-executive Director and a member of the audit, remuneration and health,  safety, security, environmental and ethics (HSSEE) committees Neil was Chief  Executive of Johnson Matthey Plc, the FTSE 100 speciality chemical company,  from 2004 to June 2014 and stepped down as a member of the board in September  2014. He joined the company in 1980 after completing an engineering degree  and held a number of senior management positions in both the UK and the US,  including Managing Director of Catalysts & Chemicals from 1999 to 2004  and Division Director of Catalytic Systems from 1997 to 1999. In July 2014,  Neil became a nonexecutive director of PayPoint plc, where he also serves as  chairman of the remuneration committee and senior independent director. He is  also co-chair of the Chemistry Growth Partnership, which is working with the  government to stimulate growth in the industry in the United Kingdom. He was  previously a founding member of the Prince of Wales’ Corporate Leaders Group  on Climate Change. Neil received an engineering degree from Lanchester  Polytechnic (now Coventry University) and has been awarded an Honorary Doctor  of Business Administration from Anglia Ruskin University. Term of office Neil  was appointed a non-executive director on 31 August 2010. His term of office  was extended in February 2014 for a second three-year term to the date of the  2017 AGM. As announced on 20 March 2015, Neil will take on the roles of  Senior Independent Director and Chairman of the remuneration committee at the  conclusion of the 2015 AGM. Colin Day Non-executive Director, Chairman of the  audit committee and a member of the remuneration and nominations committees  Colin has more than 25 years of experience of blue chip companies including  Aegis Group Plc, ABB Group, De La Rue Group Plc and British Gas. Colin was  appointed Chief Executive Officer of Essentra plc (formerly Filtrona plc) on  1 April 2011, prior to which he was Chief Financial Officer of Reckitt  Benckiser Group plc from 2000 to 2011. Between 1995 and 2000, he served as  Group Finance Director of Aegis Group plc. He spent six years in a number of  divisional finance director positions with ABB Group and served as Group  Finance Director of ABB Kent Instrumentation and ABB Kent plc from 1988 to  1994. Colin started his career in 1973 as a trainee accountant at Kodak. He  is a Fellow of the Association of Chartered Certified Accountants and holds  an MBA from Cranfield School of Management, UK. Colin has been a director of  FM Global since January 2014 and a non-executive director of WPP Group plc  since 2005. Colin was appointed to the FRC Audit Advisory Group on 3 July  2014. Term of office Colin was appointed a non-executive director on 14 October  2010. His term of office was extended in February 2014 for a second  three-year term to the date of the 2017 AGM. |
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|  | 47 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information We will continue to seek to build upon and  complement the board’s existing skills set with a focus on increasing diversity  whether this is through gender, race, nationality or general background. The  review of the effectiveness of the board in 2014 identified the need for  additional expertise in oil and gas markets and this will be the focus of  future appointments. Independence of non-executive directors The board  considers that, with the exception of Kent Masters, the non-executive  directors are independent and free from any relationships or circumstances  that could affect their independent judgement. Kent’s previous employment by  Foster Wheeler precludes him from meeting the required independence criteria.  Stephanie Newby Non-executive Director, member of the audit and health,  safety, security, environmental and ethics (HSSEE) committees Stephanie is  the Chief Executive Officer of Crimson Hexagon, a big data social analytics  company. She is the founder of Golden Seeds LLC, which has provided  investment capital to early stage, high growth companies since 2004 and is a  Managing Partner of its venture capital funds. Prior to that, she spent 20  years working in the financial services industry in Sydney, London and New  York, with the majority of her career spent with J.P. Morgan, where she  headed several global businesses serving as Global Head of Futures and  Options, Head of International Private Banking, Chief Operating Officer of  Global Equities and Head of eCommerce. Appointed in 2004, Stephanie was a  member of the Foster Wheeler AG board until the completion of the acquisition  by AMEC, serving on the audit and governance and nominating committees. She  also previously served as a non-executive director and member of the audit  and compensation and HR committees of RiskMetrics Group, Inc. Term of office  Stephanie was appointed a non-executive director on 13 November 2014 for an  initial term of three years, which will end at the 2018 AGM. In accordance  with the company’s articles of association, Stephanie will retire from office  at the forthcoming AGM and offer herself for election. Simon Thompson Senior  Independent Director, Chairman of the remuneration committee and a member of  the audit and nominations committees Simon held a number of senior positions  with the Anglo American group from 1995 to 2007 including executive director  of Anglo American plc from 2005 to 2007, chairman and chief executive of the  base metals division, chairman of the exploration division and chairman of  the Tarmac Group. Before joining the Anglo American group, he held various  investment banking positions with S. G. Warburg & Co. Ltd and N M  Rothschild & Sons Limited. Simon has been a non-executive director and  chairman of Tullow Oil plc since May 2011 and January 2012 respectively, a  non-executive director of Rio Tinto plc and Rio Tinto Limited since April  2014 and a non-executive director of Sandvik AB since April 2008. He was a  non-executive director of Newmont Mining Corporation from 2008 to April 2014,  an independent director of United Company Rusal from 2007 to 2009 and a  non-executive director of AngloGold Ashanti Limited from 2004 to 2008. Simon  holds an MA in Geology from University College, Oxford. Term of office Simon  was appointed a nonexecutive director on 21 January 2009 and became the  Senior Independent Director in April 2014. He will be retiring from the board  at the close of the 2015 AGM, having served two three-year terms as a  director. Kent Masters Non-executive Director and member of the health,  safety, security, environmental and ethics committee (HSSEE) Kent was the  Chief Executive Officer of Foster Wheeler AG from 1 October 2011 and its President  from 1 January 2014 until the completion of the acquisition by AMEC in  November 2014. Prior to joining Foster Wheeler, he served as a member of the  Executive Board of Linde AG, a world leading gases and engineering company,  from September 2006 to September 2011. At Linde, Kent had responsibility for  the Americas, Africa, the South Pacific, the global business unit Healthcare,  and the business area Merchant and Packaged Gases. He was employed by BOC  Group plc from 1984 until the acquisition of BOC by Linde in 2006. Kent  served in roles of increasing responsibility at BOC, including as Chief  Executive, Industrial and Special Products, from 2005 to 2006, and as  President, Process Gas Solutions-Americas from 2002 to 2005. He also served  on the board of directors of BOC from 2005 to 2006. Kent joined the board of  Albemarle in January 2015 following its acquisition of Rockwood Holdings,  Inc. where he had served as a director since 2007. At Rockwood, Kent had  served on the audit and compensation committees. Kent also served as the  non-executive chairman of African Oxygen Limited from April 2005 to May 2011.  Term of office Kent was appointed a non-executive director on 13 February  2015 for an initial term of three years, which will end at the 2018 AGM. In  accordance with the company’s articles of association, Kent will retire from  office at the forthcoming AGM and offer himself for election. |
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|  | 48 Amec Foster Wheeler Annual  report and accounts 2014 Amec Foster Wheeler supports the UK Corporate  Governance Code and, in the opinion of the directors, the company has  complied with the provisions of the September 2012 edition of the Code  throughout the year ended 31 December 2014. This section explains in more  detail how we have applied these provisions. Governance overview Amec Foster  Wheeler governance structure Board The board has ownership of the global  policies Behaviours, Vision, Values, Code of Business Conduct, Global  policies Local jurisdictional policies and procedures Global mandatory procedures  Board committees Support the board in its work with specific review and  oversight Group Leadership Team Responsible for implementation of the global  policies Business Unit leaders Functional leaders Chief Financial Officer  Chief Executive Primarily responsible for running Amec Foster Wheeler’s  businesses with the objective of creating shareholder value Business Unit  teams Functional teams Management committees Deal generally with more  operational matters Share allotment Pensions and retirement benefits Risk  HSSE review Corporate transactions Disclosure Tender review Project review  Audit Provides independent scrutiny of the company’s financial and  non-financial performance, risks and audit functions Nominations Identifies  and makes recommendations concerning the composition of the board and that of  its committees Health, Safety, Security, Environmental and Ethics Assists in  upholding our core value of integrity and maintaining our HSSEE commitments  for a safe and secure working environment Remuneration Aims to attract and  retain good management and to incentivise them to create shareholder value |
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|  | 49 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Board role and responsibilities Amec Foster  Wheeler’s board is ultimately responsible for promoting the long-term success  of the Company in accordance with the expectations of, and its obligations  to, all stakeholders. The directors believe that the board leads and controls  the group effectively and that all directors act in accordance with what they  consider to be the best interests of the Company, consistent with their  statutory duties under the Companies Act 2006 and other legislation. In order  to ensure it retains appropriate overall control of the group, the board  maintains a schedule of matters reserved for its approval. These include: X  annual strategic and short-range plans; X financial and treasury policies; X  risk identification, risk appetite, risk management and internal control  systems; X major acquisitions and disposals; XCode of Business Conduct; X  full and half-year accounts; X dividend policy; X succession planning for  directors and senior executives; X group-wide policy framework; and X  ensuring the effectiveness of governance practices. This schedule is reviewed  for continued acceptability on an annual basis. No changes were proposed at  the time of the annual review in August 2014. In light of the acquisition of  Foster Wheeler, the schedule was the subject of a brought forward review in  March 2015. A number of changes have been made to take account of the UK  Corporate Governance Code, the recently revised terms of reference of the  various board and management committees, the Chairman’s board plan for 2015  and the company’s new operating model. The board has responsibility for  maintaining strong corporate governance practices and regularly reviewing the  effectiveness of the Company’s governance framework. The Code of Business  Conduct forms the foundation of Amec Foster Wheeler’s approach to corporate  governance and is applicable to all employees, including the Chief Executive,  Chief Financial Officer and other senior financial professionals. It is the  responsibility of and is upheld by the board and ensures that the board and  all those who work for and under Amec Foster Wheeler’s direction understand  the behaviour that is expected of them. Following the acquisition of Foster  Wheeler, a new Code of Business Conduct is being launched to take account of  and provide a practical application of Amec Foster Wheeler’s new values and  expected working behaviours in the delivery of the Company’s vision and  values. The Code of Business Conduct complies with relevant UK and US  regulations and is available on the Company’s website at amecfw.com/ethics.  The board approves the group-wide policy framework and other mechanisms for  ensuring the effectiveness of governance in the group’s working practices. On  a day-to-day basis, the board has delegated responsibility for the  implementation of the global policies and ownership of the supporting global  mandatory procedures to the Group Leadership Team. Following the acquisition  of Foster Wheeler, the global policies and procedures and working practices  of Foster Wheeler and AMEC have been reviewed. The purpose of this review was  to create the necessary foundation needed to support a consistent approach in  the direction and management of the group’s businesses in accordance with  Amec Foster Wheeler’s vision and values. The revised global policies and  global mandatory procedures are in the process of being issued and provide a  detailed description of expected working behaviours, as we continue to  integrate the two businesses. Overall operational management is delegated to  the Chief Executive who, together with the Group Leadership Team, is  responsible for providing the company’s overall strategy and vision, driving  execution, growing markets and customers and developing our people. The board  regularly reviews its operational structure and, as more fully described in  the strategic report, on 1 January 2015 further to the acquisition of Foster  Wheeler, launched a new operating model defining how our new company is  structured and the changes to the way we will work together in our commitment  to deliver excellence to our customers. Find out more online See  amecfw.com/aboutus/corporate-governance for further details on the Code of  Business Conduct Board committees The board is supported in its work by four  board committees (audit, remuneration, nominations and HSSEE (health, safety,  security, environmental and ethics)), chaired by either the board Chairman or  another non-executive director, and a number of management committees,  chaired by executive directors (or other senior individuals), to which  specific responsibilities have been formally delegated. Find out more online  Full written terms of reference for each board committee can be found at  amecfw.com/aboutus/corporate-governance Details of the membership, duties,  responsibilities and work of the committees are set out on pages 50 to 74.  With effect from 1 January 2015, the membership of each of the board committees  has been restructured to ensure the most effective use of each non-executive  director’s time. Previously all of the board’s independent non-executive  directors were members of each of the board committees and these have been  amended to more appropriately reflect their skills and experience. The board  ensures that the committees are provided with whatever resources they need to  undertake their duties and that their membership continues to be appropriate.  The secretary of the committees produces timely records of all meetings,  which are circulated to each member. In addition, the chairman of each board  committee reports fully to the board following each meeting. |
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|  | 50 Amec Foster Wheeler Annual  report and accounts 2014 The main objectives of the audit committee are to  provide independent scrutiny of the company’s financial and non-financial  performance, the adequacy of the risk management framework and the internal  controls and the performance of both the external and internal audit  functions. This is of particular importance given the added responsibilities  of conforming to the US SEC requirements. The wide diversity of experience  and knowledge on the committee helps to achieve these objectives and  constructive challenge and guidance continues to be provided to the executive  team. Dear Shareholder The acquisition of Foster Wheeler AG in November 2014  was a celebratory moment in AMEC’s long history, as well as being a very busy  time for this committee. The level of due diligence performed by the  management team and their advisors was substantial, as you might expect for  the size of this transaction, and also for the numerous regulatory  requirements that had to be complied with here in the UK, as well as in the  US and Switzerland. Your committee and board played a key role in overseeing  and scrutinising this due diligence and, where necessary, requesting and  receiving additional detailed information for further examination. Of course,  while the acquisition of Foster Wheeler was a busy time for all concerned,  there was still the day job to be done. The committee continued to play its  vital role of scrutinising the integrity and relevance of the existing  group’s financial reporting requirements, the appropriateness of the internal  control environment across numerous geographies, and the continued  suitability of the group’s system of risk management, as well as overseeing  the internal and external audit activities. In addition, the committee has  paid particular attention to material projects and has discussed the key  features, risks and opportunities these present. Audit committee In September  2014, AMEC’s management detected a fraud in one of its overseas operations.  The fraud is not material at the group level, however it is significant at  the local entity level. Management took immediate steps to prevent further  loss and a criminal complaint was filed. Two former employees have been  arrested pending criminal proceedings. The prosecutors have required that the  details of the case remain confidential for the time being to avoid any  prejudice to their ongoing investigation and to any future criminal  proceedings. The external auditors were notified at the time this fraud was  uncovered by management. Our aim continues to be one of being proactive and  to provide constructive challenge over the information we receive. Over this  past year we have again been served particularly well with the timeliness and  quality of information provided by management and from the internal and  external auditors. Their reports have been relevant and clear which has  enabled this committee to discharge its duties effectively. Your committee is  mindful of its additional responsibilities now the combined business is  listed on both the London and New York stock exchanges. We are working on a  programme of integration and overseeing compliance with the Sarbanes- Oxley  Act (SOX), which the combined group will need to achieve full compliance with  by 2015 year-end. The composition of your committee is changing. I very much  welcome the appointment of Stephanie Newby to the committee; Stephanie  previously served as a non-executive director on the board and audit  committee of Foster Wheeler. I am sure the knowledge Stephanie brings of the  Foster Wheeler business will add value and insight to this committee. As  already announced by the company, Simon Thompson is stepping down from the  board and this committee at the conclusion of the 2015 AGM. Simon has served  this committee extremely well over a number of years and I would like to  thank him for his valuable contribution. Colin Day Chairman of the audit  committee 26 March 2015 Members During 2014, the audit committee comprised  all the independent non-executive directors. The committee meets at least  three times each year and the quorum for the committee is two members. |
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|  | 51 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Membership and attendance of the audit  committee up to 31 December 2014 Scheduled Unscheduled Colin Day (Chairman)  3/3 3/3 Linda Adamany 3/3 3/3 Neil Carson 3/3 2/3 Tim Faithfull (up to 3  April 2014) 1/1 1/1 Simon Thompson 3/3 2/3 Stephanie Newby (from 13 November  2014) 1/1 1/1 Unscheduled meetings were convened throughout the year to  consider matters relevant to the acquisition of Foster Wheeler. As these were  not scheduled, members were not always able to attend but were provided with  full packs of information and their comments were invited. There were three  scheduled audit committee meetings in 2014 and three unscheduled meetings.  Colin Day has relevant and recent experience in auditing and accounting and  the board considers that he has sufficient financial experience and  qualifications to satisfy the criteria under US rules for an audit committee  financial expert. Biographies of all committee members can be found on pages  45 to 47. The membership of the committee currently comprises Colin Day  (Chairman), Linda Adamany, Neil Carson, Stephanie Newby and Simon Thompson.  Simon will step down from the committee following the AGM in May. The company  chairman, the executive directors, the Group Financial Controller, the Head  of Internal Audit and representatives of the external auditor also attend  meetings by invitation. During 2014, the committee chairman met separately  with the external auditor, the Head of Internal Audit and the CFO, in each  case without others being present. No areas of concern were raised. Following  the acquisition of Foster Wheeler, we have established a disclosure  committee, which is a management committee that reports to the audit  committee and which will assist the committee with regard to verifying the  information that is required to be disclosed in the company’s material public  disclosures and in its periodic reports. This is intended to ensure such  disclosures are in compliance with all relevant laws, rules and regulations,  including the UK Listing Authority, the London Stock Exchange, the New York  Stock Exchange and the US Securities and Exchange Commission (SEC). Key  responsibilities XReviewing the annual and half-yearly financial statements  with particular focus on key accounting and audit judgement and making  recommendations to the board for their approval. X Monitoring the clarity of  disclosures, going concern assumptions and compliance with UK and US  accounting standards. XReviewing and monitoring the internal controls and  risk management systems. XOverseeing the relationship with the external  auditor including the approval of the engagement letter, letter of  representation and statutory audit fees, with particular focus on  independence and rotation in accordance with UK and US rules or requirements.  XPromoting an effective internal audit function. XOverseeing the company’s  compliance with London and New York stock exchanges, FCA and SEC  requirements. XReviewing arrangements whereby staff may raise concerns about  any suspected or known improprieties and ensuring that such matters are  investigated and appropriate actions taken. XTo monitor and review UK corporate  governance and US SOX compliance. XTo receive the reports of the disclosure  committee. Activities of the committee On 17 December 2014, the board adopted  revised terms of reference for the committee to take account of the  additional obligations placed on the committee as a result of the Company’s  new US listing. These are available to view at amecfw.com. Training provided  to the committee in the year included a presentation in December 2014 from  the Chief Corporate Compliance Officer on SOX requirements and information  from Ernst & Young LLP (EY) on changes in EU regulation of non-audit  services. In 2014, as part of the external review of board effectiveness,  respondents were asked about the perceived performance of the audit  committee. This was highly rated overall. It was acknowledged that  significant work would be needed to meet the additional demands required by  the US listing. In preparation for each meeting, the CFO prepares an  extensive report covering all material financial, tax and treasury matters.  Particular areas of focus in 2014 included: X given the size of the Foster  Wheeler acquisition and the estimates involved in the purchase price  allocation exercise, the committee undertook a thorough review of an in depth  report from the Chief Financial Officer and challenged the appropriateness of  the fair values assigned thereto; X with regard to the allocation of goodwill  and impairment testing arising from the acquisition, the committee challenged  and stress tested the assumptions that were being made in the process; |
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|  | 52 Amec Foster  Wheeler Annual report and accounts 2014 X contract risks and material  contracts (those above £10m in contract value) showing a deteriorating  position over time, such as TGPP and Bluewater. The committee monitored  management’s enhancements to its early warning system to augment visibility,  at an earlier stage, to the board of potentially underperforming material  contracts for further scrutiny. This process identified potential issues with  the Buncefield contract, which had been placed on the watch list, as it had  suffered margin decline and delays; X with regard to the provisions and  estimates (including litigation) within the accounts, the committee, in  conjunction with the external auditor, spent time focusing on these and  satisfying itself as to their appropriateness; X revenue recognition, which  is by necessity based on management estimates and assumptions, particularly  with regard to timing. In conjunction with the external auditor, the  judgements of management were challenged, especially those relating to  end-life forecast estimates. The group’s policies and processes that control  the estimates made in such areas were also examined to ensure that they  continued to be relevant and robustly and consistently applied; X the ongoing  quality and acceptability of the group’s accounting policies and the going  concern statement. No issues were identified; X an in depth review and  challenge of the deferred tax assets and the tax provisions; X a thorough  review of the uplift external audit procedures in order to meet the  requirements of the SEC/Public Company Accounting Oversight Board (PCAOB) in  the US; X consideration of the external auditor’s transaction fees in respect  of the Foster Wheeler acquisition. Details of these fees can be found on page  54; X a full review of the group accounts for 2011, 2012 and 2013, which had  been restated and updated to be concurrent with the 2013 accounts in  connection with the then prospective Foster Wheeler acquisition; X as part of  the CFO’s report, the committee receives details of all breaches of treasury  policy. This has increased the committee’s knowledge of how relatively minor  issues are identified and addressed to ensure they do not become more  significant matters. In the year, minor breaches were identified in relation  to bank counterparty limits but none were considered to be material; and X  agreeing the appropriate disclosures and treatment of all exceptional items,  including the disposal of the group’s investment in the Lancashire Waste  Project in March 2014. In its reviews of the full and half-year results,  particular emphasis continued to be placed on contractual issues where the  reported financial position was fully analysed and discussed in the CFO’s  report and the findings were validated by means of in depth questioning. At  the request of the board, the committee has also reviewed and provided advice  on whether the annual report and accounts, when taken as a whole, is fair,  balanced and understandable, to enable the company’s shareholders to assess  the company’s performance, business model and strategy. In coming to its view  that it is satisfied with the overall fairness, balance and clarity of the  document, the committee took into account: X its own knowledge of the group,  its strategy and performance in the year; X the comprehensive guidance  provided to all contributors to the annual report and accounts; X a thorough  internal verification of the factual content within the document; X the  comprehensive reviews undertaken at different levels in the group to ensure  consistency and overall balance; and X a detailed review by senior  management. Internal controls and risk management The committee reviews the  processes by which the company’s control environment is evaluated. A control  risk self-assessment is undertaken every year, with comprehensive integrity  checks, and the exercise in 2014 again identified no significant areas of  concern. The group’s senior management is formally required to confirm  compliance within their businesses with the group’s Code of Business Conduct,  its policies and procedures and any areas of concern need to be fully  explained and addressed. A revised Code of Business Conduct for the combined  business is in the course of preparation. The Head of Internal Audit reports  to the committee on any alleged or suspected wrongdoings reported through the  independently run helplines or otherwise. All such incidents in the year were  investigated and didn’t reveal any significant internal control failures or  have a material financial impact at group level. The committee also reviewed  management actions, which included enhancements made to existing controls or  procedures and, in a few instances, disciplinary action taken against  employees, which included dismissals where warranted. Audit committee  continued |
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|  | 53 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information The committee’s primary responsibilities in  relation to risk management are in ensuring that robust processes are in  place for managing risk throughout the group. We completed the acquisition of  Foster Wheeler in the fourth quarter of 2014 and are currently reviewing the  control framework and integrating the risk and control systems with those of  the wider group. Although Foster Wheeler was de-listed from NASDAQ and  de-registered from the SEC subsequent to completion of the acquisition, the  SOX programme of testing the group’s key financial controls for compliance  continued to its usual conclusion. Management testing was undertaken in line  with previous years and the overall conclusion was that Foster Wheeler  continued to be SOX compliant for 2014. The group’s principal business and  strategic risks are shown in the strategic report on pages 21 to 23 and the  approach to managing risk is shown in more detail on page 20. Internal audit  In 2014, the committee continued to monitor and review the operation of the  internal audit function, receiving a full report at each meeting from the  Head of Internal Audit. The Head of Internal Audit formally reports to the  committee chairman. The findings of each internal audit review are summarised  and the committee focuses its discussions on unsatisfactory findings and on  the action plans in place to address them. Particular areas of concern during  2014 included breaches of policy with regard to the appointment of advisors  by the operations, issues with the appointment of recruiting service  providers and an instance of expense abuse in an overseas company, which had  been raised through the ethics helpline. External audit During 2014, the  committee continued to oversee the relationship with the external auditor,  Ernst & Young LLP (EY). The committee reviews both the procedure for the  engagement of the external auditor and the procedure for the appointment of  the external auditor every year. In 2014 both procedures were amended to  reflect US requirements. Each year the relevant audit risks are assessed. As  in previous years, the primary risks identified were revenue recognition,  valuation of work in progress and receivables, the accuracy of end life  forecasts, the adequacy of contract provisions and legacy liabilities. For  this year, new areas included impairment testing of goodwill and purchase  price allocation following the Foster Wheeler acquisition, provisions and  contingent liabilities generally. Other risk areas included the adequacy of  tax planning and reserves, the adequacy of provisions in respect of legacy  liabilities, presentation of exceptional items and the risk of fraud and  management override. Throughout the year and in conjunction with EY, the  committee challenged management and assured itself that the risks were being  addressed and that reporting on the matters was balanced. The audit  differences and quality of earnings schedule for the year ended 2014 was  presented by EY at the March 2015 meeting. The value of unadjusted  differences and the quality of earnings high level review of the impact of  items that could be considered non-recurring in nature were discussed in  detail. The audit differences were not considered to be material and the  quality of earnings was considered appropriate. On behalf of the committee,  the Head of Internal Audit undertakes an annual assessment of the  effectiveness of the external auditor, overseen by the Company Secretary. The  views of senior members of the finance teams throughout the group are sought,  as well as qualitative feedback. Responses can be measured and directly  compared with previous surveys, so that progress can be monitored. In March  2015, the committee received a report on the effectiveness of the external  auditor during 2014. Management indicated that EY’s performance had again  been generally satisfactory but that additional focus should be given to the  audit of the integrated Foster Wheeler business going forward. EY were  appointed as Amec Foster Wheeler’s external auditor in 2010, following a  formal tender process. Both EY and the audit partner responsible for the group  audit have now been in place for five years and, therefore, a new audit  partner will be in place for the 2015 audit. The committee takes account of  and endorses the relevant provisions of the UK Corporate Governance Code with  regard to the appointment of the external auditor, which means that the  external audit contract will be put out to tender at the latest by 2020,  subject to further regulatory change. Amec Foster Wheeler has formal  procedures relating to its relationship with the external auditor including  for the provision of non-audit services, to ensure that such work does not  impair the external auditor’s objectivity and independence. This procedure  clearly outlines the category of work the external auditor is permitted to  carry out and the rules governing what is not permitted. The procedure  follows the guidelines and requirements set out by the Institute of Chartered  Accountants in England and Wales and was amended during the year to take  account of the requirements of SOX and the PCAOB. The committee now delegates  authority to the Chairman of the audit committee to pre-approve all  non-prohibited services undertaken by the external auditor. In addition, all  non-audit services performed by the external auditor will be disclosed to  investors in the company’s periodic reports. The process is continually  monitored by the Head of Internal Audit and details of all ‘other services’  performed are formally presented to the audit committee twice a year. It is  the responsibility of the audit committee to monitor the overall level of  non-audit fees relative to audit fees from an independence point of view and  to confirm that auditor independence has been safeguarded. If there are any  concerns about this, for the avoidance of doubt, the undertaking of such work  would not be permitted. |
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|  | 54 Amec Foster  Wheeler Annual report and accounts 2014 The level of non-audit fee awarded to  EY in 2014 is considerably higher than would normally be the case, as shown  in the table opposite. In conjunction with the CFO, the audit committee  chairman approved the services of EY to undertake and support management’s  continued due diligence work for the acquisition of Foster Wheeler. The  substantial due diligence performed by EY primarily covered the balance  sheet, profit & loss, accounting policies, revenues, provisions,  liabilities, general accounting, tax, corporate finance and differences  between US GAAP and IFRS. The decision to appoint EY to undertake this work  was considered by the audit committee to be in the best interest of  shareholders. The firm has a deep understanding of the group, placing them at  a distinct advantage to support the board in this regard. In addition,  following completion of the acquisition, a sizeable portion of the work  performed by EY did not need to be repeated, thereby making the most  efficient and economic use of shareholders’ funds. Following completion of  the offer for Foster Wheeler, on 13 November 2014, EY were appointed as the  independent registered public accounting firm of Foster Wheeler AG in place  of PricewaterhouseCoopers LLP (PwC). EY therefore acted in such role for the  period from 13 November 2014 to 31 December 2014. Fees payable by the group  to the company’s statutory auditor, EY, and its associates were as follows:  2014 £m 2013 £m Audit fees Audit of the company’s accounts 3.9 0.3 Audit of  the accounts of the company’s subsidiaries 1.5 1.1 5.4 1.4 Tax fees Tax  compliance services 0.4 0.3 Tax advisory services – 0.1 0.4 0.4 All other  fees Corporate finance transactions 6.4 1.6 Other non-audit services 0.1 0.1  6.5 1.7 12.3 3.5 Fees for the audit of the company’s accounts relate to the  audit of the parent company’s accounts and the consolidated financial  statements. All EY’s fees for non-audit work in 2014 were approved in  accordance with the company’s policy covering non-audit services. As a result  of the application of this policy and additional discussions with them, the  directors do not believe that EY’s independence has been compromised because  of this additional work on behalf of the company. During 2014, EY were paid  non-audit fees of £2.7m by Foster Wheeler prior to the acquisition date. Any  services that would have been prohibited for a statutory auditor to perform  ceased before the acquisition date when EY took on the responsibility of  statutory auditor for the combined group. Audit committee continued |
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|  | 55 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information The nominations committee is primarily focused on evaluating the  board of directors and on examining the skills and characteristics that are  needed in board candidates. Dear shareholder, I have referred already in this  report to the transformational changes through which your company has gone  and so, more than ever, the role of the nominations committee is a key one.  Your board has changed in size and composition and there will be further  changes following our annual general meeting in May 2015. Succession and  evolutionary change remain our key priorities, taking into account our  commitment to diversity and inclusion. You can see from the charts on page 77  that we have a strong blend of skills, experience and length of service  amongst your board of directors and I see no reason that this should not be  maintained as your company rises to the challenges we will undoubtedly face  in 2015 and beyond. John Connolly Chairman of the nominations committee 26  March 2015 Members During 2014, the nominations committee comprised all the  non-executive directors including the Chairman. The quorum for the committee  was three members. There were four committee meetings held in the year.  Membership and attendance of the nominations committee up to 31 December 2014  Meeting attendance John Connolly (Chairman) 3/41 Linda Adamany 4/4 Neil  Carson 3/42 Colin Day 4/4 Tim Faithfull (up to 3 April 2014) 1/1 Simon  Thompson 4/4 1 The Chairman was unable to attend one meeting due to illness.  2 Neil Carson was unable to attend one meeting due to an unavoidable prior  commitment. Meetings of the committee are sometimes called at short notice to  consider matters as they arise. This means that members may not always be  available, but they are always fully apprised of matters to be discussed and  their views sought and taken into account. On 17 December 2014, the board  adopted revised terms of reference for the committee. These are available to  review on amecfw.com. With effect from 1 January 2015, the membership of the  committee changed and now comprises: John Connolly (Chairman), Colin Day,  Simon Thompson and Linda Adamany. Simon will step down as a member of the  committee at the end of the AGM in May 2015. The quorum for the committee is  now two members. Key responsibilities The committee considers the structure,  size and composition of the board and its committees, including the mix of  skills, experience, independence and knowledge of the directors. In  considering recommendations to the board, the committee considers the  appropriate balance of skills and experience to progress the group’s  strategy, and takes account of the benefits of diversity, including but not  limited to gender. The committee also reviews board succession planning, in  conjunction with reports from the Chief Executive and Group Human Resources  Director on senior management succession planning, so as to ensure that an  appropriate balance of skills is maintained both within the senior management  team and on the board. As part of the externally conducted board  effectiveness review undertaken in 2014, the performance of the committee was  also evaluated. This was generally rated highly overall. Nominations  committee |
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|  | 56 Amec Foster  Wheeler Annual report and accounts 2014 Activities of the committee Tim  Faithfull stepped down in April 2014, having served nine years on the board.  In view of the proposed acquisition of Foster Wheeler, the committee decided  not to commence a search for a new director. In February 2014, we announced  that, as part of the acquisition, two directors of Foster Wheeler would join  the board following the acquisition. Subsequent to this the committee  undertook an interview process and, as a result, recommended that Stephanie  Newby and Kent Masters should join the board as non-executive directors.  Stephanie and Kent joined the board on 13 November 2014 and 13 February 2015,  respectively. No external recruitment firms were used and the committee based  its decision on the benefits that their experience and knowledge would add to  the board in view of the acquisition of Foster Wheeler. Following Tim  Faithfull’s retirement, the committee considered potential replacements for  his role as Senior Independent Director and as Chairman of the remuneration  committee. After careful consideration, the committee concluded that Simon  Thompson best met the required criteria and a recommendation was made to the  board accordingly. The committee also recommended that Linda Adamany should  replace Simon as chairman of the ethics committee, which is now known as the  health, safety, security, environmental and ethics (HSSEE) committee. Having  served six years on the board, Simon Thompson has indicated that he does not  intend to stand for re-election at the 2015 AGM. The committee will therefore  commence a search for one or two non-executive directors to join the board  for which an executive search firm will be used. Further information in respect  of any new appointments to the board will be given in due course. In July  2014, the committee considered and recommended the adoption by the board of  certain board selection criteria, to be used to identify any gaps in the  overall experience and knowledge of the board as a whole and assist  appropriately in the future board selection process. In 2014, the committee  considered the reappointment of Neil Carson and Colin Day for second  three-year terms of office as their first three-year terms ended at the 2014  AGM. Their significant external experience and their full participation in  board and committee discussions, providing constructive challenge, resulted  in a recommendation being made to the board to reappoint both directors for  second three-year terms. In early 2015, the committee considered the  reappointment of John Connolly as Chairman for a second three-year term of  office as his first three-year term will end at the 2015 AGM. On the basis of  his wide experience and his excellent chairmanship during a period of  significant change, the committee recommended that he should be reappointed  for a second three-year term. The Chairman did not participate in these  deliberations, which were led by an independent non-executive director. In  anticipation of Simon Thompson’s forthcoming retirement at the conclusion of  the 2015 AGM, the committee also considered potential replacements for the  role of the Senior Independent Director and Chairman of the remuneration  committee and, after careful consideration, concluded that Neil Carson best  met the required criteria and made a recommendation to the board accordingly.  The board continues to recognise the importance of diversity both in the  boardroom and across the group more generally. In 2014, Amec Foster Wheeler’s  diversity initiatives have continued to focus on its group-wide commitment to  diversity and inclusion, including encouraging and enabling greater diversity  of thinking. The implementation of this commitment includes measurement and  monitoring of progress on diversity and inclusion activities. As part of the  company’s broader diversity initiative, it supports the objectives of the  Davies Report on Women on Boards. Candidates for board appointments are  evaluated in light of the requirements of the role, having appropriate regard  to the objectives of the Davies Report and to the group-wide commitment to  diversity and inclusion. We are pleased to say that with the appointment of  Stephanie Newby, two out of our nine directors are female, representing just  over 22% of our board. The gender diversity of the company and its senior  management is shown on page 16. Nominations committee continued Gender  diversity of the board % Female Male 78 22 |
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|  | 57 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information The core role of the HSSEE committee is to assist the board in  upholding the company’s principal value of doing the right thing, to review  the HSSE policy statement and to satisfy itself that all significant health,  safety, security environmental and ethics risks are identified and  controlled. Dear shareholder On 1 January 2015, the board created the HSSEE  committee to replace the ethics committee and extend its terms of reference,  (full details of which can be found on amecfw.com). The HSSEE committee  provides an additional level of governance to Amec Foster Wheeler’s health,  safety, security and environmental activities, in addition to ethics, and I  look forward to telling you about the committee’s activities during 2015. We  have in place a strong framework to support Amec Foster Wheeler as it grows,  integrates and becomes more global, ensuring that our employees, and those  who work with and for us, act with integrity wherever they are based. Our  employees should also be able to work in a safe and secure environment, which  is particularly important in a company that has over 40,000 people working in  more than 50 countries. We have a well developed independent third party  reporting system for employees to report their concerns or report issues in  complete confidence. The committee treats all reports, however reported to  us, with the respect they deserve. Thankfully nothing of significance to the  group as a whole was reported in 2014 and any infractions identified were  dealt with appropriately. Linda Adamany Chairman of the health, safety,  security, environmental and ethics committee 26 March 2015 Members The ethics  committee comprised all the independent nonexecutive directors. The quorum  for the committee was two members. In 2014 there were three scheduled  committee meetings held, and no unscheduled meetings. The company chairman,  the executive directors and the Chief Ethics Officer also attended each  meeting by invitation. From December 2014, the Chief Corporate Compliance  Officer has also been in attendance. Linda Adamany replaced Simon Thompson as  the Chairman of the ethics committee following the conclusion of the 2014  AGM. From 1 January 2015, the membership of the committee was Linda Adamany  (Chairman), Stephanie Newby and Neil Carson. Kent Masters joined the  committee upon his appointment on 13 February 2015. The quorum remains at two  members. Membership and attendance of the ethics committee up to 31 December  2014 Meeting attendance Linda Adamany (Chairman) 3/3 Simon Thompson 3/3 Neil  Carson 3/3 Colin Day 3/3 Tim Faithfull (up to 3 April 2014) 1/1 Stephanie Newby  (from 13 November 2014) 1/1 Key responsibilities of the HSSEE committee With  effect from 1 January 2015, new terms of reference were adopted for the HSSEE  committee, which now covers health, safety, security and environmental  matters, as well as ethics matters. The committee reviews Amec Foster  Wheeler’s HSSE Policy at least annually to ensure it remains fit for purpose  and meets requirements in all respects. It also examines the processes in  place to satisfy itself that all significant health safety, security and  environmental risks are identified and mitigated. The committee oversees the  operations and activities of the HSSE review committee which is a management  committee, details of which are outlined on page 76. The committee reviews  and monitors business ethics within the group, including compliance with  relevant legislation, regulation and current best practice. It also reviews  and approves the Group’s Code of Business Conduct at least annually. It  considers and reviews the scope and planning of all compliance activity  within the Group and reviews the extent and effectiveness of the Group’s  internal training and external reporting of compliance and ethics matters. In  the event of an actual or suspected material breach of the Code of Business  Conduct or any other serious matter, a member of the committee will take  responsibility for and manage any investigation into the relevant matter with  the support of the General Counsel and Company Secretary. Health, safety,  security, environmental and ethics (HSSEE) committee |
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|  | 58 Amec Foster  Wheeler Annual report and accounts 2014 Activities of the ethics committee  The committee reviewed AMEC’s Code of Business Conduct in August 2014 and  endorsed its continuing use. There was particular focus on the effectiveness  of procedures to prevent bribery and corruption. As a result, additional  training on anti-bribery and corruption that was commenced in late 2013  continued during the year. This included face-to-face training for around  1,200 people in the higher risk areas of activity. During the year a total of  56 concerns were raised in AMEC in respect of alleged or suspected ethical  breaches, most of which were reported through the independent third party  reporting systems that we have set up. A relatively small number of these,  involving alleged or suspected ethical breaches, required further  investigation. None of the investigations highlighted any significant control  failure or noteworthy financial impact but each valid report was taken  seriously. The outcome of these investigations resulted in appropriate  disciplinary action as well as enhancements to the existing control environment  where necessary. In December 2014, the committee received a report on legacy  Foster Wheeler ethics matters. The process for recording, reporting and  investigating ethical issues within Foster Wheeler during the period  following the acquisition to the year-end remained the same as prior to the  transaction. Its widely advertised hotline service remained available,  allowing all Foster Wheeler employees to raise issues either with their line  manager, via the hotline website, or by calling one of the dedicated hotline  telephone numbers. The website and telephone numbers are provided by a third  party. During the period following the acquisition to the year-end, two  ethics issues relating to the Foster Wheeler Group were raised in total and  investigated as appropriate. Neither of the investigations revealed any  significant control failure or noteworthy financial impact. As above, and  where necessary, appropriate disciplinary action and enhancements to the  existing control environment were undertaken following the conclusion of the  investigations. Following the acquisition of Foster Wheeler, a new Code of  Business Conduct is being launched and the independent third-party reporting  systems of AMEC and Foster Wheeler will be combined and the ethics training  programmes of the two businesses integrated. As part of the externally  conducted board effectiveness review undertaken in 2014, the performance of  the committee was also assessed and the result of this was confirmation that  the committee’s performance was rated highly. Health, safety, security,  environmental and ethics (HSSEE) committee continued |
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|  | 59 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Remuneration committee The remuneration committee’s aim is to  design and apply a reward policy that promotes the long-term success of the  Company. Dear shareholder, This year the committee’s deliberations have taken  place against the backdrop of the Foster Wheeler acquisition and the sharp  downturn in the oil and gas market. We indicated last year that we would be  reviewing our remuneration approach both in the light of the acquisition and  shareholder expectations. As a result of that review we decided that some  changes are appropriate. We consulted with our major shareholders and  investor governance advisory bodies, the overwhelming majority of which were  supportive of the changes proposed. The revised policy, which we expect to  apply for the next three years, is set out in full on pages 61 to 66 and  approval is being sought for this in resolution number 3 at our 2015 Annual  General Meeting. In summary the proposed changes, designed to simplify our  incentive arrangements and to achieve greater alignment with shareholder  interests, are as follows: X Our previous annual bonus policy provided that  an element of bonus up to 25% of salary would be deferred in shares for three  years, but this element related only to an additional stretch profit target  and hence the deferral was only likely to apply in circumstances of  significant outperformance. We are proposing to drop this separate stretch  element and to provide that 25% of any bonus earned during the year will be  deferred in shares for three years and subject to claw-back. The overall  bonus maximum remains unchanged at 150% of salary for the Chief Executive and  125% for the CFO; and X The arrangement under the existing Long Term  Incentive Plan (LTIP), whereby participants may invest their own funds in  company shares and receive a matching award will be removed. Instead we will  introduce a requirement to retain any shares that vest at the end of the  three-year performance period for a further two years. Vested shares will be  held in trust and subject to claw-back. The overall LTIP maximum remains  unchanged at 250% of salary for both Chief Executive and CFO. We are seeking  shareholder approval for a new LTIP that reflects these changes for the  executive directors, as well as some other changes for participants below  board level and renewal of approval for our all-employee Sharesave Plan.  These are set out in resolutions 15 and 16. The second part of the report, on  pages 67 to 74, is our annual report on remuneration. This explains how our  policy has been implemented during 2014 and is subject to an advisory vote  (resolution 4). Given that the acquisition was not concluded until near the  end of the year, bonuses have been determined in relation to the targets that  were originally set for the AMEC business. The standalone AMEC business  delivered a resilient financial performance in the face of challenging market  conditions in some of its key markets. Nevertheless, it did not meet some of  the targets set by the committee at the start of the year. This outcome is  reflected in the overall remuneration of the executive directors: annual  bonus payments were lower than last year and none of the PSP awards made in  2012 will vest. Your committee continues to take a robust approach to setting  and measuring targets. We want to ensure that high reward is only achieved  for outstanding performance. We also set out below how we intend to apply the  new policy in 2015. Notwithstanding the increased scale and complexity of the  Company, we have concluded that there should be no increase to base salaries  for the executive directors or to the fees payable to the Chairman and  non-executive directors (with the exception of the fee payable to the  chairman of the Audit Committee). This is in line with the approach generally  across the Company, where increases for staff in most parts of the business  have been limited to promotions and other exceptional cases. The 2015 targets  for annual bonus have been aligned to reflect the strategic priorities with  an emphasis on the successful integration of Foster Wheeler and  implementation of our new operating model. These objectives are being applied  consistently to the entire senior management cadre in the Company. LTIP  awards will continue to be subject to two independent performance measures of  relative Total Shareholder Return (TSR) and Earning per Share (EPS) growth  with equal weighting. The TSR element will be subject to a financial underpin  that allows any vesting to be reduced at the discretion of the committee and  the stretching EPS growth targets take account of the anticipated  contribution from Foster Wheeler over the next three years. The proposed  policy makes provision for a third measure linked to specific strategic  objectives to be introduced at some future date, if appropriate. We have  reviewed the effectiveness of the application of our remuneration policy to  date and continue to be satisfied that the overall approach provides good  alignment of executive behaviour with shareholder interests and does not  encourage excessive risk. Both of our executive directors have high levels of  personal shareholdings, considerably in excess of our minimum guideline (see  page 72). As previously announced, I will be stepping down as a director at  the AGM and will be replaced as chairman of the committee by Neil Carson.  Simon Thompson Chairman of the remuneration committee 26 March 2015 |
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|  | 60 Amec Foster  Wheeler Annual report and accounts 2014 Membership and attendance of the  remuneration committee up to 31 December 2014 Scheduled Unscheduled Simon  Thompson 3/3 2/2 (Chairman from 3 April 2014) Tim Faithfull 1/1 0/0 (Chairman  up to 3 April 2014) Linda Adamany 3/3 2/2 Neil Carson 3/3 2/2 John Connolly  3/3 2/2 Colin Day 3/3 2/2 During 2014, the remuneration committee comprised  all the non-executive directors including the Chairman. The membership of the  committee currently comprises Simon Thompson (Chairman), John Connolly, Colin  Day and Neil Carson. The quorum for the committee is two members. There were  three scheduled meetings held in 2014 and two unscheduled meetings. The Chief  Executive and the Group Human Resources Director attend meetings by  invitation. Simon Thompson will be retiring as a director at the conclusion  of the 2015 AGM. He will be succeeded as committee chairman by Neil Carson.  In considering the matters within its remit, the committee takes account of  recommendations from the Chairman in respect of the Chief Executive and from  the Chief Executive in respect of the other executive directors and  designated executives. It is advised independently by New Bridge Street  (NBS). NBS was reappointed by the committee in 2014 and its terms of  engagement are available from the Company Secretary. NBS does not undertake  any material additional work for the Company. NBS is wholly owned by Aon plc  and while other companies within the Aon group do undertake material work for  the Company, this is not in the area of executive remuneration and  arrangements are in place within the Aon group to ring-fence NBS from other  services provided. Accordingly, the committee does not believe that the  independence of its adviser is compromised in any way. NBS was paid £41,226  during the year for the advice provided to the committee on the basis of time  expended and seniority of individuals providing the advice. The committee is  also supported by the Company’s human resources department who may from time  to time use third parties to provide data and technical advice. The committee  normally meets three times a year and has an established annual agenda of  items that it considers at the various meetings, the major elements of which  are summarised below: February X Confirmation of short and long-term  incentive outcomes X Approval of Directors’ remuneration report X New Long  Term Incentive awards August X Shareholder feedback/consultation X Remuneration  policy including risk review X Committee processes and appointment of  consultants December X Review of individual base salaries and total  remuneration X Incentive plan targets An additional meeting was held in  October 2014 to confirm changes to remuneration policy and to authorise the  chairman to consult with shareholders on these. In order to fully take  account of the impact of the acquisition and the changed market outlook, the  decisions that would normally have been made at the December 2014 meeting  were largely deferred to a meeting in March 2015 the outcomes of which are  described in this report. Remuneration committee continued |
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|  | 61 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Introduction The description that follows sets out the policy  that is subject to the statutory binding vote at the 2015 AGM. It is intended  that, if approved, it will take effect from that date. The main changes from  the previously approved policy relating to the operation of annual bonus and  LTIP are described in the chairman’s introductory letter on page 59. Some  additional minor changes have been made to provide greater clarity on aspects  of policy. Remuneration policy table This table sets out the components of  the directors’ remuneration package (except on recruitments or promotions which  are described on page 64). It is also part of this policy that we will honour  payments or awards crystallising after the effective date of this policy but  arising from commitments entered into prior to the effective date of the new  policy, or at a time when the relevant individual was not a director of the  Company. Executive directors Component and how this supports strategy How  this operates Maximum Salary Enables the business to attract and retain  individuals with the personal attributes, skills and experience required to  deliver our strategy. This also applies to the other elements of fixed  remuneration below (pension and other benefits). Reviewed annually from 1  January. Interim reviews only in case of significant changes of  responsibility. Salary increases for executive directors will not normally  exceed the average increase awarded to other employees based in the same  country. Increases may be above this level if there is an increase in the  scale, scope, complexity or responsibility of the role or to allow the base  salary of newly appointed executives to move towards market norms as their  experience and contribution increase. 2015 salaries for executive directors  are shown on page 67. Pension and related benefits Normally through a fixed  allowance, some or all of which can be paid in the form of a company  contribution to a defined contribution pension plan with any balance paid as  a cash supplement. Where the plan permits, individuals may also sacrifice on  a like-for-like basis part of base salary in return for an enhanced company  contribution. Pension plan membership is available on the same basis as for  senior employees generally in the country in which the individual is based  and there are no special arrangements for directors. Life assurance is also  provided. Samir Brikho has a historic arrangement that provides for a pension  payable from age 60 made up of 4.17% of final pensionable salary in respect  of service to 31 December 2007 and one-thirtieth of career averaged revalued  earnings in respect of service thereafter. Salary and earnings for pension  purposes are subject to a cap, currently £157,500 pa for tax year 2014/15.  The cap is increased annually, broadly in line with UK inflation. He also  receives the cash supplement on salary above this cap as a cash supplement.  To allow for the fluctuating value of defined benefit pension accrual and  cost of life assurance, the aggregate value of those arrangements, company  contribution to a defined contribution arrangement and cash supplement will  not exceed 50% of annual salary. Other benefits Standard benefits typically  include disability and healthcare insurance (including cover for eligible  dependants), car/travel allowance, working lunches and tax return preparation  assistance. Additional benefits may be paid where an individual is required  by the Company to relocate. This can include temporary housing prior to full  relocation and a one-off payment to cover specific costs of moving home or an  allowance of an equivalent amount paid for a fixed number of years. Where  individuals are required to work in another country on a temporary basis,  housing, travel, tax equalisation and cost of living adjustments may also be  paid in line with the Company’s normal policy for employees generally. Other  benefits may be provided from time to time where the committee feels it  appropriate and in line with market practice to do so in the country in which  the director is based. The Company may from time to time operate other  arrangements that are open to employees in a particular country (for example  relating to savings, discounted purchase, salary sacrifice, holiday buy and  sell, service recognition awards) that executive directors may participate in  on the same basis as other employees in the country in which they are based.  The actual value of these benefits will vary from time to time depending,  among other things, on the cost of insuring them. The intention is that the  aggregate cost would be in line with market practice and will not exceed 100%  of annual salary where there is a relocation/ expatriate element and 20% of  annual salary otherwise. Directors’ remuneration report Remuneration policy |
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|  | 62 Amec Foster  Wheeler Annual report and accounts 2014 Directors’ remuneration report  continued Remuneration policy continued Component and how this supports  strategy How this operates Maximum Annual bonus Rewards the achievement of  annual financial and delivery of other strategic business targets. Calculated  by reference to a mix of financial and other strategic objectives set by the  remuneration committee that vary from year to year and may vary between  individuals to reflect the business priorities associated with each role.  Profit-based measures will have a weighting of not less than 50%. The  committee will determine for each year threshold and target levels of bonus  that will be payable for meeting predefined performance levels against the  objectives set for the year. Target bonus will not exceed two-thirds of  maximum. Details of the actual measures and the levels of threshold and  target bonus for the periods under review are included in the annual report  on remuneration on page 69. 25% of any bonus earned is paid in the form of  Amec Foster Wheeler shares deferred for three years during which it is  subject to claw-back in the event that the accounts for the year for which  the shares were earned are required to be restated for a correction of a  prior period error or, at the committee’s discretion, for personal  misconduct. The balance of the bonus is normally paid as a cash allowance  following the end of the year to which the payment relates. However, to  facilitate higher levels of executive share ownership, the bonus may, at the  director’s option and subject to the committee’s agreement, be in the form of  nil-cost options over company shares of equivalent value instead of cash  payment. The vesting is deferred for three months during which it is forfeit  if the individual is a bad leaver. Such options have a six-month exercise  window. The committee has discretion to amend performance measures and  targets or adjust bonus pay-outs to take account of exceptional items,  unbudgeted acquisitions or disposals, and other aspects of performance which  have not been specifically identified in the targets. The maximum opportunity  is 150 per cent of annual salary for the Chief Executive and 125 per cent for  other executive directors. Long-term incentive plan Incentivises directors to  achieve long-term value creation and alignment with long-term returns to  shareholders. Annual awards of conditional awards or nil-cost options (with  an 18-month exercise period after vesting). Following vesting and, where  relevant, exercise all shares (net of tax) will be held in trust for two  years from the original vesting date. During this period shares will not  normally be able to be transferred and may be subject to claw-back in the  event that the accounts for any year over which the shares were earned are  required to be restated for correction of a prior period error. There is  further provision to reduce leaver awards retrospectively on an individual  basis as set out on page 65. Awards are subject to EPS growth and relative  TSR measured over a three-year period with equal weighting on each measure  and any additional strategic measures that the committee may consider  appropriate for any particular set of awards. Additionally, awards are  subject to a provision that allows the committee to reduce vesting in the  event of a materially adverse misstatement of results for any year of the  performance period, to correct errors or for personal misconduct. The number  of shares vesting from these awards is increased to take account of  reinvested dividends. The committee will determine the applicable EPS range  for each set of awards, with 25% of the relevant portion of the awards  vesting if the bottom of the range is achieved and 100% if the top is  achieved, with straight line vesting between. EPS is adjusted for certain  defined items and calculated on a consistent basis between base and final  years. The committee will determine the TSR comparator group for each set of  awards with 25% of the relevant portion of the awards vesting if Amec Foster  Wheeler’s ranking is at median and 100% if it is at upper quartile, with  straight line vesting between. The committee, at its discretion, may reduce  or eliminate the portion of the LTIP determined by reference to relative TSR  if it is not satisfied with the underlying financial performance of the  business during the performance period. The committee may amend the  performance conditions if an event happens which the committee considers to  be of a genuine, exceptional nature so that amended performance condition(s)  would be a fairer measure of performance and would be materially neither  easier nor more difficult to satisfy. In the event of a change of control and  in the absence of an exchange of awards being agreed, awards will normally  vest to the extent that the performance conditions have been met at that  time. The committee has discretion to measure performance based solely  against one of the performance conditions. Award of shares with a face value  at the time of award of up to 250 per cent of annual salary (ignoring  dividend equivalents). Sharesave Provides alignment with shareholders’  interests. Sharesave is an employee share plan under which discounted options  over Amec Foster Wheeler shares are granted linked to a savings arrangement with  the options becoming exercisable at the end of the savings period. The  exercise price can be up to a 20% discount to the share price at the time of  offer and the number of shares is that which can be bought at the exercise  price with the expected proceeds of the savings contract. Executive directors  are eligible to participate in this plan on the same basis as other employees  in the country in which they are located. Invitations to participate may be  made annually. Sharesave is not subject to performance conditions as the  terms of the plan are subject to tax legislation in the UK and certain other  countries including the US that preclude this. Sharesave options become  exercisable, to the extent of savings made, in the event of a change of  control. The maximum monthly savings level under any concurrent Sharesave  plans is in line with the limit set by the UK government from time to time  for such plans (currently £500 per month or the equivalent in other  currencies). |
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|  | 63 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Chairman and non-executive directors Note: The  remuneration of non-executive directors is set by the Chairman and Chief  Executive under delegated authority from the board rather than by the  remuneration committee. Component and how this supports strategy How this  operates Maximum Fees To attract and retain individuals with the personal  attributes, skills and experience required to determine strategy and  governance, to apply executive oversight and to represent shareholders’  interests. Non-executive directors receive only fees for their services and  do not participate in any of the incentive or benefit schemes of the group.  Fee structure comprises a base fee and additional fees to reflect time  commitment and responsibility of specific roles (for example, SID and  committee chair). Additional fees may also be paid to directors not resident  in the UK to recognise the additional travelling time in attending meetings.  The Chairman, whilst a non-executive director, will not participate in any of  the incentive or benefit schemes of the group. Directors (including the  Chairman) are reimbursed for expenses relating to performing their duties and  any tax thereon. Increases in the Chairman’s fee will not normally exceed the  average increase awarded to executive directors. The company’s articles  currently set an aggregate limit of £600,000 for base fees for non-executive  directors. Total fees will not exceed market norms. Selection of performance  targets Financial performance targets under the annual bonus plan are set so  that the target level of bonus is paid normally for achieving the Company’s  short-range plan. To achieve maximum bonus, higher targets have to be met. In  determining targets, the committee takes account of the general business  circumstances including the perceived difficulty inherent in the short-range  plan and the need to balance stretch against risk. Profit is chosen as the  most appropriate measure of the Company’s short-term performance and the cash  measures are chosen to reflect the conversion of profit to cash across the year.  Strategic targets are set to reflect other key business objectives during the  year. EPS targets under the Long-term Incentive Plan are set to reflect the  Company’s longer-term growth objectives at a level where the maximum  represents genuine outperformance against expectations. EPS is chosen as the  most appropriate measure of absolute growth in line with the Company’s  strategy. TSR is chosen to measure relative long-term performance against a  peer group comprising UK and international companies against which Amec  Foster Wheeler competes directly. Other strategic targets may be set to  reflect other key business objectives during the particular three year cycle. |
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|  | 64 Amec Foster  Wheeler Annual report and accounts 2014 Directors’ remuneration report  continued Remuneration policy continued Recruitment pay policy Item External  hire Internal promotion to the board Base salary Take account of current  terms and any premium required to secure high calibre appointment. Take  account of current terms, relativities with other board members and whether  any previous plc board experience. If initial salary is below market  benchmark for role, would expect to move progressively to that level over  next 24 months based on performance in role. Pension and related benefits  Existing arrangements may be continued, otherwise in line with standard  policy. Existing arrangements may be continued, otherwise in line with  standard policy. Other benefits Normally in line with standard policy but may  include special transitional arrangements e.g. overseas hire where dependants  remain outside the UK. Existing arrangements may be continued, otherwise in  line with standard policy. Annual bonus Inclusion in annual bonus for year of  hire based on pro-rated salary. Maximum opportunity (as a percentage of  salary) no greater than that for Chief Executive. Where relevant, increase  existing bonus opportunity to level applicable to new role and apply pro-rata  from date of promotion including any amendment to performance measures.  Maximum opportunity (as a percentage of salary) no greater than that for  Chief Executive. Long-term incentive plan Inclusion in LTIP for year of hire  subject to same performance conditions as others but with three-year vesting  period running from date of joining. Maximum opportunity in line with  standard policy. Maximum opportunity in line with standard policy allowing for  an additional award to be made in year of appointment to reflect the timing  of the appointment and the extent of other enhancements to remuneration  terms. Previous awards will continue on their original terms. Sharesave  Inclusion in next offer subject to meeting any qualifying period of service  that applies for new employees generally. Inclusion in next offer subject to  any restrictions as a result of savings limits. Notice periods Where it is  necessary to secure the services of a particular individual, the remuneration  committee has discretion to agree initial notice periods of not more than 24  months reducing to normal policy level over a period not more than 12 months.  Apply standard policy immediately including, if relevant, reducing any more  favourable existing terms. One-off arrangements Where individuals forfeit  bonus or long-term incentive payments from their former employer as a result  of resigning to join Amec Foster Wheeler, then the committee has the  discretion to make additional one-off awards in the form of cash and/or  shares and subject to performance and/or other conditions, including holding  periods, as appropriate. The maximum amounts to be awarded would be based on  an estimate of actual loss discounted for any accelerated payment and the  extent to which the loss is otherwise compensated for by the new terms  overall. Individuals may be compensated for actual expenses, including  temporary accommodation, in the event that they are required to relocate to  take up the new role. Alternatively a temporary cash allowance may be paid  for a limited period of time which equates to the estimated relocation cost  that would otherwise have been reimbursed. These amounts will include any  grossingup for tax. Individuals may be compensated for actual expenses,  including temporary accommodation, in the event that they are required to  relocate to take up the new role. Alternatively a temporary cash allowance  may be paid for a limited period of time which equates to the estimated  relocation cost that would otherwise have been reimbursed. These amounts will  include any grossingup for tax. |
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|  | 65 Amec Foster Wheeler  Annual report and accounts 2014 Financials Governance Strategic report  Additional information Policy on notice and payment for loss of office Newly  appointed executive directors will be employed on contracts that include the  following provisions: X the individual will be required to give six months’  notice if they wish to leave and the Company will give up to 12 months’  notice of termination other than for gross misconduct or other circumstances  where employment may be terminated without notice; X at the Company’s  discretion, the individual may be placed on garden leave for some or all of  the period between the giving of notice and termination in which case the  Company will continue to pay salary and benefits for the garden leave period  but will not make new share or other incentive awards; and X at any time, at  the Company’s discretion, employment may be terminated before the end of the  required notice period by making a payment in lieu of the balance and subject  to mitigation as described more fully in the table below. In the event of  long-term incapacity, employment would not normally be terminated so long as  the executive was entitled to payments under the Company’s group income  protection insurance arrangements but the executive would be required to  stand down from their role and as a director. Payment for loss of office will  be determined according to the following principles set out below and, for  the current executive directors, having regard to their existing contractual  terms as described following the table. Notice The executive will receive  base salary, pension and other benefits for any part of the notice period  worked (and any period of garden leave). On termination, the executive will  be entitled to payment for any accrued but untaken holiday pay. The Company  may elect to pay a sum in lieu of notice for all or any part of the notice  period, calculated by reference to the value of salary, pension and other  contractual benefits (excluding bonus). In determining the payments to be  made and the structure of such payments, the Company will have regard to the  executive’s ability to mitigate their loss. In respect of any defined benefit  pension rights, an augmentation of benefits for the relevant part of the  notice period may be made. The committee has discretion to continue to  provide certain benefits to the end of the notice period rather than  including them in the payment in lieu. Where the employment is being  terminated by the Company for gross misconduct (or other circumstances  entitling the Company to treat the contract as at an immediate end)  termination will be immediate and no payment in lieu of notice will be made.  Annual bonus No bonus will be paid in the event of termination for gross  misconduct. In all other circumstances, the committee will consider whether  it is appropriate to make a bonus payment for the year in question taking  into account all relevant circumstances, including performance and conduct.  Payment will usually be determined and paid in cash at the normal time.  Deferred bonus from prior years In the event of termination due to misconduct  by the individual, the Remuneration Committee may determine that some or all,  at its discretion, of the deferred shares will be forfeit. In the case of  death the shares will be released in full to the estate as soon as  practicable thereafter. In other circumstances, they will continue to be  subject to the deferral period and only released at the end of it providing  no further claw-back applies. Long-term incentive plan All unvested awards will  lapse on leaving in the event of termination for gross misconduct or other  bad leaver circumstances. An example of a ‘bad leaver’ would be an individual  resigning in order to take up a position with a competitor. Awards will  immediately vest in full in the event of death. In other cases, unvested  awards will be pro-rated for service, which may include any period for which  payment was made in lieu. For pre-2015 awards, provided the associated  investment shares remain lodged, matched awards will normally be retained in  full unless the committee decide to pro-rate for service. A further reduction  may be made at the committee’s discretion to take account of relevant  circumstances at the time of leaving. The retained awards will vest in the  normal way, taking account of the relevant performance conditions, and at the  normal time subject to the committee being satisfied at that time that the  individual remains a good leaver. Other Redundancy pay in line with statutory  provisions or those applying to employees generally in the country in which  the director is based will be provided in the event of termination due to  redundancy. The cost of legal, tax or other advice incurred by the individual  in connection with the termination and/or support with seeking alternative  employment may be met up to a maximum of £100,000. Additional payments may be  made where required to settle legal disputes or as consideration for new or  amended post-employment restrictions. Where an individual is in receipt of  relocation or expatriation benefits, the costs of actual expenses incurred in  relation to any arrangements that are subject to term contracts may continue  to be reimbursed for up to six months or, at the Company’s discretion, a  one-off payment made to cover the costs of premature cancellation. The cost  of repatriation will also be covered where this was part of the original  expatriation terms. Sharesave options lapse unless the director leaves  because of specified good leaver reasons in which case they can be exercised  for a limited period, to the extent of savings made to the date of exercise. |
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|  | 66 Amec Foster  Wheeler Annual report and accounts 2014 Samir Brikho and Ian McHoul are both  employed under contracts (dated April 2007 and September 2008 respectively)  with notice periods of twelve months from the Company and which require them  to give six months’ notice of resignation. The contracts permit for payment  to be made in lieu of all or part of the required notice period at the  Company’s discretion but there is no prescribed methodology for calculating  such payment in lieu or applying mitigation. Should circumstances arise where  notice is given and the executive is not required to work all or part of the  notice period, the terms of the existing contracts would be honoured. The  individuals may be placed on garden leave for part of the notice period in  which case the committee may determine that it is appropriate to pay an  element of bonus for that garden leave period. Existing directors’ service  contracts The notice provisions for Samir Brikho and Ian McHoul are described  above. There are no specified change-of-control provisions. The Chairman’s  engagement may be terminated on six months’ notice on either side. The  contracts of non-executive directors may be terminated by the individual at  any time. There are no specific provisions for compensation in the event of  early termination by the Company. Our practice is that all directors submit  themselves for re-election on an annual basis, in line with the  recommendations in the UK Corporate Governance Code. Consideration of  conditions elsewhere in company and shareholder views Our approach to the  annual review of base salaries is to take account of personal performance,  company performance, and pay levels more broadly within the Company. External  benchmarking is also taken into account, particularly for new appointments.  Any proposals to change remuneration policy are considered against the ‘best  practice’ guidelines produced by shareholder bodies and major shareholders  are consulted directly when formulating any proposals for significant  changes. The committee did consider these guidelines as well as  representations made by certain individual shareholders in formulating its  policy as noted in the chairman’s introductory letter on page 59. There was  no direct consultation with employees. The Chairman of the Company and the  chairman of the remuneration committee make themselves available at any time  and also at each annual general meeting to discuss any issues raised.  Differences in policy for directors compared to other employees The structure  of remuneration for executive directors is in line with other senior  management. The primary differences compared to other employees are the  structure of variable pay, which for senior management is in the form of  performance-related incentives and for other employees is largely in the form  of overtime and allowances reflecting the different emphases of the roles,  and in the level of accrual under defined benefit arrangements. Illustrations  of application of policy The total remuneration for each of the executive  directors that could result from the proposed remuneration policy in 2015  under three different performance levels is shown below. Notes 1 Fixed pay is  base salary for 2015 plus the value of pension and benefits. The value of  pension and benefits in kind is taken from the single total figure of  remuneration for 2014. 2 On target performance is the level of performance  required to deliver 66.67% of the maximum annual bonus and 50% of the full  LTIP award. 3 Maximum performance would result in the maximum bonus and 100%  vesting of LTIP award. 4 LTIP values ignore any change in share price or  dividend equivalents. Samir Brikho £m Fixed pay Annual bonus LTIP 25% 39%  100% 6 5 4 3 2 1 0 Fixed element On target Maximum 28% 24% 37% 47% 5.069  3.399 1.243 Ian McHoul £m Fixed pay Annual bonus LTIP 25% 39% 100% 3 2 1 0  Fixed element On target Maximum 25% 21% 40% 50% 2.643 1.760 0.654 Directors’  remuneration report continued Remuneration policy continued |
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|  | 67 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Application of remuneration policy for 2015  Changes to base salaries for executive directors The base salaries of the two  executive directors are not being increased in 2015. 2015 2014 % change Samir  Brikho £954,000 £954,000 n/c Ian McHoul £530,000 £530,000 n/c Annual bonus  measures and targets The annual bonus plan will operate in 2015 consistent  with the amended policy described above. The following bonus measures and  their weightings (maximum opportunity as a percentage of base salary) have  been agreed for 2015. They reflect a range of financial and strategic  measures that support the key strategic objectives of the Company. Measure  Samir Brikho Ian McHoul EBITA 90% 75% Cash conversion 15% 12.5% Cost  synergies 15% 12.5% Other strategic objectives 30% 25% Totals 150% 125% 2015  targets against these measures are commercially sensitive and may be subject  to revision so have not been disclosed. They will be disclosed  retrospectively in next year’s report to the extent that they do not remain  commercially sensitive at that time. Long-term incentive awards to be made in  2015 Subject to shareholder approval at the AGM for the new long-term  incentive plan, awards equivalent to 250% of base salary will be made. Half  of the award will be subject to a comparative TSR measure and the other half  will be subject to an EPS performance measure. TSR will be measured against a  peer group comprising Amec Foster Wheeler and 20 UK and international  companies against which Amec Foster Wheeler competes directly. The EPS target  range will be 5 percent compound annual growth for threshold vesting and 10  percent for maximum vesting measured from a pro forma 2014 base that includes  a full-year contribution from the Foster Wheeler acquisition. The measures  will operate in the manner described in the policy set out in page 62 above.  Changes to Chairman’s and non-executive directors’ fees The fee for the  Chairman and non-executive directors are not being increased for 2015 other  than that for the Audit committee chairman to reflect the increased time  commitment arising from the ongoing US listing obligations. 2015 2014 % change  Chairman £318,000 £318,000 n/c Board fee £60,500 £60,500 n/c Audit committee  chairman £30,000 £18,500 +62% Remuneration committee chairman £13,000 £13,000  n/c HSSEE committee chairman £6,000 £6,000 n/c Senior Independent Director  £5,500 £5,500 n/c Non-UK director (additional travel time) £12,100 £12,100  n/c Directors’ remuneration report continued Annual report on remuneration |
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|  | 68 Amec Foster  Wheeler Annual report and accounts 2014 Directors’ remuneration report  continued Annual report on remuneration continued The information from this  point onwards up to and including the statement of directors’ share interests  and shareholding on page 72 is subject to audit. Single total figure of  remuneration for 2014 The following table shows a single total figure of  remuneration in respect of qualifying services for the 2014 financial year  for each director, together with comparative figures for 2013. Salary/fees  £’000 Taxable benefits £’000 Bonus £’000 LTIP £’000 Sharesave £’000 Pension  £’000 Total £’000 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013  2014 2013 Executive Samir Brikho 954 927 43 66 594 717 0 420** – – 246 240  1,837 2,370 Ian McHoul 530 515 18 15 268 315 0 233** – 6 106 103 922 1,187  Non-executive John Connolly 318 309 – – – – – – – – – – 318 309 Simon  Thompson 76 64 – – – – – – – – – – 76 64 Neil Carson 61 58 – – – – – – – – –  – 61 58 Colin Day 79 76 – – – – – – – – – – 79 76 Linda Adamany 77 70 – – – –  – – – – – – 77 70 Stephanie Newby* 13 – – – – – – – – – – – 13 – Tim  Faithfull* 21 76 – – – – – – – – – – 21 76 *Stephanie Newby joined the board  in November 2014 and Tim Faithfull left the Board in April 2014. Stephanie  Newby’s fees include an amount paid in relation to her ongoing  post-acquisition service as a director of Foster Wheeler AG from 13 November  2014 to 31 December 2014; this ceased from 19 January 2015. **The 2013 values  have been updated from the estimates included in last year’s report as  detailed on page 70. Taxable benefits for the executive directors comprise  disability and healthcare insurance, car/travel allowance, working lunches  and tax return preparation assistance. The 2013 Sharesave figure for Ian  McHoul is the gain made on exercising an option over 1,512 shares made under  the Savingsrelated Share Option Scheme (Sharesave) at an option price of  £6.00. The closing share price on the date of exercise, 3 May 2013, was  £10.25, resulting in a gain on exercise of £6,426. Samir Brikho is a member  of the advisory board of Stena AB and a non-executive director of  Skandinaviska Enskilda Banken AB: he received fees of CHF 60,000 during the  year in relation to the first appointment and SEK 599,435 in relation to the  second. Ian McHoul is a director of Britvic plc and received fees of £45,385  during the year in relation to this appointment. Such appointments are  subject to prior approval of the board. Directors are permitted to retain  fees. (These amounts are not subject to audit and are not included in the  single total figure table above). Total pension entitlements The pension  amount shown in the 2014 ‘single total figure of remuneration’ above  comprises the following: Accrued DB pension at 31/12/14 £’000 Value of DB  benefit £’000 Cash allowance £’000 Total pension benefit £’000 Samir Brikho  42 87 159 246 Ian McHoul – – 106 106 Samir Brikho has a normal retirement age  of 60 in relation to the stated defined benefit (DB) pension. There are no  additional pension benefits that become payable for either director in the  event of early retirement. The cash allowance in the case of Mr Brikho  represented 20% of salary above the pension scheme cap and in the case of Ian  McHoul represented 20% of full salary. |
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|  | 69 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Annual bonus The bonus payments in respect of  2014 that will be paid in 2015 to the executive directors (expressed as a  percentage of base salary earned during the year) are shown below reflecting  the indicated outcomes against the various performance elements: Samir Brikho  Ian McHoul Measure Target range Actual Percentage of max achieved Max Actual  Max Actual EBITA* £335-370m 338 30% 70% 21.1% 55% 16.6% EBITA additional  stretch 0% 25% 0% 25% 0% Cash conversion full year 80-90% 88% 59% 18.75%  11.1% 15% 8.9% Cash conversion half year 45-50% <45% 0% 6.25% 0% 5% 0%  Other strategic objectives See note 30% 30% 25% 25% Totals 150% 62.2% 125%  50.5% *For bonus purposes EBITA (after exceptional items which may be  disallowed for bonus purposes at the committee’s discretion) is normalised  for exchange rate movements and cost of share based payments: the target and  actual figures shown above are before any such adjustments. ‘Other strategic  objectives’ measures for the Chief Executive included actions to establish  the acquisition implementation plan and strategy for the new combined  business, develop the executive management team, deliver higher revenue in  Growth Regions and safety leadership. For the CFO they included establishing  finance integration and cost synergy plans, implementation of shared services  and IT systems, and delivering performance from the Investment Services  activities. The committee has discretion to take other factors into account  and uses its judgement in determining the amount to be paid under this item.  For 2014, the committee considered performance against these objectives and resolved  that it was appropriate to award maximum bonus for this element. None of the  bonus earned for 2014 is subject to compulsory deferral, as the EBITA  additional stretch minimum target was not met. The original EBITA targets  were adjusted to remove a provision for contribution from small acquisitions,  given the focus on completing the Foster Wheeler acquisition, and the actual  results were adjusted to exclude the contribution in 2014 from the Foster  Wheeler acquisition. Performance Share Plan The LTIP amount shown in the 2014  ‘single total figure of remuneration’ on page 68 is the award made under the  Performance Share Plan in 2012. Vesting is due to take place on 3 April 2015  and is subject to two performance conditions each measured over three-year periods:  (i) earnings per share (EPS*) growth between 2011 and 2014 and (ii) total  shareholder return relative to a comparator group based on average share  prices in the first 11 weeks of 2015 compared to those in the corresponding  period in 2012 (also subject to the committee being satisfied that there has  been sustained financial growth of the Company). The two performance  conditions operate independently on different parts of the award: half of the  basic award is dependent on EPS and the other half on TSR; the matched award  depends solely on EPS. *EPS for this measure means the diluted earnings per  share expressed to one decimal place of Amec Foster Wheeler plc before  goodwill and intangible amortisation, the charge or credits associated with  executive share awards and exceptional items. ‘Real’ growth means in excess  of the change in the UK Retail Prices Index for December 2014 compared to  December 2011. The committee took account of the share buyback that took  place during 2012 and 2013 in determining the outcome for the EPS element and  also excluded the contribution in 2014 from the Foster Wheeler acquisition.  The performance achieved against the EPS target and the TSR outcome are as  follows: 2011 awards performance measure Threshold – 25% vesting Maximum – 100%  vesting Outcome Percentage of max achieved Real annual compound growth in EPS  5% 12% <5% 0% Total shareholder return ranking Median Upper quartile 17th  out of 24 0% Accordingly no shares will vest from these awards. |
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|  | 70 Amec Foster  Wheeler Annual report and accounts 2014 Directors’ remuneration report  continued Annual report on remuneration continued The LTIP amount shown in  the 2013 single total figure of remuneration on page 68 is the award made  under the Performance Share Plan in 2011 that vested in April 2014. An  estimated figure was included for this in last year’s report and this has now  been updated to reflect the actual outcome as set out below. Vesting took  place on 5 April 2014 at a share price of £12.25. The balance of the original  award lapsed at the same time. 2011 PSP awards Original award – number of  shares Total number of shares vesting including dividend equivalents Vesting  value £’000 Samir Brikho 184,695 34,2751 420 Ian McHoul 102,667 19,0511 233 1  These awards were in the form of nil cost options with an 18-month exercise  period post-vesting. If the option has not been exercised before the end of  the period, it will be exercised automatically at that stage. Additional  dividend equivalents are accrued between vesting and exercise and this is  reflected in the table on page 72. Details of share awards during year Awards  were made under the Performance Share Plan on 27 March 2014 that will vest  three years later subject to the outcome against the performance conditions  and may be exercised up to 18 months after vesting. The face value of the  awards is based on the share price at the date of award which was £11.05.  Type of interest awarded Basis of award Face value £’000 Percentage vesting  at threshold performance Number of shares End of performance period Samir  Brikho Nil-cost options Basic award – 175% of salary 1,670 25% 151,085 31 December  2016 Nil-cost options Matched award – up to 75% of salary on two for one  investment share match 715 25% 64,750 31 December 2016 Total 250% of salary  2,385 215,835 Ian McHoul Nil-cost options Basic award – 175% of salary 928  25% 83,936 31 December 2016 Nil-cost options Matched award – up to 75% of  salary on two for one investment share match 397 25% 35,972 31 December 2016  Total 250% of salary 1,325 119,908 Half of the basic award is subject to a  TSR performance condition and the other half and all of the matched award is  subject to an EPS performance condition. The TSR measure is based on Amec  Foster Wheeler’s ranking against the comparator group set out below based on  the average share price over the final quarter of 2016 compared to the  corresponding period in 2013. The threshold for any vesting to occur is that  Amec Foster Wheeler needs to be ranked at median or higher. If upper quartile  ranking is achieved, full vesting will occur. Vesting is on a straight line  basis between these threshold and maximum targets. |
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|  | 71 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Comparator group in respect of 2014 awards Aker  Solutions Norway Melrose UK AMEC UK Petrofac UK Babcock Intl. UK Rotork UK  Baker Hughes USA Saipem Italy Balfour Beatty UK Schlumberger USA Cameron  Intl. USA Serco Group UK Carillion UK SNC-Lavalin Group Canada Chicago Bridge  & Iron USA Spirax-Sarco UK Fluor USA Technip France Halliburton USA URS  USA IMI UK Weir Group UK Jacobs USA Wood Group (John) UK KBR USA Worley  Parsons Australia Foster Wheeler has been removed from the original  comparator group. The committee has discretion to make further adjustments to  the list when necessary to take account of mergers, acquisitions or other  such events. The EPS measure is based on the compound annual growth (CAGR) to  2016 from an adjusted 2013 base. EPS for this purpose is defined as the  diluted earnings per share expressed to one decimal place of Amec Foster  Wheeler plc before goodwill and intangible amortisation, the charge or  credits associated with executive share awards and exceptional items (at the  committee’s discretion). The adjustment took account of the Foster Wheeler  acquisition. Threshold (25%) vesting will occur if CAGR is 5% and maximum  (100%) vesting will occur if CAGR is 10% or higher with straight line vesting  for a result between these targets. The number of shares vesting as  determined by the performance conditions outcomes will be increased to take  account of reinvested dividends including the UK tax credit in the period  between award and vesting. Details of the specific companies included in the  TSR comparator groups for both the 2012 and 2013 awards were included in the  directors’ remuneration reports for those years and may be obtained on  request from the Company Secretary. Payments to former directors No payments  (including payments for loss of office) were made to former directors. |
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|  | 72 Amec Foster  Wheeler Annual report and accounts 2014 Directors’ remuneration report  continued Annual report on remuneration continued Directors’ share interests  and shareholding requirements As at 31 December 2014 (or in the case of Tim  Faithfull as at the date he ceased to be a director), the beneficial  interests in the share capital of the Company of the directors and their  connected persons were as follows: Legally owned shares Vested but  unexercised share options Unvested share options subject to performance  conditions (PSP awards) Unvested share options not subject to performance  conditions (Sharesave) John Connolly 35,538 – – – Samir Brikho 1,894,682  36,491 631,659 1,032 Ian McHoul 318,443 19,540 350,920 1,046 Tim Faithfull  10,000 – – – Neil Carson 5,000 – – – Colin Day 21,466 – – – Simon Thompson  4,744 – – – Linda Adamany 3,100 – – – Stephanie Newby 21,899 – – – The  unexercised share options for Samir Brikho and Ian McHoul include those  vesting during 2014 from the PSP awards made in 2011, as described on page 70  and in the case of Mr Brikho 1,335 options under the Sharesave Plan with an  exercise price of £6.74 and an exercise period from January to June 2015.  Sufficient shares may be sold on exercise of options to meet tax withholding  requirements. Details of the unvested options for Samir Brikho and Ian McHoul  are as follows: Date of award Type of award Number of shares Exercise price  Exercise period Samir Brikho April 2012 PSP 197,194 Nil April 2015 to October  2016 March 2013 PSP 218.630 Nil March 2016 to September 2017 March 2014 PSP  215,835 Nil March 2017 to September 2018 October 2014 Sharesave 1,032 £8.72  January to June 2018 Ian McHoul April 2012 PSP 109,551 Nil April 2015 to  October 2016 March 2013 PSP 121,461 Nil March 2016 to September 2017 October  2013 Sharesave 1,046 £8.60 January to June 2017 March 2014 PSP 119,908 Nil  March 2017 to September 2018 On 5 January 2015 John Connolly and Ian McHoul  acquired 601 and 28 shares respectively and on 7 January 2015 Colin Day  acquired 363 shares; all of these were in lieu of the interim dividend paid  on 5 January 2014. The unexercised share options arising from PSP awards  increased by 621 for Mr Brikho and 347 for Mr McHoul in respect of dividend  equivalents. Mr Brikho exercised his Sharesave option over 1,335 shares on 9 March  2015. There were no other changes in the directors’ interests in the share  capital of the Company between 31 December 2014 and 26 March 2015. No  director has used any of their shareholdings in hedging arrangements or as  collateral for loans. Guidelines are in place requiring executive directors  and members of the Group Leadership Team to build up and retain a holding of  Amec Foster Wheeler shares received from incentive plans or purchased by  them. The level of targeted shareholding is 250% of salary for executive  directors and 125% for other senior executives. Based on the average share  price and salaries during December 2014, the legally-owned shares shown above  represented the following percentages of base salary which are both  considerably in excess of the shareholding requirement: Samir Brikho 1,721%  Ian McHoul 521% There is no shareholding requirement for the Chairman or  non-executive directors. |
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|  | 73 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Total shareholder return This graph compares  the TSR performance of Amec Foster Wheeler plc, assuming dividends are  re-invested, with the TSR performance of the FTSE 100 over the period 31  December 2008 to 31 December 2014. Chief Executive’s pay in the last six  years 2009 2010 2011 2012 2013 2014 Single total figure of remuneration £’000  4,103 9,295 4,590 3,092 2,370 1,837 Bonus awarded as % of maximum 58% 97% 64%  57% 52% 41% LTIP vesting as % of maximum 100% 80% 71% 50% 19% 0% Percentage  change in Chief Executive’s remuneration The table below shows how the  percentage change between 2013 and 2014 in the Chief Executive’s salary,  benefits and bonus compares with the percentage change in the average of each  of those elements of pay for a comparator group of employees. The committee  has selected employees in the UK as the comparator group as they have broadly  the same structure of remuneration and to eliminate the impact of exchange  rate movements if employees in other countries were included. Salary Taxable  benefits Bonus 2014 2013 % change 2014 2013 % change 2014 2013 % change Chief  Executive 954 927 +3% 43 66 -35% 594 717 -17% UK staff +3% +4% -16% The  year-on-year change for UK staff taxable benefits is based on data for tax  years ending in 2014 and 2013 averaged over the number of employees in  receipt of those benefits. The year-on-year changes for UK staff salary and  bonus are based on the aggregate amounts paid in each year divided by the  average number of employees in that year. Total shareholder return Amec  Foster Wheeler FTSE 100 Index Source: Thomson Reuters 260 240 220 200 180 160  140 120 100 80 2008 2009 2010 2011 2012 2013 2014 80 100 120 140 160 180 200  220 240 260 |
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|  | 74 Amec Foster  Wheeler Annual report and accounts 2014 Relative importance of spending on  pay The chart below illustrates the relative importance of spending on pay  compared to distributions to shareholders (dividends and share buy-back) and  other disbursements from profit or cash flow that are considered by the  directors to be the most material expenditures in relation to the Company’s  strategy. Shareholder voting on remuneration policy and report at last AGM At  the annual general meeting held on 3 April 2014 votes were cast as follows:  Resolution Shares for (including discretionary) % in favour Shares against %  against Shares withheld To approve the remuneration report 166,409,640 88.35  21,949,194 11.65 2,103,756 To approve the remuneration policy 153,158,481 81.27  35,308,450 18.73 1,995,659 The committee do not consider that the votes  against either resolution were substantial requiring any specific explanation  or action in response. As noted above, shareholders were consulted during  2014 regarding proposed changes to remuneration policy. Relative importance  of spending on pay £bn 2014 2013 2012 2.5 2.0 1.5 1.0 0.5 0 Staff costs  Dividends Share buybacks Acquisitions Directors’ remuneration report  continued Annual report on remuneration continued |
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|  | 75 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Jonathan Nield Group Project Delivery Director Jon was appointed  Group Project Delivery Director on 13 November 2014, immediately prior to  which he served as Vice President, Project Risk Management of Foster Wheeler  – a position he held since May 2011. Previously, he was a director of Foster  Wheeler Energy Limited and he has served in various executive positions with  that company. He was a member of the Foster Wheeler team for more than 25  years. Jon has a BSc in Mechanical Engineering from Newcastle University, an  MSc in Project Management from Cranfield School of Management. He currently  serves as a director of the Engineering & Construction Risk Institute.  Will Serle Group Human Resources Director Will was appointed Group Human  Resources Director on 1 May 2011, having previously held the position of  Human Resources Operations Director since 2009. Will is also responsible for  sustainability at Amec Foster Wheeler. He joined the Company in 2000 as Human  Resources Director for the Oil & Gas business, moving to the Natural  Resources role in 2006. Will holds a Master’s degree in Human Resources from  The Robert Gordon University and is a Fellow of CIPD. Our Group Leadership  Team Simon Naylor Group President, Americas Simon was appointed Group  President, Americas in October 2012. Prior to that Simon had been President  Natural Resources Americas since 2007, where he led the growth and successful  development of the company’s leading positions in the core market sectors of  Mining, Oil & Gas and Oil Sands. In his 22 years with the company, Simon  has worked across the project life cycle; from consulting, engineering and  project management. A natural resources professional, his experience includes  project development, asset support, strategy, customer relationship management  and operations leadership. Simon has an MBA from Cranfield School of  Management and a BSc from University College London in Chemical Engineering.  Roberto Penno Group President, AMEA & Southern Europe Roberto was  appointed Group President, AMEA & Southern Europe on 1 January 2015,  immediately prior to which he was CEO of Foster Wheeler’s Global E&C  Group – a position he held since 2013. Previously he was CEO of the Global  E&C Group’s Asia-Pacific Region. A 27-year veteran of Foster Wheeler, he  has held a variety of positions with the company, including managing director  of Global Sales, Marketing and Strategic Planning; director of commercial  operations for Foster Wheeler Asia Pacific; and other senior roles in  operating unit management, sales and commercial management in Europe, Asia  and the US. Roberto has a degree in Mechanical Engineering from University  Politecnico Milan. The team is comprised of senior operational and functional  management, each of whom brings a depth of knowledge and experience to their  role. Gary Nedelka Group President, Global Power Group Gary was appointed  Group President, Global Power Group on 1 January 2015, having served as Chief  Executive Officer of Foster Wheeler’s Global Power Group since January 2009.  Prior to this, he served as President and Chief Executive Officer of Foster  Wheeler North America Corp., an indirect, wholly-owned subsidiary within the  Global Power Group. Previously he was President and General Manager of  operating companies in China and he held a variety of positions of increasing  responsibility in commercial operations and engineering management. He joined  Foster Wheeler in 1979 and is a member of the American Society of Mechanical  Engineers. Gary holds a BSc in mechanical engineering from Clarkson College  of Technology. Jeff Reilly President, Strategy & Business Development  Jeff was appointed President, Strategy & Business Development on 28 April  2014. He started his career with Stone & Webster Engineering Corp. as a  Chemical Process Design Engineer and developed his career there and at ABB  Lummus Global Inc as company Vice President at both engineering and  construction organisations. He joined ConocoPhillips in 2005, initially as  Major Contracts Manager, then led upstream and downstream major project portfolios  globally and was appointed as Chief Procurement Officer in 2012. Jeff has a  BS Chemical Engineering from The University of Texas at Austin; an MBA in  Finance and International Business from the University of Houston. John  Pearson Group President, Northern Europe & CIS Before taking the role of  Group President, Northern Europe & CIS on 1 January 2015, John was Group  President of Europe and, prior to that, he was Managing Director of the Oil  & Gas business in Europe and West Africa. He joined the company in 1990  and has worked in a variety of roles in engineering and project management.  In the past, John has led the company’s Oil & Gas projects and Asset  Support business streams globally. Prior to joining the business, John worked  for Chevron and has worked around the world, having spent time based in  Aberdeen, San Francisco, Baku and London. John is currently joint contractor  co-chair of Oil & Gas UK and sits as a board member for PILOT, the Fiscal  Forum and the OGA. John holds a BSc Honours Engineering degree from Aberdeen  University. Alison Yapp General Counsel and Company Secretary Alison was  appointed General Counsel and Company Secretary on 1 December 2012.  Immediately prior to joining the company she was Company Secretary and  General Legal Counsel of Hays plc, previous to which she was Company  Secretary and Group Legal Adviser of Charter plc. She is a solicitor and has  more than 20 years’ experience as a senior lawyer in industry. She began her  career in private practice at Turner Kenneth Brown, advising corporate and  commercial clients in M&A before moving in-house to Johnson Matthey plc  where she held various senior legal roles. Alison holds an LLB (Hons) from  Bristol University and is a qualified solicitor. In addition to the executive  directors shown on pages 45 and 46, Amec Foster Wheeler’s Group Leadership  Team consists of the following individuals: |
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|  | 76 Amec Foster Wheeler Annual  report and accounts 2014 The board has also created a number of management  committees that deal generally with more operational matters. Management  committees Share allotment Members Any two directors or a director and the  General Counsel and Company Secretary or the Deputy Company Secretary (the  chairman to be appointed from those directors present). Responsibilities The  share allotment committee approves the allotment of new shares or the issue  of existing shares held in treasury following the exercise of options under  the Savings-Related Share Option Scheme. Risk Members Chief Executive  (chairman); Chief Financial Officer; General Counsel and Company Secretary;  Group Commercial Director; Head of Risk Management and Insurance; Group  Project Delivery Director. Responsibilities The risk committee performs an  integral role in the governance of risk within Amec Foster Wheeler by helping  the board fulfil its responsibilities in determining the risk appetite of the  group and the effectiveness of the risk management and internal control  systems that support it. It also reviews the Amec Foster Wheeler plc risk  register and the potential impact of any issues on the risk appetite and the  risk profile of the group. It reports on key risk issues such as new business  and geographical locations and also makes recommendations on the insurance  programme for the group. Pensions and retirement benefits Members Chief  Financial Officer (chairman); Group Human Resources Director; Head of  Pensions; General Counsel and Company Secretary. Responsibilities The  pensions and retirement benefits committee reviews and recommends the  establishment of any new or replacement pension arrangements, any material  amendments to existing pension schemes, and the discontinuance, winding up or  merger of any existing arrangement. It also agrees with the trustees of those  pension arrangements appropriate funding plans to secure the benefits  promised. Group project review (from March 2015) Members Group Leadership  Team, Commercial Director. Responsibilities The group project review  committee reviews project execution and financial performance on higher risk,  higher value projects that could have a material affect on group performance.  Disclosure (from January 2015) Members Group Financial Controller (chairman);  General Counsel and Company Secretary; Head of Risk Management and Insurance;  Chief Corporate Compliance Officer; Head of Internal Audit; Director of Tax  and Treasury; Group Corporate Affairs Director; Head of Investor Relations.  Responsibilities Following the acquisition of Foster Wheeler, we have  established a disclosure committee which will assist the audit committee with  regard to verifying the information that is required to be disclosed in the  company’s material public disclosures and in its periodic reports. This is  intended to ensure such disclosures are in compliance with all relevant laws,  rules and regulations, including the UK Listing Authority, the London Stock  Exchange, the New York Stock Exchange and the US Securities and Exchange  Commission. Corporate transactions Members Chief Executive (chairman); Chief  Financial Officer; General Counsel and Company Secretary; Head of Mergers and  Acquisitions. Responsibilities The corporate transactions committee considers  mergers, acquisitions and disposals and approves transactions where the  consideration or assumption of liabilities, as appropriate, is £5m or less,  and above this level it submits recommendations to the board for approval. In  addition it determines transaction guidelines that are in line with group  policies and procedures. These are chaired by executive directors or other  senior individuals and members are drawn from senior management within the  group. The minutes of each of these meetings are circulated to each board  meeting. The terms of reference of all these committees have been reviewed  and updated following the acquisition of Foster Wheeler. Health, safety,  security and environmental (HSSE) review Members Chief Executive (chairman); Group  Human Resources Director; General Counsel and Company Secretary.  Responsibilities The HSSE review committee’s key responsibility is to provide  effective oversight of the company’s performance and management of HSSE  issues across the group. This includes the evaluation of the effectiveness of  the group’s policies and management systems in respect of managing health,  safety, security and environmental risk in both current and future operations  associated with the company’s growth strategy. Tender review Members Chief  Executive (chairman); Chief Financial Officer; General Counsel and Company  Secretary; Head of Risk Management and Insurance; Group Commercial Director;  Group Project Delivery Director. Responsibilities The tender review committee  primarily reviews and approves proposed tender submissions for contracts to  be undertaken by the business units that are outside the delegated authority  of the Group Presidents. |
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|  | 77 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Attendance at meetings The board holds a minimum of six regular  meetings throughout the year, scheduled in accordance with an annual  timetable. Additional board meetings and telephone conferences are held as  required to deal with specific issues. In 2014 there were six scheduled  meetings and ten unscheduled meetings. Directors are expected to attend all  scheduled board and relevant committee meetings, unless they are prevented  from doing so by unavoidable prior business commitments or other valid  reasons. All directors are provided with full papers in advance of each meeting.  Where a director is unable to attend a meeting, they are encouraged to  discuss any issues arising with the Chairman or Chief Executive as  appropriate. Number of meetings attended Scheduled Unscheduled John Connolly1  5/6 10/10 Samir Brikho 6/6 10/10 Ian McHoul 6/6 10/10 Linda Adamany 6/6 10/10  Neil Carson 6/6 6/10 Colin Day 6/6 9/10 Tim Faithfull (to 3 April 2014) 1/1  2/2 Stephanie Newby (from 13 November 2014) 1/1 2/2 Simon Thompson 6/6 10/10  1 The Chairman was unable to attend one meeting due to illness. Unscheduled  meetings were convened throughout the year to consider matters relevant to  the Foster Wheeler acquisition. As these were not scheduled, members were not  always able to attend but were provided with full packs of information and  were invited to make comments. Board composition As at 31 December 2014, the  board comprised the non-executive chairman; two executive directors (the  Chief Executive and the Chief Financial Officer); and five non-executive  directors. As a result of the Foster Wheeler acquisition, Kent Masters joined  the board on 13 February 2015 as a non-executive director. Given his former  role as Chief Executive Officer of Foster Wheeler AG, Kent is not considered  to be independent. Details of the directors, including their biographies,  other significant commitments and committee memberships can be found on pages  45 to 47. The balance of executive and non-executive directors, reinforced by  adherence to sound governance procedures, ensures no one individual, or group  of individuals, dominates the board’s decision-making process. The varied  backgrounds and commercial experience of the non-executive directors, and  their independence from management, ensures rigorous debate at meetings and  the constructive challenge and oversight of the executive directors in  relation to the strategic direction and performance of the group. The board  is mindful of the need to maintain an appropriately diverse mix of skills,  experience, independence and knowledge of the group to ensure the delivery of  the group’s strategy and performance. The nominations committee regularly  reviews the composition of the board against these criteria. The Company’s  articles of association require all directors to seek re-election by  shareholders at the AGM following their initial appointment and every three  years thereafter. However, in line with the recommendations of the Code, our  practice is that all directors submit themselves for re-election on an annual  basis. All of the directors wishing to continue serving, and considered  eligible by the board, will offer themselves for re-election at the 2015 AGM.  Details of the directors’ service contracts, emoluments and share interests  are set out in the remuneration report on pages 66 to 72. Leadership 2005  2006 2007 2008 2009 2010 2011 2012 2013 2014 Membership of the board  Non-executive Chairman Executive director Non-executive director 1 2 6  Experience of the board Financial management and corporate finance Corporate  governance International experience Experience in business sectors relevant  to Amec Foster Wheeler HSSE Strategy Number of board directors with  experience in each topic 5 6 5 6 7 9 Directors’ tenure as at 31 December 2014  John Connolly Samir Brikho Ian McHoul Linda Adamany Neil Carson Colin Day  Stephanie Newby Simon Thompson 3 yrs 7m 8 yrs 3m 6 yrs 3m 2 yrs 3m 4 yrs 4m 4  yrs 2m 1m 5 yrs 11m |
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|  | 78 Amec Foster  Wheeler Annual report and accounts 2014 Leadership continued At least one  scheduled meeting each year takes place away from Amec Foster Wheeler’s head  office in London. This provides the board with an opportunity to understand  more about Amec Foster Wheeler’s business and to meet employees based  locally. In June 2014 the board meeting took place in our offices in  Aberdeen, UK, where the board met with local management and also visited the  Robert Gordon University, accessing the state of the art Drilling and Rig  Training (DART) simulator developed by the university to help address this area  of skills shortage in our industry. Amec Foster Wheeler has a strong working  relationship with the university, which is very closely affiliated with the  oil and gas industry and has provided many of the company’s engineering  graduates. In addition to the matters reserved for the board, certain items  are considered at every scheduled board meeting. The Chief Executive provides  a report on business performance, strategy execution and emerging issues and  the Chief Financial Officer updates the board on financial results and  progress against the short range plan. Executive reports are received on  investor relations and market issues, HR and health and safety. In addition,  the Chairman and the General Counsel and Company Secretary provide an update  on legal and governance matters and twice yearly the General Counsel and  Company Secretary provides updates on material claims and disputes. Business  unit management is regularly invited to present at board meetings and, led by  the Group Presidents, provide ‘deep dive’ reviews of each region. In addition  to standing items discussed at each meeting, the board cycles through a  schedule of financial and planning matters including the approval of  financial results and dividends; strategic and special matters including the review  and approval of strategy; the determination of major risks and risk appetite  and transaction and competitor reviews. The board receives an annual  presentation from the Group Human Resources Director on senior management  succession planning and management development. In 2014, this took place in  June and the board were advised of the creation of a new people forum, the  purpose of which was to ensure that succession was considered more deeply  throughout the organisation. The board has also identified a range of topic  reviews that are addressed annually and these include the strategies followed  by the group’s functions e.g. Tax, Treasury and IT, as well as the board  effectiveness and composition reviews. The board also holds a separate  additional meeting each year to perform a full strategic review of the group.  On account of the timing of the acquisition of Foster Wheeler, the strategy  event scheduled for October 2014 was postponed until April 2015. The Chairman  and Chief Executive The company does not combine the roles of Chairman and  Chief Executive. There is a clear and well defined division of accountability  and responsibility between the roles of the Chairman and Chief Executive and  these are set out in writing and have been agreed by the board. The consequence  of this clear division of responsibility at the head of the company is such  that no individual has unfettered powers of decision. The Chairman and Chief  Executive are committed to ensuring the development and maintenance of an  effective and trusting relationship with the appropriate balance between  challenge and support. The Chairman is primarily responsible for the  leadership and effectiveness of the board. At a high level, he is accountable  for facilitating constructive relations between and the participation of all  board members, so as to encourage a culture of openness and debate and enable  the board to fulfil all aspects of its role. The Chairman has undertaken to  ensure that the board discharges its duties to promote the success of the company  and to guide Amec Foster Wheeler’s business and conduct in accordance with  the highest ethical standards. Each year the Chairman produces a board plan  intended to summarise the board’s activities in executing its duties during  the year. The plan highlights the priorities the board has identified for the  year, and those of the Chief Executive, and is modified to take account of  unscheduled developments. In setting the agenda for board meetings, the  Chairman ensures sufficient time is available for discussion and meaningful  challenge of all matters, particularly strategy, performance, value creation  and accountability. The Chief Executive is responsible, subject to those  matters reserved to the board, for running Amec Foster Wheeler’s businesses  with the primary objective of creating shareholder value. Consistent with  this objective, the Chief Executive has ultimate responsibility for the  proposal, development and implementation of the group’s strategy. The  building and maintenance of an effective executive management team, and the  allocation of responsibility therein, are key components of and essential to  the performance of the Chief Executive’s role. The Chief Executive takes the  lead role in the promotion of Amec Foster Wheeler, gives personal leadership  to the realisation of the company’s vision and values and encourages the  highest standards of health, safety, security, environmental and ethical  performance. |
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|  | 79 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Senior Independent Director Simon Thompson has  acted as the board’s Senior Independent Director since the conclusion of 2014  AGM, following the retirement of Tim Faithfull. Simon was selected for the  role on account of his significant knowledge of Amec Foster Wheeler and its  operations and his experience as a director of international companies in  sectors that are relevant to the group. The Senior Independent Director is  responsible for: X providing additional support to and acting as a sounding  board for the Chairman; X acting as an additional channel of communication  between the Chairman and the other directors; X being available to  shareholders for concerns they may have that have not been resolved through  the normal channels of the Chairman, Chief Executive or other executive  directors, or which are not appropriate to raise through these channels; X  acquiring an objective understanding of the issues and concerns of Amec  Foster Wheeler’s shareholders through attendance at a sufficient number of  meetings with the company’s major shareholders and financial analysts; X at  least annually establishing the views of the non-executive directors as to  the performance of the Chairman; X following completion of the above  evaluation exercise, providing feedback to the Chairman on his performance;  and X overseeing the recruitment of the Chairman. As previously noted, Simon  Thompson will step down from the board at the conclusion of the 2015 AGM,  having served six years on the board. Following Simon’s retirement, Neil  Carson will take on the role of Senior Independent Director. Both the nominations  committee and the board considered that Neil Carson best met the criteria  required for the role. Non-executive directors The non-executive directors  are crucial in bringing an external perspective and wide range of skills,  experience, expertise and diversity of views to the board’s deliberations and  the development of strategy. They constructively challenge and scrutinise the  performance of management against agreed objectives and provide an invaluable  contribution to the work of the board’s committees. The board benefits  greatly from the contribution and balance they bring. To ensure this  continues, the Chairman holds meetings with the non-executive directors,  without the executive directors present, immediately following most scheduled  board meetings. The board’s policy is that non-executive director  appointments are normally for three consecutive three-year terms, subject to  assessment by the nominations committee after the end of each term. The  committee makes recommendations on reappointment to the board. Prior to  appointment and on any material changes, the external commitments of each  non-executive director, including those of the Chairman, are reviewed. During  the year, John Connolly became the chairman of a small private company, the  Elian Group, which is based in Jersey; Linda Adamany was appointed as a  non-executive director of Leucadia National Corporation, Neil Carson was  appointed as a non-executive director of PayPoint Plc and Colin Day became a  director of FM Global and was appointed to the FRC Audit Advisory Group. In  accordance with the board’s policy to ensure that non-executive directors are  not conflicted and are able to commit sufficient time to meet their duties  and responsibilities to Amec Foster Wheeler, the prospective appointments  were disclosed to the board for approval. In no case was it considered that  the external appointment would have a detrimental effect. Each director’s  undertaking as to their ongoing commitment to the role, together with an  assessment of their continued independence, is reviewed as part of their  annual performance evaluation. Amec Foster Wheeler’s non-executive directors  are not employed by the company in any capacity, nor have they previously  been. Kent Masters was the former Chief Executive Officer of Foster Wheeler  AG and Stephanie Newby was formerly an independent non-executive director of  Foster Wheeler AG. The letters of appointment of the non-executive directors  are available for inspection at the company’s registered office by request to  the Company Secretary and will be available for inspection at the company’s  forthcoming AGM. Conflicts of interest The board has procedures in place for  the disclosure and review of conflicts of interest. No material conflicts of  interest arose in 2014. Prior to appointment, director-elects provide  information on any conflicts of interest, and thereafter any potential  conflicts of interest are considered at the start of each board meeting.  Accordingly, each director is aware of their responsibility to avoid a situation  where they have an actual or potential conflict of interest, the requirement  to keep the same under review and inform the Chairman and Company Secretary  of any change in their situation. An effective procedure is in place for the  board to authorise conflict situations, should they arise, in accordance with  the Companies Act 2006 and the company’s articles of association. The Company  Secretary is responsible for keeping appropriate records, including the  scope, of any authorisations granted by the board, and ensures the board  undertakes regular reviews of conflict authorisations. Executive directors  are not permitted to accept external appointments without the prior approval  of the board. In March 2014, Ian McHoul was appointed as a non-executive  director of Britvic plc. Prior to accepting the appointment, the board  reviewed the nature of the position and time commitment required and  concluded that it would not adversely impact on his ability to fulfil his  role as Chief Financial Officer of Amec Foster Wheeler plc. |
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|  | 80 Amec Foster Wheeler Annual  report and accounts 2014 Professional development The Company Secretary  assists the Chairman in the co-ordination of director induction and ongoing  training. A comprehensive induction programme is in place for all new  directors which takes into account their previous experience, background and  role on the board. The programme is tailored accordingly to: X provide an  understanding of the duties and responsibilities of a director and their  particular role; X build an understanding of how the board operates within  Amec Foster Wheeler’s structure; X further their knowledge and understanding  of Amec Foster Wheeler’s culture, its business and operations and the markets  and countries in which it operates; X establish a link with Amec Foster  Wheeler’s management and people; and X establish an understanding of the  company’s main relationships. New directors are provided with key board,  operational and financial information and relevant legislatory and regulatory  guidance. Essential to the success of the programme is the varied delivery of  materials, at intervals that allow the absorption of information at a steady  pace. Delivery of the induction programme involves a combination of  documentation, accessible via the portal used by the board to communicate and  share documents electronically, meetings with other members of the board,  senior management and their extended teams, key external parties including  the company’s advisers and, where appropriate, major shareholders, and, site  visits where possible. Where a new director is to serve on a board committee,  induction material relevant to the committee is also provided. Progress  against the induction programme is reviewed with the director midway through  the process to ensure a smooth transition into director training and ongoing  development. Ongoing training, relevant to each director’s individual  development needs, continues after appointment. The Chairman endeavours to  review the training and development needs of the directors at least annually.  The aim is to ensure the further enhancement of their skills and knowledge of  the business, so that they continue to effectively fulfil their role on the  board and its committees. Internally facilitated training is arranged by the  Company Secretary on topics and issues relevant to the operation of the board  and the responsibilities of the directors. The board receives presentations  from management on changes and significant developments in the business.  Regular updates on changes in legislation and communications from the Company  Secretary’s office on key developments in corporate governance are also  provided. In addition, use is made of external auditor and advisor training  programmes. During the year the board received presentations from external  experts on such matters as UK and US requirements in relation to mergers and  acquisitions and on health and safety legal requirements. From time to time  the directors individually attend seminars and conferences related to their  areas of expertise and responsibility. To further develop the directors’  understanding of the group’s operations and culture, the board undertakes  visits to various places of Amec Foster Wheeler business. As previously  mentioned, the board visited the group’s Aberdeen operations and also Robert  Gordon University in 2014. Evaluation In line with the recommendations of the  Code, each year a formal performance evaluation review is undertaken of the  board, its committees and the directors individually. In 2014, the  performance evaluation was externally facilitated by Lintstock, a third party  service provider. Lintstock have been the provider of the company’s insider  list management software since 2011 but other than this and the performance  evaluation, have not undertaken any other work of any kind for the board or  the company. The review process involved the completion by each director of a  survey designed to establish their perceptions in areas such as the current  composition and expertise of the board; board dynamics and the relationships  between board members and the board and senior management; the board’s  management of time and the scope of board agendas; the quality of both  internal and external support to the board including information presented at  meetings and updates on major developments between meetings; and the board’s  strategic oversight. Opinions were also sought on the appropriateness of the  board’s risk appetite and approach to risk management and on succession  planning and human resource management. The surveys that informed Lintstock’s  subsequent report to the board, for discussion at its December 2014 meeting,  were distributed prior to the completion of the acquisition of Foster  Wheeler. In summary, the results were very positive and demonstrated  improvement against the outcomes of the 2013 evaluation process. The overall  role played by the board in the acquisition of Foster Wheeler was very highly  rated, as was its oversight of the ongoing post acquisition integration  process. In line with the outcomes of the 2013 review process, areas for  improvement were again relatively minor and will be addressed as the board  focuses on the integration of Foster Wheeler and achievement of cost and  revenue synergies: X although there was a high degree of consensus as to the  top strategic issues facing the company over the next three to five years, it  was agreed that ensuring greater involvement and time spent focusing on  strategy and risk and assisting with the determination of the strategic  direction of the company, needed to remain a key area of focus; X the  introduction of the new organisational structure following the acquisition,  intended to address the appropriateness of the structure of the company at  senior levels, will be supplemented by greater prioritisation of succession  planning for the executive directors and key management positions below board  level and as well increasing the board’s exposure to top management to  improve their ability to evaluate their capabilities; and X whilst the  composition of the board was rated highly, and has subsequently been enhanced  by the addition of Stephanie Newby and Kent Masters, key changes were  identified that should be made to the profile of the board over the next  three to five years to match the company’s strategic goals including  increased oil and gas experience. 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|  | 81 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information In addition, and as required by the Code, during the year the  Senior Independent Director, having taken the views of the non-executive and  the executive directors, reviewed the performance of the Chairman. The Senior  Independent Director met with the Chairman in December 2014, to review his  performance during 2014. The Chief Executive conducts annual performance  development reviews with his direct reports. In 2015, the performance  evaluation review will again be externally facilitated and will include in  depth face to face interviews with each member of the board. Information and  support The Company Secretary is fundamental in ensuring the efficiency and  effectiveness of the board and is responsible for ensuring that the directors  have timely access to full, accurate and relevant information. Agendas and  supporting papers for board and committee meetings are circulated  approximately one week prior to the meeting date to allow sufficient time for  review and enable informed debate and challenge at meetings. Monthly interim  reports are prepared, including a report from the Chief Executive, and these  are circulated to the board if a meeting is not scheduled in the month. Where  the directors, particularly non-executive directors, require further insight  on an issue, the Company Secretary will facilitate this from the business or  relevant members of the senior management team. Members of senior management  are regularly invited to attend board meetings to present on specific  projects and issues. The Company Secretary ensures that the correct board  procedures are followed and that the board is informed on legislative,  regulatory and governance matters related to its operation. In addition to  the advice and services of the Company Secretary, a formal process exists for  the directors to obtain independent professional advice, at the company’s  expense, where appropriate and necessary to discharge their responsibilities.  The Company Secretary is responsible for the organisation and co-ordination  of access to such advice. The Company Secretary is also accountable for  ensuring that an accurate record is taken of all meetings of the board and  its committees. If a director had a concern about the running of the company  or a proposed action that could not be resolved, this would be recorded in  the minutes. In addition, upon resignation, should a director have any such  outstanding concerns, they would be invited to provide the Chairman with a  written statement for circulation to the board. No such statements were  received during 2014. The appointment and removal of the Company Secretary is  one of the matters reserved for the board. Internal control The board is  responsible for reviewing Amec Foster Wheeler’s systems of internal control.  Reviews cover the effectiveness and adequacy of financial, operational, compliance  and risk management systems and are undertaken regularly. These systems can,  however, only provide reasonable assurance against material misstatement or  loss, as they are designed to manage rather than eliminate the risk of  failure to achieve business objectives. The board and its committees have an  ongoing process that is reviewed regularly by the board and accords with the  Turnbull guidance, for identifying, evaluating and managing significant risks  faced by Amec Foster Wheeler, including strategy, major projects to be  undertaken, significant acquisitions and disposals, as well as entry into and  exit from different markets. The acquisition of Foster Wheeler was completed  in the fourth quarter of 2014 and we are currently reviewing the control framework  and integrating the risk and control systems with those of the wider group.  Where appropriate, business decisions are reached following a structured and  documented review of potential opportunities and threats, taking steps  designed to manage or mitigate any risk exposure. The threats and  opportunities associated with tender submissions are reviewed by commercial  review boards at various levels in the group, in line with delegated  authorities. The highest value tenders are, in addition, reviewed by the  tender review committee. Amec Foster Wheeler applies a set of contracting  principles, under which the level of approval required is dependent on the  contractual provision in question. The most significant issues in terms of  risk require the approval of the relevant business unit lead and the Group  Commercial Director. The internal control processes are complemented by an  annual control self-assessment exercise carried out by the principal  businesses. This covers health, safety and environment, legal, commercial and  contractual, financial, information technology and human resources. The  results are reviewed by the board, through the audit committee, as part of  the ongoing internal control monitoring process. Amec Foster Wheeler has  interests in a number of joint arrangements where controls may not be  reviewed as part of the group’s formal corporate governance process because  of the joint management responsibilities. Responsibility for such reviews  rests with the joint venture and joint operations boards and these are  reviewed from time to time as part of Amec Foster Wheeler’s normal internal  audit process. Details of significant joint arrangements can be found on page  191. Details of the Group’s risk management process, including reporting and  monitoring, and roles and responsibilities can be found on page 20.  Accountability |
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|  | 82 Amec Foster Wheeler Annual  report and accounts 2014 Relations with shareholders The executive directors  undertake an extensive programme of meetings with institutional shareholders  during each year. Events such as results presentations and other capital  market events are available on our website for those unable to attend in  person. Each year, the Chairman and Senior Independent Director offer to meet  with all major shareholders. Since the publication of the previous annual  report, six such meetings have taken place. The Chairman attends full-year  results presentations. Ad-hoc requests from shareholders for meetings with  members of the board are facilitated by the investor relations team. The  board also receives unedited feedback reports following shareholder meetings  and all material brokers’ research notes, together with a report at each  meeting showing the company’s standing/benchmark within its peer group. The  company has previously appointed an independent consultant to collate the  views of shareholders and produce an annual perception report. This report  was last presented to the board in February 2013 and it is expected that a  new report will be commissioned during 2015. Information regarding our  forthcoming AGM can be found on page 85. Find out more online We publish our  results and presentations on our investor website at amecfw.com/investors  Engagement The Company’s group internal audit function, established by  authority of the board, has its responsibilities defined by the audit  committee. The head of the function is accountable to the Chief Executive and  the audit committee, however, on a day-to-day basis accountability is  exercised by the Chief Financial Officer. We have carried out an evaluation  of the effectiveness of the design and operation of our disclosure controls and  procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under  the Exchange Act) under the supervision and the participation of the Group  Leadership Team, which is responsible for the management of the internal  controls, and which includes the Chief Executive and the Chief Financial  Officer. There are inherent limitations to the effectiveness of any system of  disclosure controls and procedures, including the possibility of human error  and the circumvention or overriding of the controls and procedures.  Accordingly, even effective disclosure controls and procedures can only  provide reasonable assurance of achieving their control objectives. Based  upon our evaluation as at 31 December 2014, the Chief Executive and Chief  Financial Officer have concluded that the disclosure controls and procedures  (i) were effective at a reasonable level of assurance as of the end of the  period covered by this annual report in ensuring that information required to  be recorded, processed, summarised and reported in the reports that are filed  or submitted under the Exchange Act, is recorded, processed, summarised and  reported within the time periods specified in the SEC’s rules and forms and  (ii) were effective at a reasonable level of assurance as of the end of the period  covered by this annual report in ensuring that information to be disclosed in  the reports that are filed or submitted under the Exchange Act is accumulated  and communicated to the management of the Company, including the Chief  Executive and the Chief Financial Officer, to allow timely decisions  regarding required disclosure. This annual report does not include a report  of management’s assessment regarding internal control over financial  reporting or an attestation report of the Company’s registered public  accounting firm due to a transition period established by rules of the SEC  for newly public companies. Changes in internal control over financial  reporting During the period covered by this annual report, we have not made  any changes to our internal control over financial reporting that have  materially affected, or are reasonably likely to materially affect, our  internal control over financial reporting. Accountability continued |
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|  | 83 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Our directors present their annual report and the audited  accounts of Amec Foster Wheeler plc (the Company) and its subsidiaries  (together referred to as the Group) for the year ended 31 December 2014.  Achievements in 2014 and priorities for 2015 Disclosures relating to  particulars of important events affecting the Group which have occured since  the last financial year and an indication of likely future developments in  the business of the Group can be found in the strategic report on pages 1 to  41. Change of name On 13 November 2014, following the acquisition of Foster  Wheeler AG, the company changed its name to Amec Foster Wheeler plc. The  names of certain of the Group’s material subsidiaries are also in the process  of being changed to reflect the acquisition. Dividends The directors are  recommending a final ordinary dividend in respect of the year ended 31  December 2014 of 28.5 pence per share. This final dividend will be payable on  2 July 2015 to shareholders on the register at the close of business on 29  May 2015. An interim dividend for the year ended 31 December 2014 of 14.8  pence per share was paid on 5 January 2015. Further information on the  payment of dividends to shareholders and the holders of American Depositary  Shares (ADSs) can be found on pages 177 to 178. Dividends paid during 2014  comprised an interim dividend of 13.5 pence per share and a final dividend of  28.5 pence per share, both in respect of the year ended 31 December 2013.  Changes to the board of directors Details of the directors of the company as  at the date of this report, together with brief biographical details and  board committee memberships, are set out on page 45 to 47. Changes to the  board since 1 January 2014: Tim Faithfull Non-executive director Retired 3  April 2014 Stephanie Newby Non-executive director Appointed 13 November 2014  Kent Masters Non-executive director Appointed 13 February 2015 In addition,  Simon Thompson will step down as a director at the conclusion of the 2015  AGM. Directors’ indemnity arrangements The Company maintains directors’ and  officers’ liability insurance cover. In addition, throughout the financial  year and at the date of this report, qualifying third party indemnity  provisions within the meaning of Sections 232–234 of the Companies Act 2006  were in place for all of the directors and the Company Secretary. Directors’  interests None of the directors is, or was, materially interested in any  contract of significance to Amec Foster Wheeler’s businesses during, or at  the end of, the financial year. Details of directors’ share interests and of  their rights to subscribe for shares are shown in the remuneration report on  page 72. Corporate governance statement The company’s statement on corporate  governance is set out on pages 44 to 85 and is incorporated into this report  by reference. Share capital The primary market for Amec Foster Wheeler’s  ordinary shares is the London Stock Exchange, where we have a premium listing  and our shares are admitted to the main market. Since the completion of the  offer for Foster Wheeler, the company’s securities have also been traded on  the New York Stock Exchange in the form of American Depositary Shares (ADS).  Further information on the company’s ADS programme can be found on pages 177  to 178. The issued share capital of the company as at 31 December 2014 and  movements during the year are set out in note 22 on pages 144 to 146. The  rights and obligations attaching to the shares are set out in full in the  articles of association of the company and are described on pages 180 to 182.  In summary, each share carries the right to one vote at general meetings of  the company and no right to a fixed income. There are no restrictions on  voting rights. Authority was granted to the directors at the 2014 AGM to  allot shares or grant rights to subscribe for or to convert any security to  shares up to a nominal amount of £49,181,027 (Section 551 amount) of which up  to £7,451,671 could be allotted for cash other than in connection with a  pre-emptive offer (Section 561 amount). To allow the directors to allot  shares to Foster Wheeler shareholders in connection with the acquisition,  without prejudice to the existing authority conferred on the directors and  approved at the 2014 AGM, this authority was increased at the General Meeting  held on 23 October 2014 by a maximum nominal value of £45,458,521.50, such  authority to expire on 31 December 2015. In anticipation that the offer for  Foster Wheeler would become effective and the issued share capital of the  company would increase as a result of the issue of new shares to Foster  Wheeler shareholders, the authority conferred on the directors at the 2014  AGM was also renewed at the General Meeting, without prejudice to the  authority conferred in respect of the new shares to be issued in connection  with the offer, up to an aggregate nominal amount of £59,228,684.50 of which  up to £8,974,043 could be allotted for cash other than in connection with a  pre-emptive offer, such authority to expire at the end of the AGM in 2015 or  1 June 2015, whichever is earlier. In connection with the acquisition of  Foster Wheeler, 85,052,989 shares were issued to Foster Wheeler shareholders  on 24 November 2014 as partial consideration for the acquisition of their  Foster Wheeler shares. Pursuant to the Squeeze-Out Merger initiated on 8  December 2014 to acquire the remaining outstanding issued and to be issued  Foster Wheeler voting rights, a further 4,255,970 shares were issued to  Foster Wheeler shareholders on 19 January 2015. Directors’ report |
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|  | 84 Amec Foster  Wheeler Annual report and accounts 2014 Resolutions will be proposed at the  forthcoming AGM to extend this authority to the end of the AGM in 2016 or 1  June 2016, whichever is earlier. The revised Section 551 amount will be  £64,158,715 and the revised Section 561 amount will be £9,721,017. The  directors have no present intention of issuing any shares other than in  respect of the exercise of share options. No issue will be made that will  effectively alter the control of the company without the prior approval of  shareholders at a General Meeting. Since the completion of the £400m share  buyback programme in February 2013, the company has not made any purchases of  its shares in the market. At the 2014 AGM, authority was granted to the  directors to make market purchases of up to 29,806,683 of the company’s  shares. In anticipation that the offer for Foster Wheeler would become  effective and the issued share capital of the company would increase as a  result of the issue of new shares to Foster Wheeler shareholders, this  authority was renewed at the General Meeting in October 2014, allowing the  purchase of up to 35,896,172 of the company’s shares in the market. This  further authority will expire at the end of the 2015 AGM or 1 June 2015,  whichever is earlier. A resolution will be proposed at the 2015 AGM to extend  the authority of the directors to make market purchases of up to 10% of the  company’s shares within prescribed limits. Major interests in shares On the  basis of notifications received under the Disclosure and Transparency Rules  (DTR 5) and other notifications received by Amec Foster Wheeler plc from  shareholders, shareholdings of 3% or more of the voting rights of the company  as at 31 December 2014 were as follows: Number % Mondrian Investment Partners  Limited 20,253,855 5.28 BlackRock, Inc 14,946,032 5.01 The shareholding  percentages reflect the issued share capital at the time of the  notifications. On 23 March 2015, pursuant to DTR 5, BlackRock, Inc notified  the company of their interest in 21,904,416 shares, representing 5.63% of the  voting rights of the company. There were no other notifications received  under DTR 5 between 31 December 2014 and 25 March 2015. There are no shareholdings  that carry special rights relating to control of the company. Financial  instruments Disclosures relating to the group’s use of financial instruments  can be found in note 19 on pages 134 to 139 and are incorporated into this  report by reference. Significant arrangements – change of control The  following significant agreements contain provisions entitling the  counterparties to exercise termination or other rights in the event of a  change of control of the company: Under each of the £377m five year multi-currency  revolving credit facility agreement dated 18 July 2012 (as amended from time  to time) between, amongst others, the company and The Royal Bank of Scotland  plc (as facility agent) and the $2,260m facilities agreement dated 13  February 2014 (as amended and re-stated from time to time), between, amongst  others, the company and Bank of America Merrill Lynch International Limited  (as facility agent), the company must promptly notify each facility agent if  it becomes aware of any change of control. Following such notice the lenders  under the relevant agreement are required to negotiate with the company for a  period of 30 days with a view to agreeing terms and conditions acceptable to  the company and all the relevant lenders for continuing the relevant  facilities. If agreement is not reached by the relevant parties before the  end of the 30-day period, if a lender so requires, the relevant facility  agent must, by notice of not less than 30 days to the company, cancel the  commitments of that lender under the relevant agreement and declare the  participations of that lender in all outstanding loans under that agreement  together with accrued interest and all other amounts accrued under that  agreement to be immediately due and payable. A change of control occurs if  any person or group of persons acting in concert gains control of the  company. Depending on the nature of the transaction, entitlements under the  company’s share plans may be triggered by a change of control. Further detail  can be found in the directors’ remuneration report. Employees Our employees  embody our knowledge, brand and reputation and it is through their  activities, day by day, that we deliver on our business objectives and  commitments to shareholders, clients and the wider community. Information on  employee development and training; how we engage with our employees to ensure  they understand the direction in which the company is going and are committed  to Amec Foster Wheeler’s values; the actions taken to share knowledge with  our employees and keep them informed of developments; how we assess and act  on employee opinion and encourage involvement in the company’s performance;  and our commitment to cultural diversity and equal opportunities can be found  on page 16 and is incorporated in this report by reference. As can be seen in  our Code of Business Conduct, Amec Foster Wheeler is committed to providing a  workplace which offers equal opportunity for promotion and advancement. As  part of the integration of the two AMEC and Foster Wheeler businesses, a  revised Code of Business Conduct is being produced that will meet the needs  of the wider Group. Directors’ report continued |
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|  | 85 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information As part of the company’s equal opportunities  policy, procedures are in place that are designed to provide for full and  fair consideration and selection of disabled applicants, to ensure they are  properly trained to perform safely and effectively and to provide career  opportunities that allow them to fulfil their potential. Where an employee  becomes disabled in the course of their employment, Amec Foster Wheeler will  actively seek to retain them wherever possible by making adjustments to their  work content and environment or by retraining them to undertake new roles.  Sustainability Summary details about our commitment to sustainability and its  importance to our day-to-day activities are set out specifically on page 24  and in general throughout our strategic report. Further detail is available  in our sustainability report and on our website. Greenhouse gas emissions  Disclosures relating to the group’s greenhouse gas emissions, as required to  be disclosed under the Companies Act 2006 (strategic report and directors’  report) Regulations 2013, can be found in the strategic report on page 24.  Political donations During 2014, Amec Foster Wheeler made no political  donations in the UK or European Union, including donations as defined for the  purposes of the Political Parties, Elections and Referendums Act 2000. Amec  Foster Wheeler Americas Limited (formerly AMEC Americas Limited), a  subsidiary of the company in Canada, made contributions to non-EU political  parties in Canada totalling C$1,810 (£995). Going concern The directors,  having made enquiries, consider that the group has adequate resources to  operate for the foreseeable future and, therefore, it is appropriate to  continue to adopt the going concern basis in preparing the accounts. Further  details of this review can be found on page 39. Auditor A resolution will be  proposed at the AGM for the re-appointment of Ernst & Young LLP as  auditor of the company. Disclosure of information to auditor The directors  who held office at the date of approval of this directors’ report confirm  that, so far as they are each aware, there is no relevant audit information  of which the company’s auditor is unaware; and the directors have taken all  the steps that they ought to have taken as directors to make themselves aware  of any relevant audit information and to establish that the company’s auditor  is aware of that information. The above statement is made in accordance with  Section 418 of the Companies Act 2006. Responsibility statements The  statement of directors’ responsibilities, including the fair, balanced and  understandable statement, in respect of the annual report and accounts can be  found on page 86. The statement by the Company’s auditor relating to their  reporting responsibilities can be found on pages 93 and 94. Annual general  meeting This year’s AGM will be held at Glaziers Hall, 9 Montague Close,  London Bridge, London SE1 9DD on 14 May 2015 at 11:00am. The notice of  meeting, which includes explanatory notes on the business to be transacted at  the meeting, accompanies this report and is also available on our website.  Separate resolutions will be proposed at the AGM to receive the annual report  and accounts; to declare a final dividend; to approve the remuneration report  and remuneration policy; to re-elect all of the current directors who will  retire in accordance with the provisions of the Code; to re-elect Ernst &  Young LLP as auditor; and to authorise the directors to fix the auditor’s  remuneration. Shareholders will also be asked to renew both the general  authority of the directors to allot shares in the company and to allot such  shares without the application of statutory pre-emption rights. In addition,  shareholders will be requested to authorise the company to make market  purchases of its own shares within prescribed limits and approve the  resolution, to be repeated at each AGM going forward, to authorise the  calling of general meetings, other than annual general meetings, on 14 clear  days’ notice. This year shareholders will be asked to approve updated UK and  International Sharesave Scheme rules together with the rules for a new LTIP  (Amec Foster Wheeler plc Long Term Incentive Plan 2015). The board views the  AGM as an opportunity to directly communicate the group’s progress and engage  with shareholders. Where possible, the entire board will attend the AGM and  will be available to answer questions from those shareholders present. The  board encourages all shareholders to attend and participate where possible.  On behalf of the board Alison Yapp General Counsel and Company Secretary 26  March 2015 Find out more online Visit our website at amecfw.com/investors for  further information regarding this year’s AGM. |
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|  | 86 Amec Foster Wheeler Annual  report and accounts 2014 Statement of directors’ responsibilities in respect  of the annual report and the accounts The directors are responsible for  preparing the annual report and the consolidated and parent company accounts,  in accordance with applicable law and regulations. Company law requires the  directors to prepare consolidated and parent company accounts for each  financial year. Under that law the directors are required to prepare the  consolidated accounts in accordance with IFRS as adopted by the EU and  applicable law and have elected to prepare the parent company accounts in  accordance with UK Accounting Standards and applicable law (UK Generally  Accepted Accounting Practice). Under Company law the directors must not  approve the consolidated and parent company accounts unless they are  satisfied that they give a true and fair view of the state of affairs of the  group and parent company and of their profit or loss for that period. In  preparing each of the consolidated and parent company accounts, the directors  are required to: X select suitable accounting policies and then apply them  consistently; X make judgements and estimates that are reasonable and  prudent; X for the consolidated accounts, state whether they have been  prepared in accordance with IFRS as adopted by the EU; X for the parent  company accounts, state whether applicable UK Accounting Standards have been  followed, subject to any material departures disclosed and explained in the  parent company accounts; and X prepare the consolidated and parent company  accounts on the going concern basis unless it is inappropriate to presume  that the consolidated and the parent company will continue in business. The  directors are responsible for keeping adequate accounting records that are  sufficient to show and explain the parent company’s transactions and disclose  with reasonable accuracy at any time the financial position of the parent  company and enable them to ensure that its accounts comply with the Companies  Act 2006. They have general responsibility for taking such steps as are reasonably  open to them to safeguard the assets of the group and to prevent and detect  fraud and other irregularities. Under applicable law and regulations, the  directors are also responsible for preparing a strategic report, directors’  report, directors’ remuneration report and corporate governance statement  that comply with that law and those regulations. The directors are  responsible for the maintenance and integrity of the corporate and financial  information included on the company’s website. Legislation in the UK  governing the preparation and dissemination of consolidated and parent  company accounts may differ from legislation in other jurisdictions.  Responsibility statement of the directors in respect of the annual financial  report We confirm that to the best of our knowledge: X the accounts, prepared  in accordance with the applicable set of accounting standards, give a true  and fair view of the assets, liabilities, financial position and profit or  loss of the company and the undertakings included in the consolidation taken  as a whole; and X the strategic report and directors’ report includes a fair  review of the development and performance of the business and the position of  the issuer and undertakings included in the consolidation taken as a whole,  together with a description of the principal risks and uncertainties that  they face. In addition, we confirm that the annual report and accounts, taken  as a whole, is fair, balanced and understandable and provides the information  necessary for shareholders to assess the position and performance, strategy  and business model of the company. Signed on behalf of the board Samir Brikho  Chief Executive Ian McHoul Chief Financial Officer 26 March 2015  Responsibility statements of the directors |
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|  | 95 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information The Board of Directors and Shareholders of Amec Foster Wheeler  plc We have audited the accompanying consolidated balance sheets of Amec  Foster Wheeler plc as of December 31, 2014 and 2013, and the related  consolidated statements of income, comprehensive income, changes in equity,  and cash flows for each of the three years in the period ended December 31,  2014. These financial statements are the responsibility of the Company’s  management. Our responsibility is to express an opinion on these financial  statements based on our audits. We conducted our audits in accordance with  the standards of the Public Company Accounting Oversight Board (United  States). Those standards require that we plan and perform the audit to obtain  reasonable assurance about whether the financial statements are free of  material misstatement. We were not engaged to perform an audit of the  Company’s internal control over financial reporting. Our audits included  consideration of internal control over financial reporting as a basis for  designing audit procedures that are appropriate in the circumstances, but not  for the purpose of expressing an opinion on the effectiveness of the  Company’s internal control over financial reporting. Accordingly, we express  no such opinion. An audit also includes examining, on a test basis, evidence  supporting the amounts and disclosures in the financial statements, assessing  the accounting principles used and significant estimates made by management,  and evaluating the overall financial statement presentation. We believe that  our audits provide a reasonable basis for our opinion. In our opinion, the  financial statements referred to above present fairly, in all material  respects, the consolidated financial position of Amec Foster Wheeler plc at  December 31, 2014 and 2013, and the consolidated results of its operations  and its cash flows for each of the three years in the period ended December  31, 2014, in accordance with International Financial Reporting Standards as  adopted by the European Union and International Financial Reporting Standards  as issued by the International Accounting Standards Board. Ernst & Young  LLP London, England 26 March 2015 Report of Independent Registered Public  Accounting Firm |
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|  | 96 Amec Foster Wheeler Annual  report and accounts 2014 2014 2013 2012 Note Before amortisation, exceptional  items and asbestos related items £m Amortisation, exceptional items and  asbestos related items (note 5) £m Total £m Before amortisation and  exceptional items £m Amortisation and exceptional items (note 5) £m Total £m  Before amortisation and exceptional items £m Amortisation and exceptional  items (note 5) £m Total £m Continuing operations Revenue 2, 3 3,993 – 3,993  3,974 – 3,974 4,088 – 4,088 Cost of sales (3,475) – (3,475) (3,431) – (3,431)  (3,556) – (3,556) Gross profit 518 – 518 543 – 543 532 – 532 Administrative  expenses (219) (135) (354) (228) (65) (293) (221) (68) (289) Loss on business  disposals and closures – (16) (16) – (7) (7) – – – Profit/(loss) before net  financing expense 4 299 (151) 148 315 (72) 243 311 (68) 243 Financial income  11 – 11 12 – 12 10 – 10 Financial expense (11) (5) (16) (14) – (14) (11) –  (11) Net financing expense 7 – (5) (5) (2) – (2) (1) – (1) Share of post-tax  results of joint ventures 2, 13 12 – 12 14 – 14 12 – 12 Profit/(loss) before  income tax 2 311 (156) 155 327 (72) 255 322 (68) 254 Income tax 8 (67) 18  (49) (67) (2) (69) (68) 21 (47) Profit/(loss) for the year from continuing  operations 244 (138) 106 260 (74) 186 254 (47) 207 (Loss)/profit for the year  from discontinued operations 9 (8) (19) (27) (8) – (8) (3) 5 2 Profit/(loss)  for the year 236 (157) 79 252 (74) 178 251 (42) 209 Attributable to: Equity  holders of the parent 82 179 208 Non-controlling interests (3) (1) 1 79 178  209 Basic earnings/(loss) per share 10 Continuing operations 81.8p 36.1p  89.0p 63.8p 80.1p 65.2p Discontinued operations (2.6)p (8.9)p (2.7)p (2.7)p  (0.8)p 0.6p 79.2p 27.2p 86.3p 61.1p 79.3p 65.8p Diluted earnings/(loss) per  share 10 Continuing operations 79.5p 35.1p 87.2p 62.5p 78.6p 64.0p  Discontinued operations (2.5)p (8.6)p (2.7)p (2.7)p (0.8)p 0.6p 77.0p 26.5p  84.5p 59.8p 77.8p 64.6p Consolidated income statement For the year ended 31  December 2014 |
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|  | 97 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Note 2014 £m 2013 £m 2012 £m Profit for the year 79 178 209 Other  comprehensive income Items that may be reclassified to profit and loss  Exchange movements: - Exchange movements on translation of foreign  subsidiaries 17 (70) (34) - Net (loss)/gain on hedges of net investment in  foreign subsidiaries 19 (4) (1) 1 - Tax on exchange movements – 1 (1) Cash  flow hedges: - Effective portion of changes in fair value (1) 3 3 - Tax on  effective portion of changes in fair value – (1) (1) - Transferred to the  income statement – 1 – 12 (67) (32) Items that will not be reclassified to  profit and loss Actuarial (losses)/gains on defined benefit pension schemes  14 (58) 40 37 Tax on actuarial (losses)/gains 11 (20) (24) (47) 20 13 Other  comprehensive income (35) (47) (19) Total comprehensive income 44 131 190  Attributable to: Equity holders of the parent 47 133 189 Non-controlling  interests (3) (2) 1 Total comprehensive income 44 131 190 Consolidated  statement of comprehensive income For the year ended 31 December 2014 |
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|  | 98 Amec Foster Wheeler Annual  report and accounts 2014 Note 2014 £m 2013 £m ASSETS Non-current assets  Property, plant and equipment 11 157 39 Intangible assets 12 3,319 907  Interests in joint ventures 13 122 52 Derivative financial instruments 19 2 1  Retirement benefit assets 14 102 102 Other receivables 20 149 24 Deferred tax  assets 15 61 35 Total non-current assets 3,912 1,160 Current assets  Inventories 16 14 3 Trade and other receivables 17 1,506 956 Derivative  financial instruments 19 12 5 Current tax receivable 18 10 Bank deposits  (more than three months) 23 21 18 Cash and cash equivalents (excluding bank  overdrafts) 23 495 232 Total current assets 2,066 1,224 Total assets 5,978  2,384 LIABILITIES Current liabilities Interest-bearing loans and borrowings  23 (710) (129) Trade and other payables 18 (1,381) (801) Derivative financial  instruments 19 (14) (1) Current tax payable (132) (73) Total current  liabilities (2,237) (1,004) Non-current liabilities Interest-bearing loans  and borrowings 23 (609) – Trade and other payables 20 (83) (11) Derivative  financial instruments 19 (5) – Retirement benefit liabilities 14 (188) (62)  Deferred tax liabilities 15 (136) (20) Provisions 21 (696) (163) Total  non-current liabilities (1,717) (256) Total liabilities (3,954) (1,260) Net  assets 2,024 1,124 EQUITY Share capital 22 194 152 Share premium account 22  978 101 Hedging and translation reserves 22 45 33 Capital redemption reserve  22 34 34 Retained earnings 22 744 802 Total equity attributable to equity  holders of the parent 1,995 1,122 Non-controlling interests 29 2 Total equity  2,024 1,124 The accounts on pages 96 to 155 were approved by the board of  directors on 26 March 2015 and were signed on its behalf by: Samir Brikho Ian  McHoul Chief Executive Chief Financial Officer Consolidated balance sheet As  at 31 December 2014 Registered number 1675285 |
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|  | 99 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Share capital £m Share premium £m Hedging reserve £m Translation  reserve £m Capital redemption reserve £m Retained earnings £m Total £m Non-controlling  interests £m Total equity £m As at 1 January 2014 152 101 1 32 34 802 1,122 2  1,124 Profit for the year – – – – – 82 82 (3) 79 Exchange movements on  translation of foreign subsidiaries – – – 17 – – 17 – 17 Net loss on hedges  of net investment in foreign subsidiaries – – – (4) – – (4) – (4) Effective  portion of changes in fair value of cash flow hedges – – (1) – – – (1) – (1)  Actuarial losses on defined benefit pension schemes – – – – – (58) (58) –  (58) Tax on actuarial losses – – – – – 11 11 – 11 Other comprehensive income  for the year – – (1) 13 – (47) (35) – (35) Total comprehensive income for the  year – – (1) 13 – 35 47 (3) 44 Dividends – – – – – (124) (124) – (124)  Equity-settled share-based payments – – – – – 25 25 – 25 Utilisation of  treasury shares – – – – – 6 6 – 6 Arising on business combinations – – – – –  – – 30 30 Shares issued 42 877 – – – – 919 – 919 As at 31 December 2014 194  978 – 45 34 744 1,995 29 2,024 Consolidated statement of changes in equity  For the year ended 31 December 2014 |
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|  | 100 Amec Foster  Wheeler Annual report and accounts 2014 Share capital £m Share premium £m  Hedging reserve £m Translation reserve £m Capital redemption reserve £m  Retained earnings £m Total £m Non-controlling interests £m Total equity £m As  at 1 January 2013 154 101 (2) 101 32 693 1,079 4 1,083 Profit for the year –  – – – – 179 179 (1) 178 Exchange movements on translation of foreign  subsidiaries – – – (69) – – (69) (1) (70) Net loss on hedges of net  investment in foreign subsidiaries – – – (1) – – (1) – (1) Tax on exchange  movements – – – 1 – – 1 – 1 Effective portion of changes in fair value of  cash flow hedges – – 3 – – – 3 – 3 Tax on effective portion of changes in  fair value of cash flow hedges – – (1) – – – (1) – (1) Cash flow hedges  transferred to the income statement – – 1 – – – 1 – 1 Actuarial gains on  defined benefit pension schemes – – – – – 40 40 – 40 Tax on actuarial gains –  – – – – (20) (20) – (20) Other comprehensive income for the year – – 3 (69) –  20 (46) (1) (47) Total comprehensive income for the year – – 3 (69) – 199 133  (2) 131 Dividends – – – – – (108) (108) – (108) Equity-settled share-based  payments – – – – – 14 14 – 14 Tax on equity-settled share-based payments – –  – – – (1) (1) – (1) Acquisition of shares by trustees of the Performance  Share Plan – – – – – (2) (2) – (2) Utilisation of treasury shares – – – – – 7  7 – 7 Acquisition of shares under the buyback programme (2) – – – 2 – – – –  As at 31 December 2013 152 101 1 32 34 802 1,122 2 1,124 Consolidated  statement of changes in equity continued For the year ended 31 December 2013 |
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|  | 101 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Share capital £m Share premium £m Hedging  reserve £m Translation reserve £m Capital redemption reserve £m Retained  earnings £m Total £m Noncontrolling interests £m Total equity £m As at 1  January 2012 169 101 (4) 135 17 955 1,373 1 1,374 Profit for the year – – – –  – 208 208 1 209 Exchange movements on translation of foreign subsidiaries – –  – (34) – – (34) – (34) Net gain on hedges of net investment in foreign  subsidiaries – – – 1 – – 1 – 1 Tax on exchange movements – – – (1) – – (1) –  (1) Effective portion of changes in fair value of cash flow hedges – – 3 – –  – 3 – 3 Tax on effective portion of changes in fair value of cash flow hedges  – – (1) – – – (1) – (1) Actuarial gains on defined benefit pension schemes –  – – – – 37 37 – 37 Tax on actuarial gains – – – – – (24) (24) – (24) Other  comprehensive income for the year – – 2 (34) – 13 (19) – (19) Total  comprehensive income for the year – – 2 (34) – 221 189 1 190 Dividends – – –  – – (98) (98) – (98) Equity-settled share-based payments – – – – – 15 15 – 15  Acquisition of shares by trustees of the Performance Share Plan – – – – – (6)  (6) – (6) Utilisation of treasury shares – – – – – 9 9 – 9 Acquisition of  treasury shares – – – – – (36) (36) – (36) Acquisition of shares under the  buyback programme (15) – – – 15 (322) (322) – (322) Forward share purchase  agreement as at 31 December 2012* – – – – – (45) (45) – (45) Arising on  business combinations – – – – – – – 2 2 As at 31 December 2012 154 101 (2)  101 32 693 1,079 4 1,083 *See note 19 for further details. Consolidated  statement of changes in equity continued For the year ended 31 December 2012 |
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|  | 102 Amec Foster Wheeler Annual  report and accounts 2014 Note 2014 £m 2013 £m 2012 £m Cash flow from  operating activities Profit before income tax from continuing operations 155  255 254 (Loss)/profit before income tax from discontinued operations 9 (33)  (16) 2 Profit before income tax 122 239 256 Financial income 7 (11) (12) (10)  Financial expense 7 16 14 11 Share of post-tax results of joint ventures 2,  13 (12) (14) (12) Intangible amortisation 5, 12 49 47 44 Impairment of joint  venture investment 13 – – 3 Depreciation 11 16 12 11 Loss on disposal of  businesses 5 44 6 11 Difference between contributions to retirement benefit  schemes and current service cost (2) – (5) Profit on disposal of property,  plant and equipment – (1) (2) Loss on disposal of intangible assets 1 – 1  Equity-settled share-based payments 8 14 15 231 305 323 Decrease in  inventories – 1 – Decrease/(increase) in trade and other receivables 106 66  (154) (Decrease)/increase in trade and other payables and provisions (137)  (80) 102 Cash generated from operations 200 292 271 Tax paid (54) (52) (29)  Net cash flow from operating activities 146 240 242 Cash flow from investing  activities Acquisition of businesses (net of cash acquired) 24 (781) (20)  (159) Funding of joint ventures (1) (7) (11) Purchase of property, plant and  equipment (14) (10) (19) Purchase of intangible assets (17) (13) (15) Movements  in bank deposits (more than three months) (3) (1) 11 Disposal of businesses  (net of cash disposed of) (2) (4) (6) Disposal of joint ventures (21) – –  Disposal of property, plant and equipment – 1 4 Interest received 4 9 8  Dividends received from joint ventures 13 14 8 11 Amounts paid on maturity of  net investment hedges (7) (3) (7) Net cash flow from investing activities  (828) (40) (183) Net cash flow before financing activities (682) 200 59 Cash  flow from financing activities Proceeds from other borrowings 1,198 100 150  Repayments of other borrowings (100) (130) – Cash flows in respect of  facility arrangement fees (13) – – Interest paid (7) (11) (9) Dividends paid  (124) (108) (98) Acquisition of shares for cancellation – (45) (322) Cash  flows in respect of treasury shares (net)* 6 7 (27) Acquisition of shares by  trustees of the Performance Share Plan – (2) (6) Net cash flow from financing  activities 960 (189) (312) Increase/(decrease) in cash and cash equivalents  278 11 (253) Cash and cash equivalents as at the beginning of the year 223  232 493 Exchange losses on cash and cash equivalents (6) (20) (8) Cash and  cash equivalents as at the end of the year 23 495 223 232 Cash and cash  equivalents consist of: Cash at bank and in hand 23 377 153 169 Bank deposits  (less than three months) 23 118 79 89 Bank overdrafts 23 – (9) (26) Cash and  cash equivalents as at the end of the year 23 495 223 232 Bank deposits (more  than three months) 23 21 18 17 Bank loans 23 (1,267) (120) (150) Fees  capitalised against bank facilities 23 9 – – Finance leases 23 (61) – – Net  (debt)/cash as at the end of the year (803) 121 99 *Net of £6m (2013: £7m;  2012: £9m) received from SAYE option holders on exercise of options.  Consolidated cash flow statement For the year ended 31 December 2014 |
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|  | 103 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information 1 Significant accounting policies On 13 November 2014, following  Amec plc acquisition of Foster Wheeler AG, the company changed its name from  Amec plc to Amec Foster Wheeler plc. The primary market for Amec Foster  Wheeler’s shares is the London Stock Exchange where we have a premium listing  and our shares are admitted to the main market. Since the completion of the  acquisition of Foster Wheeler, the company’s securities have also been traded  on the New York Stock Exchange in the form of American Depositary Shares.  Amec Foster Wheeler plc is a public limited company and incorporated and  domiciled in the United Kingdom. Statement of compliance The consolidated  accounts include the accounts of Amec Foster Wheeler plc and all of its  subsidiaries made up to 31 December each year, and the Group’s share of the  profit after interest and tax and net assets of joint ventures based on the  equity method of accounting. In accordance with EU law (IAS Regulation EC  1606/2002), the consolidated accounts of the Group have been prepared in  accordance with International Financial Reporting Standards (IFRS) adopted  for use in the EU as at 31 December 2014 (adopted IFRS), International  Financial Reporting Interpretations Committee (IFRIC) interpretations and  those parts of the Companies Act 2006 applicable to companies reporting under  IFRS. The company has elected to prepare its parent company accounts in  accordance with UK Generally Accepted Accounting Principles (UK GAAP); these  are presented on pages 156 to 162. From the Group’s perspective, there are no  applicable differences between adopted IFRS and IFRS as issued by the IASB,  and therefore the financial statements also comply with IFRS as issued by the  IASB. Accounting standards adopted in the year There are no IFRS, IAS  amendments or IFRIC interpretations effective for the first time this  financial year that have had a material impact on the Group. New standards,  amendments and interpretations issued but not effective which have not been  early adopted by the Group IFRS 9 ‘Financial Instruments’ replaces the  existing guidance in IAS 39 ‘Financial Instruments: Recognition and  Measurement’. IFRS 9 includes revised guidance on the classification and  measurement of financial instruments, including the new expected credit loss  model for calculating impairment on financial assets and the new general  hedge accounting requirements. It also carries forward guidance on  recognition and derecognition on financial instruments from IAS 39. IFRS 9 is  effective for annual periods beginning on or after 1 January 2018 with early  application permitted. IFRS 15 ‘Revenue from Contracts with Customers’ will  supersede the current revenue recognition guidance including IAS 18  ‘Revenue’, IAS 11 ‘Construction Contracts’ and the related Interpretations  when it becomes effective. Under IFRS 15 an entity recognises revenue when  (or as) a performance obligation is satisfied. That is when the control of  goods or services underlying the particular performance obligation is  transferred to the customer. The standard provides far more prescriptive  guidance with regards to specific scenarios and requires extensive  disclosures. IFRS 15 is effective for annual periods beginning on or after 1  January 2017 with early application permitted. The application of IFRS 9 and  IFRS 15 in the future may have a material impact on the amounts reported and  disclosures made in the Group’s accounts. However it is not practical to  provide a reasonable estimate of the effect of IFRS 9 and IFRS 15 until the Group  performs a detailed review. Other than as described above, there are no other  IFRS, IAS amendments or IFRIC interpretations which are not yet effective  that would be expected to have a material impact on the Group. Basis of  preparation The accounts are presented in Sterling, rounded to the nearest  million. All calculated numbers, for example earnings per share, are  calculated on the underlying numbers to one decimal place precision. They are  prepared on the historical cost basis except that derivative financial  instruments and retirement benefit assets and liabilities are stated at fair  value. The preparation of accounts in accordance with generally accepted  accounting principles requires management to make judgements, estimates and  assumptions that affect the application of policies and reported amounts of  assets and liabilities, income and expenses. The estimates and associated  assumptions are based on historical experience and various other factors that  are believed to be reasonable under the circumstances, the results of which  form the basis of making the judgements about carrying values of assets and  liabilities that are not readily apparent from other sources. Actual results  may differ from these estimates. The estimates and underlying assumptions are  reviewed on an ongoing basis. Revisions to accounting estimates are  recognised in the period in which the estimate is revised if the revision  affects only that period, or in the period of the revision and future periods  if the revision affects both current and future periods. Notes to the  consolidated accounts |
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|  | 104 Amec Foster  Wheeler Annual report and accounts 2014 1 Significant accounting policies  continued Basis of preparation continued Amec Foster Wheeler believe some of  these policies require a high level of judgement, and the most critical  accounting policies and significant areas of judgement and estimation arise  from: X acquisition accounting under IFRS 3 ’Business Combinations’; X  long-term contracts under IAS 11 ‘Construction Contracts’; X intangible  assets including goodwill under IAS 38 ‘Intangible Assets’ and IAS 36  ‘Impairment of Assets’; X provisions under IAS 37 ‘Provisions, Contingent  Liabilities and Contingent Assets’; and X defined benefit pension schemes  under IAS 19 (revised) ‘Employee Benefits’. In addition, judgement has also  been applied in the presentation of certain research and development  government credits and in presenting the UK conventional power business as a  discontinued operation in 2013. IFRS 3 ‘Business Combinations’ During the  year the Group acquired Foster Wheeler. The acquisition was accounted for as  a purchase under IFRS 3. Determining the fair value of the assets and liabilities  acquired involved significant judgement and estimates. This involved the use  of valuation models to determine the fair value of the intangible assets  acquired. Inputs to these models include estimates of the future cash flows  of Foster Wheeler; the appropriate discount rate to apply to these future  cash flows, estimates of the retention rates for key customers and the  likelihood of renewal of significant service contracts. Further information  about the assumptions used for calculating provisions and goodwill are  documented below. IAS 11 ‘Construction Contracts’ A significant amount of the  Group’s activities is undertaken via long-term contracts. These contracts are  accounted for in accordance with IAS 11 ‘Construction Contracts’ which  requires estimates to be made for contract costs and revenues. Management  bases its judgements of contract costs and revenues on the latest available  information, which includes detailed contract valuations. In many cases the  results reflect the expected outcome of long-term contractual obligations  which span more than one reporting period. Contract costs and revenues are  affected by a variety of uncertainties that depend on the outcome of future  events and often need to be revised as events unfold and uncertainties are resolved.  The estimates of contract costs and revenues are updated regularly and  significant changes are highlighted through established internal review  procedures. In particular, the internal reviews focus on the timing and  recognition of incentive payments and the age and recoverability of any  unagreed income from variations to the contract scope or claims. The impact  of the changes in accounting estimates is then reflected in the ongoing  results. Principally, there are two types of long-term contracts being cost  reimbursable contracts and fixed price contracts. Due to the nature of these  contracts the significant estimates tend to arise on fixed price contracts  rather than cost reimbursable contracts. IAS 38 ‘Intangible Assets’ and IAS  36 ‘Impairment of Assets’ The Group has a significant amount of intangible  assets on its balance sheet. Goodwill arising on acquisitions represents the  excess of the fair value of the purchase consideration over the fair value of  the assets and liabilities acquired. Goodwill is capitalised and subject to  impairment review, both annually and when there are indications that its  carrying value may not be recoverable. An impairment loss is recognised to  the extent that the carrying value of an asset exceeds its recoverable amount.  The determination of carrying value involves significant judgements when  allocating goodwill to the cash generating units (‘CGUs’) expected to benefit  from the acquisition. The estimation of the recoverable amounts also requires  significant judgements and estimates including the future cash flows of the  CGU, terminal growth rates and the appropriate rate at which to discount  those cash flows. See note 12 for further details of the impairment reviews  performed during the year. Intangible assets, other than goodwill, are stated  at cost less accumulated amortisation and impairment losses. The cost of an  intangible asset acquired in a business combination is the fair value of the  asset at the date of acquisition. Amortisation is charged to the income  statement over the estimated useful lives of intangible assets. Notes to the  consolidated accounts continued |
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|  | 105 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 1 Significant accounting policies continued  Basis of preparation continued IAS 37 ‘Provisions, Contingent Liabilities and  Contingent Assets’ When accounting for provisions for litigation and other  items the Group has taken internal and external advice in considering known  legal claims and actions made by or against the Group. It carefully assesses  the likelihood of success of a claim or action. Appropriate provisions are  made for legal claims or actions against the Group on the basis of likely  outcome, but no provisions are made for those which, in the view of  management, are unlikely to succeed. The Group has a significant asbestos related  provision. Some of the Group’s US and UK subsidiaries are defendants in  numerous asbestos-related lawsuits and out-of-court informal claims pending  in the US and UK. Plaintiffs claim damages for personal injury alleged to  have arisen from exposure to or use of asbestos in connection with work  allegedly performed by the Group’s subsidiaries during the 1970s and earlier.  The provision for asbestos is the Group’s best estimate of its obligation  required to settle claims that is expected to continue up until 2050. The  provision is discounted back to a net present value using a US Treasury yield  curve discount rate. See note 21 for further details of the Group’s  provisions. IAS 19 (revised) ‘Employee Benefits’ Defined benefit pension  schemes are accounted for in accordance with the advice of independent  qualified actuaries but significant judgements are required in relation to  the assumptions for future salary and pension increases, discount rate,  inflation and member life expectancy that underpin their valuations. For Amec  Foster Wheeler, these assumptions are important given the relative size of  the schemes that remain open for future accrual. See note 14 for further  details of the Group’s retirement benefit schemes. IFRS 5 ‘Non-current Assets  Held for Sale and Discontinued Operations’ In accordance with IFRS 5  ‘Non-current Assets Held for Sale and Discontinued Operations’, the post-tax  results of discontinued operations are disclosed separately in the  consolidated income statement. Discontinued operations include the non-core  Built Environment businesses, which were sold during 2007, SPIE, which was  sold in 2006, and the UK conventional power business that was discontinued in  2013. The cash flows of discontinued operations are fully consolidated within  Amec Foster Wheeler up to the date of sale. The results and other disclosures  in respect of discontinued operations are shown in note 9. Going concern The  directors are satisfied that the Group has adequate resources to operate for  the foreseeable future. During the year, the acquisition of Foster Wheeler AG  was partially funded by utilising committed banking facilities. This resulted  in the Group having net debt of £803m as at 31 December 2014 (31 December  2013: net cash of £121m). In addition, as at 31 December 2014 the Group had  committed banking facilities of £1,863m. As at 31 December 2014, the undrawn  portion of the Group’s committed facilities was £440m. The Group has complied  with all applicable covenant requirements and has assessed it will be able to  meet expected mandatory interest and repayment of its banking facilities in  place. The Group will finance operations and growth from its existing cash  resources and its committed banking facilities. The Group’s policy aims to  ensure the constant availability of an appropriate amount of funding to meet  both current and future forecast requirements consistent with the Group’s  budget and strategic plans. If for any reason the Group is unable to continue  as a going concern, it could impact the Group’s ability to realise assets at  their recognised values; in particular goodwill and other intangible assets  and to extinguish liabilities in the normal course of business at the amounts  stated in the consolidated accounts. Accounting policies The accounting  policies set out below have, unless otherwise stated, been applied  consistently to all periods presented in these consolidated accounts. |
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|  | 106 Amec Foster  Wheeler Annual report and accounts 2014 1 Significant accounting policies  continued Basis of consolidation The consolidated accounts comprise the  accounts of the Group and its subsidiaries as at 31 December 2014. Control is  achieved when the Group is exposed, or has rights, to variable returns from  its involvement with the investee and has the ability to affect those returns  through its power over the investee. Generally there is a presumption that a  majority of voting rights result in control. The Group re-assesses whether or  not it controls an investee if facts and circumstances indicate there is a  change of control. Consolidation of a subsidiary begins when the Group  obtains control over the subsidiary and ceases when the Group loses control  of the subsidiary. Assets, liabilities, income and expenses of a subsidiary  acquired or disposed of during the year are included in the consolidated  accounts from the date the Group gains control until the date the Group  ceases to control the subsidiary. Profit or loss and each component of  comprehensive income is attributed to the equity holders of the parent of the  Group and to the non-controlling interests, even if this results in the  non-controlling interests having a deficit balance. When necessary,  adjustments are made to the financial statements of subsidiaries to bring  their accounting policies into line with the Group’s accounting policies. All  intra-Group assets and liabilities, equity, income, expenses and cash flows  relating to transactions between members of the Group are eliminated in full  on consolidation. A change in the ownership interest of a subsidiary, without  a loss of control, is accounted for as an equity transaction. If the Group  loses control over a subsidiary, it derecognises the related assets  (including goodwill), liabilities, non-controlling interest and other  components of equity while any resultant gain or loss is recognised in profit  or loss. Any investment retained is recognised at fair value. A joint venture  is a type of joint arrangement whereby the parties that have joint control of  the arrangement have rights to the net assets of the joint venture. Joint  control is the contractually agreed sharing of control of an arrangement,  which exists only when decisions about the relevant activities require  unanimous consent of the parties sharing control. The considerations made in  determining joint control are similar to those necessary to determine control  over subsidiaries. The Group’s investments in its joint ventures are  accounted for using the equity method. Under the equity method, the  investment in a joint venture is initially recognised at cost. The carrying  amount of the investment is adjusted to recognise changes in the Group’s  share of net assets of the joint venture since the acquisition date. The  results of the joint ventures are included in the consolidated accounts from  the date the joint control commences until the date that it ceases. The  aggregate of the Group’s share of profit or loss of a joint venture is shown  on the face of the income statement and represents profit or loss after tax  and non-controlling interests in the joint venture. Losses of a joint venture  are recognised only to the extent of the Group’s interest in the joint  venture, unless the Group has incurred legal or constructive obligations or  made payments on behalf of the joint venture. A joint operation is a joint  arrangement whereby the parties that have joint control of the arrangement  have rights to the assets, and obligations for the liabilities, relating to  the arrangement. When a Group entity undertakes its activities under joint  operations, the Group as a joint operator recognises in relation to its  interest in a joint operation: X its assets and liabilities, including its  share of any assets and liabilities held jointly; X its revenue from the sale  of its share of the output arising from the joint operation; X its share of  the revenue from the sale of the output by joint operation; and X its  expenses, including its share of any expenses incurred jointly. Bid costs Bid  costs are expensed as incurred until the Group is appointed as the preferred  bidder. Subsequent to appointment as preferred bidder, bid costs are  capitalised and held on the balance sheet provided the award of the contract  is virtually certain and it is expected to generate sufficient net cash flow  to allow recovery of the bid costs. Where bid costs are reimbursed at  financial close, the proceeds are applied first against the balance of costs  included in the balance sheet, with any additional amounts treated as  deferred income and released to profit over the period of the contract.  Business combinations and goodwill The purchase method is used to account for  all business combinations. Goodwill represents the excess of the fair value  of the purchase consideration over the fair value of the assets, liabilities  and contingent liabilities acquired. Goodwill arising on acquisitions since 1  January 2004 is capitalised and subject to an impairment review, both  annually and when there are indications that its carrying value may not be  recoverable. Goodwill is not amortised. Notes to the consolidated accounts  continued |
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|  | 107 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 1 Significant accounting policies continued  Cash and cash equivalents and short-term investments Cash comprises cash  balances and deposits repayable on demand and available within one working  day without penalty. Cash equivalents are other deposits with a maturity  period of three months or less from date of acquisition; convertible without  an undue period of notice and not subject to a significant risk of changes in  value. Bank overdrafts that are repayable on demand and form an integral part  of Amec Foster Wheeler’s cash management are included as a component of cash  and cash equivalents for the purpose of the statement of cash flows. In the  consolidated balance sheet, bank overdrafts are shown within borrowings in  current liabilities. Deposits with a maturity period of more than three  months at inception are classified as bank deposits (more than three months).  Development expenditure Expenditure that is directly attributable to the  development of wind farm projects is recognised as an intangible asset when  the Group can demonstrate it is probable that the wind farm development will  generate future economic benefits in excess of the amounts capitalised and  other relevant criteria for capitalising such costs in accordance with IAS 38  ‘Intangible Assets’ have been met. Following initial recognition of the  development expenditure as an asset, the asset is carried at cost less any  accumulated amortisation and accumulated impairment losses. Amortisation of  the asset begins when the wind farm development is complete and the asset is  available for use. It is amortised over the period of expected future  benefit. During the period of development, the asset is reviewed for  impairment annually. Discontinued operations and assets and liabilities held  for sale A discontinued operation is a separate major line of business or  geographic area of operations that has either been disposed of, abandoned or  is part of a plan to dispose of a major line of business or geographic area.  An operation is classified as a discontinued operation in the year that the  above criteria are met. Certain legacy settlements and relevant provision  adjustments are allocated to discontinued operations when those settlements  and provisions arise from or are directly related to the discontinued  operations. Dividend income Dividend income is recognised when the right to  receive payment is established. Employee benefits Defined contribution plans  Obligations for contributions to defined contribution pension plans are  recognised in the income statement as incurred. Defined benefit plans The  Group’s net obligation in respect of defined benefit pension plans is  calculated separately for each plan by estimating the amount of future  benefit that employees have earned in return for their service in the current  and prior periods. That benefit is discounted to determine its present value;  and the fair value of any plan assets (at bid price) is deducted. The  liability discount rate is the yield at the balance sheet date on AA-rated  corporate bonds that have maturity dates approximating to the terms of the  Group’s obligations. The calculation is performed by a qualified actuary  using the projected unit credit method. A net surplus from a defined benefit  plan is recognised on the balance sheet when the asset would be recoverable  as a result of an expected future refund after a gradual settlement of plan  liabilities. Net interest is calculated by applying the discount rate to the  net defined benefit liability or asset. Actuarial gains and losses are  recognised in other comprehensive income in the year in which they arise.  Exceptional items As permitted by IAS 1 ‘Presentation of Financial  Statements’, certain items are presented separately as exceptional on the  face of the consolidated income statement. In the opinion of the directors,  these exceptional items require separate disclosure by virtue of their  nature, size or incidence in order to obtain a clear and consistent  presentation of the Group’s underlying performance and to provide consistency  with internal management reporting. Exceptional items may include, but are  not restricted to: acquisitionrelated costs; restructuring costs; gains and  losses on the disposal of fixed assets; and gains and losses on the disposal or  closure of businesses. Acquisition-related costs may include transaction  costs (including external advisory, legal, valuation and other professional  fees and attributable internal costs), the amortisation of  acquisition-related facility fees, payments to selling shareholders that are  accounted for as remuneration and changes in the fair value of contingent  consideration. |
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|  | 108 Amec Foster  Wheeler Annual report and accounts 2014 1 Significant accounting policies  continued Financial instruments Financial instruments are initially recorded  at fair value. Subsequent valuation depends on the designation of the  instrument. Cash, bank deposits, borrowings and trade receivables and  payables are held at amortised cost. Bank loans and similar borrowings are  recognised initially at fair value (i.e. proceeds received) net of directly  attributable transaction fees. Interest expense, including transaction fees  is recognised over the life of the bank loan using the effective interest method.  Derivative financial instruments are recognised initially and subsequently at  fair value. The gain or loss on re-measurement to fair value is recognised  immediately in the income statement. However, where derivatives qualify for  hedge accounting, recognition of any resultant gain or loss depends on the  nature of the item being hedged. The fair value of derivative financial  instruments is determined by reference to market values for similar financial  instruments or by discounting the expected future cash flows at prevailing  interest rates. The sale and purchase of derivative financial instruments are  non-speculative. Cash flow hedges Where a derivative financial instrument is  designated as a hedge against the variability in cash flows of a recognised asset  or liability, or a highly probable forecast transaction, any gain or loss on  the effective part of the derivative financial instrument is recognised in  other comprehensive income and accumulated within the hedging reserve. The  gain or loss on any ineffective portion of the hedge is recognised  immediately in the income statement. Hedge accounting is discontinued when  the hedging instrument no longer meets the criteria for hedge accounting,  expires, or is sold, terminated or exercised. The cumulative gain or loss  previously recognised in the hedging reserve remains there until the forecast  transaction occurs. The cumulative gain or loss in the hedging reserve is  transferred to the income statement in the same period that the hedged item  affects profit or loss. Net investment hedges Foreign currency differences  arising on the retranslation of financial instruments designated as a hedge  of a net investment in a foreign operation are recognised in other  comprehensive income, to the extent that the hedge is effective. The gain or  loss of any ineffective portion of the hedge is recognised immediately in the  income statement. On disposal of the foreign operation, the cumulative value  of gains and losses recorded in equity is transferred to the income  statement. Foreign currencies The Group’s consolidated accounts are presented  in Sterling, which is also the parent company’s functional currency. Each  entity in the Group determines its own functional currency and items included  in the accounts of each entity are measured using that functional currency.  An entity’s functional currency reflects the underlying transactions, events  and conditions that are relevant to it. At an individual entity level,  transactions in a currency other than the functional currency of the entity  are translated to the functional currency at the exchange rate ruling at the  day of the transaction. Entities which have multiple foreign currency  transactions apply the average rate for the month as an approximation of the  exchange rate on the day of the transaction. Monetary assets and liabilities  denominated in foreign currencies are translated into the functional currency  at the rates of exchange ruling at the balance sheet date and any foreign  exchange differences arising are recognised in the income statement except  those arising on intra-Group balances, settlement of which is neither planned  nor probable to occur, which are recognised in other comprehensive income.  Non-monetary assets and liabilities are measured in terms of historical cost  and are translated using the exchange rate at the date of the transaction. On  consolidation, the results of entities with a functional currency other than  Sterling are translated into Sterling using a monthly average exchange rate.  The net assets of such entities are translated into Sterling at the closing  exchange rate. Exchange differences arising on the translation of foreign  currency net investments and any foreign currency borrowings, or forward  contracts used to hedge those investments, are taken to a translation  reserve. They are recycled and recognised as a profit or loss on the disposal  or closure of a business. The cumulative translation difference for all  foreign operations was deemed to be zero as at 1 January 2004, the date of  transition to adopted IFRS. Impairment The carrying values of all of the  Group’s assets other than inventories, balances on long-term contracts and  deferred tax assets are reviewed at each balance sheet date to determine  whether there is any indication of impairment. If there are indications of an  impairment in the carrying value then the recoverable amount is estimated and  compared to the carrying amount. For goodwill and assets not yet available  for use, the recoverable amount is estimated at each balance sheet date. An  impairment loss is recognised to the extent that the carrying value of an  asset exceeds its recoverable amount. Notes to the consolidated accounts  continued |
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|  | 109 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 1 Significant accounting policies continued  Intangible assets other than goodwill Intangible assets acquired by the  Group, which include customer relationships, brands/trademarks, order  backlog, patents and software, are stated at cost less accumulated  amortisation and impairment losses. The cost of an intangible asset acquired  in a business combination is its fair value at date of acquisition.  Amortisation is charged to the income statement on a straight line basis over  the estimated useful lives of intangible assets, from the date they are  available for use. The estimated lives of intangible assets held at 31  December 2014 are as follows: Customer relationships Two to 18 years  Brand/trademarks Up to 20 years Order backlog Three to five years Patents 15  years Software Three to seven years Other Up to six years Inventories  Inventories, including land held for and in the course of development, are  stated at the lower of cost and net realisable value. Development land and  work in progress is included at cost less any losses foreseen in completing  and disposing of the development. Cost includes cost of acquisition and  development to date, including directly attributable fees and expenses net of  rental and other income attributable to the development. Leases The  determination of whether an arrangement is (or contains) a lease is based on  the substance of the arrangement at the inception of the lease. The  arrangement is, or contains, a lease if fulfilment of the arrangement is  dependent on the use of a specific asset or assets and the arrangement  conveys a right to use the asset or assets, even if that right is not  explicitly specified in an arrangement. A lease is classified at the  inception date as a finance lease or an operating lease. A lease that  transfers substantially all the risks and rewards incidental to ownership to  the Group is classified as a finance lease. Finance leases are capitalised at  the commencement of the lease at the inception date fair value of the leased  property or, if lower, at the present value of the minimum lease payments.  Lease payments are apportioned between finance charges and reduction of the  lease liability so as to achieve a constant rate of interest on the remaining  balance of the liability. Finance charges are recognised in finance costs in  the income statement. A leased asset is depreciated over the useful life of  the asset. However, if there is no reasonable certainty that the Group will  obtain ownership by the end of the lease term, the asset is depreciated over  the shorter of the estimated useful life of the asset and the lease term.  Operating lease costs, including incentives received, are charged to the  income statement on a straight line basis over the period of the lease. Net  financing expense Net financing expense comprises interest receivable on  funds invested, interest payable, pension financing income, the unwinding of  discounted balances and foreign exchange gains and losses. Interest income  and interest payable are recognised in the income statement as they accrue,  using the effective interest method. Directly attributable finance costs are  capitalised in the cost of purchased and constructed property, plant and  equipment, until the relevant assets are brought into operational use. |
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|  | 110 Amec Foster  Wheeler Annual report and accounts 2014 1 Significant accounting policies  continued Property, plant and equipment Property, plant and equipment is  measured at cost less accumulated depreciation and impairment losses. The  cost of property, plant and equipment as at 1 January 2004, the date of  transition to adopted IFRS, was determined by reference to its fair value at  that date. Depreciation is provided on all property, plant and equipment,  with the exception of freehold land, at rates calculated to write off the  cost, less estimated residual value, of each asset on a straight line basis over  its estimated useful life. Reviews are made annually of the estimated  remaining lives and residual values of individual assets. The estimated lives  used are: Freehold buildings Up to 50 years Leasehold land and buildings The  shorter of the lease term or 50 years Plant and equipment Mainly three to  five years Provisions for liabilities and charges Provisions are recognised  when the Group has a present obligation (legal or constructive) as a result  of a past event; it is probable that an outflow of resources embodying  economic benefits will be required to settle the obligation; and a reliable  estimate can be made of the amount of the obligation. The Group has taken  internal and external advice in considering known and reasonably likely legal  claims and actions made by or against the Group. It carefully assesses the  likelihood of success of a claim or action. Appropriate provisions are made  for legal claims or actions against the Group on the basis of likely outcome,  but no provisions are made for those which, in the view of management, are  unlikely to succeed. These possible but not probable liabilities are  disclosed in note 26 as contingent liabilities. Research and development  government credits The Group claims research and development government  credits in the UK, US and Canada. These are judged to have characteristics  more akin to grants than income taxes and are offset against the relevant  expenditure caption. Credits are recognised to the extent there is reasonable  assurance they will be received which, given the necessary claims processes,  can be some time after the original expense is incurred. Revenue recognition  and long term contracts Revenue represents the amount received or receivable  for goods and services supplied by the Group to its customers, including the  Group’s share of revenue from work carried out by jointly controlled  operations. Revenue excludes intra-Group sales and value added tax and other  sales taxes. The Group’s revenue is derived principally from service and  construction-type contracts. Contract revenue is recognised over the term of  the contract by reference to the stage of completion of the contract activity  at the end of each reporting period. Revenue from cost reimbursable contracts  is based on the services provided, typically represented by man-hours worked,  and is measured by reference to agreed charge-out rates or to the estimated  total contract revenue. Flow-through costs on cost reimbursable contracts,  typically consisting of materials, equipment or subcontractor services, are  included as both contract revenue and contract costs. Revenue from fixed  price contracts is recognised using the percentage-of-completion method,  measured by reference to physical completion or the ratio of costs incurred  to total estimated contract costs. If the outcome of a contract cannot be  estimated reliably, as may be the case in the initial stages of completion of  the contract, revenue is recognised only to the extent of the costs incurred  that are expected to be recoverable. If a contract is expected to be  loss-making, the expected amount of the loss is recognised immediately in the  income statement. A variation is an instruction by the customer for a change  in the scope of the work to be performed under the contract. Variations are  included in contract revenue when it is probable that the customer will  approve the variation and the related adjustment to the contract price can be  measured reliably. A claim is an amount that the contractor seeks to collect  from the customer as reimbursement for costs whose inclusion in the contract  price is disputed, and may arise from, for example, delays caused by the  customer, errors in specification or design and disputed variations in  contract work. Claims are included in contract revenue when negotiations with  the customer have reached an advanced stage such that it is probable that the  customer will accept the claim and the amount of the claim can be measured  reliably. Notes to the consolidated accounts continued |
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|  | 111 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 1 Significant accounting policies continued  Revenue recognition and long term contracts continued Incentive payments are  additional amounts payable to the contractor if specified performance  standards are met or exceeded. Incentive payments are recognised when the  contract is sufficiently far advanced that it is probable that the required  performance standards will be met and the amount of the payment can be  measured reliably. Gross amounts due from customers included in trade and  other receivables represent the costs incurred plus recognised profits, less  provision for recognised losses and progress billings. Progress billings that  have not been settled by customers (including retentions related to contracts  in progress) are included in trade receivables where they are stated after  allowance for any doubtful debts. Gross amounts due to customers included in  trade and other payables represent payments on account received from  customers in excess of the gross amounts due from customers and advances.  Advances are amounts received by the customer before the related work is  performed. Share-based payments There are various share-based payment  arrangements which allow Amec Foster Wheeler employees to acquire Amec Foster  Wheeler shares; these awards are granted by Amec Foster Wheeler. The fair  value of awards granted is recognised as a cost of employment with a  corresponding increase in equity. The fair value is measured at grant date  and spread over the period during which the employees become unconditionally  entitled to the award. The fair value of the award is measured using a  valuation model, taking into account the terms and conditions upon which the  awards were granted. The amount recognised as an expense is adjusted to  reflect the actual number of shares that vest except where non-vesting is due  to total shareholder return not achieving the threshold for vesting. Taxation  Income tax expense comprises the sum of the current tax charge and the  movement in deferred tax. Current tax payable or recoverable is based on  taxable profit for the year using tax rates and laws that have been enacted  or substantively enacted by the balance sheet date, and any adjustment to tax  payable in respect of previous years. Tax is recognised in the income  statement except to the extent that it relates to items recognised in other  comprehensive income or equity, in which case it is recognised in other  comprehensive income or equity as appropriate. Deferred tax is provided on  temporary differences between the carrying amounts of assets and liabilities  in the accounts and the corresponding tax bases used in the computation of  taxable profit. Deferred tax liabilities are generally recognised for all  taxable temporary differences with deferred tax assets being recognised where  it is probable that future taxable profits will be available against which  the asset can be utilised. The carrying amount of deferred tax assets is  reviewed at each balance sheet date and adjustments made to the extent that  it is no longer probable that sufficient profits will be available. Assets  and liabilities are not recognised if the temporary differences arise from  the initial recognition (other than in a business combination) of assets and  liabilities in a transaction that affects neither accounting nor taxable  profit. Deferred tax liabilities are recognised for taxable temporary  differences arising on investments in subsidiaries and joint ventures, except  where the Group is able to control the reversal of the temporary difference  and it is probable that the temporary difference will not reverse in the  foreseeable future. Deferred tax is calculated using tax rates and laws that  have been enacted or substantively enacted to apply when the deferred tax  asset is realised or the liability is settled. Deferred tax assets and  liabilities are offset when they relate to income taxes levied by the same  taxation authority and it is intended that they will be settled on a net  basis. |
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|  | 112 Amec Foster  Wheeler Annual report and accounts 2014 2 Segmental analysis of continuing  operations Amec Foster Wheeler designs, delivers and maintains strategic and  complex assets for its customers across the global energy and related  sectors. Segment information is presented on a consistent basis with the  information presented to the Group Leadership Team for the purposes of  allocating resources within the Group and assessing the performance of the  Group’s businesses. Prior to the acquisition of Foster Wheeler in November  2014, the Group’s continuing operations comprised of four operating segments:  Americas, Europe, Growth Regions and Investment Services. For the short  period between its acquisition and the end of 2014, Foster Wheeler’s results  were presented to the Group Leadership Team analysed by its existing  operating segments: E&C Services and Global Power Group. With effect from  1 January 2015, the Group adopted three new geographical operating segments:  Americas; Northern Europe & CIS; and Asia, Middle East, Africa &  Southern Europe; with Foster Wheeler’s E&C Services segment being merged  into these segments. Foster Wheeler’s Global Power Group continues to be  reported as a separate operating segment. Investment Services also continues  to be reported separately. Details of the services offered by each segment  and the end markets in which they operate are given on pages 3 to 5 and 26 to  27. The Group Leadership Team uses trading profit as the measure of the  profitability of the Group’s businesses. Trading profit is, therefore, the  measure of the segment profit presented in the Group’s segment disclosures.  Trading profit represents profit before net financing expense excluding  exceptional items; the amortisation of intangible assets; and  asbestos-related costs (net of insurance recoveries). Trading profit includes  the Group’s share of the trading profit of joint ventures. Revenue and  results Revenue Profit/(loss) 2014 £m 2013 £m 2012 £m 2014 £m 2013 £m 2012 £m  Americas 2,072 2,247 2,500 207 241 233 Europe 1,119 1,227 1,080 101 93 95  Growth Regions 590 536 531 30 33 32 E&C Services 221 – – 4 – – Global  Power Group 53 – – 2 – – Investment Services 6 6 9 8 11 7 4,061 4,016 4,120  352 378 367 Internal revenue (68) (42) (32) – – – External revenue 3,993  3,974 4,088 – – – Corporate costs1 (31) (35) (33) Trading profit2 321 343 334  Net financing expense3 (4) (11) (7) Adjusted profit before tax 317 332 327  Tax on results of joint ventures4 (6) (5) (5) 311 327 322 Intangible  amortisation (49) (47) (44) Exceptional and asbestos related items (107) (25)  (24) Profit before income tax 155 255 254 1 Corporate costs comprise the  costs of operating central corporate functions and certain regional  overheads. 2 Trading profit is earnings from continuing operations before net  financing expense, tax, intangible amortisation, pre-tax exceptional items  and asbestos related items of £299m (2013: £315m; 2012: £311m), but including  joint venture trading profit of £22m (2013: £28m; 2012: £23m). 3 Net  financing expense includes Amec Foster Wheeler’s share of net interest  payable of joint ventures. 4 The share of post-tax results of joint ventures  is further analysed as follows: 2014 £m 2013 £m 2012 £m Trading profit 22 28  23 Net financing expense (4) (9) (6) Tax (6) (5) (5) 12 14 12 Notes to the  consolidated accounts continued |
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|  | 113 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 2 Segmental analysis of continuing operations  continued Transactions between reportable segments are conducted on an arm’s  length basis. Internal revenue arises in the segments as follows: 2014 £m  2013 £m 2012 £m Americas 13 18 15 Europe 30 17 8 Growth Regions 24 7 9  Investment Services 1 – – 68 42 32 Other information Share of post-tax  results of joint ventures Depreciation Intangible amortisation 2014 £m 2013  £m 2012 £m 2014 £m 2013 £m 2012 £m 2014 £m 2013 £m 2012 £m Americas 1 2 1 6 7  6 17 18 18 Europe 8 7 12 4 3 3 17 17 16 Growth Regions 2 2 2 2 2 2 4 12 10  E&C Services – – – 3 – – 7 – – Global Power Group 2 – – 1 – – 4 – –  Investment Services (1) 3 (3) – – – – – – 12 14 12 16 12 11 49 47 44  Geographical origin Revenue Non-current assets 2014 £m 2013 £m 2012 £m 2014  £m 2013 £m 2012 £m United Kingdom 1,067 1,112 1,030 774 326 336 Canada 938  1,104 1,260 297 188 211 United States 1,218 1,070 1,097 1,131 284 278 Rest of  the world 770 688 701 1,396 225 261 3,993 3,974 4,088 3,598 1,023 1,086 The  non-current assets analysed by geography include property, plant and  equipment, intangible assets and interests in joint ventures. |
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|  | 114 Amec Foster  Wheeler Annual report and accounts 2014 3 Revenue 2014 £m 2013 £m 2012 £m  Construction contracts 917 342 414 Services 3,076 3,632 3,674 3,993 3,974  4,088 The revenue from construction contracts shown above is based on the  definition of construction contracts included in IAS 11 and includes revenue  from all contracts directly related to the construction of an asset even if  Amec Foster Wheeler‘s role is as a service provider, for example project  management. 4 Profit before net financing expense – continuing operations  2014 £m 2013 £m 2012 £m Depreciation of property, plant and equipment 16 12  11 Minimum payments under operating leases 87 96 92 Research and development  government credits (23) (22) (5) There are no material receipts from  subleases. 2014 £m 2013 £m 2012 £m Fees paid to the auditor and its  associates: The auditing of the accounts 3.9 0.3 0.3 The auditing of accounts  of any subsidiaries of the company 1.5 1.1 1.0 Taxation compliance services  0.4 0.3 0.3 All taxation advisory services other than compliance – 0.1 0.1  All services relating to corporate finance transactions entered into, or  proposed to be entered into, by or on behalf of the company or any of its  associates 6.4 1.6 0.2 All other non-audit services 0.1 0.1 0.1 12.3 3.5 2.0  Notes to the consolidated accounts continued |
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|  | 115 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 5 Amortisation, exceptional items and  asbestos-related items 2014 £m 2013 £m 2012 £m Continuing operations:  Administrative expenses – exceptional items (86) (18) (24) Administrative  expenses – intangible amortisation (49) (47) (44) (135) (65) (68) Loss on  business disposals and closures (16) (7) – Net financing expense (5) – –  (156) (72) (68) Taxation credit/(charge) on exceptional items of continuing  operations 6 (6) 9 Taxation charge on restructuring – (16) – Taxation credit  on intangible amortisation 12 20 12 18 (2) 21 Post-tax amortisation and  exceptional items of continuing operations (138) (74) (47) Exceptional items  of discontinued operations (post–tax) (19) – 5 Post-tax amortisation and  exceptional items (157) (74) (42) Post-tax exceptional items for 2014 are  further analysed as follows: 2014 Loss on disposals £m Profit in respect of  business closures £m Loss on business disposals and closures £m Asbestos-related  items £m Other exceptional items £m Total £m Continuing operations (21) 5  (16) (9) (82) (107) Discontinued operations (23) – (23) – – (23) Loss before  tax (44) 5 (39) (9) (82) (130) Taxation on exceptional items 5 – 5 – 5 10  Loss after tax (39) 5 (34) (9) (77) (120) During the year ended 31 December  2014, the Group disposed of its investment in the Lancashire Waste project at  a loss of £21m mainly arising from a reverse premium payable on exit. This  combined with additional indemnity provisions and costs of £23m associated  with businesses sold in prior years (and classified as discontinued) to give  a pre-tax loss on disposal of £44m. This includes a provision £11m in respect  of a new claim received in the year related to a contract completed by the  DPS business which was sold in 2007. There was a credit of £5m from the  release of a provision no longer required in respect of a business closed in  a prior year (and classified as continuing). Other exceptional items of £82m  includes transaction costs of £37m relating to the acquisition of Foster  Wheeler AG, £35m costs of integrating the two businesses and £4m of fees  associated with the borrowings taken on to fund the acquisition. Integration  costs include consultancy and other costs of identifying cost synergies of  £18m which includes associated internal labour, plus £17m costs of achieving  cost synergies (including £14m redundancy costs). In addition £6m was  incurred in completing the previously announced restructuring into geographic  business units. There was a charge of £8m relating to a change in the  discount rate applied to the asbestos liability and £1m in respect of unwinding  the discount. Out of the £82m of other exceptional items £58m was paid in  cash during the year. |
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|  | 116 Amec Foster  Wheeler Annual report and accounts 2014 5 Amortisation, exceptional items and  asbestos-related items continued Post-tax exceptional items for 2013 are  further analysed as follows: 2013 Loss on disposals £m Loss in respect of  business closures £m Loss on business disposals and closures £m Other  exceptional items £m Total £m Continuing operations – (7) (7) (18) (25)  Discontinued operations (6) – (6) – (6) Loss before tax (6) (7) (13) (18)  (31) Taxation charge on restructuring – – – (16) (16) Taxation on exceptional  items 6 – 6 (6) – Loss after tax – (7) (7) (40) (47) Additional indemnity provisions  of £10m and costs in respect of businesses sold in prior years (and  classified as discontinued) were offset by the release of a £5m litigation  provision and indemnity provisions no longer required, and give a pre-tax  exceptional loss on disposals of £6m. There were additional litigation  provisions of £9m offset by releases of £2m in respect of businesses closed  in a prior year and classified as continuing. Exceptional costs of £18m in  continuing operations includes £14m restructuring costs associated with the  management reorganisation into geographic business units and transaction  costs of £4m which, in line with IFRS 3, are charged to the income statement.  A tax provision of £16m has been established for potential withholding tax  following a Group restructuring that resulted in a significant amount of cash  being repatriated from foreign subsidiaries. Post-tax exceptional items for  2012 are further analysed as follows: 2012 Loss on disposals £m Loss in  respect of business closures £m Loss on business disposals and closures £m  Other exceptional items £m Total £m Continuing operations – – – (24) (24)  Discontinued operations (11) – (11) 17 6 Loss before tax (11) – (11) (7) (18)  Taxation on exceptional items 3 – 3 5 8 Loss after tax (8) – (8) (2) (10) A loss  on disposals of £11m arose from adjustments to provisions held in respect of  a business sold in prior years (and classified as discontinued) and foreign  exchange movements on provisions established on the disposal of SPIE.  Exceptional costs of £24m in continuing operations included the £11m costs of  funding a joint venture which was part of a recent acquisition, costs of £11m  associated with restructuring following the management reorganisation into  geographic business units and transaction and deferred compensation costs  which, in line with IFRS 3, are charged to the income statement. Transaction  costs of £2m were incurred in the year. The exceptional gain in discontinued  operations of £17m arises from the recognition of an insurance receivable  following the UK Supreme Court judgement on mesothelioma liability, a  provision against which was established a number of years ago. Notes to the  consolidated accounts continued |
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|  | 117 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 6 Staff costs and employee numbers – continuing  operations 2014 £m 2013 £m 2012 £m Wages and salaries 1,466 1,459 1,424  Social security costs 100 98 94 Equity-settled share-based payments (note 22)  8 14 15 Contributions to defined contribution schemes 37 36 34 Defined  benefit pension scheme expense (note 14) 31 32 32 1,642 1,639 1,599 2014  number 2013 number 2012 number The average number of people employed was as  follows: Americas 11,839 13,046 13,516 Europe 7,154 7,216 7,294 Growth  Regions 3,295 3,070 2,348 E&C Services 1,357 – – Global Power Group 322 –  – Investment Services/Centre 258 240 221 24,225 23,572 23,379 The average  number of people employed by E&C Services and Global Power Group relates  to the period following the acquisition of Foster Wheeler. Details of  directors’ remuneration are provided in the Directors’ remuneration report on  pages 61 to 74. The average number of employees as stated above excludes  agency staff. 7 Net financing expense – continuing operations 2014 £m 2013 £m  2012 £m Financial income Interest income on bank deposits 3 7 7 Other interest  and similar income 5 3 2 Pension financing income 2 1 – Foreign exchange  gains 1 1 1 11 12 10 Financial expense Interest payable on bank loans and  overdrafts (10) (9) (5) Other interest and similar expense (4) (3) (2)  Pension finance expense – – (3) Foreign exchange losses (1) (2) (1) Unwinding  of the discount on the asbestos provision (1) – – (16) (14) (11) Net  financing expense (5) (2) (1) The unwinding of the discount on the asbestos  provision of £1m and the amortisation of facility fees of £4m (included  within interest payable on bank loans and overdrafts) have been presented as  exceptional items in the income statement. There were no exceptional items  included in net financing expense in the year ended 31 December 2013 or 31  December 2012. |
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|  | 118 Amec Foster  Wheeler Annual report and accounts 2014 8 Income tax – continuing operations  Income tax arises in respect of the different categories of income and  expenses as follows: 2014 £m 2013 £m 2012 £m Income tax expense on continuing  operations before amortisation, exceptionals and asbestos related items 67 67  68 Income tax credit on amortisation (12) (20) (12) Income tax charge on  restructuring – 16 – Income tax (credit)/charge in respect of other  exceptional items (6) 6 (9) Total income tax expense from continuing  operations in the income statement 49 69 47 2014 £m 2013 £m 2012 £m Current  tax UK corporation tax at 21.5% (2013: 23.25%; 2012: 24.5%) 21 18 16 Double  tax relief (2) (3) (4) Overseas tax 53 80 56 Adjustments in respect of prior  years (6) (26) (7) 66 69 61 Deferred tax UK deferred tax at 20.0% (2013:  20.0%; 2012: 23.0%), pension surplus at 20.0% (2013: 20.0%; 2012: 35.0%) –  origination and reversal of temporary differences 1 (16) 4 Overseas deferred  tax (14) 14 (15) Adjustments in respect of prior years (4) 2 (3) (17) – (14)  Total income tax expense for continuing operations 49 69 47 In his budget  speeches on 21 March 2012 and 20 March 2013, the UK Chancellor of the  Exchequer announced reductions in the rate of corporation tax to 23% from 1  April 2013, 21% from 1 April 2014 and 20% from 1 April 2015. As at 31  December 2014, the reduction in the rate of corporation tax to 20% had been  substantively enacted. Factors affecting the tax expense for the year are  explained as follows: 2014 £m 2013 £m 2012 £m Profit before income tax from  continuing operations 155 255 254 Expected income tax expense 34 59 62  Non-deductible expenses – pre-exceptional 13 12 9 Non-deductible expenses –  exceptional 11 – 1 Non-taxable income – pre-exceptional (6) (6) (5) Impact of  providing deferred tax on pension surplus at 20.0% (2013: 20.0%; 2012: 35.0%)  – (21) (1) Impact of change in UK tax rate to 20.0% (2013: 20.0%; 2012:  23.0%) on deferred tax – – 3 Overseas income and expenses taxed at rates  other than 21.5% (2013: 23.25%; 2012: 24.5%) 7 25 3 Change in recognition of  deferred tax assets 2 28 (11) Other adjustments in respect of prior years  (10) (24) (10) Effects of results of joint ventures (2) (4) (4) Total income  tax expense for the year for continuing operations 49 69 47 Notes to the  consolidated accounts continued |
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|  | 119 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 8 Income tax – continuing operations continued  2014 £m 2013 £m 2012 £m Tax recognised directly in equity Current tax – – (1)  Deferred tax (note 15) (11) 21 27 Tax (credit)/charge recognised directly in  equity (11) 21 26 As at 31 December 2014 and 31 December 2013, the deferred tax  liability arising on the UK pension surplus has been measured at the  substantively enacted UK tax rate of 20%. It was measured as at 31 December  2012 at 35% being the tax rate that would be applied if the surplus was  refunded. The change in 2013 reflected the fact there was no longer any  reasonable expectation of a refund of the pension surplus in advance of  anything that may have become due on the eventual winding-up of the scheme.  The impact of the change was a deferred tax credit in respect of continuing  operations of £21m, a deferred tax credit in respect of discontinued  operations of £4m and a deferred tax charge of £12m recognised in other  comprehensive income during the year ended 31 December 2013. 9 (Loss)/profit  for the year from discontinued operations Discontinued operations represent  the residual assets and retained obligations in respect of businesses sold in  prior years, as well as the UK conventional power business, which was  discontinued in 2013. In accordance with IFRS 5, the post-tax results of  discontinued operations are disclosed separately in the consolidated income  statement. The results of the discontinued operations are all attributable to  the equity holders of the parent and are as follows: 2014 £m 2013 £m 2012 £m  Revenue (13) 15 70 Cost of sales and net operating expenses 3 (25) (74) Loss  before exceptional items and income tax (10) (10) (4) Attributable tax 2 2 1  (8) (8) (3) Loss on disposal (23) (6) (11) Tax on disposals 4 6 3 Other  exceptional items – – 17 Tax on exceptional items – – (4) (Loss)/profit for  the year from discontinued operations (27) (8) 2 The negative revenue of £13m  and loss of £10m before exceptional items and income tax in 2014 relates to  the settlement of final accounts and additional provisions on certain contracts  within the UK conventional power business. The loss on disposals of £23m  (2013: £6m) relates to additional indemnity provisions and costs associated  with businesses sold in prior years. Other exceptional items in 2012 related  to the recognition of an insurance receivable, following the UK Supreme Court  judgement on mesothelioma liability. Net cash flows attributable to  discontinued operations The net cash flows attributable to discontinued  operations during the year were as follows: 2014 £m 2013 £m 2012 £m Net cash  flow from operating activities (3) (12) (12) Net cash flow from investing  activities 3 (2) (4) – (14) (16) |
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|  | 120 Amec Foster  Wheeler Annual report and accounts 2014 10 Earnings per share Basic and  diluted earnings per share are shown on the face of the income statement. The  calculation of the average number of shares in issue has been made having  deducted the shares held by the trustees of the Performance Share Plan and  those held in treasury by the company. 2014 2013 2012 Earnings £m Weighted  average shares number million Earnings per share pence Earnings £m Weighted  average shares number million Earnings per share pence Earnings £m Weighted  average shares number million Earnings per share pence Basic earnings from  continuing operations 109 302 36.1 187 293 63.8 206 315 65.2 Share options –  2 (0.2) – 2 (0.4) – 2 (0.4) Employee share and incentive schemes – 7 (0.8) –  4 (0.9) – 4 (0.8) Diluted earnings from continuing operations 109 311 35.1  187 299 62.5 206 321 64.0 Basic (loss)/earnings from discontinued operations  (27) 302 (8.9) (8) 293 (2.7) 2 315 0.6 Share options – 2 0.1 – 2 – – 2 –  Employee share and incentive schemes – 7 0.2 – 4 – – 4 – Diluted  (loss)/earnings from discontinued operations (27) 311 (8.6) (8) 299 (2.7) 2  321 0.6 Basic and diluted profit from continuing operations is calculated as  set out below: 2014 £m 2013 £m 2012 £m Profit for the year from continuing  operations 106 186 207 Loss/(profit) attributable to non-controlling  interests 3 1 (1) Basic and diluted profit from continuing operations 109 187  206 Notes to the consolidated accounts continued |
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|  | 121 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 10 Earnings per share continued In order to  appreciate the effects on the reported performance of intangible  amortisation, exceptional items and asbestos related items, additional  calculations of earnings per share are presented. 2014 2013 2012 Earnings £m  Weighted average shares number million Earnings per share pence Earnings £m  Weighted average shares number million Earnings per share pence Earnings £m  Weighted average shares number million Earnings per share pence Basic  earnings from continuing operations 109 302 36.1 187 293 63.8 206 315 65.2  Exceptional items and asbestos related items (post-tax) 101 – 33.4 47 – 16.0  15 – 4.7 Amortisation (post-tax) 37 – 12.3 27 – 9.2 32 – 10.2 Basic earnings  from continuing operations before amortisation, exceptional items and  asbestos related items 247 302 81.8 261 293 89.0 253 315 80.1 Share options –  2 (0.5) – 2 (0.6) – 2 (0.5) Employee share and incentive schemes – 7 (1.8) –  4 (1.2) – 4 (1.0) Diluted earnings from continuing operations before  amortisation, exceptional items and asbestos related items 247 311 79.5 261  299 87.2 253 321 78.6 Basic (loss)/earnings from discontinued operations (27)  302 (8.9) (8) 293 (2.7) 2 315 0.6 Exceptional items (post-tax) 19 – 6.3 – – –  (5) – (1.4) Basic (loss)/earnings from discontinued operations before  exceptional items (8) 302 (2.6) (8) 293 (2.7) (3) 315 (0.8) Share options – 2  – – 2 – – 2 – Employee share and incentive schemes – 7 0.1 – 4 – – 4 –  Diluted loss from discontinuing operations before exceptional items (8) 311  (2.5) (8) 299 (2.7) (3) 321 (0.8) |
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|  | 122 Amec Foster  Wheeler Annual report and accounts 2014 11 Property, plant and equipment Land  and buildings £m Plant and equipment £m Total £m Cost As at 1 January 2014 30  95 125 Exchange and other movements 5 (1) 4 Acquired through business  combinations 84 34 118 Additions 6 8 14 Disposals (1) (3) (4) As at 31  December 2014 124 133 257 Depreciation As at 1 January 2014 17 69 86 Exchange  and other movements 2 – 2 Provided during the year 6 10 16 Disposals (1) (3)  (4) As at 31 December 2014 24 76 100 Cost As at 1 January 2013 32 103 135  Exchange and other movements (2) (4) (6) Additions 2 8 10 Disposals (2) (12)  (14) As at 31 December 2013 30 95 125 Depreciation As at 1 January 2013 17 75  92 Exchange and other movements (1) (3) (4) Provided during the year 3 9 12  Disposals (2) (12) (14) As at 31 December 2013 17 69 86 Net book value As at  31 December 2014 100 57 157 As at 31 December 2013 13 26 39 As at 1 January  2013 15 28 43 31 December 2014 £m 31 December 2013 £m The net book value of  land and buildings comprised: Freehold 68 5 Short leasehold 32 8 100 13 The  carrying value of land and buildings held under finance lease at 31 December  2014 was £6m (2013: £nil). The amount acquired through business combinations  was £6m (2013: £nil). Additions during the year include £nil (2013: £nil)  under finance leases. Notes to the consolidated accounts continued |
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|  | 123 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 12 Intangible assets Goodwill £m Customer  relationships £m Brands/ trademarks £m Order backlog £m Patents £m Software  £m Total £m Cost As at 1 January 2014 792 192 23 9 – 66 1,082 Exchange and  other movements 15 8 1 1 – 2 27 Acquired through business combinations 1,617  372 155 127 110 5 2,386 Additions – – – – – 51 51 Disposals and retirements –  (3) – (1) – (1) (5) As at 31 December 2014 2,424 569 179 136 110 123 3,541  Amortisation As at 1 January 2014 35 85 19 7 – 29 175 Exchange and other  movements (1) 2 – – – 1 2 Provided during the year – 24 3 6 1 15 49 Disposals  and retirements – (3) – (1) – – (4) As at 31 December 2014 34 108 22 12 1 45  222 Cost As at 1 January 2013 831 197 35 12 – 53 1,128 Exchange and other  movements (52) (5) (1) – – (1) (59) Acquired through business combinations 13  5 1 – – – 19 Additions – – – – – 15 15 Disposals and retirements – (5) (12)  (3) – (1) (21) As at 31 December 2013 792 192 23 9 – 66 1,082 Amortisation As  at 1 January 2013 40 61 27 10 – 21 159 Exchange and other movements (5) (2)  (1) (1) – (1) (10) Provided during the year – 31 5 1 – 10 47 Disposals and  retirements – (5) (12) (3) – (1) (21) As at 31 December 2013 35 85 19 7 – 29  175 Net book value As at 31 December 2014 2,390 461 157 124 109 78 3,319 As at  31 December 2013 757 107 4 2 – 37 907 As at 1 January 2013 791 136 8 2 – 32  969 The carrying value of software held under deferred payment arrangements  which are similar to finance leases as at 31 December 2014 was £30m (2013:  £nil). Additions during the year include £33m (2013: £nil) of software held  under deferred payment arrangements. |
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|  | 124 Amec Foster  Wheeler Annual report and accounts 2014 12 Intangible assets continued The  Group is required to test its goodwill and intangible assets for impairment  at least annually, or more frequently if indicators of impairment exist. The  review of goodwill for indications of impairment by management is performed  against the three core geographies of Americas, Europe and Growth Regions,  along with the two new reportable segments of Foster Wheeler, E&C  Services and Global Power Group being the lowest level of cash-generating  units (CGU) monitored for goodwill purposes. The goodwill arising on the acquisition  of Foster Wheeler has been allocated to the CGUs expected to benefit from the  synergies of the acquisition. This has resulted in an allocation of goodwill  generated by the acquisition to the Americas, Europe and Growth Regions CGUs.  The recoverable amount of the CGUs has been based on value-in-use  calculations. These calculations use cash flow projections included in the  financial budgets approved by the Board for 2015 and pre-tax discount rates  as set out in the table below. For the purposes of the calculation of the  recoverable amount, the cash flow projections beyond the budgeted period  include no growth in 2016 and 2017, 10% growth in 2018, 2019 and 2020 and 3%  growth per annum thereafter. In 2013 financial budgets approved by management  covering a two-year period were used together with a 2% growth thereafter.  The long-term growth rates are in line with long-term average growth rates  for the regions in which the CGUs operate. The value in use has been compared  to the carrying value for each CGU and no impairment is required nor has been  charged in respect of any of the CGUs. The financial budgets reflect  management’s judgement of the future cash flows which includes past  experience and expectations of future performance. The most significant assumptions  relate to trading profit margin1 and the conversion of trading profit into  cash (cash conversion). Revenue is underpinned by a secure order book for  each CGU and the order book remains strong at £6.3 billion as at 31 December  2014 (2013: £4.1 billion). The selection of trading profit margin takes into  account the margins being generated on contracts in progress and management’s  view of the margin on orders received, and is consistent with Amec Foster  Wheeler’s growth strategy. The cash conversion reflects past experience and  current contract mix. Goodwill is as follows: Goodwill 31 December 2014 £m  Pre-tax discount rate 2014 % Goodwill 31 December 2013 £m Pre-tax discount  rate 2013 % Americas 635 11 431 12 Europe 399 11 250 12 Growth Regions 203 11  76 12 E&C Services 675 11 – – Global Power Group 478 12 – – 1 Before  intangible amortisation and exceptional items but including joint venture  trading profit, as a percentage of revenue. A sensitivity analysis has been  performed, at the individual CGU level, in order to review the impact of  changes in key assumptions. For example, a 10% decrease in volume, with all  other assumptions held constant, or a 1% decrease in margin, with all other  assumptions held constant, did not identify any impairments. Similarly, zero  growth after the initial two-year period, with all other assumptions held  constant or a 2% increase in discount rate, did not identify any impairments  in the Americas, Europe. E&C Services or Global Power Group CGUs. The  value in use calculation referred to above showed headroom of £100m in the  Growth Regions CGU. However, applying zero terminal growth, a 1% reduction on  margin or a 2% increase in discount rate would eliminate the headroom in this  CGU. Notes to the consolidated accounts continued |
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|  | 125 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 13 Interests in joint ventures Interests in  joint ventures The Group does not hold any individual material interests in  joint ventures in either the current or prior year. Details in aggregate of  the Group’s interests in all individually immaterial joint ventures that are  accounted for using the equity method are as follows: £m Net book value As at  1 January 2014 52 Acquired through business combinations 73 Disposal of  businesses (2) Additions 1 Total comprehensive income 12 Dividends received  (14) As at 31 December 2014 122 As at 1 January 2013 47 Exchange and other  movements (1) Additions 1 Reclassifications (1) Total comprehensive income 14  Dividends received (8) As at 31 December 2013 52 During 2013 total  comprehensive income of £14m was net of provisions of £15m taken against the  comprehensive income of one joint venture entity, where the corresponding  increase in the carrying value of the joint venture was not recoverable. This  joint venture was disposed during the current year. Principal Group companies  are listed on pages 190 to 191. PPP service concessions Details of the PPP  service concessions are as follows: Financial close Equity stake Concession  period Net equity invested Transport A13 Thames Gateway 2000 25% 30 years –  Incheon Bridge, Korea 2005 23% 30 years £13m Power Petropower Energía  Limitada, Chile 1998 85% 20 years £54m Interests in joint operations The  Group does not hold any individual material interests in joint operations in  either the current or prior year. |
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|  | 126 Amec Foster  Wheeler Annual report and accounts 2014 14 Retirement benefit assets and  liabilities Defined benefit schemes The Group operates a number of pension  schemes for UK and overseas employees. Following the acquisition of Foster  Wheeler AG, there are three principal defined benefit schemes. In the UK  these are the AMEC Staff pension scheme, (which also has an associated  executive top-up scheme) and the Foster Wheeler Pension Plan and in the US,  The Foster Wheeler Inc. Salaried Employees Pension Plan. The AMEC Staff and  Executive pension schemes are closed to new members but remain open to further  accrual. The Foster Wheeler Pension Plan is a hybrid benefit arrangement. The  defined benefit section is closed to new members and further accrual, but the  defined contribution section remains open to further accrual. The Foster  Wheeler Inc. Salaried Employees Pension Plan is also closed to new members  and further accrual. Contributions by the Group into defined contribution  schemes are disclosed in note 6. The AMEC Staff and Executive pension schemes  are average salary plans for UK employees. The Foster Wheeler Pension Plan  was a final salary pension plan. All three schemes require contributions to  be made to a separately administered fund. These schemes are governed by the  employment laws of the UK. The level of benefits provided depends on the  member’s length of service and salary each year. Once the benefits are in  payment, the pension is adjusted each year relative to the UK’s Retail Prices  Index for the AMEC Staff and Executive pension schemes. The Foster Wheeler  Pension Plan is adjusted each year relative to the UK’s Consumer Price Index.  Each scheme is established under trust law and are governed by a Board of  Trustees, which consists of employers’ and employees’ representatives. In  addition, the AMEC Staff and Executive pension schemes have two independent  trustees. The Board of Trustees is responsible for the administration of the  plan assets and for the definition of the investment strategy. Every three  years, the Board of Trustees is required by legislation to review the level  of funding in the pension plans. The Board of Trustees decides the  contribution levels in consultation with the employers’ based on the results  of this triennial review. In the event that there is a funding deficit, the  Trustees and the employer will agree a recovery plan to eliminate that  deficit over as short a period as is reasonably affordable. Due to the nature  of the liabilities, the pension plans are exposed to inflation, interest rate  risk and changes in the life expectancy for pensioners. As the plan assets  include significant investments in quoted equities, the Group is also exposed  to equity market risk. The valuations used have been based on the preliminary  valuation of AMEC Staff pension scheme and the final valuation of the AMEC  Executive pension scheme as at 31 March 2014 and 31 March 2011 respectively.  The Foster Wheeler Pension Plan’s most recent valuation took place as at 1  April 2013. These schemes have been updated by the schemes’ actuaries for the  requirement to assess the present value of the liabilities of the schemes as  at 31 December 2014. The assets of the schemes are stated at their aggregate  market value as at 31 December 2014. The Foster Wheeler Inc. Salaried  Employees Pension Plan provides pension benefits to certain full-time  employees. Under the pension plan, retirement benefits are primarily a  function of both years of service and level of compensation. The pension plan  is closed to new members and further accrual. Notes to the consolidated  accounts continued |
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|  | 127 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 14 Retirement benefit assets and liabilities  continued Defined benefit schemes continued The principal assumptions made by  the actuaries are as follows: 31 December 2014 % 31 December 2013 % 31  December 2012 % The AMEC Staff pension scheme and the AMEC Executive pension scheme  Rate of discount 3.6 4.6 4.5 Rate of inflation 3.0 3.3 2.9 Rate of increase  in salaries 3.0 3.3 2.9 Rate of increase in pensions in payment (service  before/after 1 January 2008) 2.9/2.0 3.2/2.2 2.8/2.0 The Foster Wheeler  Pension Plan Rate of discount 3.7 – – Rate of inflation 3.0 – – Rate of  increase in salaries 1.9 – – Rate of increase in pensions in payment 1.1 – –  The Foster Wheeler Inc. Salaried Employees Pension Plan Rate of discount 3.6  – – Rate of inflation 2.5 – – Rate of increase in salaries N/A – – Rate of  increase in pensions in payment N/A – – In addition the Group has a number of  smaller overseas schemes. During the year the rate of discount ranged from  1.8% to 9.0% (2013: 4.8% to 4.9%; 2012: 4.2% to 4.3%). The rate of increase  in salaries ranged from 1.9% to 2.5% (2013: 2.8%; 2012: 2.8%). For the three  principal defined benefit schemes, the assumed life expectancy is as follows:  31 December 2014 Male years 31 December 2014 Female years 31 December 2013  Male years 31 December 2013 Female years 31 December 2012 Male years 31  December 2012 Female years The AMEC Staff pension scheme and the AMEC  Executive pension scheme Member aged 65 (current life expectancy) 22.5 24.6  22.9 24.4 22.8 24.3 Member aged 45 (life expectancy at 65) 24.2 26.5 24.7 26.3  24.6 26.2 The Foster Wheeler Pension Plan Member aged 65 (current life  expectancy) 23.5 23.2 N/A N/A N/A N/A Member aged 45 (life expectancy at 65)  25.3 25.1 N/A N/A N/A N/A The Foster Wheeler Inc. Salaried Employees Pension  Plan Member aged 65 (current life expectancy) 21.6 23.7 N/A N/A N/A N/A  Member aged 45 (life expectancy at 65) 23.2 25.4 N/A N/A N/A N/A The  assumptions used by the actuaries are the best estimates chosen from a range  of possible actuarial assumptions, which, due to the timescale covered, may  not necessarily be borne out in practice. |
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|  | 128 Amec Foster  Wheeler Annual report and accounts 2014 14 Retirement benefit assets and  liabilities continued Defined benefit schemes continued The amounts  recognised in the balance sheet are as follows: 31 December 2014 £m 31  December 2013 £m 31 December 2012 £m Retirement benefit assets 102 102 86  Retirement benefit liabilities (188) (62) (93) Retirement benefit net  (liability)/asset (86) 40 (7) The retirement benefit net (liability)/asset is  analysed as follows: 31 December 2014 £m 31 December 2013 £m 31 December 2012  £m The AMEC Staff and the AMEC Executive pension scheme 65 102 86 The Foster  Wheeler Pension Plan 37 – – The Foster Wheeler Inc. Salaried Employees  Pension Plan (57) – – Other smaller pension schemes (131) (62) (93) (86) 40  (7) The retirement benefit liabilities of £188m (2013: £62m; 2012: £93m)  reflect primarily the deficits on the smaller overseas schemes. The major  categories of scheme assets as a percentage of total scheme assets are as  follows: 31 December 2014 % 31 December 2013 % 31 December 2012 % Equities  35.4 41.3 39.8 Bonds (including gilts) 52.6 47.6 51.8 Property 8.4 8.8 8.2 Other  3.6 2.3 0.2 100.0 100.0 100.0 The equities and bonds as listed above are  predominantly quoted investments. There is a small investment in privately  held pooled fund investments and the property/other investments are unquoted.  The amounts recognised in the income statement are as follows: 2014 £m 2013  £m 2012 £m Current service cost and administrative expenses 33 33 29 Interest  cost 84 72 75 Interest income (86) (73) (72) Total amount recognised in the  income statement and included within staff costs (note 6) 31 32 32 Settlement  gain (3) – (4) Total amount recognised in the income statement 28 32 28 The  total amount is recognised in the income statement as follows: Cost of sales  20 19 15 Administrative expenses 10 14 10 Net financing (income)/expense (2)  (1) 3 Total amount recognised in the income statement 28 32 28 Notes to the  consolidated accounts continued |
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|  | 129 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 14 Retirement benefit assets and liabilities  continued Defined benefit schemes continued Changes in the present value of  the defined benefit liability are as follows: 2014 £m 2013 £m 2012 £m As at 1  January 1,743 1,652 1,618 Exchange and other movements 3 (14) (6) Acquired  through business combinations 898 – – Current service cost 29 31 29 Interest  cost 84 72 75 Plan participants’ contributions 12 12 12 Actuarial charges  arising from changes in financial assumptions 278 58 8 Actuarial  (gains)/charges arising from changes in demographic assumptions (19) 7 –  Settlements (12) (4) (13) Benefits paid (85) (71) (71) As at 31 December  2,931 1,743 1,652 The defined benefit obligation can be allocated to the  plans’ participants as follows: 2014 % 2013 % 2012 % Active plan participants  22.0 25.2 23.4 Deferred plan participants 31.3 33.8 32.5 Retirees 46.7 41.0  44.1 100.0 100.0 100.0 The weighted average duration of the defined benefit  obligation at the end of the reporting period is 17 years. Changes in the  fair value of scheme assets are as follows: 2014 £m 2013 £m 2012 £m As at 1  January 1,783 1,645 1,569 Exchange and other movements 3 (8) (3) Acquired  through business combinations 826 – – Interest income 86 73 72 Actuarial  gains 201 105 45 Employer contributions 32 29 30 Plan participants’  contributions 12 12 12 Administrative expenses (4) (2) – Settlements (9) –  (9) Benefits paid (85) (71) (71) As at 31 December 2,845 1,783 1,645 |
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|  | 130 Amec Foster  Wheeler Annual report and accounts 2014 14 Retirement benefit assets and  liabilities continued Defined benefit schemes continued The movement in the  scheme net (liability)/asset during the year is as follows: 2014 £m 2013 £m  2012 £m Scheme net asset/(liability) as at 1 January 40 (7) (49) Exchange and  other movements – 6 3 Acquired through business combinations (72) – – Total  charge as per note 6 (31) (32) (32) Employer contributions 32 29 30  Settlements 3 4 4 Actuarial (losses)/gains recognised in other comprehensive  income (58) 40 37 Scheme net (liability)/asset as at 31 December (86) 40 (7)  The impact on the defined benefit obligation of the principal pension schemes  of changes in the most significant assumptions as at 31 December 2014 is  shown below: The AMEC Staff and the AMEC Executive pension schemes £m The  Foster Wheeler Pension Plan £m The Foster Wheeler Inc. Salaried Employees  Pension Plan £m Discount rate -10 bps (32) (9) (3) +10 bps 32 9 3 Inflation  -10 bps 26 6 – +10 bps (26) (6) – Salary increase -10 bps 4 1 – +10 bps (4)  (1) – Mortality +1 year (61) (13) (10) - 1 year 61 15 10 The sensitivity  analysis above is based on a method that extrapolates the impact on the  defined benefit obligation of reasonable changes in key assumptions occurring  as at 31 December 2014. The defined benefit obligations of the other benefit  schemes are significantly lower than those of the principal defined benefit  schemes. Sensitivity analysis of reasonable changes in the key assumptions as  at 31 December did not indicate any significant changes to the defined  benefit obligations of those schemes. Expected benefit payments from the  defined benefit plans in future years are as follows: £m Year 1 126 Year 2  128 Year 3 132 Year 4 136 Year 5 140 Next five years 751 1,413 The Group  expects to contribute £33m to its defined benefit pension schemes in 2015. This  includes special contributions of £6m. Notes to the consolidated accounts  continued |
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|  | 131 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 15 Deferred tax assets and liabilities Deferred  tax assets and liabilities are attributable to the following: Recognised  deferred tax assets and liabilities Assets Liabilities 31 December 2014 £m 31  December 2013 £m 31 December 2014 £m 31 December 2013 £m Property, plant and  equipment 26 15 (14) (2) Intangible assets 3 – (233) (33) Retirement benefits  68 8 (46) (20) Derivative financial instruments 2 1 – (1) Provisions 118 46 –  – Employee share schemes 1 3 – – Other items 5 13 (27) (18) Tax losses  carried forward 20 3 – – Tax credits carried forward 2 – – – Deferred tax  assets/(liabilities) 245 89 (320) (74) Offset of deferred tax assets and  liabilities relating to income tax levied by the same taxation authority  (184) (54) 184 54 Net deferred tax assets/(liabilities) 61 35 (136) (20) As  at 1 January 2014 £m Exchange and other movements £m Acquisitions £m  Recognised in income £m Recognised in equity £m As at 31 December 2014 £m  Property, plant and equipment 13 – (5) 4 – 12 Intangible assets (33) (3)  (202) 8 – (230) Retirement benefits (12) – 28 (5) 11 22 Derivative financial  instruments – – 2 – – 2 Provisions 46 2 72 (2) – 118 Employee share schemes 3  – – (2) – 1 Other items (5) – (19) 2 – (22) Tax losses carried forward 3 – 6  11 – 20 Tax credits carried forward – – 1 1 – 2 15 (1) (117) 17 11 (75) As at  1 January 2013 £m Exchange and other movements £m Acquisitions £m Recognised  in income £m Recognised in equity £m As at 31 December 2013 £m Property,  plant and equipment 10 (1) – 4 – 13 Intangible assets (48) 1 – 14 – (33)  Retirement benefits (11) (2) – 21 (20) (12) Provisions 60 (2) – (12) – 46  Employee share schemes 4 – – – (1) 3 Other items 3 2 – (10) – (5) Tax losses  carried forward 15 (1) – (11) – 3 33 (3) – 6 (21) 15 The deferred tax credit  of £17m (2013: £6m) recognised in income consists of a credit of £16m (2013:  £nil) relating to continuing operations and a £1m credit (2013: £6m) in  respect of discontinued operations. |
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|  | 132 Amec Foster  Wheeler Annual report and accounts 2014 15 Deferred tax assets and  liabilities continued Factors affecting the tax charge in future years There  are a number of factors that may affect the Group’s future tax charge  including the resolution of open issues with tax authorities, corporate  acquisitions and disposals, the use of brought-forward losses and changes in  tax legislation and tax rates. Unrecognised deferred tax assets Deferred tax  assets have not been recognised in respect of the following items: 31  December 2014 £m 31 December 2013 £m Deductible temporary differences 259 33  Tax losses 103 20 362 53 In addition, claims have been made to HM Revenue  & Customs (HMRC) to offset tax losses of up to £79m against the Group’s  UK taxable profits. These losses were generated in a legacy German business  in accounting periods up to 31 December 2002. If successful, the claims will  result in a refund of UK corporation tax. The amount and availability of the  refund depends on a number of factors which are currently being discussed  with HMRC. This potential refund is not included as an asset in the accounts.  As at 31 December 2014 the expiry dates of unrecognised deferred tax assets  carried forward are as follows: Tax losses £m Deductible temporary  differences £m Total £m Expiring within 5 years 5 28 33 Expiring within 6-10  years 2 55 57 Expiring within 11-20 years 51 – 51 Unlimited 45 176 221 103  259 362 Deferred tax assets have not been recognised in respect of these  items because it is not probable that future taxable profits will be  available against which the Group can utilise these assets. Unrecognised  deferred tax liabilities No deferred tax liability has been recognised in  respect of £1,440m (2013: £355m) of unremitted earnings of subsidiaries and  joint ventures because the Group is in a position to control the timing of  the reversal of the temporary difference and it is not probable that such  differences will reverse in the foreseeable future. The amount of  unrecognised deferred tax liabilities in respect of these unremitted earnings  is estimated to be £29m (2013: £16m). 16 Inventories 31 December 2014 £m 31  December 2013 £m Raw materials and consumables 14 – Development land and work  in progress – 3 14 3 Notes to the consolidated accounts continued |
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|  | 133 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 17 Current trade and other receivables 31  December 2014 £m 31 December 2013 £m Amounts expected to be recovered within  one year Gross amounts due from customers 544 385 Trade receivables 784 471  Amounts owed by joint ventures 20 22 Other receivables 63 18 Prepayments and  accrued income 60 56 Asbestos related insurance recovery debtor (note 21) 13  – 1,484 952 Amounts expected to be recovered after more than one year Trade  receivables 6 2 Amounts owed by joint ventures 1 2 Other receivables 15 – 22  4 1,506 956 Trade receivables expected to be recovered within one year  include retentions of £56m (2013: £34m) relating to contracts in progress.  Trade receivables expected to be recovered after more than one year include  retentions of £5m (2013: £2m) relating to contracts in progress. The  aggregate amount of costs incurred plus recognised profits (less recognised  losses) for all long-term contracts in progress for continuing businesses at  the balance sheet date was £16,082m (2013: £4,960m). Trade receivables,  amounts owed by joint ventures and other receivables are classified as loans  and receivables. 18 Current trade and other payables 31 December 2014 £m 31  December 2013 £m Amounts expected to be settled within one year Trade  payables 597 449 Gross amounts due to customers 361 76 Other taxation and  social security costs 37 59 Other payables 139 134 Accruals 236 75 1,370 793  Amounts expected to be settled after more than one year Trade payables 1 –  Gross amounts due to customers 5 – Other payables 4 3 Accruals 1 5 11 8 1,381  801 Gross amounts due to customers include advances received of £nil (2013:  £3m). Trade payables, other payables and accruals are classified as other  financial liabilities. |
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|  | 134 Amec Foster  Wheeler Annual report and accounts 2014 19 Capital and financial risk  management Capital management The objective of the Group’s capital management  is to ensure that it has a strong financial position from which to grow the  business and to maximise shareholder value. The appropriate capital structure  for the Group comprises of a mix of debt and equity. The mix is determined by  considering business profile and strategy, financial policies and  availability and cost of funding. Following the acquisition of Foster  Wheeler, the Group is currently in a net debt position. The long-term net debt  is targeted to be no more than two times trading profit. The Group may exceed  this operating parameter should the business profile require it. However, it  is expected that any increases would be temporary given the net operational  cash flows of the Group. The Group has committed banking facilities of  £1,863m (2013: £477m). This consists of a $56m (£37m) project debt and a  £377m multi-currency revolving facility that was taken out on 18 July 2012.  The facility is committed for five years and is available for general  corporate purposes. In 2014, the Group entered into acquisition facilities  totalling $2,260m (£1,449m). This comprises of the following: X $250m (£160m)  bridge to cash facility maturing August 2015; X $830m (£532m) bridge facility  which matured February 2015 with two further six month extensions at the  Group’s option (see below); X $830m (£532m) term loan maturing in equal  instalments in 2017, 2018 and 2019; and X $350m (£225m) revolving credit  facility maturing May 2016. The Group extended the $830m (£532m) bridge  facility for 6 months in February 2015 and it is the intention to refinance  this facility in the capital markets during 2015. As at 31 December 2013, the  Group had a £100m Sterling term loan. This was settled in full during the  year. As at 31 December 2014, £1,267m (2013: £120m) of the loans and  facilities were utilised by way of debt and £156m (2013: £nil) was utilised  by way of Letter of Credit. As at 31 December 2014, the undrawn portion of  the Group’s committed facilities was £440m. In February 2012, the board  approved a share buyback programme of £400m. A total of 37 million shares  were purchased under this programme. During 2012 and 2013, this included the  use of forward share purchase contracts through close periods. The Group completed  the buyback programme on 8 February 2013 and no further purchases took place  during 2014. In November 2014, as part of the acquisition of Foster Wheeler  AG, the Group issued 85 million of ordinary shares. This increased share  capital by £42m and generated a share premium of £877m. No changes were made  to the objectives, policies or processes for managing capital during 2014 or  2013. Financial risk management The principal financial risks to which the  Group is exposed are: foreign currency exchange risk; funding and liquidity  risk; counterparty credit risk; and interest rate risk. The board has  approved policies for the management of these risks which are reviewed  annually. The Group’s treasury department manages funding, liquidity, credit  risk and risks arising from movements in interest and foreign currency rates  within a framework of policies and guidelines approved by the board, most  recently in October 2014. The treasury department does not operate as a  profit centre and the undertaking of speculative transactions is not  permitted. Notes to the consolidated accounts continued |
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|  | 135 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 19 Capital and financial risk management  continued Foreign currency exchange risk The Group publishes its consolidated  accounts in Sterling. The majority of the Group’s trading income is  denominated in the local currency of the business operations which provides a  natural hedge against the currency of its cost base. Where commercial  contracts are undertaken which are denominated in foreign currencies, the Group  seeks to mitigate the foreign exchange risk, when the cash flow giving rise  to such exposure becomes certain or highly probable. This is achieved through  the use of forward currency arrangements, which may include the purchase of  currency options. There are currently no material transactional exposures  which have been identified and remain unhedged. The Group has no reason to  believe that any outstanding forward contract will not be able to be settled  from the underlying commercial transactions. A significant portion of the  Group’s earnings is generated in non-Sterling currencies. Such overseas  profits are translated into Sterling at the average exchange rate prevailing  throughout the year. There is currently no hedging in place for profits  generated in non-Sterling currencies but the impact on Group profits is  monitored on an ongoing basis. In addition, the Group has various assets  denominated in foreign currencies, principally US Dollars, Canadian Dollars  and Euros. With the introduction of the acquisition facilities detailed above  the Group hedges translation exposure, wherever possible, by matching the  currency of its borrowing (either directly or via derivatives) to the  currency of its net assets and future free cash flow. As a result in 2014,  the Group has designated a series of derivatives and financial instruments as  hedging instruments in net investment hedge relationships. In specific  circumstances, for example the planned repatriation of foreign assets, the  Group may from time to time enter into additional net investment hedges to  manage foreign exchange risks. The Group applies hedge accounting in respect  of transactions entered into to manage the cash flow exposures of its  borrowings. Forward foreign exchange contracts and cross currency interest  rate swap contracts are held to manage the cash flow exposures of a portion  of borrowings denominated in foreign currencies and are designated as cash  flow hedges. Based on the Group’s net debt as at 31 December 2014, if  Sterling were to weaken against all other currencies by 10%, the Group’s net  debt would increase by £44m (2013: £26m increase in net cash). This  represents a £134m increase in foreign currency borrowings (2013: £nil), a  £47m increase in derivative assets designated as cash flow hedges of Group  borrowings (2013: £nil) and a £43m increase in foreign currency cash and cash  equivalents (2013: £26m). If Sterling were to weaken against all other  currencies by 10%, then the fair value of forward foreign exchange contracts  and cross currency interest rate swaps, other than those designated as cash  flow hedges of foreign currency borrowings, as at 31 December 2014 would  decrease by £57m (2013: £8m). Movements in the fair value of forward foreign  exchange contracts and cross currency interest rate swaps would be recognised  in other comprehensive income and accumulated in the hedging reserve or  translation reserve. Hedging of foreign currency exchange risk – cash flow  hedges The Group looks to mitigate the foreign exchange risk arising on  foreign currency borrowings and where contracts are awarded in, or involve  costs in, non-local currency. Forward foreign exchange contracts and foreign  exchange swaps are used for this purpose and are designated as cash flow  hedges. The notional contract amount, carrying amount and fair values of  forward contracts and swaps designated as cash flow hedges are as follows:  2014 Notional contract amount £m 2013 Notional contract amount £m 2014  Carrying amount and fair value £m 2013 Carrying amount and fair value £m  Non-current assets – cash flow hedges of foreign currency borrowings 105 – –  – Total non-current assets 105 – – – Current assets – cash flow hedges of  contracts in foreign currencies 15 56 – 3 Current assets – cash flow hedges  of foreign currency borrowings 318 – 1 – Total current assets 333 56 1 3  Current liabilities – cash flow hedges of contracts in foreign currencies 44  12 (1) – Total current liabilities 44 12 (1) – 482 68 – 3 |
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|  | 136 Amec Foster  Wheeler Annual report and accounts 2014 19 Capital and financial risk  management continued The following tables indicate the periods in which the  cash flows associated with the forward foreign exchange contracts designated  as cash flow hedges are expected to occur and the periods in which they are  expected to impact profit or loss: 2014 Carrying amount £m Expected cash  flows £m 12 months or less £m 1 to 2 years £m 2 to 5 years £m Forward  exchange contracts Assets 1 438 332 – 106 Liabilities (1) 44 44 – – – 482 376  – 106 Hedging of foreign currency exchange risk – cash flow hedges 2013 Carrying  amount £m Expected cash flows £m 12 months or less £m 1 to 2 years £m 2 to 5  years £m Forward exchange contracts Assets 3 56 55 1 – Liabilities – 12 12 –  – 3 68 67 1 – There was no charge for ineffectiveness recognised in either  2014 or 2013. Hedging of foreign currency exchange risk – fair value through  income statement Certain forward foreign exchange contracts and foreign  exchange swaps are not designated as cash flow hedges and changes in their  fair value are recognised through the income statement. The notional contract  amount, carrying amount and fair values of these forward contracts and swaps  are as follows: 2014 Notional contract amount £m 2013 Notional contract  amount £m 2014 Carrying amount and fair value £m 2013 Carrying amount and  fair value £m Current assets 229 36 2 2 Current liabilities 422 13 (12) – 651  49 (10) 2 Hedging of foreign currency exchange risk – net investment hedges  The Group has forward foreign exchange contracts which have been designated  as hedges of the net investments in core subsidiaries in Canada, the US and  Europe. The notional contract amount, carrying amount and fair values of  swaps designated as net investment hedges are as follows: 2014 Notional  contract amount £m 2013 Notional contract amount £m 2014 Carrying amount and  fair value £m 2013 Carrying amount and fair value £m Non-current assets 105 –  2 – Current assets 318 – 8 – 423 – 10 – A net foreign exchange loss for the  year of £4m (2013: £1m) was recognised in the translation reserve in respect  of these forward foreign exchange contracts and currency interest rate swaps.  Notes to the consolidated accounts continued |
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|  | 137 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 19 Capital and financial risk management  continued Other financial derivative assets and liabilities The Group has  other financial derivative assets of £1m (2013: £1m) and financial derivative  liabilities of £6m (2013: £1m). Funding and liquidity risk The Group’s policy  aims to ensure the constant availability of an appropriate amount of funding  to meet both current and future forecast requirements consistent with the  Group’s budget and strategic plans. The Group will finance operations and  growth from its existing cash resources and the £440m undrawn portion of the  Group’s committed banking facilities as at 31 December 2014. The requirement  to enter into additional external facilities has been kept under review  during the year. This includes discussions with the Group’s main relationship  banks to ensure additional bilateral lending capacity is available.  Appropriate facilities will be maintained to meet ongoing requirements for  bank guarantees and letters of credit. Counterparty credit risk The Group is  exposed to credit risk to the extent of non-payment by either its customers  or the counterparties of its financial instruments. The effective monitoring  and controlling of credit risk is a key component of the Group’s risk  management activities. The maximum credit risk exposure on derivatives at 31  December 2014 was £10m, being the total net debit fair values per derivative  counterparty on forward foreign exchange contracts, currency swaps and  interest rate swaps. A 60 basis point deterioration in the credit quality of  the Group’s derivative counterparties would have no impact on the Group’s  2014 income statement (2013 £nil).Credit risks arising from treasury  activities are managed by a central treasury function in accordance with the  board approved treasury policy. The objective of the policy is to diversify  and minimise the Group’s exposure to credit risk from its treasury activities  by ensuring that surplus funds are placed with a diversified range of 25 to  30 mainstream banks and with each counterparty up to a pre-approved limit.  These limits are set at prudent levels by the board and are based primarily  on credit ratings set by Moody’s, Standard & Poor’s and Fitch. Credit  ratings are monitored continually by the Group treasury department. The  maximum credit risk exposure on cash and cash equivalents and bank deposits  (more than three months) at 31 December 2014 was £516m (2013: £241m). The  Group treasury department monitors counterparty exposure on a global basis to  avoid an over-concentration of exposure to any one counterparty. The credit  risk associated with customers is considered as part of each tender review  process and is addressed initially through contract payment terms. Where  appropriate, payment security is sought. Credit control practices are applied  thereafter during the project execution phase. A right to interest and  suspension is normally sought in all contracts. The ageing of trade  receivables at the year end was: Gross receivables 31 December 2014 £m  Impairment 31 December 2014 £m Gross receivables 31 December 2013 £m  Impairment 31 December 2013 £m Not past due 402 – 234 – Past due 0 to 30 days  163 – 107 – Past due 31 to 120 days 99 – 79 (1) Past due 121 to 365 days 46  (6) 28 (10) More than one year 33 (8) 5 (5) 743 (14) 453 (16) The above  analysis excludes retentions relating to contracts in progress of £56m (2013:  £34m) expected to be recovered within one year and £5m (2013: £2m) expected  to be recovered after one year. Net receivables as at 31 December 2014  include £25m (2013: £nil) in respect of amounts overdue by more than one  year. |
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|  | 138 Amec Foster  Wheeler Annual report and accounts 2014 19 Capital and financial risk  management continued Counterparty credit risk continued The movement in the  allowance for impairment in respect of trade receivables during the year was  as follows: 2014 £m 2013 £m As at 1 January (16) (15) Increase in impairment  allowance (7) (3) Decrease in impairment allowance 9 2 As at 31 December (14)  (16) Based on past experience, the Group believes that no material impairment  allowance is necessary in respect of trade receivables not past due. Trade  receivable exposures are typically with large companies and government-backed  organisations and the credit ratings of these organisations are monitored.  Credit risks are minimised through the use of letters of credit, parent  company guarantees, insurance instruments and forward funding where  achievable. The Group’s most significant customer in 2014 accounted for  around 8% (2013: 8%) of continuing revenues, and around 4% (2013: 4%) of  current trade and other receivables. The revenue was generated in the  Americas. Interest rate risk The £377m multi-currency revolving credit  facility is subject to an interest rate of LIBOR plus a margin depending on  leverage. The $250m (£160m) bridge to cash facility is subject to an interest  rate of LIBOR plus a margin. The $830m (£532m) bridge facility is subject to  an interest rate of LIBOR plus a margin which increases over time. The $830m  (£532m) term loan is subject to an interest rate of LIBOR plus a margin  depending on leverage. The $350m (£225m) revolving credit facility is subject  to an interest rate of LIBOR plus a margin. The $56m (£37m) project debt is  subject to a mixture of fixed and variable interest rates. $49m (£31m) is  subject to an interest rate of EURIBOR plus a margin. The remainder is  subject to fixed rates of interest. The Group is exposed to interest rate  risk on cash and borrowings. Cash is viewed as temporary with any longer term  surplus used to repay credit facilities. When required the Group uses  interest rate swaps and cross currency interest rate swaps to meet its  objective of protecting borrowing costs within parameters set by the Board.  The Group’s policy is to keep between 30% and 70% of its borrowings at fixed  rates of interest. Movements in the fair value of interest rates swaps and  cross currency interest rate swaps that are designated as cash flow hedges of  the Group’s borrowings resulting from changes in market interest rates are  recognised in other comprehensive income and accumulated in the hedging  reserve with the fair value recorded in the balance sheet. At 31 December  2014, after taking into account the effect of interest rate swaps and cross  currency interest rate swaps, approximately 23% of the Group’s borrowings are  at a fixed rate of interest (2013: nil). The year-end position which was  below the lower threshold has been rectified in early 2015. Based on the  Group’s gross borrowings as at 31 December 2014, if interest rates were to  increase by 100 basis points in all currencies then the annual net interest  charge would increase by £9m (2013: £1m). A decrease in interest rates by 100  basis points in all currencies would have an equal but opposite effect. Notes  to the consolidated accounts continued |
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|  | 139 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 19 Capital and financial risk management  continued Interest rate risk – contractual maturity and effective interest  rates In respect of interest-earning financial assets and interest-bearing  financial liabilities, the following table indicates their effective interest  rates at the balance sheet date and the periods in which they mature: 2014  Effective interest rate % Total £m 6 months or less £m 6 to 12 months £m 1 to  2 years £m 2 to 5 years £m Over 5 years £m Bank deposits (more than three  months) 0.80 21 18 – 2 1 – Cash and cash equivalents (excluding bank  overdrafts) 1.24 495 495 – – – – Fees capitalised against bank facilities – 9  4 1 2 2 – Bank overdrafts 1.00 – – – – – – Bank loans 1.49 (1,267) (633) (73)  (5) (545) (11) Finance leases 6.54 (61) (3) (6) (9) (26) (17) (803) (119)  (78) (10) (568) (28) 2013 Effective interest rate % Total £m 6 months or less  £m 6 to 12 months £m 1 to 2 years £m 2 to 5 years £m Bank deposits (more than  three months) 0.56 18 13 3 1 1 Cash and cash equivalents (excluding bank  overdrafts) 0.82 232 232 – – – Bank overdrafts 0.21 (9) (9) – – – Bank loans  1.25 (120) (120) – – – 121 116 3 1 1 Interest payments of £11m are expected  to be paid within one year, £13m between one and two years, £22m between two  and five years and £1m over five years. Group borrowing The Group’s bank  overdrafts are all denominated in US Dollars (2013: US Dollars) and the bank  loans are denominated in Sterling and US Dollars (2013: Sterling). All  covenants attached to borrowings have been complied with throughout the  current and prior years. Fair values Fair values are determined using  observable market prices (level 2 as defined by IFRS 13 ‘Fair Value  Measurement’) as follows: X The fair value of forward foreign exchange  contracts is estimated by discounting the difference between the contractual  forward price and the current forward price for the residual maturity of the  contract using a risk-free interest rate; and X The fair value of interest  rate swaps and cross currency interest rate swaps are estimated by  discounting estimated future cash flows based on the terms and maturity of  each contract and using market rates. All derivative fair values are verified  by comparison to valuations provided by the derivative counterparty banks.  There are no material credit valuation adjustments (CVA) or debit valuation  adjustments (DVA) required on the derivatives outstanding at 31 December  2014. |
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|  | 140 Amec Foster  Wheeler Annual report and accounts 2014 20 Other non-current receivables and  payables Other non-current receivables 2014 £m 2013 £m Asbestos related  insurance recovery debtor 90 12 Indemnities receivable 13 12 Insurance  receivables 4 – Lease incentives 28 – Other non-current receivables 14 – 149  24 Other non-current payables 2014 £m 2013 £m Deferred consideration on  acquisition 2 3 Lease incentives 7 8 Other payables 35 – Other post  employment benefits 11 – Other non-current accruals 28 – 83 11 21 Provisions  Asbestosrelated litigation £m Project litigation £m Obligations relating to  disposed businesses £m Property related provisions £m Other £m Total £m As at  1 January 2014 12 37 71 8 35 163 Exchange and other movements 3 3 (1) (1) – 4  Acquired through business combinations 347 100 – 82 4 533 Transfer out to  trade payables – (13) – – – (13) Utilised (3) (1) (3) (1) (11) (19) Provided  4 2 20 – 4 30 Released – (8) – (3) – (11) Change in discount rate 8 – – – – 8  Unwinding of discount 1 – – – – 1 As at 31 December 2014 372 120 87 85 32 696  Notes to the consolidated accounts continued |
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|  | 141 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 21 Provisions continued Asbestos-related  litigation Certain of the Company’s subsidiaries in the US and the UK are  defendants in numerous asbestos-related lawsuits and out-of-court informal  claims pending in the US and the UK. Plaintiffs claim damages for personal  injury alleged to have arisen from exposure to asbestos primarily in  connection with equipment allegedly manufactured by certain of our  subsidiaries during the 1970s or earlier. We expect that these subsidiaries  will be named as defendants in additional and/or similar suits and that new  claims will be filed in the future. Whilst some of these claims have been and  are expected to be made in the UK, the overwhelming majority have been and  are expected to be made in the US. We assumed the majority of our  asbestos-related liabilities when we acquired Foster Wheeler in November  2014. Management worked with independent asbestos valuation experts, to  measure the asbestos-related liabilities assumed. Asbestos-related  liabilities recognised by the Group include estimates of indemnity amounts  and defence costs expected to be incurred in each year in the period to 2050,  beyond which time management expects that there will no longer be a  significant number of open claims. Management’s estimates were based on the  following information and/or assumptions: the number of open claims, the  forecasted number of future claims, the estimated average cost per claim by  disease type – mesothelioma, lung cancer and non-malignancies, claim filings  which result in no monetary payments (the ‘zero pay rate’), as well as other  factors. Over the last several years, certain of our subsidiaries have  entered into settlement agreements calling for insurers to make lump-sum  payments, as well as payments over time, for use by our subsidiaries to fund  asbestos-related indemnity and defence costs, and, in certain cases, for  reimbursement for portions of out-of-pocket costs incurred. Asbestos-related  insurance recoveries under executed settlement agreements are recognised in trade  and other receivables together with our best estimate of actual and probable  insurance recoveries relating to our liability for pending and estimated  future asbestos claims in the period to 2050. Our actual insurance recoveries  may be limited by future insolvencies among our insurers. We do not recognise  insurance recoveries due from currently insolvent insurers unless they are  subject to court-approved settlement in liquidation proceedings. We have  discounted the expected future cash flows with respect to the  asbestos-related liabilities and the expected insurance recoveries using  discount rates determined by reference to appropriate risk-free market  interest rates. Asbestos-related liabilities and assets recognised on the  Group’s balance sheet were as follows: 2014 2013 US £m UK £m Total £m US £m  UK £m Total £m Asbestos-related provision Gross provision 446 37 483 – 12 12  Effect of discounting (76) – (76) – – – Net provision1 370 37 407 – 12 12  Insurance recoveries Gross recoveries (75) (36) (111) – (12) (12) Effect of  discounting 4 – 4 – – – Net recoveries (71) (36) (107) – (12) (12) Net  asbestos-related liabilities 299 1 300 – – – 1 The net asbestos provision is  made up of £372m included in provisions and £35m in respect of asbestos  provisions included in trade and other payables. Estimation of  asbestos-related liabilities and insurance recoveries is subject to a number  of uncertainties that may result in significant changes in the current  estimates. Among these are uncertainties as to the ultimate number and type  of claims filed, the amounts of claim costs, the impact of bankruptcies of  other companies with asbestos claims, uncertainties surrounding the  litigation process from jurisdiction to jurisdiction and from case to case,  as well as potential legislative changes. Fluctuations in market interest  rates could cause significant changes in the discounted amount of the  asbestos-related liabilities and insurance recoveries. |
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|  | 142 Amec Foster  Wheeler Annual report and accounts 2014 21 Provisions continued Project  litigation As described in note 26, the Group is party to litigation  involving clients and sub-contractors arising out of project contracts.  Management has taken internal and external legal advice in considering known  or reasonably likely legal claims and actions by and against the Group. Where  a known or likely claim or action is identified, management carefully  assesses the likelihood of success of the claim or action. Generally, a  provision is recognised only in respect of those claims or actions that  management considers are probable of success. Additionally, however, the  Group recognises provisions for known or likely claims against an acquired  business if, at the acquisition date, it is possible that the claim or action  will be successful and its amount can be reliably estimated. Provision is  made for management’s best estimate of the future legal costs to be incurred  in defending each claim or action and of the likely settlement costs and/or  damages to be awarded for those claims and actions that management considers  are likely to be successful. Due to the inherent commercial, legal and  technical uncertainties underlying the estimation of our project claims, the  amounts ultimately paid or realised by the Group could differ materially from  the amounts, if any, that are recognised in the financial statements. As at  31 December 2014, there were two significant ongoing disputes. Both of these  disputes involve Foster Wheeler and were ongoing at the acquisition date.  Accordingly, in measuring Foster Wheeler’s identifiable assets and  liabilities at the acquisition date, management established provisions in  respect of these disputes and made appropriate reductions to the carrying  amount of the related receivables. Power Plant Arbitration – US Foster  Wheeler is involved in arbitration arising from its role in the construction  of a power plant in West Virginia, US. Foster Wheeler contracted with its  client, Longview Power LLC (‘Longview’), the owner of the power plant, to  supply the steam generation equipment. Separate contracts existed between  Longview and Siemens Energy, Inc. (‘Siemens’) for the supply of the turbine,  electricity generator and other plant equipment and with Kvaerner North  American Construction Inc. (Kvaerner) for the erection of the plant.  Beginning in 2011, various claims and counterclaims were made between Foster  Wheeler, Kvaerner, Siemens and Longview. In February 2014, Foster Wheeler  reached a partial settlement with Longview. In December 2014, various  settlement agreements were entered into involving the parties, leaving the  claims between Foster Wheeler and Kvaerner the only claims to be resolved.  Kvaerner’s total claims against Foster Wheeler amount to approximately  US$190m in relation to compensation for alleged delays, disruptions,  inefficiencies and extra work associated with the construction of the plant  allegedly caused by Foster Wheeler’s performance under its steam generation  equipment supply contract. Foster Wheeler has claimed approximately US$26m  from Kvaerner in relation to claims for extra work, delays, scope disputes,  and improperly assessed delay liquidated damages, as well as the cost to  perform certain ongoing rehabilitation work on the steam generation equipment  due to erection failures by Kvaerner. Pursuant to the settlement agreements reached  in December 2014, Foster Wheeler received from Kvaerner a parental guarantee  securing its claims against Kvaerner. Arbitration of the dispute between  Foster Wheeler and Kvaerner is being conducted by the American Arbitration  Association. We intend to vigorously defend the claims against us in the  arbitration and pursue our claims against Kvaerner. Management considers that  the arbitration process is likely to be concluded during 2015. Refinery  Project Arbitration – India In November 2012, Foster Wheeler commenced  arbitration in India against Indian Oil Corporation Limited (‘IOCL’) seeking  collection of unpaid invoices arising from services performed on a  reimbursable basis for IOCL in connection with the construction of an oil  refinery plant in north-eastern India. IOCL rejected the claims and has  submitted counterclaims totalling approximately 70 billion Indian rupees for  damages, including claims for revenue loss and loss of tax benefits due to  delay in the execution of the project. IOCL has also withheld payment of  Foster Wheeler invoices on account of delay liquidated damages. We strongly  dispute IOCL’s claims. Any liability for delay liquidated damages is capped  under the contract at a specified percentage of the contract value, currently  equivalent to approximately £12m, an amount already retained by IOCL.  Moreover, the contract also excludes liability for special damages and  consequential damages, including lost profits or product, and contains an  overall cap on liability for claims in the aggregate of up to a specified  percentage of the contract value, currently equivalent to approximately £29m.  An arbitration panel was formed in 2013 and held a number of hearings during  2014. A partial award was made to Foster Wheeler in March 2014, but IOCL have  petitioned the court for its annulment. We will continue to defend  strenuously the claims made by IOCL and pursue the collection of unpaid  invoices. As the project is still in execution, the unpaid amount that we are  seeking to collect has increased to the equivalent of approximately £54m and  may increase further should IOCL continue to withhold amounts from our  invoices. Management have made appropriate allowances against these  receivables. Notes to the consolidated accounts continued |
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|  | 143 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 21 Provisions continued Indemnities and  retained obligations As described in note 26, the Group agreed to indemnify  certain third parties relating to businesses and/or assets that were  previously owned by the Group and were sold to them. As at 31 December 2014,  we recognised indemnity provisions totalling £87m (2013: £71m). Indemnity  provisions principally relate to the indemnification of the purchasers of  SPIE in 2006, and the Built Environment and other peripheral businesses that  were sold in 2007. During 2014, the Group recognised additional indemnity  provisions of £20m in relation to businesses sold in previous years, which  included a provision of £11m in respect of a new claim received relating to a  contract completed by the Built Environment business. Certain of the  jurisdictions in which the Group operates, in particular the US and the EU,  have environmental laws under which current and past owners or operators of  property may be jointly and severally liable for the costs of removal or  remediation of toxic or hazardous substances on or under their property,  regardless of whether such materials were released in violation of law and  whether the operator or owner knew of, or was responsible for, the presence  of such substances. Largely as a consequence of the acquisition of Foster  Wheeler, the Group currently owns and operates, or owned and operated,  industrial facilities. It is likely that, as a result of the Group’s current  or former operations, hazardous substances have affected the property on  which those facilities are or were situated. The Group also have received and  may continue to receive claims pursuant to indemnity obligations from the  present owners of facilities we have transferred, which claims may require us  to incur costs for investigation and/or remediation. As at 31 December 2014,  the Group held provisions totalling £33m (2013: £nil) for the estimated  future environmental clean-up costs in relation to industrial facilities that  it no longer operates. Whilst the timing of the related cash flows is  typically uncertain, the Group expect that certain of our remediation  obligations may continue for up to 60 years. Property-related provisions  Property-related provisions comprise provisions for onerous leases, certain  leases held by acquired businesses and dilapidation of leasehold buildings.  On the acquisition of a business, provisions are recognised to the extent  that the terms of any property leases held by the acquired business are  unfavourable relative to prevailing market terms. During 2014, the Group  recognised provisions for unfavourable leases totalling £65m on the  acquisition of Foster Wheeler, which are expected to be utilised by 2024. The  Group has discounted the provision using discount rates determined by  reference to appropriate risk-free market interest rates. Other provisions  Other provisions include £2m (2013: £2m) in respect of the Group’s legal and  constructive obligations to fund loss-making joint ventures and to meet its  share of certain of their obligations, and insurance provisions of £28m  (2013: £27m) relating to the potential liabilities in the Group’s captive  insurance entity and provisions in relation to risks associated with  insurance claims. These potential liabilities and risks relate predominantly  to industrial disease of former employees. |
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|  | 144 Amec Foster  Wheeler Annual report and accounts 2014 22 Share capital and reserves  Movements in share capital and reserves are shown in the consolidated  statement of changes in equity on pages 99 to 101. Share capital The share  capital of the company comprises ordinary shares of 50 pence each. All the  ordinary shares rank pari passu in all respects. To the company’s knowledge  and belief, there are no restrictions on the transfer of shares in the  company or on voting rights between holders of shares. The movement in issued  share capital during the year was as follows: Number £m As at 1 January 2013  307,997,570 154 Cancellation of shares acquired under the buyback programme  (4,174,716) (2) As at 31 December 2013 303,822,854 152 Issued during the year  85,052,989 42 As at 31 December 2014 388,875,843 194 Share buyback programme  During 2013, £4m ordinary shares were purchased at an average price of £10.84  and a total cost of £45m, this completed the £400m share buyback programme.  Of the shares acquired, 34 million, including all of the share acquired in  2013 were subsequently cancelled. Reserves As at 1 January 2014, there were  6,186,965 shared held in treasury (2013: 7,291,522), during the year 755,651  shares were transferred to share scheme participants (2013: 1,104,557)  leaving a balance held in treasury as at 31 December 2014 of 5,431,314 (2013:  6,186,095). £57m (2013: £62m) has been deducted from equity in respect of  these shares. The hedging reserve comprises the effective portion of the  cumulative net change in the fair value of cash flow hedging instruments  related to hedged transactions that have not yet occurred. The translation  reserve comprises all foreign exchange differences arising from the  translation of the accounts of foreign operations, as well as from the  translation of liabilities and the cumulative net change in the fair value of  instruments that hedge the company’s net investment in foreign subsidiaries,  that have arisen since 1 January 2004, being the date of transition to  adopted IFRS. Share-based payments Offers are made periodically in certain  countries under the UK and International Savings-related Share Option Schemes  which are open to all employees in those countries who meet minimum service  criteria. Grants of share options are made to participating employees that  entitle them to buy shares in the company normally after three years at up to  20% discount to the market price of the shares at the time of offer. In the  US, to conform with the relevant tax rules, options are granted at a maximum  discount of 15% to the share price at the time of grant and are normally  exercisable after two years. Under the Performance Share Plan, annual awards  are made to directors and selected senior employees of restricted shares that  are subject to both market and non-market based conditions calculated over a  three-year period. Detailed terms of this plan are included in the Directors’  remuneration report on pages 61 to 74. Under the Restricted Share Plan,  awards are made to selected employees as restricted shares which vest in full  after three years provided the employee has remained in continuous employment.  Prior to the acquisition, Foster Wheeler’s Compensation and Executive  Development Committee administered the Foster Wheeler AG Omnibus Incentive  Plan for Foster Wheeler’s employees, non-employee directors and third-party  service providers. Under the terms of the Implementation Agreement,  equivalent awards of AMEC shares were granted by AMEC in replacement of  Foster Wheeler awards and the terms of those replacement awards will be  equivalent in all material respects to the terms of the Foster Wheeler Omnibus  Plan. All employees of Foster Wheeler and its subsidiaries and/or affiliates,  its non-employee directors, and certain of its third-party service providers  were eligible to participate in the Foster Wheeler Omnibus Plan. As at the  date of acquisition, only Foster Wheeler options, Foster Wheeler RSUs and  Foster Wheeler PRSUs were outstanding under the Foster Wheeler Omnibus Plan.  The share-based payment arrangements operated by the Group are equity settled  and, other than in defined good leaver circumstances, require participants to  be still in employment with the Group at the time of vesting. Notes to the  consolidated accounts continued |
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|  | 145 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 22 Share capital and reserves continued  Share-based payments continued The number and weighted average exercise price  of share options under the Savings-related Share Option Scheme are as  follows: Weighted average exercise price 2014 pence Number of options 2014  Weighted average exercise price 2013 pence Number of options 2013 Outstanding  on 1 January 794 6,691,883 751 6,954,967 Lapsed/cancelled 822 (777,995) 789  (901,776) Exercised 777 (765,267) 644 (1,127,999) Granted 874 2,563,374 866  1,766,691 Outstanding on 31 December 819 7,711,995 794 6,691,883 Exercisable  on 31 December 902 200,948 760 283,867 Options were exercised on a regular  basis during the year and the average share price for the year was 1,102  pence (2013: 1,070 pence). Options outstanding on 31 December 2014 have  weighted average remaining contractual lives as follows: Weighted average  remaining contractual life 2014 years Number of options 2014 Weighted average  remaining contractual life 2013 years Number of options 2013 600.00 pence to  699.99 pence – 2,391,513 0.4 2,711,612 700.00 pence to 799.99 pence – – –  683,313 800.00 pence to 899.99 pence 1.1 3,807,935 0.7 1,488,608 Over 900.00  pence 0.2 1,512,547 0.4 1,808,350 7,711,995 6,691,883 The numbers of shares  held under the Performance Share Plan and Restricted Share Plan are as  follows: Number of shares 2014 Number of shares 2013 As at 1 January  4,194,248 3,923,198 Lapsed (1,110,559) (766,743) Vested (250,328) (591,863)  Granted 3,883,876 1,629,656 As at 31 December 6,717,237 4,194,248 |
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|  | 146 Amec Foster  Wheeler Annual report and accounts 2014 22 Share capital and reserves  continued Share-based payments continued The fair value of services received  in return for share options granted and shares awarded are measured by  reference to the fair value of those instruments. For grants in either the  current or preceding years, the pricing models used and inputs (on a weighted  average basis where appropriate) into those models are as follows:  Savings-related Share Option Scheme (Black-Scholes model) Performance Share  Plan (Monte Carlo model) Restricted Share Plan (Monte Carlo model) Foster  Wheeler Omnibus plan 2014 2013 2012 2014 2013 2012 2014 2013 2012 2014  Weighted average fair value at measurement date 198p 217p 239p 1,006p 948p  1,053p 949p 960p 990p 1,027p Weighted average share price at measurement date  1,014p 1,061p 1,103p 1,105p 1,060p 1,139p 1,082p 1,070p 1,106p 1,081p  Exercise price 874p 866p 927p n/a n/a n/a n/a n/a n/a n/a Expected share  price volatility 27% 27% 28% 26% 28% 29% n/a n/a n/a n/a Option life 3.3  years 3.3 years 3.3 years 3.1 years 2.8 years 3.0 years 2.7 years 2.7 years 2.7  years n/a Expected dividend yield 3.5% 4.0% 3.3% n/a n/a n/a 3.5% 3.0% 3.0%  3.5% Risk-free interest rate 1.0% 1.0% 1.0% n/a n/a n/a n/a n/a n/a n/a  Comparator share price volatility n/a n/a n/a 32% 33% 35% n/a n/a n/a n/a  Correlation between two companies in comparator group n/a n/a n/a 50% 50% 50%  n/a n/a n/a n/a The expected share price volatility is based on the  historical volatility of the company’s share price. The performance  conditions attaching to the Performance Share Plan involve a comparison of the  total shareholder return of the company with that of its comparators and  achievement of targeted earnings per share growth. The former is a market  based test and as such is incorporated into the grant date fair value of the  award. There are no performance conditions attached to the Restricted Share  Plan. Prior to the acquisition, Foster Wheeler had issued shares awards to  employees, non-employee directors and certain third parties under the Foster  Wheeler AG Omnibus Incentive Plan. Under the terms of the Implementation  Agreement, equivalent awards of Amec Foster Wheeler shares were granted in  replacement of these Foster Wheeler awards. On acquisition awards of  2,400,766 Amec Foster Wheeler shares were granted. There are no performance  conditions attached to these awards. Dividends The directors are proposing a  final dividend in respect of the financial year ended 31 December 2014 of  28.5 pence per share, which will absorb an estimated £107m of equity. Subject  to approval, it will be paid on 2 July 2015 to shareholders on the register  of members on 29 May 2015. This dividend has not been provided for and there  are no income tax consequences for the company. This final dividend together  with the interim dividend of 14.8 pence (2013: 13.5 pence; 2012: 11.7 pence)  per share results in a total dividend for the year of 43.3 pence per share  (2013: 42.0 pence; 2012: 36.5 pence). 2014 £m 2013 £m 2012 £m Dividends  charged to reserves and paid Interim dividend in respect of 2013 of 13.5  pence (2013: interim dividend in respect of 2012 of 11.7 pence; 2012: interim  dividend in respect of 2011 of 10.2 pence) per share 40 36 34 Final dividend  in respect of 2013 of 28.5 pence (2013: final dividend in respect of 2012 of  24.8 pence; 2012: final dividend in respect of 2012 of 20.3 pence) per share  84 72 64 124 108 98 The amount waived by trustees of the Performance Share  Plan in respect of the interim and final dividends was £1m (2013: £1m; 2012:  £1m). Notes to the consolidated accounts continued |
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|  | 147 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 23 Analysis of net (debt)/cash As at 1 January  2014 £m Acquisition £m Cash flow £m Exchange and other non-cash movements £m  As at 31 December 2014 £m Cash at bank and in hand 153 239 (9) (6) 377 Bank  deposits (less than three months) 79 29 10 – 118 Cash and cash equivalents  (excluding bank overdrafts) 232 268 1 (6) 495 Bank overdrafts (9) – 9 – –  Cash and cash equivalents 223 268 10 (6) 495 Bank deposits (more than three  months) 18 – 3 – 21 Bank loans (120) (39) (1,102) (6) (1,267) Fees  capitalised against bank facilities – – 13 (4) 9 Finance leases – (32) 4 (33)  (61) Net (debt)/cash as at the end of the year 121 197 (1,072) (49) (803) As  at 1 January 2013 £m Cash flow £m Exchange and other non-cash movements £m As  at 31 December 2013 £m Cash at bank and in hand 169 5 (21) 153 Bank deposits  (less than three months) 89 (11) 1 79 Cash and cash equivalents (excluding  bank overdrafts) 258 (6) (20) 232 Bank overdrafts (26) 17 – (9) Cash and cash  equivalents 232 11 (20) 223 Bank deposits (more than three months) 17 1 – 18 Bank  loans (150) 30 – (120) Net cash as at the end of the year 99 42 (20) 121 The  fair value of bank loans is £1,268m (2013: £120m) compared to a carrying  value of £1,267m (2013: £120m). The fair value of finance leases is £66m  (2013: £nil) compared to a carrying value of £61m (2013: £nil). Cash and cash  equivalents as at 31 December 2014 includes £60m (2013: £25m) that is held in  countries from which prior approval is required to transfer funds abroad.  There are restrictions on the use of £7m (2013: £7m) of cash held on behalf  of joint venture arrangements and £28m (2013: £nil) held on behalf of  customers and collateral against bank guarantees. In addition, there are  restrictions on the use of a further £16m (2013: £16m) of cash and cash  equivalents in respect of commitments of the Group’s captive insurance  subsidiary to certain insurers. |
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|  | 148 Amec Foster Wheeler Annual report and accounts 2014 24  Acquisitions and disposals Acquisitions in 2014 Foster Wheeler Background On  6 October 2014, the Group launched a public tender offer to acquire the  entire issued share capital of Foster Wheeler AG, the ultimate parent company  of Foster Wheeler. Pursuant to the tender offer, which closed on 13 November  2014 (the acquisition date), the Group acquired 95.3% of the issued share  capital of Foster Wheeler AG. Foster Wheeler is a leading international  engineering, construction and project management contractor and power  equipment supplier with approximately 12,000 employees in more than 30  countries. Management believes that the combination of Foster Wheeler with  the Group’s existing operations will complement the Group’s growth strategy  and low-risk, cash-generative business model and will position the Group to  take advantage of, and create, new growth opportunities. Specifically,  management expects that the addition of Foster Wheeler will enable the Group  to expand its operations in the mid and downstream oil and gas markets, to  increase its presence in growth regions such as the Middle East and Latin  America, and benefit from Foster Wheeler’s strong profitable power equipment  business. Under the terms of the tender offer, Foster Wheeler shareholders  were offered US$16 in cash and 0.8998 ordinary shares or ADSs in the Company  for each share in Foster Wheeler AG held. Foster Wheeler shareholders were  able to elect to receive either US$32 in cash or 1.7796 ordinary shares or  ADSs in the Company for each share in Foster Wheeler AG held, subject to  limitations on the total amount of the consideration permitted to be settled  in cash or in the Company’s ordinary shares or ADSs. On completion of the  offer, US$1,540m was paid in cash and 29 million ordinary shares and 56  million ADSs were issued. Cash consideration was financed by a combination of  the Group’s existing cash resources and by drawing on new debt financing  facilities. Whilst the tender offer did not extend to employee-held options  and awards over shares in Foster Wheeler AG, separate arrangements were made  whereby certain of these options and awards were replaced by options and  awards over ordinary shares or ADSs in the Company. Purchase price allocation  Consideration payable for the interests in Foster Wheeler acquired by the  Group amounted to £1,915m (measured at fair value at the acquisition date),  of which £979m was settled in cash, £919m was settled by the issue of  ordinary shares and ADSs and £17m was settled by the grant of replacement  share options and awards. Due to the relatively short period of time that has  elapsed since the acquisition date, management has not yet finalised its  assessment of the fair values at the acquisition date of certain of Foster  Wheeler’s property, plant and equipment, equity-accounted investments, and  property-related, legal and environmental obligations. Management expects to  substantially complete the fair value assessment during the first half of  2015. As at 31 December 2014, provisional goodwill of £1,583m was recognised  on the acquisition of Foster Wheeler. Management considers that the goodwill  is attributable to the future strategic growth opportunities arising from the  acquisition, Foster Wheeler’s highly skilled, customer-oriented and  collaborative assembled workforce, the significant cost synergies that are expected  to result from the integration of Foster Wheeler with the Group’s existing  operations, and the potential for tax synergies. None of the goodwill is  expected to be deductible for tax purposes. Acquisition-related costs  relating to the acquisition of Foster Wheeler totalling £37m were recognised  within administrative expenses during 2014. Costs of issuing the Company’s  ordinary shares and ADSs in relation to the acquisition amounting to £877m  were set against the Company’s share premium account. On 19 January 2015, the  Group acquired the 4.7% non-controlling interest in Foster Wheeler by way of  a ‘squeeze-out’ merger under Swiss law for consideration of £85m, of which  £51m was paid in cash and £34m was settled by the issue of 5 million of the  Company’s ADSs. Non-controlling interests in Foster Wheeler were measured at  their proportionate share of Foster Wheeler’s identifiable assets and  liabilities at the acquisition date. Subsequent to its acquisition, Foster  Wheeler contributed £274m to the Group’s revenue and £1m to the Group’s  trading profit. After amortisation of the acquired intangibles, exceptional  items and asbestos related items, Foster Wheeler generated a loss of £44m in  the period from acquisition to 31 December 2014. Notes to the consolidated accounts  continued |
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|  | 149 Amec Foster Wheeler Annual report and accounts 2014  Financials Governance Strategic report Additional information 24 Acquisitions  and disposals continued Acquisitions in 2014 continued Summary of financial  effect Purchase consideration was provisionally allocated as follows: £m  Assets acquired Property, plant and equipment 117 Identifiable intangible  assets 738 Interests in joint ventures 73 Current tax asset 11 Deferred tax  assets 27 Inventories 11 Trade and other receivables 771 - Gross contractual  amounts receivable 801 - Allowance for doubtful debts (30) Derivative financial  instruments (12) Cash and cash equivalents 265 Liabilities assumed Bank loans  (39) Finance lease obligations (32) Trade and other payables (772) Current  tax liability (53) Net retirement benefit liabilities (72) Deferred tax  liabilities (138) Provisions (533) Net identifiable assets acquired 362  Non-controlling interests (30) Goodwill 1,583 1,915 Consideration Share based  payments 17 Cash paid on completion 979 Shares issued including share premium  919 1,915 Management estimates that if Foster Wheeler had been acquired on 1  January 2014, the Group’s revenue for the year would have been £1,814m higher  than reported at £5,807m. Management is, however, unable to estimate reliably  what the Group’s profit or loss for the year would have been on this basis,  principally because it is not practicable to retrospectively apply the  significant purchase accounting adjustments that were made to the carrying  amounts of the assets and liabilities of Foster Wheeler at its acquisition  date and the tax effects of those adjustments. Scopus On 15 December 2014,  the Group acquired the entire issued share capital of Scopus Group (Holdings)  Limited (Scopus) for £68m with £67m paid on completion and £1m deferred for  one year. Headquartered in Aberdeen, UK, with bases in international oil and  gas hubs, Scopus has around 200 employees who provide specialist engineering  services to the global oil and gas, petrochemical and nuclear industries. Due  to the relative short period of time that has elapsed since the acquisition  date, management has not yet finalised its assessment of the fair values at  the acquisition date of 15 December 2014. Management expects to complete the  fair value assessment during the first half of 2015. As at 31 December 2014,  provisional goodwill of £34m was recognised on the acquisition which  management considers is principally attributable to its skilled workforce  which did not meet the criteria for recognition as an intangible asset at the  date of acquisition. This specialist expertise will complement Amec Foster Wheeler’s  existing project delivery capability across the lifecycle of a project. |
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|  | 150 Amec Foster  Wheeler Annual report and accounts 2014 24 Acquisitions and disposals  continued Acquisitions in 2014 continued Summary of financial effect Purchase  consideration was provisionally allocated as follows: £m Identifiable  intangible assets 31 Property, plant and equipment 1 Trade and other  receivables 7 Cash and cash equivalents 3 Trade and other payables (2)  Deferred tax liability (6) Net identifiable assets and liabilities 34  Goodwill on acquisition 34 68 Consideration Cash – paid on completion 67 –  deferred 1 68 Scopus did not make a material contribution to the Group’s  results for the year and would not have done so even if it had been acquired  on 1 January 2014. Acquisitions in 2013 Automated Engineering Services Corp.  On 15 November 2013, the Group acquired all of the shares in Automated  Engineering Services Corp. (AES) for up to US$35m, of which US$29m (£18m) was  paid on completion and up to $6m (£4m) will be paid after three years  dependent on the achievement of certain performance targets. AES is a  professional design engineering nuclear services firm based in Naperville,  Illinois, US. It provides plant design/ modification engineering, engineering  analysis, safety, licensing and regulatory services, and engineering  programme support to existing nuclear utilities, primarily in the US. We  acquired AES to build on the Group’s position in the nuclear industry in the  US, allowing us to better serve our clients and providing a strong platform  from which to achieve further growth in nuclear services. Goodwill of £12m  was recognised on the acquisition of AES. Purchase consideration was allocated  as follows: £m Intangible assets 6 Trade and other receivables 6 Trade and  other payables (2) Net identifiable assets and liabilities 10 Goodwill 12  Consideration 22 Notes to the consolidated accounts continued |
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|  | 151 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 24 Acquisitions and disposals continued  Acquisitions in 2012 Unidel On 30 May 2012, the Group acquired all of the  shares in Unidel Group Pty Limited (Unidel) for £16m in cash. Unidel operates  in Australia’s energy, resources and infrastructure sectors and provides a  range of environmental and infrastructure services. Unidel has experience of  projects involving gas field exploration, development, production and  transmission, coal seam methane and water pipelines. We acquired Unidel to  build to expand the Group’s capabilities to allow us to better serve  customers in the oil & gas, mining, and clean energy markets in one of  the key growth regions. Goodwill of £5m was recognised on the acquisition of  Unidel. Energy, Safety and Risk Consultants On 29 June 2012, the Group acquired  all of the shares in Energy, Safety and Risk Consultants (UK) Limited (ESRC)  for £137m in cash. ESRC was Serco Group plc’s nuclear technical services  business. It is based at a number of sites in the UK and provides consultancy  and project solutions for customers including the UK Ministry of Defence,  EDF, Magnox and the Nuclear Decommissioning Authority. We acquired ESRC to  build the Group’s footprint and capabilities in the clean energy market.  ESRC’s team of highly skilled professionals will complement the Group’s  existing expertise in nuclear support activities. Goodwill of £75m was  recognised on the acquisition which was attributed to the value of ESRC’s  assembled workforce and the significant growth opportunities for the combined  business. Other acquisitions During 2012, other acquisitions were made for  total consideration of £8m, of which £6m was paid on completion and the  balance of £2m will be paid dependent on the achievement of earnings targets.  Goodwill of £6m was recognised on these acquisitions. Purchase consideration  was allocated as follows: ESRC £m Unidel £m Other £m Total £m Property, plant  and equipment 1 – – 1 Intangible assets 74 11 6 91 Cash and cash equivalents  1 1 – 2 Trade and other receivables 13 7 2 22 Trade and other payables (7)  (5) (2) (14) Deferred tax liabilities (20) (3) (2) (25) Net identifiable  assets acquired 62 11 4 77 Non-controlling interests – – (2) (2) Goodwill 75  5 6 86 Consideration 137 16 8 161 Net cash outflow on acquisitions The net  cash out flow on acquisitions was as follows: 2014 £m 2013 £m 2012 £m Cash  consideration paid1 Current year acquisitions 1,049 18 159 Acquisitions in  prior years – 2 2 1,049 20 161 Cash and cash equivalents acquired (268) – (2)  Net cash outflow 781 20 159 1 The £1,049m includes £3m exchange loss for the  year ended 31 December 2014. This was created due to the movement in exchange  rates between the date the Group acquired Foster Wheeler AG and the date when  the liability was settled, net of cash flow hedges. |
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|  | 152 Amec Foster  Wheeler Annual report and accounts 2014 25 Commitments Operating lease  commitments The total obligations under non-cancellable operating lease  rentals for continuing operations are as follows: 31 December 2014 £m 31  December 2013 £m In one year or less 99 66 Between one and five years 249 157  Over five years 124 61 472 284 Amec Foster Wheeler enters into the following  types of lease: short-term plant hires; leases for motor vehicles and office  equipment with lease periods of two to five years; and longer-term property  leases. None of the leases include any contingent rentals. Finance lease and  hire purchase commitments The Group has finance leases and hire purchase  contracts for various items of property and deferred payment arrangements  which are similar to finance leases for software. These leases have terms of  renewal, but no purchase options and escalation clauses. Renewals are at the  option of the specific entity that holds the lease. Future minimum lease  payments under finance leases and hire purchase contracts together with the  present value of the net minimum lease payments are, as follows: 2014 2013  Minimum payments £m Present value of payments £m Minimum payments £m Present  value of payments £m In one year or less 12 9 – – Between one and five years  47 35 – – Over five years 20 17 – – Total minimum lease payments 79 61 – –  Less amounts representing finance charges (18) – – – Present value of minimum  lease payments 61 61 – – Notes to the consolidated accounts continued |
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|  | 153 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 26 Contingent liabilities Legal claims and  actions From time to time, the Group is party to litigation involving clients  and sub-contractors arising out of project contracts. Such litigation  includes claims or actions by and against the Group for cancelled contracts,  for additional costs incurred in excess of contract provisions, as well as  for back charges for alleged breaches of warranty and other contract  commitments. As described in note 21, we have recognised provisions for  certain known or reasonably likely legal claims or actions against the Group.  We do not expect known and reasonably likely legal claims or actions for  which a provision has not been established to have a material impact on the  Group’s financial position, results of operations or cash flows. Guarantees  and indemnities Guarantees The Group have guaranteed certain performance obligations  in a refinery/electric power generation plant located in China in which we  hold a non-controlling interest. Borrowings of joint ventures are generally  without recourse to the Company or any of its subsidiaries. Indemnities and  retained obligations We have agreed to indemnify certain third parties  relating to businesses and/or assets that were previously owned by the Group  and were sold to them. Such indemnifications relate primarily to breach of  covenants, breach of representations and warranties, as well as potential  exposure for retained liabilities, environmental matters and third party  claims for activities conducted by the Group prior to the sale of such  businesses and/or asset. As described in note 21, we have established  provisions for those indemnities in respect of which we consider it probable  that there will be a successful claim. We do not expect indemnities or  retained obligations for which a provision has not been established to have a  material impact on the Group’s financial position, results of operations or  cash flows. Mount Polley The Mount Polley mine is owned and operated by Mount  Polley Mining Corporation, a subsidiary of Imperial Metals Corporation, and  is located near the town of Lively, British Columbia, Canada. On 4 August 2014,  a tailings pond facility at the mine failed releasing large quantities of  water and mine tailings into the local environment. The dam was in the  process of being raised at the time of the failure. One of our subsidiaries,  along with other parties, had various design and quality assurance  responsibilities associated with the expansion of this facility. Our  subsidiary was the engineer at the time of the breach, but did not perform  the original design. An Independent Review Panel issued its report on 30 January  2015 concluding that the cause of failure was shearing along a zone  containing a weak soil layer along with other contributory factors. At this  time, no litigation has commenced against the Group and management’s opinion  is that its employees performed in a professional manner consistent with the  standard of care for a competent engineer on a project of this nature.  Management has taken external legal advice and in light of this advice and,  given the early stages of this matter, it is not considered probable that  there will be an outflow in respect of this issue. |
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|  | 154 Amec Foster  Wheeler Annual report and accounts 2014 27 Related party transactions During  2014 there were a number of transactions with the senior management group,  joint venture entities and subsidiary companies. Transactions with the senior  management group Following the acquisition of Foster Wheeler in late 2014,  the senior management group now consists of Amec Foster Wheeler plc board  members and the presidents of the Americas, Europe and Growth Regions  geographies along with the presidents of the Foster Wheeler segments of  E&C Services and Global Power Group. In 2013 the senior management group  consisted of Amec Foster Wheeler plc board members and the presidents of the  Americas, Europe and Growth Regions geographies. The senior management group  and relatives controlled 0.64% of the voting rights of the company as at 31  December 2014. In addition to their salaries, the company also provides  non-cash benefits to executive directors and other senior managers and they  receive share awards under the Performance Share Plan. The company also  contributes to a defined benefit plan on behalf of certain executive  directors. Details of their compensation are as follows: 2014 £m 2013 £m  Short-term employee benefits 5 6 Pension costs – – Equity-settled share-based  payments 1 3 6 9 Transactions and related balances outstanding with joint  ventures The transactions and related balances outstanding with joint venture  entities are as follows: Value of transactions in the year Outstanding  balance as at 31 December 2014 £m 2013 £m 2014 £m 2013 £m Services received 3  – – – Services rendered 26 38 12 15 Provision of finance 9 8 16 41 In  September 2012, the UK government’s Department for Business, Innovation and  Skills announced a change to UK legislation with respect to the requirement  for a UK company to be subject to annual audit. An additional audit exemption  has been introduced, such that for a subsidiary of a parent established in a  European Economic Area state, that subsidiary can be exempt from annual audit  if certain conditions are met. The principal conditions are the requirement  for the subsidiary’s shareholders to agree to the exemption and a guarantee  to be issued to the subsidiary by the parent undertaking, guaranteeing all of  the subsidiary’s outstanding liabilities at the year end, until they are  satisfied in full. Notes to the consolidated accounts continued |
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|  | 155 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 27 Related party transactions continued  Transactions and related balances outstanding with joint ventures continued  The Group will be exempting the following companies from an audit in 2014  under Section 479A of the Companies Act 2006, all of which are fully  consolidated in these accounts: Amec Foster Wheeler Finance Asia Limited  (Registered number: 6205760). AMEC Hedge Co 1 Limited (Registered number:  07870120). AMEC Kazakhstan Holdings Limited (Registered number: 4530056).  Amec Foster Wheeler Property and Overseas Investments Limited (Registered  number: 1580678). AMEC USA Finance Limited (Registered number: 5299446). AMEC  USA Holdings Limited (Registered number: 4041261). AMEC USA Limited  (Registered number: 4044800). PI Energy & Emissions Limited (Registered  number: SC209704). Sandiway Solutions (No 3) Limited (Registered number:  5318249). Sigma Financial Facilities Limited (Registered number: 3863449). |
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|  | 156 Amec Foster Wheeler Annual  report and accounts 2014 Note 2014 £m 2013 £m Fixed assets Tangible assets 2  32 27 Investment in subsidiaries 3 4,480 2,353 4,512 2,380 Current assets  Debtors: including amounts falling due after one year of £1,102m (2013: £nil)  4 1,149 40 Cash at bank and in hand 93 76 1,242 116 Current liabilities  Creditors: amounts falling due within one year 5 (2,026) (154) Net current  liabilities (784) (38) Total assets less current liabilities 3,728 2,342  Creditors: amounts falling due after one year 6 (1,324) (761) Net assets  2,404 1,581 Capital and reserves Called up share capital 7, 8 194 152 Share  premium account 8 978 101 Capital redemption reserve 8 34 34 Profit and loss  account 8 1,198 1,294 Equity shareholders’ funds 2,404 1,581 The accounts on  pages 156 to 162 were approved by the board of directors on 26 March 2015 and  were signed on its behalf by: Samir Brikho Ian McHoul Chief Executive Chief  Financial Officer Company balance sheet As at 31 December 2014 |
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|  | 157 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information 1 Accounting policies Basis of accounting The accounts have been  prepared under the historical cost convention, except that derivative  financial instruments are stated at fair value, in accordance with applicable  accounting standards and the Companies Act 2006. The company has not  presented its own profit and loss account, as permitted by Section 408 of the  Companies Act 2006. Cash flow statement The company is exempt from the  requirement of FRS 1 ‘Cash Flow Statements’ to prepare a cash flow statement  as its cash flows are included within the consolidated cash flow of the  Group. Depreciation Depreciation is provided on all tangible assets, other  than assets in the course of construction, at rates calculated to write off  the cost or valuation, less estimated residual value, of each asset on a  straight line basis over its estimated useful life. The estimated lives of  tangible assets as at 31 December 2014 are as follows: Plant and equipment  Three to five years Software Three to seven years Depreciation is provided  from the month in which the asset is available for use. Dividend income  Dividend income is recognised when the right to receive payment is  established. Financial instruments Financial instruments are initially  recorded at fair value. Subsequent valuation depends on the designation of  the instruments. Cash, deposits and short-term investments are held at  amortised cost. Derivative financial instruments are accounted for as  described in note 1 to the consolidated accounts. The company is exempt from  the disclosure requirements of FRS 29 ‘Financial Instruments: Disclosures’ as  the financial instruments disclosures of IFRS 7 ‘Financial Instruments:  Disclosures’ and IFRS 13 ‘Fair Value Measurement’ are included in the notes  to the consolidated accounts. Foreign currencies Transactions in a currency  other than Sterling are translated to Sterling at the exchange rate ruling at  the date of the transaction. Monetary assets and liabilities denominated in  foreign currencies are translated into Sterling at rates of exchange ruling  at the balance sheet date and exchange differences are taken to profit and  loss accounts in the year. Non-monetary assets and liabilities are measured  in terms of historical cost and are translated using the exchange rate at the  date of the transaction. Interest Interest is recognised in profit or loss on  an accruals basis using the effective interest method. Investments  Investments are stated at cost less provision for permanent diminution in  value. Where equity-settled share-based payments are granted to the employees  of subsidiary companies, the fair value of the award is treated as a capital  contribution by the company and the investment in subsidiaries are adjusted  to reflect this capital contribution. Pensions The company participates in  the Amec Staff and Executive defined benefit pension schemes. The assets of  these schemes are held separately from those of the company. The company is  unable to identify its share of the underlying assets and liabilities of the  schemes on a consistent and reasonable basis and therefore, as required by  FRS 17 ‘Retirement Benefits’, accounts for these schemes as if they were  defined contribution schemes. As a result, the amount charged to the profit  and loss account represents the contributions payable to the schemes in  respect of the accounting period. Details of the defined benefit schemes can  be found in note 14 of the consolidated accounts. Remuneration of auditors  The detailed information concerning auditors’ remuneration is shown in note 4  of the consolidated accounts. Notes to the company balance sheet |
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|  | 158 Amec Foster  Wheeler Annual report and accounts 2014 1 Accounting policies continued  Share-based payments There are share-based payment arrangements which allow  Amec Foster Wheeler employees to acquire Amec Foster Wheeler shares; these  awards are granted by Amec Foster Wheeler. The fair value of awards granted  is recognised as a cost of employment with a corresponding increase in  equity. The fair value is measured at grant date and spread over the period  during which the employees become unconditionally entitled to the award. The  fair value of the award is measured using a valuation model, taking into  account the terms and conditions upon which the awards were granted. The  amount recognised as a cost is adjusted to reflect the actual number of  shares that vest except where non-vesting is due to share prices not  achieving the threshold for vesting. Taxation The charge for taxation is  based on the results for the year and takes into account taxation deferred  because of timing differences between the treatment of certain items for  taxation and accounting purposes. Deferred tax is recognised, without discounting,  in respect of all timing differences between the treatment of certain items  for taxation and accounting purposes which have arisen but not reversed by  the balance sheet date, except as otherwise required by FRS 19 ‘Deferred  Tax’. 2 Tangible assets Plant and equipment £m Software £m Total £m Cost As  at 1 January 2014 4 30 34 Additions – 11 11 As at 31 December 2014 4 41 45  Depreciation As at 1 January 2014 3 4 7 Provided during the year – 6 6 As at  31 December 2014 3 10 13 Net book value As at 31 December 2014 1 31 32 As at  1 January 2014 1 26 27 Notes to the company balance sheet continued |
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|  | 159 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 3 Investments (held as fixed assets) Shares in  subsidiaries £m Amounts owed by subsidiaries £m Total investment in  subsidiaries £m Cost As at 1 January 2014 1,525 874 2,399 Exchange and other  movements – (15) (15) Additions 2,537 2 2,539 Loan repayment – (397) (397) As  at 31 December 2014 4,062 464 4,526 Provisions As at 1 January and 31  December 2014 46 – 46 Net book value As at 31 December 2014 4,016 464 4,480  As at 1 January 2014 1,479 874 2,353 Principal Group companies are listed on  pages 190 to 191. 4 Debtors 31 December 2014 £m 31 December 2013 £m Debtors:  amounts falling due within one year Amounts owed by subsidiaries 5 2  Derivative financial instruments 13 5 Corporation tax 24 27 Prepayments and  accrued income 5 5 Other debtors – 1 47 40 Debtors: amounts falling due after  one year Derivative financial instruments 2 – Amounts owed by subsidiaries  1,100 – 1,149 40 The deferred tax balance is analysed as follows: 31 December  2014 £m 31 December 2013 £m Difference between accumulated depreciation and  capital allowances (1) 1 Share-based schemes 1 (1) – – In his budget speeches  on 21 March 2012 and 20 March 2013 the UK Chancellor of the Exchequer  announced reductions in the rate of corporation tax to 23% from 1 April 2013,  21% from 1 April 2014 and 20% from 1 April 2015. As at 31 December 2014, the  reduction in the rate of corporation tax to 20% had been substantively  enacted. |
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|  | 160 Amec Foster  Wheeler Annual report and accounts 2014 5 Creditors: amounts falling due  within one year 31 December 2014 £m 31 December 2013 £m Bank overdrafts 8 1  Bank and other loans 693 120 Trade creditors 37 2 Derivative financial  instruments 12 5 Other taxation and social security costs – 14 Other  creditors – 4 Accruals – 8 Amounts owed to subsidiaries 1,276 – 2,026 154 The  company has committed banking facilities of £1,826m (2013: £477m). This  consists of a £377m multi-currency revolving facility that was taken out on  18 July 2012. The facility is committed for five years and is available for  general corporate purposes. In addition on 13 February 2014 the company  entered into acquisition facilities totalling $2,260m (£1,449m). This  comprises of the following: X $250m (£160m) bridge to cash facility maturing  August 2015; X $830m (£532m) bridge facility which matured February 2015 with  two further six month extensions at the company’s option; X $830m (£532m)  term loan maturing in equal instalments in 2017, 2018 and 2019; and X $350m  ($225m) revolving credit facility maturing May 2016. It is the intention of  the Company to refinance the $830m (£532m) bridge facility in the capital  markets during 2015. Previously the company had a £100m Sterling term loan  for a period of 12 months. This was settled in full during the year. As at 31  December 2014, £1,230m (2013: £120m) of the loans and facilities were  utilised by way of debt and £159m (2013: nil) was utilised by way of Letter  of Credit. 6 Creditors: amounts falling due after one year 31 December 2014  £m 31 December 2013 £m Amounts owed to subsidiaries 794 761 Bank and other  loans 528 – Derivative financial instruments 2 – 1,324 761 Notes to the  company balance sheet continued |
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|  | 161 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information 7 Share capital The share capital of the  company comprises ordinary shares of 50 pence each. All the ordinary shares  rank pari passu in all respects. To the company’s knowledge and belief, there  are no restrictions on the transfer of shares in the company or on voting  rights between holders of shares. 31 December 2014 £m 31 December 2013 £m  Allotted, called up and fully paid ordinary shares of 50 pence each 194 152  The movement in issued share capital during the year was as follows: Number  £m As at 1 January 2014 303,822,854 152 Shares issued 85,052,989 42 As at 31  December 2014 388,875,843 194 Share-based payment Details of share-based  payment schemes operated by the company are provided in note 22 to the  consolidated accounts. 8 Reserves Share capital £m Share premium account £m  Capital redemption reserve £m Profit and loss account £m Total £m As at 1  January 2014 152 101 34 1,294 1,581 Loss for the year – – – (3) (3) Dividends  – – – (124) (124) Equity-settled share-based payments – – – 25 25 Utilisation  of treasury shares – – – 6 6 Shares issued 42 877 – – 919 As at 31 December  2014 194 978 34 1,198 2,404 Details of dividends approved by the company and  paid during the year are disclosed in note 22 to the consolidated accounts.  During 2012 Amec Foster Wheeler plc generated a significant profit from an  internal restructuring. This becomes distributable as qualifying consideration  is passed to Amec Foster Wheeler plc. As at 31 December 2014, £746m of  reserves are considered to be distributable. The company’s profit for the  year in 2013 was £148m. |
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|  | 162 Amec Foster  Wheeler Annual report and accounts 2014 9 Contingent liabilities Guarantees  and indemnities Guarantees given by the company in respect of borrowings of  subsidiaries amounted to £nil as at 31 December 2014 (2013: £nil). In  addition, the company is party to cross-guarantee arrangements relating to  overdrafts for certain Group companies. The maximum gross exposure as at 31  December 2014 was £94m (2013: £20m). The company will guarantee the debts and  liabilities of the following UK subsidiaries in accordance with Section 479C  of the Companies Act 2006: Amec Foster Wheeler Finance Asia Limited  (Registered number: 6205760). AMEC Hedge Co 1 Limited (Registered number:  07870120). AMEC Kazakhstan Holdings Limited (Registered number: 4530056).  Amec Foster Wheeler Property and Overseas Investments Limited (Registered  number: 1580678). AMEC USA Finance Limited (Registered number: 5299446). AMEC  USA Holdings Limited (Registered number: 4041261). AMEC USA Limited  (Registered number: 4044800). PI Energy & Emissions Limited (Registered  number: SC209704). Sandiway Solutions (No 3) Limited (Registered number:  5318249). Sigma Financial Facilities Limited (Registered number: 3863449).  The company has assessed the probability of loss under these guarantees as  remote. 10 Related party transactions During the year the only related party  transactions for which disclosure is required under FRS 8 ‘Related Party  Disclosures’ were with the senior management group. As allowed by FRS 8  transactions with wholly owned subsidiary undertakings are not disclosed.  Transactions with the senior management group The senior management group of  the company consists of Amec Foster Wheeler plc board members. The senior  management group of the company and their immediate relatives controlled  0.60% of the voting rights of the company as at 31 December 2014. In addition  to their salaries, the company also provides non-cash benefits to executive  directors and other senior managers and they receive share awards under the  Performance Share Plan. The company also contributes to a defined benefit  plan on behalf of certain executive directors. Details of their compensation  are as follows: 2014 £m 2013 £m Short-term employee benefits 3 4 Pension  costs – – Equity-settled share-based payments 1 3 4 7 Notes to the company  balance sheet continued |
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|  | 163 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Details of incorporation Amec Foster Wheeler plc (formerly AMEC  plc) is a public limited company that is incorporated in England and Wales  with the registered number 01675285. AMEC plc changed its name to Amec Foster  Wheeler plc on 13 November 2014 when it took control of Foster Wheeler AG.  The Company’s registered office is situated at Booths Park, Chelford Road,  Knutsford, Cheshire, WA16 8QZ, UK. The Company operates under English law.  The Company’s agent in the US is CT Corporation, whose contact address is 111  Eighth Avenue, New York, New York 10011, US. Origins AMEC plc was formed in  1982, when Fairclough Construction merged with William Press Group. The  Matthew Hall Group of Companies was acquired in 1988. As a business, we can  trace our history back over 150 years to the origins of these predecessor  companies. Subsequent transformation In recent years, the Group’s activities  have been transformed by exiting from civil construction and becoming a  consultancy, engineering and project management business. We have achieved  this transformation through a combination of organic growth, acquisitions and  divestment of non-core activities. X In 2000, we acquired AGRA Inc., a North  American environmental, engineering and construction services company, and  Ogden Environmental and Energy Services Co. Inc., a US environmental  consulting company. X In 2005, we acquired Paragon Engineering Services,  Inc., a Houston-based oil and gas engineering services company, and NNC  Holdings Limited, a UK nuclear consultancy and engineering business. X In  2007, we sold our UK-based civil construction businesses. X In 2008, we  acquired Geomatrix Consultants, Inc., a Californiabased technical consulting  and engineering firm; Rider Hunt International Limited, a project services  company to the oil, gas, chemical, energy and process industries; and Bower  Damberger Rolseth Engineering Limited. X In 2008, we sold our wind  developments business. X In 2009, we acquired GRD Limited, an engineering and  project delivery company based in Perth, Australia, specialising in the design,  procurement and construction of mineral projects. X In 2010, we acquired  Entec Holdings Limited, a UK-based environmental and engineering consultancy  company. X In 2011, we acquired MACTEC Inc., a US engineering and  environmental services company; and QED International Limited, or qedi, an  oil and gas completions and commissioning services company. X In 2012, we  acquired Energy, Safety and Risk Consultants (UK) Limited, or ESRC, a  UK-based nuclear technical services business, Unidel Group Pty Limited, or  Unidel, a consulting, engineering and technical services company serving  Australia’s energy, resources and infrastructure sectors, and a 50% stake in  Kromav Engenharia Ltda, or KROMAV, a participant in the Brazilian oil and gas  market. History and development X In 2013, we acquired Automated Engineering  Services Corp., a US design engineering nuclear services firm which provides  support to existing nuclear utilities. Between 1997 and 2006, we bought and  sold interests in SPIE, which provided electrical engineering, communications  services and specialist activities in the energy and rail industries,  predominantly in France. Developments during 2014 Acquisition of Foster  Wheeler In November 2014, the Company acquired control of Foster Wheeler AG,  a leading international engineering, construction and project management  contractor and power equipment supplier, by way of a public tender offer.  Foster Wheeler AG was a Swiss-registered company that was listed on NASDAQ in  the US. At 31 December 2014, the Company owned, through a wholly-owned  subsidiary, 95.3% of the issued share capital of Foster Wheeler AG. Details  of the acquisition are set out in note 24 to the consolidated financial  statements. During January 2015, the Company acquired the remaining shares in  Foster Wheeler AG by way of a so-called ‘squeezeout merger’ conducted under  Swiss law and Foster Wheeler AG merged with and into one of the Company’s  wholly-owned subsidiaries. At the time of the acquisition, Foster Wheeler had  around 12,000 employees and operated in over 30 countries. Foster Wheeler  operates through two business groups: X E&C Services, which designs,  engineers and constructs onshore and offshore upstream oil and gas processing  facilities, natural gas liquefaction facilities and receiving terminals,  gas-to-liquids facilities, oil refining, chemical and petrochemical,  pharmaceutical and biotechnology facilities and related infrastructure,  including power generation facilities, distribution facilities, gasification  facilities and processing facilities associated with the minerals and metals  sector, and is also involved in the design of facilities in developing market  sectors, including carbon capture and storage, solid fuel-fired integrated  gasification combined-cycle power plants, coal-to-liquids, coal-to-chemicals  and biofuels; and X Global Power Group, which designs, manufactures and  installs steam generators and auxiliary equipment for electric power  generating stations, district heating and power plants and industrial  facilities worldwide and also provides a wide range of aftermarket services.  Acquisition of Scopus In December 2014, the Company acquired Scopus Group  (Holdings) Limited (Scopus). Headquartered in Aberdeen, UK, with bases in  international oil and gas hubs, Scopus has around 200 employees who provide  specialist engineering services to the global oil and gas, petrochemical and  nuclear industries. Details of the acquisition are set out in note 24 to the  consolidated financial statements. |
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|  | 164 Amec Foster Wheeler Annual  report and accounts 2014 We describe below those risks and uncertainties that  we consider to be significant because their outcome may have a material  adverse effect on the Group’s business, financial condition, results of  operations or cash flows. We have not listed these risks and uncertainties in  any particular order of priority. Other risks and uncertainties that are  currently unknown to us, or that are known but not considered by us to be  significant, could also have such material adverse effects. Adverse global  economic conditions or other macro-economic developments in the geographic  regions and markets in which we operate. We expect to derive the majority of  our revenue from the Oil & Gas market. Combining Foster Wheeler’s mid-  and downstream capabilities with our existing upstream capabilities has  resulted in greater exposure across the Oil & Gas value chain. Many Oil  & Gas companies are reducing their capital expenditure in response to  market and investor pressure. In our other markets, such as Clean Energy,  spending by customers will depend on cost developments for new technologies,  support for government initiatives and the availability of funding for  projects; whilst demand for raw materials from China may have a significant  impact on Mining projects. We have experienced increased competition for new  contracts and some customers have requested different, less favourable  contract terms due to these conditions. We expect to derive the majority of  our revenue from Europe, the US and Canada and will be exposed to the impact  of global and local economic conditions affecting these regions. We may,  therefore, be adversely affected if conditions in these regions deteriorate.  Adverse or volatile economic conditions may impact liquidity and the  availability of credit, as well as the demands of investors for greater  returns in these markets, which may in turn influence customer spending on  capital investment and/or asset maintenance and may result in delays or  cancellation of projects. If we are unable to successfully anticipate  changing economic and political conditions affecting the jurisdictions and  markets in which we operate, we may be unable to effectively plan for or  respond to those changes. Risks associated with operating in emerging  markets. We conduct a portion of our operations in emerging markets. Going  forward, we expect that our operations will be more heavily focused in the  Middle East, as well as in other emerging markets, such as Latin America and  parts of Asia. Our operations in these markets are exposed to risks that may  not be encountered in countries with more well-established economic and  political systems, which include, to a greater or lesser extent, changes in  international governmental regulations, trade restrictions and laws, tariffs  and other barriers, the potential for nationalisation of enterprises or  government policies favouring local production, renegotiation or  nullification of existing agreements, fluctuations in interest rates and  currency exchange rates, the introduction of exchange controls and other  restrictions by foreign governments, timeliness of client payments, differing  protections for intellectual property and enforcement thereof and divergent  environmental laws and regulations. Risk factors Continuing political and  social unrest in the Middle East may have a negative impact on existing and  future opportunities in the region. Changes in commodity prices may impact  demand for our services. Commodity prices are volatile and are influenced by  a number of external factors, including the supply of and demand for  commodities, speculative activities by market participants, global political  and economic conditions, the levels of production in major  commodity-producing countries and the costs of exploring for, developing,  producing and delivering the commodities. Fluctuations in commodity prices may  impact customer spending on capital investment and asset maintenance and may  result in delays or cancellation of projects. A sustained reduction in oil  prices may adversely impact investment in both oil and gas production by  driving international oil companies to focus on ways in which they can be  more capital efficient. Such companies may choose to reduce overall levels of  upstream capital expenditure and look at options to improve the efficiency of  operating expenditure. Fluctuations in the price of metals and minerals, such  as gold and copper, have also impacted mining customer spending. Such  declines in the levels of customer spending as a result of a reduction in  commodity prices could negatively impact our operations. Any delay, deferral  or size reduction in our customers’ projects may restrict the opportunities  available to us for organic growth and the achievement of our targets.  Expected cost, revenue and tax synergies in relation to the acquisition of  Foster Wheeler may not be achieved or may be materially lower than has been  estimated. We expect that the acquisition of Foster Wheeler will produce  significant cost and revenue synergies. We estimate that the acquisition will  create cost synergies of at least US$125m per year, principally from overhead  reduction and the removal of other administrative cost duplication, with the  full benefit of the cost synergies estimated to be realised by the third year  after completion of the acquisition. We also believe that the acquisition  will result in a number of operational benefits, such as greater scale in  Latin America, the Middle East and Asia and cross-selling opportunities to a  combined customer base. If we are not able to successfully complete the  integration process in an efficient and effective manner, the anticipated  synergies may not be realised fully, or at all, or may take longer to realise  than expected. Furthermore, any expected revenue synergies may not  materialise, or may be offset by competing commercial considerations arising  out of the acquisition: for example, our existing business and Foster Wheeler  may act for competing private sector customers which, for confidentiality  reasons, may not wish to award work to businesses that also provide services  to their competitors. |
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|  | 165 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Integration of Foster Wheeler involves numerous  challenges that may be more time-consuming and costly than expected. Our  future success may, in part, depend upon our ability to integrate Foster  Wheeler without disruption to our existing businesses. The integration  process is complex and will require the co-ordinated efforts of our  management teams and employees. Integration may take longer than expected,  may prove more difficult than currently anticipated or unanticipated  difficulties may arise, thereby posing a risk to our profitability. A  significant amount of management’s time will be required to achieve the  integration of the businesses, and this may distract the management team from  running our ongoing businesses. In addition, it is possible that certain key  personnel may leave during the integration period and the management team may  be required to spend additional time and money hiring suitable replacements.  We currently estimate that we will incur approximately US$75m to US$90m in  costs over the first two years following completion of the acquisition in  order to achieve the expected cost synergies. However, the costs of achieving  the expected synergies may be higher than we anticipate or there may be  significant additional unanticipated costs that we may not be able to  recover. Adverse changes in macro-economic, market and other conditions could  result in the impairment of goodwill and other intangible assets. Goodwill is  tested for impairment annually, or more often if an event or circumstance  indicates that it may be impaired. Other intangible assets are tested for  impairment whenever there is an indication of impairment. An impairment test  is an assessment of whether the carrying amount of an asset can be supported  by the net present value of the future cash flows that are expected to be  derived from it, either by use in the business or from sale. An impairment  test requires management to make certain critical assumptions including  future sales volumes, profit margins and long-term growth rates and to  determine an appropriate discount rate to apply to the estimated cash flows.  Other factors that may affect revenue and profitability (for example,  intensifying competition, pricing pressures, regulatory changes and other  industry developments) are also considered. Discount rates are based on  current yields on government bonds, the level of which may change  substantially from period to period and which may be affected by political  and economic developments which are beyond our control. An impairment loss may  be recognised in the future if there is an adverse change in the assumptions  underlying the estimated future cash flows or in the discount rates applied  to those cash flows. Whilst an impairment loss does not in itself affect cash  flows, it may be an indication that future cash flows will decline. Moreover,  no assurance can be given that any future impairment loss would not affect  the Company’s distributable reserves and, therefore, our ability to pay  dividends to our shareholders. Failure to meet customer expectations on  project delivery could result in damage to our reputation and/or loss of  repeat business and potentially lead to litigation. Many of the contracts  which we enter into with our customers are long term and may contain  liquidated damages clauses relating to on-time delivery and/or liquidated  damages relating to performance and/or liability in respect of unliquidated  damages. A number of factors including failure to follow best practice  guidelines could mean that projects are not delivered to time, cost, quality  or appropriate health, safety and environmental standards and therefore do  not meet customer expectations or the expectations of the relevant third  party. Any failure to deliver in accordance with customer expectations could  subject us to damages and/or reduce our margins on these contracts. Failure  to meet customer expectations may also result in disputes or litigation,  cancelled contracts, additional costs incurred in excess of current contract  provisions, or back-charges for alleged breaches of warranty and other  contract commitments. Damage to reputation or loss of repeat business as a  result of our failure to meet our customers’ expectations could negatively  impact our ability to win new contracts in the future. Long-term contracts may  be subject to early termination, variation or non-renewal provisions. We  enter into long-term contracts with customers, which are performed over a  period that may exceed two years. Such contracts may be terminated earlier  than expected, either within the relevant notice periods or upon default or  non-performance by ourselves which may result in additional costs if adequate  compensation is not received. Projects included in our order book may be  delayed or cancelled. Changes in project scope or schedule create uncertainty  as to the portion of orders that can be performed or the amount of revenue  that will be recognised in any given year. Customers may also not be able to  secure the necessary financing and approvals for their projects, which could  result in a delay or cancellation of the proposed project. Even where a  project proceeds as scheduled, it is possible that contracted parties may  default and fail to pay amounts owed. Furthermore, fluctuations in currency  exchange rates may affect the value of the order book. As a result of these  uncertainties, the order book may not be a reliable indicator of our future  revenue or profitability. |
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|  | 166 Amec Foster  Wheeler Annual report and accounts 2014 Risk factors continued Lump-sum  contracts are more subject to unanticipated modifications, technical problems  and delays. Prior to the acquisition of Foster Wheeler, we usually entered  into reimbursable contracts, but in limited circumstances, where the customer  and project are well known to us, such as with work for the US federal  government or in the Clean Energy business in the Americas or on occasion in  other AMEC businesses, we have entered into lump-sum contracts in which we  contracted based upon specifications and other design information provided by  the customer. Comparatively, Foster Wheeler historically entered into a  higher percentage of lump-sum contracts, including lump-sum turnkey contracts  and other fixed-price contracts, mostly within its Global Power Group.  Lump-sum contracts carry different risks than reimbursable contracts because  the selling price of the project is agreed based on estimates at the time the  contractor enters into the contract and the contractor assumes a greater  proportion of the risks associated with completing the project. In  particular, in the EPC contracts in which we engage, the contractor often  assumes the risk of variations from original contract projections due to  engineering design changes or project modifications that the contractor has  to make after submitting its tender. There may also be unanticipated  technical problems with the equipment being supplied or developed by the  contractor, changes in the costs of components, materials or labour,  difficulties in obtaining required governmental permits or approvals, changes  in labour conditions and other unexpected delays or costs. We may incur a  loss on contracts that are subject to these amendments if we are unable to  obtain a variation of the contract, or are not sufficiently reimbursed for  the costs incurred as a result of these changes or modifications. We may lose  key management or face difficulty in attracting and retaining appropriately  skilled personnel. Our future success is dependent on our ability to attract  and retain key management, qualified engineering managers and lead engineers,  project managers and other highly skilled personnel. It will be particularly  important for us to retain the expertise of Foster Wheeler’s management and  personnel in markets and jurisdictions in which we were not involved before  the acquisition of Foster Wheeler. Many of the markets in which we operate  continue to experience a scarcity of resources for key positions and we face  intense competition for suitably qualified and experienced personnel from  other companies and organisations. While we may have appropriately qualified  and experienced personnel, we may find it difficult to move them between  projects and regions and this could impact our ability to meet obligations  under our contracts. Senior management departures or prolonged absences, key  personnel shortages and difficulties in relocating our personnel could  adversely affect our ability to implement our strategy and manage our  operations efficiently. Failure to comply with health, safety and  environmental laws may result in losses. We are subject to numerous laws,  regulations and policies concerning the protection of health, safety and the  environment, such as those concerning the use and production of waste and  by-products considered to be hazardous under the environmental laws and  regulations of the jurisdictions in which we operate, including nuclear and  other low-level radioactive materials, the remediation of environmental  contamination, waste water and waste disposal or that otherwise relate to  environmental protection. Failure to comply with such laws, regulations and  policies and non-compliance could potentially lead to reputational damage,  fines, litigation and claims for compensation, which can be substantial. Such  failure may also result in the withdrawal or suspension of licences and  permits or we may be forced to undertake extensive remedial clean-up action  or to pay for government-ordered remedial clean-up actions, even in cases  where such hazards have been caused by third parties. We may be subject to  liabilities for environmental contamination as an owner or operator (or  former owner or operator) of a facility, or as a generator of hazardous  substances, without regard to negligence or fault. Our Clean Energy business  is involved in providing services to operators and utilities in the full  lifecycle of nuclear energy, from new build and reactor support to nuclear  decommissioning and the management of radioactive and hazardous materials. We  could, therefore, be exposed to risks associated with the nuclear industry  and the impact of nuclear regulation. As part of any contract involving work  or services at or in connection with nuclear facilities, we typically require  an indemnity in respect of nuclear liability from our customers. Where an  indemnity is not provided, international nuclear conventions, such as the  Paris Convention and the Vienna Convention, protect us against liability,  provided that our contracting entity is registered in a country which is a  signatory of the relevant convention. In cases where our customers are not  prepared to provide an indemnity of this nature and no protection is provided  by international convention, we may be required to bear the cost of such  liabilities in addition to any reputational damage. Changes in environmental  laws and regulations, remediation obligations, enforcement actions, stricter  interpretations of existing requirements, future discovery of contamination  or claims for damages to persons, property, natural resources or the  environment could result in unanticipated material costs and liabilities. |
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|  | 167 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information A major safety incident could lead to  reputational damage and increase potential liabilities. We are involved in  activities and environments that can be dangerous and that have the potential  to cause serious injury to personnel or damage to property or the  environment. Our projects are increasingly complex and place employees and  others near large equipment, dangerous processes, highly regulated materials  or in remote and challenging environments. We are responsible for the safety  and security of our employees travelling on company business and while  working at project sites and of third-party personnel while working at  project sites under our supervision, and, accordingly, must implement safety  procedures. Failure to comply with such procedures may cause us to be subject  to losses and liability under client contracts or statutory regulations. Any  failure in health and safety performance which results in a major or  significant health and safety or environmental incident is likely to result  in additional costs in terms of potential liabilities or remediation costs.  Such failure could generate significant adverse publicity, resulting in  employee turnover and damage to our reputation which may adversely impact our  ability to win new business. Failure or security breaches of our IT systems  and/or data security or failure to effectively integrate Foster Wheeler’s IT  systems may result in losses. We are dependent on the efficient operation of  our IT systems. Such systems may fail and/or sensitive data held by them may  be lost. Information and communication systems are, by their nature,  susceptible to internal and external security breaches, including computer  hacker and cyber terrorist breaches, employee wilful breaches and the risk of  employees succumbing to criminal scamming from external sources, and can fail  or become unavailable for a significant period of time. A significant  performance failure of the Group’s IT systems could lead to loss of control  over critical business, project information and/or systems (such as design  tools, contract costs, invoicing, payroll management and/or internal  reporting), resulting in an adverse impact on the ability to operate  effectively or to fulfil contractual obligations. Such failure may, in turn,  lead to a loss of customers, revenue and profitability and the incurring of  significant remedial costs. Our operations are especially dependent on the  use of internal data and customer data. We have incurred, and will continue  to incur, expenses to comply with mandatory privacy and security standards  and protocols imposed by law, regulation, industry standards or contractual  obligations relating to the collection, use and security of personal  information data. Failure to comply with such data privacy laws and  regulations may result in fines, penalties, claims and reputational damage.  Additionally, if data security controls fail, there is a risk that we will  unintentionally disclose protected or sensitive data, including important intellectual  property, which could lead to the violation of client confidentiality  agreements, reputational harm and the loss of critical data. We have  developed a plan to harmonise Foster Wheeler’s IT systems with our own. As a  result of the differences between our existing IT systems and Foster  Wheeler’s, there can be no assurance that this harmonisation will be  successful. We may experience failures in either Foster Wheeler’s IT systems  or our own as we work to integrate them. Failure to comply with anti-corruption  laws and regulations, economic sanction programmes or other laws and  regulations may result in us becoming subject to fines or penalties and the  disruption of our business activities. Many of the countries in which we  operate have anti-corruption laws and regulations that restrict the offer or  payment of anything of value to government officials or other persons with  the intent of gaining business or favourable government action. We are  subject to these laws and regulations, including the US Foreign Corrupt  Practices Act of 1977 and the UK Bribery Act 2010. Additionally, economic  sanctions programmes, including those administered by the United Nations, the  EU and the US Office of Foreign Asset Control, restrict our business dealings  with certain sanctioned countries. Many of these regulations and sanctions  programmes establish recordkeeping obligations. We are exposed to the risk of  violating anti-corruption laws and sanctions regulations applicable in those  countries where we, our partners or agents operate. Some of the locations in  which we currently operate lack a developed legal system, have high levels of  corruption and have proven to be susceptible to the occurrence of fraud.  Whilst we mandate compliance with relevant policies, laws and regulations  (including anti-corruption laws) and have implemented procedures and controls  to monitor internal and external compliance, there can be no assurance that  our policies and procedures will be followed at all times or will effectively  detect and/or prevent violations of the applicable laws or other fraudulent  activity by one or more of our employees, consultants, subcontractors, agents  or partners. Violations of anti-corruption laws and sanctions regulations are  punishable by civil penalties, including fines, denial of export privileges,  injunctions, asset seizures, debarment from government contracts (and  termination of existing contracts) and revocations or restrictions of  licences, as well as criminal fines and imprisonment. In addition, any major  violations of policy, law or regulation (including instances of fraud) could  have a significant impact on our reputation and consequently on our ability  to win future business. |
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|  | 168 Amec Foster  Wheeler Annual report and accounts 2014 Funding risks in relation to defined  benefit pension schemes. We operate a number of defined benefit pension  schemes, where careful judgement is required in determining the assumptions  for future salary and pension increases (for those plans that are not  frozen), discount rate, inflation, investment return and member longevity. We  expect to continue to operate these schemes, although the most significant  schemes are now closed to new entrants. Based on our current assumptions, we  expect that we will be able to fund these pension schemes without seeking  recourse to additional external financing. Actual outcomes could, however,  differ from our assumptions. For example, a prolonged period of lower than  expected asset returns and/or unexpected increases in longevity could create  or worsen a funding shortfall on one or more of the schemes, in which  circumstances we may agree or be required to make additional cash  contributions to the schemes to eliminate the funding shortfall. If  significant, such additional contributions may constrain our ability to invest  in acquisitions or undertake capital expenditure, thereby adversely impacting  our growth and profitability. If the actual number and/or cost to the Group  of resolving asbestos-related claims is higher than expected, there may be an  adverse effect on our cash flows and our results to the extent that the  additional cost is not covered by insurance, or expected insurance recoveries  are not, in fact, realised. Certain of the Company’s subsidiaries have been  named as defendants in numerous lawsuits and out-of-court administrative  claims in which the plaintiffs claim damages for alleged bodily injury or  death arising from exposure to asbestos primarily in connection with asbestos  placed by others on steam-generating units and auxiliary equipment assembled,  installed and/or sold, by those subsidiaries. In the US, certain of Foster  Wheeler’s subsidiaries have received claims alleging personal injuries due to  contracting work performed by them and more rarely from exposure to  asbestos-containing components installed in their steam-generating units and  auxiliary equipment. We expect that these subsidiaries will be named as  defendants in additional and/or similar suits and that new claims will be  filed in the future. Whilst some of these claims have been and are expected  to be made in the UK, the overwhelming majority have been and are expected to  be made in the US. We have provided for the estimated indemnity amounts and  defence costs that we expect to incur in relation to open and expected future  asbestos-related claims in each year in the period to 2050. We have also  recognised the estimated future recoveries under our insurance arrangements  against the costs of resolving these claims. It is possible that the actual  number of future claims brought against us and the cost of resolving pending  and future claims could be substantially higher than expected due to a number  of factors, which include: X an increase in the rate at which new claims are  filed and increases in the number of new claimants; X adverse changes in the  mix of diseases alleged to be suffered by the claimants; X adverse changes in  the mix of claimants making allegations; X increases in indemnity payments or  defence costs associated with asbestos-related claims; X decreases in the  proportion of claims dismissed with zero indemnity payments; X indemnity  payments being required to be made sooner than expected; X adverse  fluctuations in the discount rate (e.g., the 30-year US Treasury rate) used  to discount the provision for asbestosrelated claims and related insurance  recoveries; X adverse changes to forecasting, estimation or valuation  assumptions or methodologies (whether related to potential liabilities,  claims and/or associated costs); X payment of damages in amounts greater than  expected; and X adverse changes in legislative or judicial standards  governing the filing, handling or resolution of asbestos-related claims.  Whilst certain of these claims are covered by insurance, the settlements that  we made with our insurers were sometimes for fixed monetary amounts and/or  provide cover only for claims made before a specified future date.  Accordingly, a future increase in the Group’s asbestos-related liabilities  would not result in an equivalent increase in the amount recoverable from  those insurers. It is also possible that insurance recoveries may not be  realised in full and on time or at all, due to insurer insolvency or for some  other reason. To the extent that any defence and/or indemnity costs incurred  by us for open and expected future asbestos-related claims are not covered by  insurance proceeds, we would be responsible for the payment of those costs,  which would adversely affect our cash flows. Obligations and liabilities  relating to divested and non-core businesses. We remain at risk to potential  litigation and business claims in relation to divested and non-core  businesses where we have provided customary warranties to the purchaser or  have continuing obligations such as to carry out environmental remediation.  Where appropriate, we have made provision for these obligations but it is  possible that the actual costs incurred in settling any claims will  materially exceed those provisions. Risk factors continued |
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|  | 169 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information We assess the financial performance of our businesses using a  variety of measures. Certain of these measures are particularly important and  we have termed them ‘key performance indicators’. We refer to these measures  in the strategic report and use them in presentations to investors. In this  section, we explain the relevance to us of each of these measures and show  how they are calculated. Some of these measures are non-IFRS measures because  they exclude amounts that are included in, or include amounts that are  excluded from, the most directly comparable measure calculated and presented  in accordance with IFRS, or are calculated using financial measures that are  not calculated in accordance with IFRS. We do not regard these non-IFRS  measures as a substitute for, or superior to, the equivalent measures  calculated and presented in accordance with IFRS and it should be noted that  they may not be comparable with similarly-titled measures used by other  companies. Scope revenue Scope revenue represents reported revenue less  flow-through procurement revenue. Flow-through procurement revenue and costs  are recognised when we purchase materials, equipment or third-party services  for our customers on a reimbursable basis. We do not recognise any profit on  flow-through procurement costs. Scope revenue is a non-IFRS measure that we  present because it represents the revenue that we have earned from providing  services to our customers. We use scope revenue in the calculation of trading  margin because our margins would otherwise be reduced by flow-through revenue  on which we earn no profit and would fluctuate from one period to another  depending on the extent of procurement activities. 2014 £m 2013 £m 2012 £m  Continuing operations Revenue 3,993 3,974 4,088 Flow-through procurement  revenue (73) (120) (320) Scope revenue 3,920 3,854 3,768 Profitability measures  Management uses three measures of profitability that are not recognised  measures under IFRS: trading profit, trading margin and adjusted profit  before tax. Each of these measures is based on an IFRS measure of profit but  excludes specific items whose inclusion in the IFRS measure hinders the  comparison of the trading performance of our businesses from one period to  another, with each other or with those of our competitors. Management has  identified the following specific items that are excluded in arriving at  these non-IFRS measures: exceptional items; the amortisation of intangible  assets; and asbestos-related costs (net of insurance recoveries). Exceptional  items are items of income and expense that are material by their size,  incidence or nature and may include, but are not restricted to:  acquisitionrelated costs; restructuring costs; gains and losses on the  disposal of fixed assets; and gains and losses on the disposal or closure of  businesses. Acquisition-related costs may include transaction costs  (including external advisory, legal, valuation and other professional fees  and attributable internal costs), the amortisation of acquisition-related  facility fees, payments to selling shareholders that are accounted for as  remuneration and changes in the fair value of contingent consideration.  Exceptional items that were recognised in continuing operations are analysed  in note 5 to the consolidated financial statements. Trading profit, trading  margin and adjusted profit before tax exclude items that can have a  significant effect on the Group’s profit or loss and should, therefore, be  used in conjunction with, and not as a substitute for, the equivalent IFRS  measures. Management compensates for these limitations by separately  monitoring the items that are excluded from the equivalent IFRS measures in  calculating these non-IFRS measures. Trading profit Trading profit represents  profit before net financing expense excluding exceptional items; the  amortisation of intangible assets; and asbestos-related costs (net of  insurance recoveries). Trading profit includes the Group’s share of the  trading profit of joint ventures. Trading profit is the measure used by  management to assess the trading performance of the Group’s individual  businesses and is the measure of segment profit that we present under IFRS.  Trading profit is a non-IFRS measure when presented on a consolidated basis.  2014 £m 2013 £m 2012 £m Continuing operations Profit before net financing  expense 148 243 243 Intangibles amortisation 49 47 44 Net asbestos-related  costs 8 – – Exceptional items 94 25 24 Share of trading profit of joint  ventures 22 28 23 Trading profit 321 343 334 Performance measures |
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|  | 170 Amec Foster  Wheeler Annual report and accounts 2014 Performance measures continued  Trading margin Trading margin represents trading profit expressed as a  percentage of scope revenue. Trading margin is a non-IFRS measure that is  used by management to measure the success of our businesses in managing their  cost base and improving profitability. £m unless stated otherwise 2014 2013  2012 Continuing operations Scope revenue 3,920 3,854 3,768 Trading profit 321  343 334 Trading margin 8.2% 8.9% 8.9% Adjusted profit before tax Adjusted  profit before tax represents profit before tax before exceptional items, the  amortisation of intangible assets, asbestosrelated costs and interest expense  (net of insurance recoveries), and the Group’s share of tax on the results of  joint ventures. Adjusted profit before tax is a non-IFRS measure that is used  by management to assess the trend in the Group’s overall profitability. 2014  £m 2013 £m 2012 £m Continuing operations Profit before tax 155 255 254  Intangibles amortisation 49 47 44 Net asbestos-related expense 9 – –  Exceptional items 98 25 24 Share of income tax of joint ventures 6 5 5  Adjusted profit before tax 317 332 327 Cash flow measures Trading cash flow  (previously operating cash flow) Trading cash flow represents cash generated  from operations before cash flows arising from exceptional items,  asbestos-related payments (net of insurance recoveries), the difference  between retirement benefit contributions and the current service cost, legacy  settlements and discontinued operations, and currency translation differences  on working capital, but including dividends received from joint ventures.  Trading cash flow is a non-IFRS measure which is an indicator of the Group’s  ability to generate cash from its continuing operations before taking into  account exceptional items and the servicing of long-term obligations and the  settlement of legacy issues. 2014 £m 2013 £m 2012 £m Cash generated from  operations 200 292 271 Net asbestos-related payments 5 – – Excess of pension  contributions over current service cost 2 – 5 Cash outflow on exceptional  items 58 21 19 Legacy settlements and discontinued operations 9 14 – Currency  translation differences (5) 6 6 Dividends received from joint ventures 14 8  11 Trading cash flow 283 341 312 Cash conversion Cash conversion represents  trading cash flow expressed as a percentage of trading profit. Cash  conversion is a non-IFRS measure that we use as a measure of the efficiency  of our businesses in converting their trading results into cash. £m unless  stated otherwise 2014 2013 2012 Trading cash flow 283 341 312 Trading profit  321 343 334 Cash conversion 88% 99% 93% |
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|  | 171 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Other measures Underlying change in revenue  Management uses the underlying change in revenue to measure the organic  growth of our businesses relative to each other, to our markets and to our  competitors. We define the underlying change as the year-on-year change  excluding the effect of flow-through procurement, acquisitions and disposals  of businesses and currency exchange rate movements. Underlying change – 2014  compared with 2013 2013 £m Currency translation £m Change in flow-through  procurement £m Acquisitions £m Underlying change £m 2014 £m Underlying change  % Continuing operations Americas 2,247 (193) (70) 17 71 2,072 +4% Europe  1,227 (8) – 1 (101) 1,119 -8% Growth Regions 536 (37) – – 91 590 +18%  Investment Services 6 – – – – 6 0% Intercompany eliminations (42) – – – (26)  (68) n/a AMEC 3,974 (238) (70) 18 35 3,719 +1% E&C Services 221 Global  Power Group 53 Foster Wheeler 274 Amec Foster Wheeler 3,993 Underlying change  – 2013 compared with 2012 2012 £m Currency translation £m Change in  flow-through procurement £m Acquisitions £m Underlying change £m 2013 £m  Underlying change % Continuing operations Americas 2,500 (10) (200) 13 (56)  2,247 -2% Europe 1,080 1 – 29 117 1,227 +11% Growth Regions 531 (13) – 8 10  536 +2% Investment Services 9 – – – (3) 6 0% Intercompany eliminations (32) –  – – (10) (42) n/a AMEC 4,088 (22) (200) 50 58 3,974 +2% Adjusted diluted EPS  Adjusted diluted earnings per share represents profit for the year from  continuing operations before exceptional items, the amortisation of  intangible assets, asbestos-related costs and interest expense (net of  insurance recoveries), and the tax effect of those items, divided by the  diluted number of ordinary shares. Growth in adjusted diluted EPS from  continuing operations is an indicator of the underlying trend in the Group’s  ability to generate earnings and may be useful to investors in assessing the  value of the Company’s ordinary shares (for example, by way of price earnings  multiples). Whilst IFRS does not define any adjusted EPS measures, the  presentation of such measures is permitted in financial statements prepared  in accordance with IFRS. Accordingly, reconciliations of adjusted diluted EPS  to diluted EPS from continuing operations for each period presented are  included in note 10 to the consolidated financial statements. |
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|  | 172 Amec Foster  Wheeler Annual report and accounts 2014 Dividend cover Dividend cover is a  non-IFRS measure that represents adjusted diluted EPS from continuing  operations as a multiple of the dividend per ordinary share. Whilst dividend  cover is an indicator of the sustainability of future dividend payments in  the context of the Group’s underlying trading performance, we can only pay  dividends to the extent of the Company’s accumulated distributable reserves.  2014 2013 2012 Dividend per ordinary share 43.3p1 42.0p 36.5p Adjusted  diluted EPS from continuing operations 79.5p 87.2p 78.6p Dividend cover 1.8x  2.1x 2.2x 1 Includes the proposed final dividend for 2014 of 28.5 pence per  ordinary share. Order book Our order book represents the total remaining  value of secured projects to be executed up to any break point in the  relevant contracts. Contracts are included in our order book only when they  are signed and we do not include contracts won by joint ventures. Our order  book and order intake are significant indicators of our future revenues. As  at 31 December 2014, our order book was £6.3bn (2013: £4.1bn). We discuss  significant recent contract wins in the strategic report on page 18.  Performance measures continued |
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|  | 173 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Continuing operations £m unless stated 2013 20121 Change  Underlying change2 Reported under IFRS Revenue 3,974 4,088 -3% Profit before  net financing expense 243 243 0% Profit before tax 255 254 0% Profit for the  year 186 207 -10% Adjusted measures2 Scope revenue 3,854 3,768 -2% +2%  Trading profit 343 334 +3% Trading margin 8.9% 8.9% 0bps Adjusted profit  before tax 332 327 +2% 1 Restated for the adoption of IAS 19 (Revised 2011)  ‘Employee Benefits’ and the reclassification of the UK conventional power  business as a discontinued operation. 2 See Performance measures on pages 169  to 172. Revenue Revenue for the year declined by 3% compared with 2012 to  £3,974m (2012: £4,088m). Revenue declined across all regions in the mining  market to £493m (2012: £682m). Revenue from unconventional oil and gas (oil  sands) in Canada declined to £510m (2012: £668m), primarily the result of  reduced service and flow-through procurement activity at the Kearl oil sands  facility. Revenue from conventional oil and gas increased by £237m, primarily  as a result of growth in the number of brownfield projects across the world.  Currency exchange rate movements reduced revenue by £22m in 2013 compared  with 2012. Excluding flow-through procurement, underlying revenue increased  by 2%, driven by growth in oil and gas and renewables. Administrative  expenses Administrative expenses were £293m (2012: £289m), including  intangibles amortisation and exceptional costs totalling £65m (2012: £68m).  Administrative expenses before intangibles amortisation and exceptional costs  increased by 3% to £228m (2012: £221m), principally due to the inclusion for  a full year of the administrative expenses of ESRC, which was acquired during  2012, and increased corporate costs. Corporate costs, which comprise the  costs of operating central corporate functions and certain regional  overheads, increased by £2m to £35m (2012: £33m). Profit before net financing  expense Profit before net financing expense was unchanged compared with 2012  at £243m. Prior year operating results Amortisation and impairment of  intangible assets Intangible assets principally comprise goodwill and  identifiable intangible assets that were recognised in relation to acquired  businesses. Goodwill is not amortised but is subject to an annual impairment  test. No impairment was recognised in either 2013 or 2012. Intangibles  amortisation was £47m (2012: £44m), the increase being due to the full-year  impact of acquisitions completed in 2012 and accelerated amortisation of the  intangible assets recognised on a prior year acquisition. Exceptional items  Exceptional costs and losses totalling £25m (2012: £24m) were recognised in  arriving at profit before tax from continuing operations, as follows: X  exceptional costs of £18m which comprised transaction costs of £4m and  restructuring costs of £14m associated with the re-organisation of the  management structure of the Group into geographical business units. X a loss  of £7m arising from adjustments to provisions made in respect of disposals  and closures of businesses in prior years. Additionally, in 2013, there was  an exceptional income tax expense of £16m due to the provision for potential  withholding tax following a group restructuring that resulted in significant  amounts of cash being repatriated from foreign subsidiaries. Trading profit  and trading margin £m unless stated 2013 2012 Change Underlying change1  Revenue 3,974 4,088 -3% Flow-through procurement (120) (320) Scope revenue  3,854 3,768 -2% +2% Profit before net financing expense 243 243 Intangibles  amortisation 47 44 Exceptional items 25 24 Share of trading profit of joint  ventures 28 23 Trading profit1 343 334 +3% Trading margin1 8.9% 8.9% 0bps 1  Non-IFRS measure (see Performance measures on pages 169 to 172). Trading  profit increased by 3% to £343m (2012: £334m). Trading margin was unchanged  at 8.9% (2012: 8.9%). |
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|  | 174 Amec Foster  Wheeler Annual report and accounts 2014 Prior year operating results  continued In Americas, trading profit and trading profit margin increased as  a result of the successful close-out (i.e. the settlement of final accounts)  of a number of projects within the oil and gas and mining markets, which  enabled the release of contingencies and provisions related to certain  projects. Trading margin also benefited from the reduction in flow-through  procurement. By contrast, in Europe trading profit and trading margin were  adversely affected by the reduction in contribution from the NMP joint venture  and losses incurred from contract delays at the Teesside Gas Processing  Plant. Trading profit margin was also affected by changes in business mix. In  the Growth Regions, the positive impact on trading profit and trading margin  of cost efficiencies arising from integrating the business into the new  geographic structure was offset by difficult market conditions in Australia.  Currency exchange rate movements reduced trading profit by £2m in 2013  compared with 2012. Net financing expense Net financing expense was £2m  (2012: £1m) and comprised net bank interest payable of £2m (2012: £2m  receivable), net foreign exchange losses of £1m (2012: £nil) and net interest  income on pension assets and liabilities of £1m (2012: £3m expense). A net  currency exchange loss of £1m (2012: gain of £1m) was recognised in the  translation reserve in respect of derivatives held in designated net  investment hedging relationships. Share of results of joint ventures The  Group’s share of joint ventures’ profit for the year was £14m (2012: £12m).  Profit before tax Profit before tax was broadly unchanged at £255m (2012:  £254m) after intangibles amortisation of £47m (2012: £44m), exceptional costs  and losses of £25m (2012: £24m) and the Group’s share of joint ventures’ tax  expense of £5m (2012: £5m). Adjusted profit before tax was 2% ahead at £332m  (2012: £327m). Taxation Income tax on continuing operations was £69m (2012:  £47m). During 2013, there was an exceptional income tax expense of £16m  (2012: £nil) and a tax charge on other exceptional items of £6m (2012: tax  credit of £9m), the effect of which was partially offset by an increase in  the tax credit on intangibles amortisation to £20m (2012: £12m). The Group’s  share of joint ventures’ income tax expense was £5m (2012: £5m). The Group’s  effective tax rate on continuing operations (including its share of joint  ventures’ income tax expense but before exceptional items and intangibles  amortisation) declined to 21.9% (2012: 22.5%). The reduction principally  reflected decreases in statutory tax rates, a reduction in the tax rate  applied to the UK pension surplus, changes in the recognition of tax losses  and the agreement of historical items with various tax authorities. Profit  for the year from continuing operations Profit for the year from continuing  operations was £186m (2012: £207m) after intangibles amortisation of £47m  (2012: £44m), exceptional costs and losses of £25m (2012: £24m), an income  tax credit on those items of £14m (2012: £21m) and, in 2013, an exceptional  income tax expense of £16m. Adjusted profit for the year from continuing  operations increased by 2% to £265m (2012: £259m). Results by operating  segment Americas £m unless stated 2013 2012 Change Underlying change1 Revenue  2,247 2,500 -10% Flow-through procurement (120) (320) Scope revenue1 2,127  2,180 -2% -2% Profit before net financing expense 211 212 Intangibles  amortisation 18 18 Exceptional items 10 1 Share of trading profit of joint  ventures 2 2 Trading profit1 241 233 +3% Trading margin1 11.3% 10.7% +60bps 1  Non-IFRS measure (see Performance measures on pages 169 to 172). Revenue in  Americas was £2,247m (2012: £2,500m), a decline of 10%. Growth of £49m across  conventional oil and gas and renewables was outweighed by a decline in mining  of £112m and in oil sands due to the phasing of work on certain major  projects and the £200m reduction in flow-through procurement to £120m.  Excluding flow-through procurement, underlying revenue declined by 2%  compared with 2012. Trading profit increased by 3% to £241m (2012: £233m).  Trading margin was 11.3%, up 60 bps compared with 2012, largely as a result  of the benefits of cost efficiencies following the geographical restructuring  in 2012, favourable project close-outs and from increased grants from the US  government for research and development activities. |
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|  | 175 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Europe £m unless stated 2013 2012 Change  Underlying change1 Revenue 1,227 1,080 +14% +11% Profit before net financing  expense 63 61 Intangibles amortisation 17 16 Exceptional items 1 3 Share of  trading profit of joint ventures 12 15 Trading profit1 93 95 -2% Trading  margin1 7.6% 8.8% -120bps 1 Non-IFRS measure (see Performance measures on  pages 169 to 172). Revenue in Europe improved by 14% to £1,227m (2012:  £1,080m), primarily due to the level of oil and gas activity in the North Sea  and the inclusion of a full year’s revenue of ESRC in the clean energy market  following its acquisition in 2012. Trading profit declined 2% to £93m (2012:  £95m). Trading margin was 7.6%, down 120 bps compared with 2012. Trading  margin declined largely as the result of a reduced contribution from the  Sellafield joint venture (£12m in 2013 compared with £15m in 2012) and losses  incurred due to delays in the Teesside Gas Processing Plant contract. Growth  Regions £m unless stated 2013 2012 Change Underlying change1 Revenue 536 531  +1% +2% Profit before net financing expense 10 1 Intangibles amortisation 12  10 Exceptional items 7 18 Share of trading profit of joint ventures 4 3  Trading profit1 33 32 +3% Trading margin1 6.2% 6.1% +10bps 1 Non-IFRS measure  (see Performance measures on pages 169 to 172). Revenue in Growth Regions  improved by 1% to £536m (2012: £531m), primarily driven by increased revenue  from oil and gas activities in the Middle East which was partially offset by  the decline in mining revenue in Australia. Trading profit increased by 3% to  £33m (2012: £32m) and the trading margin was 6.2%, up 10 bps compared with  2012. Cost efficiencies resulting from the geographical restructuring in  2012, were offset by the effect of weak market conditions in Australia.  Investment Services During the periods under review, Investment Services  principally comprised the Incheon Bridge PPP project in Korea and the  Lancashire waste PFI project (which was subsequently exited in 2014), the  Group’s insurance captive, the Group’s residual UK wind development  activities and a range of other non-core activities. Revenue in Investment  Services was £6m (2012: £9m). Profit before net financing expense was £11m  (2012: £7m), of which £7m (2012: £2m) was derived from joint ventures. The  Investment Services result increased significantly in 2013 compared with 2012  due to the successful resolution of disputes relating to the Group’s former  construction business in North America. Discontinued operations Discontinued  operations represent the residual assets and retained obligations of  businesses sold in prior years, together with the UK conventional power  business that was classified as a discontinued operation during 2013.  Discontinued operations generated a trading loss before tax of £10m (2012:  loss of £4m) and after a tax credit of £2m (2012: £1m) generated a loss for  the year of £8m (2012: loss of £3m). Discontinued operations included a loss  on disposals of £6m (2012: loss of £11m) and, in 2012, an exceptional gain of  £17m on the recognition of an insurance recovery in relation to mesothelioma  liabilities following a judgement of the UK Supreme Court. Discontinued  operations generated an overall loss for the year of £8m (2012: profit of  £2m). Before exceptional items and losses on disposals, discontinued  operations showed a loss for the year of £8m (2012: loss of £3m). |
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|  | 176 Amec Foster Wheeler Annual  report and accounts 2014 Our website Our website, amecfw.com, is the best  source of useful, up-to-date information about Amec Foster Wheeler and its  activities, including annual reports, AGM documents and other shareholder  communications. All announcements made to the London Stock Exchange can be  found on our website and you can arrange to receive email alerts of such  announcements. Information made available on our website, or other websites  mentioned in this annual report, are not, and should not be considered as  being, part of or incorporated into this annual report or our annual report  on Form 20-F. Financial calendar We published the Group’s full-year 2014  results and the 2014 annual report later than usual as a consequence of the  acquisition of Foster Wheeler having completed so close to the Group’s  year-end date. Management expects to move towards the Group’s normal  financial calendar during 2015 as follows: Annual General Meeting1 14 May  2015 Payment of final dividend for 20142 2 July 2015 Half-year 2015 results  issued 27 August 2015 Payment of interim dividend for 2015 January 2016  Full-year 2015 results issued 10 March 2016 2015 annual report published3  March 2016 1 Information on the Company’s AGM is provided in the Directors’  report. 2 Subject to approval by shareholders. 3 Our annual report will be  filed with the SEC on Form 20-F and periodic results announcements will be  furnished to the SEC on Form 6-K. Where they have not yet been determined,  the exact dates of the above events will be finalised as the year progresses  and can be found on our website. Share price The latest price of the  Company’s shares can be found on our website and may also be obtained from  the London Stock Exchange’s website, www.londonstockexchange.com (in both  cases the live share price is updated with a 15-minute delay). Dividends We  usually announce our interim dividend for the year with our half-year results  in August and it is paid in the following January. We propose our final  dividend for the year with the full-year results and, subject to shareholder  approval at the subsequent AGM, it is paid in the following July. Dividends  can be paid directly into your bank or building society account and can also  be paid in local currency in certain overseas territories. Shareholders  should contact the Company’s registrars to take advantage of these  facilities. We have a DRIP to allow shareholders to acquire more of the  Company’s shares rather than receive cash dividends. The DRIP is only  available to shareholders in certain countries. You can find out more on our  website or by contacting the Company’s registrars. Registrars The Company’s  registrars are Capita Asset Services. They maintain the shareholder register  on our behalf and handle all administration related to it. They should be  your first port of call if you have any queries relating to your shareholding  in Amec Foster Wheeler. For DRIP, electronic communications and general  enquiries Email shareholderenquiries@capita.co.uk Website  www.capitaassetservices.com Postal address Capita Asset Services The Registry  34 Beckenham Road Beckenham Kent BR3 4TU United Kingdom Telephone1 UK 0871  664 03002 Others +44 20 8639 3399 Payment of dividends overseas Telephone1  +44 20 8639 3405 Email ips@capita.co.uk 1 Lines open 9.00am to 5.30pm UK  time, Monday to Friday (excluding public holidays). 2 Calls cost 10 pence per  minute plus network extras. Electronic shareholder communication The majority  of our shareholders now receive information from us electronically. If you  have elected to do so and have provided an email address, you will receive an  email from us whenever any new shareholder information is published. If you  have not provided an email address, you will be sent a letter that includes  details of where the information can be found on our website. You can  register for electronic shareholder communication and also manage your  personal shareholding online at www.capitashareportal.com. You will need your  Investor Code (IVC) which can be found on your proxy card, share certificate  or dividend tax voucher. Printed copies of the annual report Shareholders may  receive a printed copy of the Company’s latest annual report on request by  writing to our registered office or by filling in the form on our website.  Unauthorised brokers (boiler room scams) Shareholders are advised to be wary  if they receive any unsolicited calls or correspondence making claims of  highly profitable investment opportunities. Typically these investments turn  out to be worthless or simply do not exist. Such approaches are usually made  by unauthorised companies and individuals and are commonly known as boiler  room scams. If you receive any unsolicited investment advice or offers to buy  shares from a source that is unknown to you, we recommend that you obtain the  name of the person and organisation that has contacted you and check whether  they are properly authorised by the Financial Conduct Authority by visiting  its website at www.fca.org.uk/register. If you think that you have been  approached by an unauthorised organisation, you are advised to contact the  Financial Conduct Authority’s consumer helpline on +44 (0)800 111 6768 or  email consumer.enquiries@fca.org.uk. Information for shareholders |
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|  | 177 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information Holders of ADSs ADSs and ADRs The Company’s ordinary shares are  traded in the form of ADSs on the NYSE. Each ADS represents one ordinary  share. The ADSs are evidenced by ADRs issued by Deutsche Bank Trust Company  Americas as Depositary under a deposit agreement dated 2 October 2014. The  ADRs are issued in respect of ordinary shares deposited with State Street  Bank & Trust Company, as custodian for the Depositary. ADSs may be held  directly by having an ADR (a certificate evidencing a specific number of  ADSs) registered in your name or by holding ADSs in the Direct Registration  System, or indirectly through a broker or other financial institution. If you  hold ADSs directly, you are an ADS holder. The Company’s ADSs are issued  through the Direct Registration System unless the investor specifically  requests to receive certificated ADRs. A registered holder is one whose name  appears on the books of the Depositary. The registered holder is considered  the owner of record. A beneficial holder is one whose holdings are registered  in a name other than their own, such as the name of a broker, bank or  nominee. ADS holders are not members of the Company but may instruct the  Depositary on the exercise of voting rights relative to the number of  ordinary shares represented by their ADSs. Role of the Depositary The  Depositary performs the following roles for ADS holders: X distributes  company circulars and documents in relation to general meetings of the  Company (including the AGM); X distributes dividends in US dollars; X  facilitates the voting process and the exercise of voting rights of ADS  holders at any general meeting of the Company; X issues and cancels the  Company’s ADSs; X acts as the stock transfer agent; and X records and  maintains the register of ADS holders. The Company provides to the Depositary  all notices of meetings of the Company’s shareholders and other reports and  communications that are made available to the Company’s shareholders. The  Depositary makes such notices, reports and communications available for  inspection by recorded holders of ADSs and sends voting instruction forms by  post to all recorded holders of ADSs. Investors who are not registered with  the Depositary because their ADRs are held through a nominee account may need  to make arrangements with their nominee if they wish to receive such  documents and to be able to exercise their vote through the Depositary at  general meetings of the Company. ADS holders may receive a printed copy of  the Company’s latest annual report on request by writing to our registered  office or by filling in the form on our website. Dividends The Depositary  will pay to ADS holders cash dividends or other distributions it or the  custodian receives on the Company’s shares after deducting its fees and  expenses. ADS holders will receive these distributions in proportion to the  number of the Company’s shares the ADSs represent at the record date (which  will be as close as practicable to the record date for the Company’s ordinary  shares) set by the Depositary with respect to the ADSs. The Depositary will  usually convert any cash dividend or other cash distribution on the Company’s  shares or any net proceeds from the sale of any ordinary shares, rights,  securities or other entitlements into US dollars. Before making a  distribution to ADS holders, any taxes or other governmental charges that  must be paid, together with the fees and expenses of the Depositary, will be deducted.  ADS enquiries All enquiries regarding ADS holder accounts and payment of  dividends should be addressed to the Depositary: Deutsche Bank Shareholder  Service American Stock Transfer & Trust Company Peck Slip Station P.O.  Box 2050 New York, NY 10272-2050 US Telephone (toll free): +1 866 706 0509  Telephone (international): +1 718 921 8137 Email: db@amstock.com DB Global  Direct US residents may enrol in DB Global Direct, enabling them to invest  directly in the Company’s ADSs with reduced brokerage commissions and service  costs. Registered ADS holders may reinvest all or a portion of their  dividends in the Company’s ADSs through DB Global Direct. For further  information on DB Global Direct, please contact Deutsche Bank (as above) or  visit www.adr.db.com. ADS price The latest price of the Company’s ADSs can be  found on our website and may also be obtained from the NYSE’s website,  www.nyse.com (in both cases the live ADS price is updated with a 15-minute  delay). Fees payable by ADS holders ADS holders are required to pay certain  service fees to the Depositary. The Depositary collects its fees for delivery  and surrender of ADSs directly from investors depositing shares or  surrendering ADSs for the purpose of withdrawal or from intermediaries acting  for them. The Depositary collects fees for making distributions to investors,  including payment of dividends by the Company, by deducting those fees from  the amounts distributed or by selling a portion of distributable property to  pay the fees. The Depositary may collect its annual fee for depositary  services by deductions from cash distributions or by directly billing  investors or by charging the book-entry system accounts of participants  acting from them. The Depositary may generally refuse to provide fee-attracting  services until its fees for those services are paid. Other information |
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|  | 178 Amec Foster  Wheeler Annual report and accounts 2014 Other information continued Service  Fees To any person to whom ADSs are issued or to any person to whom a  distribution is made in respect of ADSs pursuant to share dividends or other  free distributions of shares, bonus distributions, stock splits or other  distributions (except where converted to cash) Up to US$0.05 per ADS issued  Cancellation of ADSs (including in the case of termination of the deposit  agreement) Up to US$0.05 per ADS cancelled Distribution of cash dividends Up  to US$0.05 per ADS held Distribution of cash entitlements (other than cash  dividends) and/or cash proceeds, including proceeds from the sale of rights,  securities and other entitlements Up to US$0.05 per ADS held Distribution of  ADSs pursuant to exercise of rights Up to US$0.05 per ADS held Depositary  services Up to US$0.05 per ADS held on the applicable record date(s)  established by the Depositary ADS holders are also responsible for paying  certain fees and expenses incurred by the Depositary such as: X fees for the  transfer and registration of the Company’s shares charged by the registrar  and transfer agent for the shares in the UK; X expenses incurred for  converting foreign currency into US dollars; and X expenses for cable, telex,  fax and electronic transmission and for delivery of securities. Since the  Company’s ADSs were first issued in November 2014, a fee of US$0.01 per ADS  was levied on the 2014 interim dividend that was paid in January 2015. Fees  paid by the Depositary to the Company The Depositary has agreed to reimburse  the Company for a portion of certain expenses the Company incurs that are  related to establishment and maintenance of the ADR programme, including, but  not limited to, investor relations expenses and expenses associated with  being a company listed in the US. There are limits on the amount of expenses for  which the Depositary will reimburse the Company. Further, the Depositary has  agreed to reimburse the Company with certain fees payable to the Depositary  by ADS holders. In the period from 2 October 2014 (the date of the deposit  agreement with the Depositary) to 25 March 2015, the Company did not receive  any amounts from the Depository but it expects to receive reimbursement of  certain costs incurred in that period during the fourth quarter of 2015.  Share capital As permitted by English law, the Company has no authorised  share capital. The Company’s share capital may be increased, consolidated or  sub-divided by ordinary resolution at a general meeting of the Company. As at  25 March 2015, the Company’s issued share capital was £196,565,907 divided  into 393,131,813 ordinary shares of 50 pence each. Of this number, 4,291,115  ordinary shares were registered as treasury shares, leaving a balance of  388,840,698 ordinary shares with voting rights. All of the Company’s ordinary  shares are fully paid or were issued as fully paid. Accordingly, no further  contribution of capital may be required by the Company from the holders of  those shares. The Company has neither authorised nor issued any conditional  share capital and has not issued convertible or exchangeable bonds, warrants  or other securities granting rights to the Company’s shares, other than  securities granted to directors, senior management and employees under the  Company’s share-based compensation plans. Information on these plans is  provided in note 22 to the consolidated financial statements. As at 25 March  2015, there were 5,976,299 share options outstanding under the Company’s UK  and International SAYE schemes and 5,783,597 shares reserved for share awards  under the Company’s share-based compensation plans (in relation to which  2,015,070 shares were held in the Company’s Employee Share Trust). The  Articles authorise the Company to purchase its own shares. A resolution  passed at the Company’s General Meeting on 23 October 2014 provides the  directors with the authority to purchase up 35,896,172 of the Company’s  ordinary shares in the market, such authority to expire at the end of the  Company’s next AGM or 1 June 2015, whichever is earlier. A resolution will be  proposed at the Company’s AGM in May 2015 to extend the authority of the  directors to make market purchases of up to 10% of the Company’s ordinary  shares within prescribed limits. The Company may repurchase shares only if  the shares are fully paid and out of distributable profits or the proceeds of  a new issue of shares made for the purpose of the repurchase. The UKLA  requires that purchase of 15% or more of any class of the Company’s share  capital must be by way of a tender offer to all shareholders of that class.  The Company may reduce its share capital, share premium account, capital  redemption reserve or any other undistributable reserve only by special  resolution of its shareholders and having obtained the consent of the High  Court of Justice in England and Wales. Markets The primary trading market for  the Company’s ordinary shares is the London Stock Exchange, on which they  have been listed since the Company’s formation in 1982. The Company has a  premium listing on the London Stock Exchange and its ordinary shares are  admitted to the main market. The Company’s SEDOL number is 0028262 (ISIS Code  GB0000282623) and its trading symbol is AMFW. |
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|  | 179 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information As at 25 March 2015, the Company’s total market  capitalisation was approximately £3.8bn and it was a constituent of The  Financial Times Stock Exchange 250 Index (FTSE 250). Since November 2014, the  Company’s ordinary shares have been traded in the form of ADSs on the NYSE.  The Company’s CUSIP code is 00167X205 (ISIN Code US00167X2053) and its ticker  symbol is AMFW. Share price history For the periods indicated in the tables  below, the highest and lowest middle market quotation for the Company’s  ordinary shares on the London Stock Exchange (as derived from the Daily  Official List of the UK Listing Authority) and the highest and lowest sales  price of its ADSs on the NYSE (as reported on the NYSE composite tape) were  as follows: £ per ordinary share US$ per ADS1 Year ended 31 December High Low  High Low 2010 11.68 7.34 n/a n/a 2011 12.51 7.41 n/a n/a 2012 11.72 9.23 n/a  n/a 2013 12.07 9.66 n/a n/a 2014 12.62 7.89 16.97 14.47 £ per ordinary share  US$ per ADS1 Quarter High Low High Low 2013 First quarter 11.24 10.10 n/a n/a  Second quarter 10.98 9.66 n/a n/a Third quarter 11.10 10.02 n/a n/a Fourth  quarter 12.07 10.40 n/a n/a 2014 First quarter 11.24 10.20 n/a n/a Second  quarter 12.62 11.65 n/a n/a Third quarter 12.45 10.59 n/a n/a Fourth quarter  11.05 7.89 16.97 12.25 2015 First quarter2 9.95 7.77 14.83 12.75 £ per  ordinary share US$ per ADS1 Month High Low High Low September 2014 11.20  10.59 n/a n/a October 2014 10.92 9.90 n/a n/a November 2014 11.05 9.35 16.97  14.47 December 2014 9.36 7.90 14.47 12.25 January 2015 8.62 7.77 13.11 11.89  February 2015 9.03 8.31 13.83 12.39 March 20152 9.95 8.73 14.79 13.00 1 From  13 November 2014. 2 Up to and including 25 March 2015. Shareholdings As at 25  March 2015, 17,130,827 ADSs equivalent to 4.4% of the number of the Company’s  ordinary shares in issue were outstanding and were held by 1,321 registered  holders. As at 25 March 2015, 154,517 ordinary shares were held by 386 registered  holders with a registered address in the US. Since certain of the ordinary  shares were registered in the names of nominees, the number of shareholders  with a registered address in the US may not be representative of the number  of beneficial owners of ordinary shares who are resident in the US. In  accordance with the DTRs of the UKLA, major shareholders are considered to be  those that have a beneficial interest in 3% or more of the Company’s issued  ordinary shares. On the basis of notifications received under the DTRs (DTR  5) and other notifications received by the Company from shareholders,  shareholdings of 3% or more of the voting rights in the Company were as  follows: Percentage of voting rights held As at 31 December 2014 2013 2012  2011 Artisan Partners Limited Partnership n/a 5.20% n/a n/a Mondrian  Investment Partners Limited 5.28% 5.15% n/a n/a BlackRock, Inc. 5.01% n/a  9.97%1 9.94% Legal & General Assurance n/a n/a 3.98% 3.96% 1 In response  to a disclosure request under Section 793 of the Companies Act 2006,  Blackrock, Inc. advised the Company on 19 December 2012 that their holding  had reduced to 5.52%. On 23 March 2015, pursuant to DTR 5, BlackRock, Inc.  notified the Company of their interest in 5.63% of the voting rights in the  Company. Otherwise, there were no notifications received under DTR 5 between  31 December 2014 and 25 March 2015. Each of the Company’s ordinary shares,  including those held by major shareholders, carries equal voting rights.  Purchase of ordinary shares In February 2013, the Company completed a £400m  share buyback programme. During 2014, the Company did not purchase any of its  own shares in the market and no purchases of the Company’s shares were made  by trustees of the Company’s employee share schemes. Options and awards made  under the Company’s employee share schemes that were exercised or vested  during 2014 were satisfied by the transfer to the participants of the shares  held by the Company in treasury or by the trustee of the relevant scheme.  Details of the Company’s employee share schemes are set out in note 22 to the  consolidated financial statements. |
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|  | 180 Amec Foster  Wheeler Annual report and accounts 2014 Other information continued Articles  of Association We summarise below certain provisions of the Articles and  applicable English law. The summary is qualified in its entirety by reference  to the Companies Act 2006 and the Articles. Please refer to Documents on  display on page 187 for information on where copies of the Articles can be  obtained. In the following description, a ‘shareholder’ is the person  registered in the Company’s register of members as the holder of a share or  shares. Principal objects The Articles of Association do not restrict the  Company’s objects or purposes. Directors The board Under the Articles, the  board shall consist of not less than three nor more than 15 directors, who  shall manage the business and affairs of the Company subject to the  requirements of English law, the Articles and any resolutions of  shareholders. Appointment, retirement and re-election Directors may be  appointed by the board at any time. Any director appointed since the last AGM  holds office only until the conclusion of the next AGM and then shall be eligible  for election by shareholders. Under the Articles, all directors retire by  rotation and are eligible for re-election every three years. However, in line  with the recommendations of the UK Corporate Governance Code, each of the  directors who wishes to continue in office, and is considered eligible by the  board, actually offers himself or herself for re-election at every AGM. Under  the Articles, there are no age limits relating to a person’s qualification to  hold office as a director. Restrictions on voting Under the Articles, a  director may not vote in respect of any contract, arrangement, transaction or  proposal in which he or she, or any person connected with him or her, has any  material interest other than by virtue of that person’s interests in the Company’s  ordinary shares or other securities. However, this restriction on voting does  not apply to proposals: X giving the director or a third party any guarantee,  security or indemnity in respect of obligation incurred at the request of or  for the benefit of the Company; X giving any guarantee, security or indemnity  to the director or a third party in respect of obligations of the Company for  which the director has assumed responsibility under an indemnity or  guarantee; X relating to an offer of securities of the Company in which the  director is entitled to participate as a holder of shares or other securities  or in the underwriting of such shares or securities; X concerning any other  company in which the director (together with any connected person) is a shareholder  or an officer or is otherwise interested, provided that the director  (together with any connected person) is not interested in 1% or more of any  class of such other company’s equity share capital or the voting rights  available to its shareholders; X relating to the arrangement of any employee  benefit in which the director will share equally with other employees; and X  relating to any insurance that the Company purchases or renews for its  directors or any group of people including directors. Compensation awarded to  the executive directors is determined by the remuneration committee. A  director shall not vote nor be counted in any quorum present at a general  meeting of the Company’s shareholders in relation to a resolution on which he  or she is not entitled to vote. Borrowing powers The directors are empowered  to exercise all the powers of the Company to borrow money, subject to the  limitation that the borrowings of the Company and its subsidiaries may not  exceed two times the ‘adjusted capital and reserves’ (as defined in the  Articles). Shareholding requirements Directors are not required under the  Articles to hold any shares of the Company as qualification to act as a  director. Any director who is not a shareholder is entitled to attend and  speak at general meetings of the shareholders. |
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|  | 181 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Rights attaching to ordinary shares In  accordance with English law, the Company’s ordinary shares rank equally in  all respects. Dividends The Company’s ordinary shares carry the right to  receive dividends and distributions that have been declared by the Company.  Except in relation to dividends that have been declared and rights on a  liquidation of the Company, ordinary shareholders have no rights to share in  the profits of the Company. English law requires that dividends are paid only  out of profits available for distribution, as determined in accordance with  UK GAAP and by the Companies Act 2006, and additionally restricts a public  company from making a distribution if that would reduce the net assets of the  company below the aggregate amount of its called-up share capital and certain  undistributable reserves. Dividends are proposed by the directors. Dividends  are declared following approval by ordinary resolution of the Company’s  shareholders at a general meeting of the Company. Shareholders may not  declare a dividend in excess of the amount proposed by the directors. The  directors may declare and pay interim dividends if they believe that the  Company’s financial position justifies such payments. Any unclaimed dividend  may be invested or otherwise applied for the benefit of the Company until the  dividend is claimed. Any dividend that remains unclaimed for 12 years after  the date on which it was declared, or became due for payment, shall be  forfeited and shall revert to the Company. If authorised by ordinary  resolution of the shareholders, the directors may offer to shareholders the  right to elect to receive a dividend, in whole or in part, by way of an  allotment of new ordinary shares credited as fully paid. Voting rights  Holders of the Company’s ordinary shares have the right to receive notice of,  and to attend and vote at, all general meetings of the Company. Any  shareholder who is entitled to attend and vote at the meeting is entitled to  appoint a proxy to exercise all or any of his rights to attend, speak and  vote at the meeting. Voting at any general meeting is by a show of hands  unless a poll is duly demanded and held. Under English law, shareholders of a  public company are not permitted to pass resolutions by written consent. On a  show of hands, each shareholder who is present in person at the meeting has  one vote regardless of the number of shares held. On a poll, every  shareholder who is present in person or by proxy has one vote for each ordinary  share held by him. A poll may be demanded by the following: X the chairman of  the meeting; or X not less than three members present or by proxy entitled to  vote; or X a member or members present in person or by proxy and representing  not less than one-tenth of the total voting rights of all the members having  the right to vote at the meeting; or X a member or members present in person  or by proxy and holding shares in the Company conferring a right to vote at  the meeting, being shares on which an aggregate sum has been paid up equal to  not less than one-tenth of the total sum paid up on all the shares conferring  that right. Unless the directors determine otherwise, if any sum remains  unpaid in relation to a member’s shareholding, that member is not entitled to  vote in relation to that holding. Rights in a winding up If the Company is  liquidated (whether the liquidation is voluntary or court-supervised), the  liquidator is obliged to realise the assets of the Company to its creditors  and, subject to any special rights attaching to any other class of shares  that may be in issue at the time, any surplus would be distributed to the  ordinary shareholders according to the amounts paid-up on the shares held by  them. Pre-emption rights English law provides for statutory pre-emption  rights that apply on an allotment of equity securities (which include the  Company’s ordinary shares or securities convertible into the Company’s  ordinary shares). Pre-emption rights can be disapplied by a special  resolution passed by shareholders at a general meeting. Such a resolution was  passed at the Company’s General Meeting on 23 October 2014 and provides the  directors with the authority to allot equity securities or grant rights to  subscribe for or to convert any security to shares up to a nominal amount of  £59,228,684.5, of which up to £8,974,043 could be allotted for cash without  offering the shares to existing shareholders, such authority to expire at the  end of the Company’s next AGM or 1 June 2015, if earlier. Variation of rights  Whenever the share capital of the Company is divided into different classes  of shares, the rights attached to any class can only be changed either: X  with the written consent of the holders of three-quarters in nominal value of  the issued shares of that class (excluding shares held as treasury shares);  or X with the sanction of a special resolution passed at a separate meeting  of the holders of the shares of that class. The rights attached to any class  of shares are not, unless otherwise expressly provided by the terms of issue,  deemed to be varied by the creation or issue of further shares ranking  equally with them. |
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|  | 182 Amec Foster  Wheeler Annual report and accounts 2014 Other information continued General  meetings An AGM of the Company must be held each calendar year and within a  period of six months of the day following the Company’s accounting reference  date (which is 31 December). Otherwise, the directors may call a general  meeting whenever they think fit or where required to do so by shareholders  holding at least 10% of the voting rights of the paid-up capital of the  Company carrying voting rights (excluding shares held as treasury shares).  General meetings may be held at such place, date and time as may be decided  by the directors. An AGM must be convened by giving not less than 21 days’  notice. Other general meetings must also be convened by giving not less than  21 days’ notice unless shareholder approval has been given for such meetings  to be convened on giving only 14 days’ notice (such approval has been given  by the Company’s shareholders and is effective until the next AGM when it is  proposed that it should be renewed). General meetings may be called on  shorter notice if, in the case of an AGM, all of the members entitled to  attend and vote at that meeting so agree, or if, in the case of other general  meetings, 95% of the members entitled to attend and vote at that meeting so  agree. For the purposes of determining which persons are entitled to attend  or vote at a meeting, and how many votes such persons may cast, the Company  must specify in the notice of the meeting a time, not more than 48 hours  before the time fixed for the meeting, by which a person must be entered on  the register in order to have the right to attend or vote at the meeting. No  business shall be transacted at any general meeting unless a quorum is  present at the time when the meeting proceeds to business. Two shareholders  present in person or by proxy shall be a quorum. The directors may require  attendees to submit to searches or put in place such arrangements or  restrictions as they think fit to ensure the safety and security of attendees  at a general meeting. Any member, proxy or other person who fails to comply  with such arrangements or restrictions may be refused entry to, or removed  from, the general meeting. Limitations on voting and shareholding Neither  English law nor the Articles impose any limitation on the rights of non-UK  residents or foreign shareholders to own the Company’s ordinary shares or  ADSs, including the rights to hold or exercise voting rights on those shares  or ADSs. Disclosure of interests in the Company’s ordinary shares Under the  DTRs, a person is required to notify the Company in writing within two days  of becoming aware that the voting rights which he holds as a shareholder or  through his direct or indirect holding of financial instruments reaches or  exceeds 3% of the voting rights in the Company and reaches, exceeds or falls  below each 1% threshold thereafter. Under the Companies Act 2006, the Company  may send a notice to any person whom it knows or believes to be interested in  the Company’s shares requiring such person to confirm whether he has such an  interest and, if so, the details of the interest and any other interest in  the Company’s shares of which he is aware. Under the DTRs, ‘persons  discharging managerial responsibilities’ (primarily directors and some senior  executives) and their connected persons are required to notify the Company in  writing of the occurrence of all transactions conducted on their own account  in the Company’s shares, or derivatives or any other financial instruments  relating to those shares within four business days of the day on which the  transaction occurred. Mandatory bids The Articles contain no provisions that  would have an effect of delaying, deferring or preventing a change in control  of the Company. However, under the UK City Code on Takeovers & Mergers,  if an acquisition of the Company’s shares increases the aggregate holding of  an acquirer and its concert parties to shares carrying 30% or more of the  voting rights in the Company, the acquirer and, depending on the  circumstances, its concert parties, would be required (except with the  consent of the Panel on Takeovers & Mergers) to make a cash offer for the  remainder of the Company’s shares at a price not less than the highest price  paid for the Company’s shares by the acquirer or its concert parties during  the previous 12 months. Such an offer would also be triggered by any acquisition  of shares by a person holding (together with its concert parties) shares  carrying between 30% and 50% of the voting rights in the Company if the  effect of such acquisition were to increase that person’s percentage of the  voting rights. Amendments Under English law, the Company’s shareholders may,  by special resolution, alter, delete, substitute amend or add to the  Articles. The directors are not authorised to change the Articles. Material  contracts During the last two years, the Group entered into the following  material contracts (other than contracts entered into in the ordinary course  of business): Acquisition of Foster Wheeler AG Pursuant to an implementation  agreement between AMEC and Foster Wheeler entered into on 13 February 2014  (as amended by the letter agreement dated 28 March 2014, the deed of  amendment dated 28 May 2014 and the deed of amendment dated 2 October 2014,  together, the Implementation Agreement), AMEC commenced an offer to acquire  all outstanding Foster Wheeler AG shares on 6 October 2014 (the Offer). The  Offer closed on 13 November 2014 and, upon completion of the Offer, AMEC had  acquired 95.3% of the outstanding Foster Wheeler AG shares. |
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|  | 183 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Following completion of the Offer, on 8  December 2014, AMEC (through its subsidiaries) and Foster Wheeler entered  into a merger agreement, which provided for the squeeze-out merger of Foster  Wheeler AG under Swiss law. The squeeze-out merger was subject to the  approval of the merger agreement by at least 90% of the outstanding voting  rights of Foster Wheeler AG, which was received on 19 January 2015.  Agreements with former Foster Wheeler directors Pursuant to the  Implementation Agreement, AMEC entered into letters of appointment with Kent  Masters and Stephanie Newby regarding their appointment as non-executive  directors of Amec Foster Wheeler following the completion of the acquisition.  Amec Foster Wheeler also entered into a co-ordination and settlement  agreement with Kent Masters relating to his termination arrangements as CEO of  Foster Wheeler. Credit facility agreement In February 2014, the Group entered  into a US$2,160m credit facility agreement with Bank of America Merrill Lynch  International Limited as facility agent and Bank of America Merrill Lynch  International Limited, Bank of Tokyo Mitsubishi UFJ, Ltd., Barclays Bank PLC  and The Royal Bank of Scotland plc as original lenders. In July 2014, the  facility was amended to increase the financing available to US$2,260m. The  credit facility comprises three loan facilities totalling US$1,910m and a  multi-currency revolving credit facility of US$350m. Further details of the  terms and conditions of the credit facility agreement are set out in note 19  to the consolidated financial statements. Exchange controls and other  limitations affecting security holders There are no UK government laws,  decrees or regulations that restrict or affect the export or import of  capital or that affect the payment of dividends, interest or other payments  to non-UK resident holders of the Company’s securities, except for certain  restrictions imposed from time to time by the UK Treasury pursuant to  legislation, such as the United Nations Act 1964 and the Emergency Laws Act  1964, against the government or residents of certain countries. There are no  limitations, either under the laws of the UK or under the Articles,  restricting the right of non-UK residents to hold or to exercise voting  rights in respect of the Company’s ordinary shares, except that where any  overseas shareholder has not provided a UK address for the service of  notices, the Company is under no obligation to send any notice or other  document to an overseas address. It is, however, the Company’s current  practice to send every notice or other document to all shareholders  regardless of the country recorded in the register of members, with the  exception of details of the Company’s DRIP, which are not sent to  shareholders with recorded addresses in the US or Canada. Taxation  information for US Holders Background A summary is provided below of the material  US federal income tax and UK tax consequences for a US Holder (defined below)  of owning or disposing of ordinary shares or ADSs of the Company. This  section addresses only the tax position of a US Holder who holds ordinary  shares or ADSs as capital assets. This section does not consider the  provisions of the IRC known as the Medicare Contribution tax or the tax  consequences for holders subject to other special rules, such as: X certain  financial institutions; X insurance companies; X dealers and traders in  securities who use a mark-to-market method of tax accounting; X persons  holding ordinary shares or ADSs as part of a straddle, conversion or other  integrated transaction or wash sale or persons entering into a constructive  sale with respect to the ordinary shares or ADSs; X persons whose functional  currency for US federal income tax purposes is not the US dollar; X  partnerships or other entities classified as partnerships for US federal  income tax purposes; X persons liable to the alternative minimum tax; X  persons who hold ordinary shares or ADSs in individual retirement accounts or  other tax-deferred accounts; X persons who have ceased to be US citizens or  lawful permanent residents of the US; X tax-exempt organisations; X persons  who acquired the Company’s ordinary shares or ADSs pursuant to the exercise  of employee stock options or otherwise in connection with employment; or X  persons who, directly, indirectly, or by attribution own 10% or more of the  Company’s voting stock. Except where expressly stated to the contrary, this  section does not deal with the position of a US Holder who is resident or  domiciled in the UK for UK tax purposes or who is subject to UK taxation on  income or capital gains by virtue of carrying on a trade, profession or vocation  in the UK through a branch, agency or permanent establishment to which  ordinary shares or ADSs are attributable, i.e. those who are referred to  below as trading in the UK. |
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|  | 184 Amec Foster  Wheeler Annual report and accounts 2014 Other information continued As used  herein, a ‘US Holder’ is a person who, for the purposes of US federal income  tax and UK tax, is a beneficial holder of ordinary shares or ADSs and is: X a  citizen or individual resident of the US; X a corporation (or other entity  taxable as a corporation) created or organised in or under the laws of the US  or any political subdivision thereof; X an estate whose income is subject to  US federal income tax regardless of its source; X a trust, if a US court can  exercise primary supervision over the trust’s administration and one or more  US persons are authorised to control all substantial decisions of the trust;  or X a trust that has validly elected to be treated as a domestic trust for  US federal income tax purposes. This section is based on the IRC, its  legislative history, existing and proposed regulations, published rulings and  court decisions, and on UK tax laws and the published practice of HMRC, all  as at 25 March 2015. These laws, and that practice, are subject to change,  possibly on a retroactive basis. This section is further based in part upon  the representations of the Depositary and assumes that each obligation in the  deposit agreement and any related agreement will be performed in accordance  with its terms. For US federal income tax purposes, the owner of ADRs  evidencing ADSs will generally be treated as the owner of the underlying  shares represented by those ADSs. For UK tax purposes, it is likely that HMRC  will also regard holders of ADSs as the beneficial owners of the ordinary  shares represented by those ADSs. Generally, exchanges of ordinary shares for  ADSs, and ADSs for ordinary shares, will not be subject to US federal income  tax or UK taxation on capital gains, although UK stamp duty reserve tax may  arise as described below. The US Treasury has expressed concerns that parties  to whom ADRs are pre-released may be taking actions that are inconsistent  with the claiming of foreign tax credits by US Holders of ADSs. Such actions  would also be inconsistent with the claiming of the preferential rates of tax,  described below, for qualified dividend income. Accordingly, the availability  of preferential rates of tax for qualified dividend income could be affected  by actions taken by parties to whom ADRs are prereleased. The following  discussion assumes that the Company is not, and will not become, a PFIC. We  outline below the consequences for US Holders should the Company become a  PFIC in the future. Investors should consult their own tax advisers regarding  the US federal, state, and local, the UK and other tax consequences of owning  and disposing of ordinary shares or ADSs of the Company in their particular  circumstances. Taxation of dividends UK taxation Under current UK tax law,  the Company is not required to withhold tax at source from its dividend  payments. A US Holder who is not resident in the UK for UK tax purposes and  who is not trading in the UK will generally not be liable for UK taxation on  dividends received in respect of the Company’s ADSs or ordinary shares. US  federal income taxation A US Holder is subject to US federal income tax on  the gross amount of any dividend paid by the Company out of its current or  accumulated earnings and profits (as determined for US federal income tax  purposes). Distributions in excess of the Company’s current and accumulated  earnings and profits will be treated as a return of capital to the extent of  the US Holder’s basis in the shares or ADSs and thereafter as a capital gain.  Because the Company has not historically maintained, and does not currently  maintain, books in accordance with US tax principles, the Company does not  expect to be in a position to determine whether any distribution will be in  excess of the Company’s current and accumulated earnings and profits as  determined for US federal income tax purposes. As a result, the Company  expects that the amounts distributed will be reported to the IRS as  dividends. Subject to applicable limitations, dividends paid to certain  non-corporate US Holders of ordinary shares or ADSs may be taxable at the  favourable tax rates applicable to long-term capital gain if the dividends  constitute qualified dividend income. A US Holder will be eligible for these  rates only if it has held the ordinary shares or ADSs for more than 60 days  during the 121-day period beginning 60 days before the ex-dividend date. The  Company expects that the dividends paid by the Company with respect to its  ordinary shares or ADSs will constitute qualified dividend income. US Holders  should consult their own tax advisers to determine whether they are subject to  any special rules that limit their ability to be taxed at these favourable  rates. Dividends must be included in income when the US Holder, in the case  of shares, or the Depositary, in the case of ADSs, actually or constructively  receives the dividend, and will not be eligible for the dividends-received  deduction generally allowed to US corporations in respect of dividends  received from other US corporations. For foreign tax credit limitation  purposes, dividends paid by the Company will be income from a source outside  the US. The amount of any dividend paid in pounds sterling will be the US  dollar value of the sterling payments made, determined at the spot  sterling/US dollar exchange rate on the date the dividend is included in  income for federal income tax purposes, regardless of whether the payment is  in fact converted into US dollars. If the dividend is converted into US  dollars on that date, a US Holder should not be required to recognise a  foreign currency gain or loss in respect of the dividend income. Generally,  any gain or loss resulting from currency fluctuations during the period from  the date the dividend payment is included in income to the date the payment  is converted into US dollars will be treated as ordinary income or loss from  sources within the US. |
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|  | 185 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Taxation of capital gains UK taxation A US  Holder who is not resident in the UK for UK tax purposes and who is not  trading in the UK will not generally be liable for UK taxation on capital  gains, or eligible for relief for allowable losses, realised or accrued on  the sale or other disposal of the Company’s ordinary shares or ADSs. A US  Holder who is an individual and has temporarily ceased to be a resident in  the UK or has been temporarily treated as non-resident in the UK for UK tax  purposes for a period of not more than five years and who sells or otherwise  disposes of ordinary shares or ADSs during that period may, for the year of  assessment when the individual becomes resident again in the UK, be liable  for UK tax on capital gains (subject to any available exemption or relief),  notwithstanding the fact that the individual was not treated as resident in  the UK at the time of the sale or other disposal. US federal income taxation  A US Holder who sells or otherwise disposes of ordinary shares or ADSs will  recognise a capital gain or loss for US federal income tax purposes equal to  the difference, if any, between the amount realised on the sale or other  disposal and the adjusted tax basis of the securities. Any capital gain or loss  will be a long-term capital gain or loss where the holder has held the  securities for more than one year. The capital gain or loss will generally be  income or loss from sources within the US for foreign tax credit limitation  purposes. The deductibility of capital losses is subject to limitations. PFIC  status Management believes that the Company was not a PFIC for US federal  income tax purposes for its taxable year ended 31 December 2014. Management  reviews the Company’s PFIC status annually and it is subject to change. If  the Company were to be treated as a PFIC, any gain realised on the sale or  other disposal of the Company’s ordinary shares or ADSs would, in general,  not be treated as capital gain. Instead, any gain would be treated as if the  US Holder had realised the gain rateably over the period during which the  ordinary shares or ADSs were held. Any gain that is allocated to the taxable  year of the disposal, and to any taxable year before the Company became a  PFIC, would be taxed as ordinary income. Any gain allocated to each other  taxable year would be taxed at the highest tax rate in effect for the taxable  year to which the gain was allocated and an interest charge in respect of the  tax attributable to each such year would also apply. Similar rules would  apply to any ‘excess distribution’ (as determined for US federal income tax  purposes) received on the ordinary shares or ADSs. The preferential rates for  qualified dividend income received by certain non-corporate US Holders would  not apply to dividends received in any year in which the Company was a PFIC  or in any year immediately following a year in which the Company was a PFIC.  If the Company was to be treated as a PFIC certain elections may be available  to US Holders that would result in alternative treatments of the ordinary  shares or ADSs. If the Company were to be treated as a PFIC in any taxable  year in which a US Holder held ordinary shares or ADSs, the holder may be  required to file annual reports with the IRS containing such information as may  be required by the US Treasury Department. Inheritance and estate taxes UK  inheritance tax may apply to a deemed transfer which occurs on death, and to  gifts to individuals within the seven years preceding death. For UK  inheritance tax purposes, a transfer of shares at less than full market value  may be treated as a gift and particular rules apply where the donor reserves  or retains some benefit in the shares. Special UK inheritance tax rules also  apply to companies and to trustees of settlements. An individual who is  neither domiciled nor deemed domiciled in the UK is only chargeable to UK  inheritance tax to the extent the individual owns assets situated in the UK.  Whilst UK tax law is unclear as to whether the Company’s ADSs are considered  to be situated in the UK for inheritance tax purposes, HMRC is likely to take  the view that they, as well as the Company’s ordinary shares, are situated in  the UK. However, HMRC considers that the US/UK Double Taxation Convention on  Estate and Gift Tax applies to inheritance tax. Consequently, a US Holder who  is domiciled in the US for the purposes of the US/UK Double Taxation  Convention and is not for such purposes a UK national will not be subject to  UK inheritance tax on their death or on a lifetime transfer of the Company’s  ordinary shares or ADSs, provided that any applicable US federal gift or  estate tax is paid, unless the ordinary shares or ADSs are part of the  business property of a permanent establishment of an enterprise situated in  the UK or pertain to a UK fixed base used for the performance of independent  personal services. Where the ordinary shares or ADSs have been placed into  trust by a settlor, they may be subject to UK inheritance tax, unless, when  the trust was created, the settlor was domiciled in the US and was not a UK  national. A UK national who is domiciled in the US will be subject to both UK  inheritance tax and US federal estate tax but will be entitled to a credit  for US federal estate tax charged in respect of the Company’s ordinary shares  or ADSs in computing the liability to UK inheritance tax. Similarly, a US  citizen who is domiciled or deemed domiciled in the UK will be entitled to a  credit for UK inheritance tax charged in respect of the Company’s ordinary  shares or ADSs in computing the liability for US federal estate tax. |
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|  | 186 Amec Foster  Wheeler Annual report and accounts 2014 Other information continued US  information reporting and back-up withholding Payments of dividends and other  proceeds to a US Holder with respect to the Company’s ordinary shares or ADSs  by a US paying agent or other US intermediary will be reported to the IRS and  to the US Holder as may be required under applicable regulations. Unless the  US Holder is an exempt recipient, back-up withholding tax may apply to these  payments if the US Holder fails to provide an accurate taxpayer  identification number or certification of exempt status or fails to comply  with applicable certification requirements. Any back-up withholding tax  deducted may be credited against the US Holder’s US federal income tax  liability, and, where the back-up withholding tax exceeds the actual  liability, the US Holder may obtain a refund by timely filing the appropriate  refund claim with the IRS. Foreign financial asset reporting US taxpayers  that own certain foreign financial assets, including debt and equity of  foreign entities, with an aggregate value in excess of US$50,000 at the end  of the taxable year or US$75,000 at any time during the taxable year (or, for  certain individuals living outside the US and married individuals filing  joint returns, certain higher thresholds) may be required to file an  information report with respect to such assets with their US federal income  tax returns. The Company’s ADSs or ordinary shares constitute foreign  financial assets subject to these requirements unless they are held in an  account at a financial institution (in which case the account may still be  reportable if maintained by a foreign financial institution). UK stamp duty  and SDRT UK stamp duty is charged on certain documents, including instruments  for the transfer of registered ownership of ordinary shares. Transfers of  ordinary shares are generally subject to UK stamp duty at the rate of 0.5% of  the consideration (rounded up to the nearest £5). SDRT is charged where there  is an unconditional agreement to transfer shares in UK companies for  consideration in money or money’s worth. SDRT is generally charged at the  rate of 0.5% of the agreed consideration (rounded up to the nearest penny).  The charge to SDRT will be cancelled, and any SDRT already paid will be  refunded, if within six years of the unconditional agreement an instrument of  transfer is produced to HMRC and the appropriate stamp duty paid. Neither  stamp duty nor SDRT will be payable on any purchase or transfer of the  Company’s ADSs, provided that the ADSs and any separate instrument or written  agreement to transfer are executed and remain at all times outside the UK. UK  legislation does, however, provide for stamp duty or SDRT to be charged at  the rate of 1.5% of the amount or value of the consideration (or, in some  circumstances, the value of the shares concerned) on a transfer or issue of  ordinary shares to the Depositary or to certain persons providing a clearance  service (or their nominees or agents) for the conversion into ADRs. In  accordance with the deposit agreement, any tax or duty payable on deposits of  ordinary shares by the Depositary or by the custodian of the Depositary will  be typically charged to the party to whom ADSs are delivered against such  deposits. Following litigation on the subject, HMRC has accepted that it will  no longer seek to apply the 1.5% SDRT charge when new shares are issued to a  clearance service or depositary receipt system on the basis that the charge  is not compatible with EU law. In HMRC’s view, however, the 1.5% SDRT or  stamp duty charge will continue to apply to transfers of shares into a  clearance service or depositary receipt system unless they are an integral  part of the issue of share capital. HMRC’s view is currently being challenged  in further litigation. Neither stamp duty nor SDRT will be payable on a  transfer of ordinary shares where no beneficial interest passes, including  the transfer of underlying ordinary shares from the Depositary to a holder of  the Company’s ADSs. Foreign currency translation For the periods indicated in  the tables below, the average exchange rate between Sterling and the US  dollar, calculated by using the average of the exchange rates at the close of  business in London on the last trading day of each month in the period, were  as follows: Year ended 31 December £1=US$ 2010 1.54 2011 1.60 2012 1.59 2013  1.57 2014 1.65 For the periods indicated in the table below, the high and low  exchange rate between sterling and the US dollar were as follows: £1=US$ Month High Low September 2014 1.66 1.61 October 2014 1.62 1.59 November 2014  1.60 1.56 December 2014 1.57 1.55 January 2015 1.54 1.50 February 2015 1.55  1.50 March 20151 1.54 1.47 1 Up to and including 25 March 2015. At the close  of business in London on 25 March 2015, the sterling/US dollar exchange rate  was £1=US$1.49. |
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|  | 187 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Significant differences between corporate  governance practices and NYSE listing standards Background Our corporate  governance practices are designed to be compliant with the principles and  provisions specified by the UK Corporate Governance Code. Our statement of  compliance with the principles and provisions of the Code is set out on page  44. We have also adopted the corporate governance requirements of the US  Sarbanes-Oxley Act of 2002 and related listing standards of the NYSE, to the  extent that they are applicable to a foreign private issuer. We disclose  below the significant differences between our corporate governance practices  and those that are required of US companies that are listed on the NYSE.  Corporate governance guidelines The Code contains a series of principles and  provisions. It is not, however, mandatory for companies to follow these  principles. Instead, companies must disclose how they have applied them and,  if applicable, must disclose and explain the reasons for any areas of  non-compliance. By comparison, the NYSE listing standards require US  companies to adopt and disclose corporate governance guidelines. Independence  Different tests of independence for directors are applied under the Code and  the NYSE listing standards. The Board has carried out an assessment based on the  independence requirements of the Code and has determined that, in its  judgement, each of the non-executive directors except Kent Masters is  independent within the meaning of those requirements. As the Company is a  foreign private issuer, the Board is not required to take into consideration  the definition of independence set out in the NYSE’s listing standards.  Committees NYSE listing standards require US companies to have a  nominating/corporate governance committee, an audit committee and a  compensation committee, each composed entirely of independent directors. Each  of these committees is required to have a written charter which addresses the  committee’s purpose and responsibilities and the compensation committee must  have sole authority and adequate funding to engage compensation consultants,  independent legal counsel and other external advisers. We have terms of  reference for our Nominations Committee, Audit Committee and Remuneration  Committee, each of which complies with the requirements of the Code and is  available for inspection on our website. Whilst these terms of reference are  generally consistent with the requirements of the NYSE listing rules, they  may not address all aspects of those rules. NYSE listing standards specify  that the nominating/corporate governance committee is responsible for  identifying individuals qualified to become members of the Board and to  recommend to the Board a set of corporate governance principles. The Code  requires companies to have a nominations committee but does not require a  corporate governance committee. Our Nominations Committee is concerned only  with the membership of the Board. Corporate governance issues are discussed  and decided upon at meetings of the Board. NYSE listing standards require the  audit committee to comprise at least three independent directors. Whilst our  Audit Committee comprises independent non-executive directors (and currently  has five members), it should be noted that only two members of the committee  need be present for there to be a quorum. Compliance certification NYSE rules  require that the CEO of a US company must certify to the NYSE each year that  he or she is not aware of any violation by the Company of any of the NYSE’s  corporate governance listing standards. As the Company is a foreign private  issuer, the CEO is not required to make this certification. However, the CEO  is required to notify the NYSE promptly in writing if any of the Company’s  executive officers become aware of any non-compliance with those NYSE  corporate governance listing standards that are applicable to the Company.  Documents on display The Company is subject to the information requirements  of the US Securities Exchange Act of 1934 applicable to foreign private  issuers. In accordance with these requirements, the Company files an annual  report on Form 20-F and other related documents with the SEC. Certain other  announcements made by the Company are furnished to the SEC on Form 6-K.  Information submitted by the Company to the SEC may be inspected at the SEC’s  public reference rooms located at 100 F Street NE, Washington, DC, 20549.  Information on the operation of the public reference room can be obtained by  calling the SEC’s Office of Investor Education and Advocacy on +1 800 732  0330. You may also access information submitted by the Company to the SEC  through the SEC’s website, www.sec.gov |
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|  | 188 Amec Foster Wheeler Annual  report and accounts 2014 Item Form 20–F caption Location in this document  Page 1 Identity of directors, senior management and advisers Not applicable  n/a 2 Offer statistics and expected timetable Not applicable n/a 3 Key  information A – Selected financial data Five-year record 192 Foreign currency  translation 186 B – Capitalisation and indebtedness Not applicable n/a C –  Reasons for the Offer and Use of Proceeds Not applicable n/a D – Risk Factors  Risk Factors 164-168 4 Information on the Company A – History and development  of the Company History and Development 163 Note 24 – Acquisitions and  disposals 148-151 B – Business overview Amec Foster Wheeler at a glance 2-5  Chief Executive’s statement 8-11 Our business model 14-15 Delivering  excellence 16-19 Our markets 26-27 Financial review – Seasonality 31 C –  Organisational structure Principal subsidiaries and joint ventures 190-191 D  – Property, plant and equipment Financial review – Property, plant and  equipment 38 4A Unresolved staff comments None 5 Operating and financial  review and prospects A – Operating results Financial review – Operating  results 30-35 Prior year operating results 173-175 B – Liquidity and capital  resources Financial review – Liquidity and capital resources 35-37 Note 19 –  Capital and financial risk management 134-139 Note 23 – Analysis of (net  debt)/cash 147 C – Research and development, patents, licences etc Financial  review – Research and development 37 D – Trend information Global market  trends 25 Financial review – Operating results 30-35 E – Off-balance sheet  arrangements Financial review – Off-balance sheet arrangements 39 Note 25 –  Commitments – Operating lease commitments 152 Note 26 – Contingent  liabilities 153 F – Tabular disclosure of contractual obligations Financial  review – Contractual obligations 39 G – Safe harbor Forward-looking statements  194 6 Directors, senior management and employees A – Directors and senior  management Our board of directors 45-47 B – Compensation Directors’  remuneration report 68-73 Note 27 – Related party transactions 154 C – Board  practices Our board of directors 45-47 Directors’ remuneration report 66  Audit committee 51 Remuneration committee 60 D – Employees Note 6 – Staff  costs and employee numbers 117 E – Share ownership Note 22 – Share capital  and reserves – Share-based payments 144 Note 27 – Related party transactions  154 7 Major shareholders and related party transactions A – Major  shareholders Other information – Shareholdings 179 B – Related party  transactions Note 27 – Related party transactions 154 C – Interests of  experts and counsel Not applicable n/a Cross reference to Form 20-F |
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|  | 189 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Item Form 20–F caption Location in this  document Page 8 Financial information A – Consolidated financial statements  and other Consolidated financial statements 96-155 financial information  Report of independent registered public accounting firm 95 – Legal  proceedings Note 26 – Contingent liabilities 153 – Dividends Financial Review  – Dividend 33 B – Significant changes None n/a 9 The offer and listing A –  Offer and listing details Other information – Share price history 179 B –  Plan of distribution Not applicable n/a C – Markets Other information –  Markets 178-179 D – Selling shareholders Not applicable n/a E – Dilution Not  applicable n/a F – Expenses of the issue Not applicable n/a 10 Additional  information A – Share capital Not applicable n/a B – Memorandum and articles  of association Other information – Articles of Association 180-182 C –  Material contracts Other information – Material contracts 182-183 D –  Exchange controls Other information – Exchange controls and other limitations  affecting security holders 183 E – Taxation Other information – Taxation  information for US Holders 183-186 F – Dividends and paying agents Not  applicable n/a G – Statement by experts Not applicable n/a H – Documents on  display Other information – Documents on display 187 I – Subsidiary  information Not applicable n/a 11 Quantitative and qualitative disclosures  about market risk Note 19 – Capital and financial risk management 134-139 12  Description of securities other than equity securities A – Debt securities  Not applicable n/a B – Warrants and rights Not applicable n/a C – Other  securities Not applicable n/a D – American depositary shares Other  information – Holders of ADSs – Fees payable by ADS holders 177-178 13  Defaults, dividend arrearages and delinquencies None n/a 14 Material  modifications to the rights of security holders and use of proceeds None n/a  15 Controls and procedures Accountability – Internal controls 82 16A Audit  Committee financial expert Audit committee – Members 51 16B Code of ethics  Leadership – Board role and responsibilities 49 16C Principal accountant fees  and services Audit committee – External audit 54 16D Exemptions from the  listing standards for audit committees Not applicable n/a 16E Purchase of  equity securities Other information – Purchase of ordinary shares 179 16F  Change in registrant’s certifying accountant Not applicable n/a 16G Corporate  governance Other information – Significant differences between corporate  governance practices and NYSE listing standards 187 16H Mine safety  disclosure Not applicable n/a 17 Financial statements Not applicable n/a 18  Financial statements Consolidated financial statements 96-155 19 Exhibits  Filed with the SEC |
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|  | 190 Amec Foster Wheeler Annual  report and accounts 2014 We set out below details of the Company’s principal  trading subsidiaries and joint ventures. Except where indicated, all  subsidiaries listed below are wholly owned, incorporated in England &  Wales and carry on their activities principally in their countries of  incorporation. Except where marked with an asterisk, the Company’s  shareholdings are held indirectly through subsidiaries. A full list of the  Company’s subsidiaries and joint ventures will be filed with the Company’s  annual return to the Registrar of Companies. Principal subsidiaries and joint  ventures As at 31 December 2014 Subsidiaries AMEC CADE Ingenieria y Desarollo  de Proyectos Limitada (Chile) AMEC Canada Holdings Inc. (Canada) Amec Foster  Wheeler Australia Holding Company Pty Ltd (Australia) †Amec Foster Wheeler  AES, Inc. (US) †Amec Foster Wheeler Americas Limited (Canada) Amec Foster  Wheeler Australia Pty Limited (Australia) Amec Foster Wheeler Asia KK (Japan)  ^Amec Foster Wheeler Asia Pacific Pte. Ltd (Singapore) ^Amec Foster Wheeler  Bimas Birlesik Insaat vs Muhendislik A.S. (Turkey) ^Amec Foster Wheeler  Constructors, Inc. (US) ^†Amec Foster Wheeler Consulting Poland Sp. Z.O.O.  (Poland) Amec Foster Wheeler Earth and Environmental (UK) Limited ^Amec  Foster Wheeler Energi Aktiebolag (Sweden) ^Amec Foster Wheeler Energia GmbH  (Germany) ^†Amec Foster Wheeler Energia, S.L.U. (Spain) ^†Amec Foster Wheeler  Energy Limited ^†Amec Foster Wheeler Energy Management (Shanghai) Company  Limited (China) Amec Foster Wheeler Environment & Infrastructure Pty  Limited (Australia) ^Amec Foster Wheeler Engineering & Construction  Design (Shanghai) Co, Ltd (China) ^Amec Foster Wheeler Engineering &  Consulting (Shanghai) Co Ltd (China) Amec Foster Wheeler Engineering Holdings  Pty Limited (Australia) Amec Foster Wheeler Engineering Pty Limited  (Australia) Amec Foster Wheeler Environment & Infrastructure UK Limited  †Amec Foster Wheeler Environment & Infrastructure, Inc. (US) †Amec Foster  Wheeler E&C Services, Inc. (US) Amec Foster Wheeler E & I GmbH  (Germany) *Amec Foster Wheeler Finance Limited Amec Foster Wheeler Finance  Asia Limited ^†Amec Foster Wheeler France S.A. (France) ^†Amec Foster Wheeler  Global E&C S.r.l. (Italy) *Amec Foster Wheeler Group Limited ^†Amec  Foster Wheeler Iberia, S.L.U. (Spain) †Amec Foster Wheeler Inc. (Canada)  ^Amec Foster Wheeler India Private Limited (India) ^†Amec Foster Wheeler  International Trading (Shanghai) Company Limited (China) ^†Amec Foster  Wheeler Italiana S.r.l. (Italy) †Amec Foster Wheeler Kamtech, Inc. (US) ^Amec  Foster Wheeler Martinez, Inc. (US) †Amec Foster Wheeler NCL Limited (Canada)  ^Amec Foster Wheeler North America Corp. (US) †Amec Foster Wheeler Nuclear  Czech Republic, a.s. (Czech Republic) †Amec Foster Wheeler Nuclear France SAS  (France) Amec Foster Wheeler Nuclear Holdings Limited Amec Foster Wheeler  Nuclear International Limited †Amec Foster Wheeler Nuclear RO SRL (Romania)  †Amec Foster Wheeler Nuclear Slovakia s.r.o. (Slovakia) Amec Foster Wheeler  Nuclear UK Limited †Amec Foster Wheeler Oil & Gas, Inc. (US) ^Amec Foster  Wheeler Power Group Asia Limited (China) ^†Amec Foster Wheeler Power S.r.l.  (Italy) ^Amec Foster Wheeler Power Systems, Inc. (US) *Amec Foster Wheeler  Property and Overseas Investments Limited †Amec Foster Wheeler s.r.o. (Czech  Republic) ^Amec Foster Wheeler Talcahuano, Operaciones y Mantenciones Limitada  (Chile) †Amec Foster Wheeler Ventures, Inc. (US) Amec Foster Wheeler Zektin  Architecture Pty Limited Amec Foster Wheeler Zektin Pty Limited AMEC  Holdings, Inc. (US) AMEC International Limited AMEC International Ingenieria  y Construcción Limitada (Chile) AMEC Liberia Inc. (Liberia) AMEC (Malaysia)  Sdn Bhd (Malaysia) AMEC NSS Limited (Canada) AMEC Operations Ghana Limited  (Ghana) AMEC Operations S.R.L. (Romania) AMEC (Peru) S.A. (Peru) ^Foster  Wheeler Chile, S.A. (Chile) |
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|  | 191 Amec Foster  Wheeler Annual report and accounts 2014 Financials Governance Strategic  report Additional information Subsidiaries continued ^Foster Wheeler Colombia  S.A.S. (Colombia) ^Foster Wheeler E&C (Malaysia) Sdn. Bhd. (Malaysia)  (70%) ^Foster Wheeler Energia Oy (Finland) ^Foster Wheeler Energia Polska Sp.  z.o.o. (Poland) ^Foster Wheeler Engineering A.G. (Switzerland) ^Foster Wheeler  Hellas Engineering & Construction Societe Anonyme (Greece) ^Foster  Wheeler Inc. (US) ^Foster Wheeler Intercontinental Corporation (US) ^Foster  Wheeler International Corporation (US) ^Foster Wheeler Limited ^Foster  Wheeler LLC (US) ^Foster Wheeler (Philippines) Corporation (Philippines)  (99.962%) ^Foster Wheeler South Africa (PTY) Limited (South Africa) (70%)  ^Foster Wheeler (Thailand) Limited (Thailand) ^Foster Wheeler Services  (Thailand) Limited (Thailand) ^Foster Wheeler USA Corporation (US) Kromav  Engenharia S.A. (Brazil) (50%) ^OOO Foster Wheeler (Russia) ^Martinez Cogen  Limited Partnership (US) (99%) ^Mossel Bay Energy IPP Limited (South Africa)  (90%) ^†PT Amec Foster Wheeler Indonesia (Indonesia) (55%) ^PT Foster Wheeler  O&G Indonesia (Indonesia) (90%) QEDI Commissioning and Completions  (Canada) Limited (Canada) QED International (UK) Limited (Scotland) Rider  Hunt International Limited Rider Hunt International (USA) Inc. (US) Terra  Nova Technologies, Inc. (US) *Directly owned. ^ Entity acquired with Foster  Wheeler in November 2014. The Company initially acquired a 95.3% interest in  Foster Wheeler but acquired the noncontrolling interest on 19 January 2015.  In the above table, the interest shown is that owned by the Company as at 19  January 2015. In each case, the Company owned only 95.3% of the interest  shown as at 31 December 2014. † Name shown is the entity’s name at 25 March  2015, which is different from its name at 31 December 2014. Joint ventures  AMEC Black Cat LLC (Qatar) (49%) AMEC Black & McDonald Limited (Canada)  (50%) AMEC Larastia Sdn Bhd (Malaysia) (49%) AMEC Samsung Oil and Gas LLC  (US) (49%) ^Centro Energia Ferrara S.p.A (Italy) (41.65%) ^Centro Energia  Teverola S.p.A (Italy) (41.65%) Clough AMEC Pty Ltd (Australia) (50%)  ^Construccion e Ingenieria Chile FI Limitada (Chile) (50%) ^Construccion e  Ingenieria FIM Chile, Limitada (Chile) (33.33%) Core Tech-AMEC-SKEC, LLC  (Guam) (50%) ^Foster Wheeler and Partners Engineering Company (Saudi Arabia)  (50%) ^Foster Wheeler Energy FAKOP Sp. z.o.o. (Poland) (53.35%) ^Foster  Wheeler Kentz Energy Services DMCC (UAE) (50%) ^Foster Wheeler Power  Machinery Company Limited (China) (52%) ^FW (Hebei) Engineering Design Co Ltd  (China) (49%) ^FWP Joint Venture (Singapore) (50%) Incheon Bridge Co. Ltd  (Korea) (23%) ^Lomellina Energia S.r.l. (Italy) (39.2%) Nuclear Management  Partners Limited (UK) (36%) Paragon Angola Engenharia E Serviços, Limitada  (Angola) (60%) ^Petropower Energia Limitada (Chile) (85%) ^Project Management  Holdings Limited (Ireland) (25%) PT AMEC Berca Indonesia (50%) Shanghai Zone  Petrochemical Engineering Co., Ltd. (China) (50%) ^Socar-Foster Wheeler  Engineering LLC (Azerbaijan) (35%) ^Voreas S.r.l. (Italy) (50%) |
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|  | 192 Amec Foster Wheeler Annual  report and accounts 2014 Consolidated income statement data Year ended 31  December £m unless stated 2014 2013 Restated1 2012 Restated1 2011 Restated1  2010 Continuing operations Revenue 3,993 3,974 4,088 3,133 2,786 Adjusted  profit before tax2 317 332 327 316 282 Exceptional items (98) (25) (24) (6)  11 Amortisation of intangible assets (49) (47) (44) (39) (25) Net  asbestos-related expense (9) – – – – Share of tax of joint ventures (6) (5)  (5) (7) (7) Profit before tax 155 255 254 264 261 Income tax (49) (69) (47)  (53) (25) Profit from continuing operations 106 186 207 211 236 (Loss)/profit  from discontinued operations (27) (8) 2 16 (9) Profit for the year 79 178 209  227 227 Earnings per ordinary share Continuing operations: – Basic 36.1p  63.8p 65.2p 64.4p 73.0p – Adjusted diluted3 79.5p 87.2p 78.6p 71.6p 62.6p  Total operations: – Basic 27.2p 61.1p 65.8p 69.2p 70.1p – Diluted 26.5p 59.8p  64.6p 67.8p 68.5p Dividends per ordinary share4 43.3p 42.0p 36.5p 30.5p 26.5p  Dividend cover5 1.8x 2.1x 2.2x 2.3x 2.4x Consolidated balance sheet data As  at 31 December £m unless stated 2014 2013 2012 2011 2010 Goodwill and other  intangible assets 3,319 907 969 848 621 Other non-current assets 593 253 245  203 199 Current assets 2,066 1,224 1,304 1,404 1,443 Total assets 5,978 2,384  2,518 2,455 2,263 Current liabilities (2,237) (1,004) (1,151) (828) (746)  Non-current liabilities (1,717) (256) (284) (253) (242) Net assets 2,024  1,124 1,083 1,374 1,275 Share capital 194 152 154 169 169 Other reserves  1,801 970 925 1,204 1,103 Equity attributable to holders of the parent 1,995  1,122 1,079 1,373 1,272 Non-controlling interests 29 2 4 1 3 Total equity  2,024 1,124 1,083 1,374 1,275 Number of ordinary shares in issue (millions)  389 304 308 338 338 Net working capital 23 99 54 55 (43) Net (debt)/cash  (803) 121 99 521 740 1 The selected financial data set out above has been  extracted from the consolidated financial statements for the relevant year  prepared in accordance with IFRS except that the income statement data for  2012, 2011 and 2010 has been restated to reflect the reclassification in 2013  of the UK conventional power business as a discontinued operation and the  adoption of IAS 19 (Revised 2011) ‘Employee Benefits’. 2 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. 3 Adjusted diluted earnings per share represents  profit for the year from continuing operations before exceptional items, the  amortisation of intangible assets, asbestos-related costs and interest  expense (net of insurance recoveries), and the tax effect of those items,  divided by the diluted number of ordinary shares. 4 The dividend for 2014  includes the proposed final dividend for the year of 28.5p per ordinary  share. 5 Dividend cover represents the dividend per ordinary share as a  multiple of adjusted diluted earnings per share from continuing operations.  Five-year record (unaudited) |
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|  | 193 Amec Foster Wheeler Annual  report and accounts 2014 Financials Governance Strategic report Additional  information ADSs American Depositary Shares, evidenced by ADRs, the form in  which the Company’s ordinary shares are traded on the NYSE ADRs American  Depositary Receipts, issued in respect of ordinary shares deposited with  State Street Bank & Trust Company, as custodian for the Depositary AGM Annual  General Meeting of the Company’s shareholders AMEC used for convenience to  refer to the Company and its subsidiaries prior to the acquisition of Foster  Wheeler, unless the context requires otherwise Amec Foster Wheeler used for  convenience to refer to the Company and its subsidiaries, unless the context  requires otherwise the Articles the Company’s Articles of Association, which  set out the Company’s constitution Basis point one hundredth of one  percentage point the board the collective term for the executive and  non-executive directors of the Company CEO Chief Executive CFO Chief  Financial Officer the Code the UK Corporate Governance Code issued by the FRC  (formerly the Combined Code) the Companies Act 2006 the Companies Act 2006 of  England and Wales, as amended the Company Amec Foster Wheeler plc, formerly  AMEC plc the Depositary Deutsche Bank Trust Company Americas, the Depositary  for the Company’s ADR programme Downstream the refining or processing of  crude oil into finished fuel products the DRIP the Dividend Re-Investment  Plan operated by the Company the DTRs the Disclosure & Transparency Rules  of the UKLA E&C Engineering & Construction E&I Environment &  Infrastructure EPC Engineering, Procurement & Construction (conducted on  a fixed price basis) EPCM Engineering, Procurement & Construction  Management (conducted on a cost- reimbursable basis) the EU the European  Union Glossary Euro or € the common currency used in the majority of the  member countries of the EU the FCA the UK Financial Conduct Authority Foster  Wheeler used for convenience to refer to Foster Wheeler AG and its  subsidiaries, unless the context requires otherwise the FRC the UK Financial  Reporting Council GPG the Global Power Group, one of the Group’s business  units the Group the Company and its subsidiaries HMRC Her Majesty’s Revenue  & Customs, the UK taxation authority the IASB the International  Accounting Standards Board IFRS International Financial Reporting Standards,  comprising accounting standards issued by the IASB the IRC the US Internal  Revenue Code of 1986, as amended the IRS the Internal Revenue Service, the US  taxation authority LIBOR London Interbank Offered Rate, a benchmark interest  rate for instruments of the specified currency and maturity NASDAQ the  National Association of Securities Dealers Automated Quotations the NYSE the  New York Stock Exchange a PFIC a Passive Foreign Investment Company for US  federal income tax purposes Pound sterling, £, pence or p the currency of the  UK SDRT Stamp Duty Reserve Tax the SEC the US Securities and Exchange  Commission SOX the US Sarbanes-Oxley Act of 2002 UK the United Kingdom of  Great Britain and Northern Ireland UK GAAP accounting practice generally  accepted in the UK UKLA UK Listing Authority Upstream the exploration,  production and transportation of oil and gas US the United States of America  US dollars, US $, cents or c the currency of the US US GAAP accounting  principles generally accepted in the US |
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|  | 194 Amec Foster Wheeler Annual  report and accounts 2014 This annual report contains a number of ‘forward-looking  statements’ with respect to the Group’s financial condition, results of  operations and certain of the Group’s plans and objectives. In particular,  such forward-looking statements include statements with respect to: X our  expectations regarding the Group’s financial and operating performance,  including statements contained within the strategic report on pages 1 to 41  of this document, including the Outlook statement on page 39, and the  performance of joint ventures and newly-acquired businesses; X intentions and  expectations regarding the contracts entered into by the Group or by third  parties, including new services, such as the supply of consultancy,  engineering and project management services; X expectations regarding the  global economy and the Group’s operating environment, including future market  conditions and trends; X revenue and growth expected from Amec Foster  Wheeler’s business and its expectations with respect to long-term shareholder  value growth; X our ability to acquire new contracts, expected growth  prospects and growth in our customer base generally; and X expected benefits  associated with the acquisition of Foster Wheeler. Forward-looking statements  are sometimes, but not always, identified by their use of a date in the  future or such words as ‘will’, ‘anticipates’, ‘aims’, ‘could’, ‘may’,  ‘should’, ‘expects’, ‘believes’, ‘intends’, ‘plans’ or ‘targets’. By their  nature, forwardlooking statements are inherently predictive, speculative and  involve risk and uncertainty because they relate to events and depend on  circumstances that will occur in the future. There are a number of factors  that could cause actual results and developments to differ materially from  those expressed or implied by these forward-looking statements. These factors  include, but are not limited to, the following: X global economic conditions  or other macro-economic developments in the geographic regions and markets in  which the Group operates, including fluctuations in exchange rates; X changes  in commodity prices which may impact demand for the Group’s services; X the  Group’s exposure to the risks associated with operating in emerging markets;  Forward-looking statements X the failure to meet customer expectations on  project delivery, which could result in damage to reputation and/or loss of  repeat business and potentially lead to litigation; X long-term contracts  which may be subject to early termination, variation or non-renewal  provisions; X projects included in the Group’s order book which may be  delayed or cancelled; X lump-sum contracts, which are subject to the risks  associated with unanticipated modifications, technical problems and delays; X  the loss of senior management or difficulty in attracting and retaining  appropriately skilled personnel; X the failure to comply with health, safety  and environmental laws; X the possibility of major safety incidents that can  lead to reputational damage and increase potential liabilities; X obligations  and liabilities relating to the Group’s divested and non-core businesses; X  the failure or security breaches of its information technology systems and/or  data security; and X the failure to comply with anti-corruption laws and  regulations, economic sanction programmes or other laws and regulations,  which may result in the Group becoming subject to fines or penalties and the  disruption of its business activities. A review of the reasons why actual  results and developments may differ materially from the expectations  disclosed or implied within forward-looking statements can be found under the  heading ‘Risk factors’ on pages 164 to 168 of this document. All subsequent  written or oral forward-looking statements attributable to the Company or any  persons acting on its behalf are expressly qualified in their entirety by the  factors referred to above. No assurances can be given that the forwardlooking  statements in this document will be realised. Subject to compliance with  applicable law and regulations, the Company does not intend to update these  forward-looking statements and does not undertake any obligation to do so. |
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|  | This report is  printed using vegetable-based inks by Pureprint Group, a company totally  committed to reducing the impact printing has on the environment. The  production of this report is carbon neutral and Pureprint Group is certified  to ISO 14001, registered to EMAS (Eco Management Audit Scheme) and holds the  FSC® (Forest Stewardship Council) Chain of Custody; number SCS-COC-000620 as  well as the Queen’s Award for Enterprise: Sustainable Development. This  report is printed on Olin Smooth Absolute White, a paper produced from 100%  ECF (elemental chlorine free) wood pulps from well managed forests certified  in accordance with the rules of the FSC®. The producing mill is certified to  ISO 14001 and EMAS environmental management systems. Designed and produced by  Langsford +44 (0) 20 7378 1457 www.langsford.co.uk |
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|  | Registered  office Booths Park Chelford Road Knutsford Cheshire WA16 8QZ UK Head office  Old Change House 128 Queen Victoria Street London EC4V 4BJ UK Telephone: +44  (0) 20 7429 7500 www.amecfw.com Amec Foster Wheeler plc Annual report and  accounts 2014 |
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**ITEM 19: EXHIBITS**

 

The following instruments and documents are included as Exhibits to this annual report.

 
| **No.** | ** ** | **Exhibit**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|---------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.1     |       | Articles   of Association of Amec Foster Wheeler plc                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 2.1     |       | Form of   Deposit Agreement among AMEC plc, Deutsche Bank Trust Company Americas, as   depositary and the holders and beneficial owners of Amec Foster Wheeler ADSs   (incorporated by reference to Exhibit 99.(A) to the Registration   Statement on Form F-6 (File No. 333-198926), filed on 25   September 2014)                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 2.2     |       | Credit   Facilities Agreement, dated 13 February 2014, between AMEC plc and Bank   of America Merrill Lynch International Limited, as Global Co-ordinator, Bank   of America Merrill Lynch International Limited, Barclays Bank plc, The Bank   of Tokyo-Mitsubishi UFJ, Ltd. and The Royal Bank of Scotland plc, as   Original Mandated Lead Arrangers, and Bank of America Merrill Lynch   International Limited, as Facility Agent (incorporated by reference to   Exhibit 10.1 to the Registration Statement on Form F-4 (File   No. 333-199116), filed on 2 October 2014)                                                                                                                                                                            |
|    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 2.3     |       | Global   Transfer and Amendment Agreement, dated 28 March 2014, relating to a   US$2,160,000,000 Credit Facilities Agreement, dated 13 February 2014,   between AMEC plc and Bank of America Merrill Lynch International Limited, as   Global Co-ordinator, Bank of America Merrill Lynch International Limited,   Barclays Bank plc, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and The Royal   Bank of Scotland plc, as Original Mandated Lead Arrangers, and Bank of   America Merrill Lynch International Limited, as Facility Agent (incorporated   by reference to Exhibit 10.2 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                                                                        |
|    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 2.4     |       | Amendment   and Restatement Agreement, dated 14 July 2014, relating to a   US$2,160,000,000 Credit Facilities Agreement, dated 13 February 2014 (as   amended on 28 March 2014), between AMEC plc and Bank of America Merrill   Lynch International Limited, as Facility Agent (incorporated by reference to   Exhibit 10.19 to the Registration Statement on Form F-4 (File   No. 333-199116), filed on 2 October 2014)                                                                                                                                                                                                                                                                                                                             |
|    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 2.5     |       | Agreement,   dated 13 February 2014 (as amended on 28 March 2014 and as amended   and restated on 14 July 2014) relating to a US$2,260,000,000 Credit   Facilities between AMEC plc and Bank of America Merrill Lynch International   Limited as Global Co-ordinator, Bank of America Merrill Lynch International   Limited, Barclays Bank plc, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and   The Royal Bank of Scotland plc as Original Mandated Lead Arrangers, BNP   Paribas, London Branch, as Original Issuing Bank, and Bank of America Merrill   Lynch International Limited, as Facility Agent (incorporated by reference to   Exhibit 10.20 to the Registration Statement on Form F-4 (File   No. 333-199116), filed on 2 October 2014) |
|    |       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 4.1     |       | Implementation   Agreement, dated 13 February 2014, between AMEC plc and Foster Wheeler   AG (incorporated by reference to Exhibit 2.1 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

 

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| 4.2    |   | Letter   Agreement, dated 28 March 2014, between AMEC plc and Foster Wheeler AG   (incorporated by reference to Exhibit 2.2 to the Registration Statement   on Form F-4 (File No. 333-199116), filed on 2 October 2014)                                                                                                                   |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.3    |   | Deed   of Amendment, dated 28 May 2014, between AMEC plc and Foster Wheeler AG   (incorporated by reference to Exhibit 2.3 to the Registration Statement   on Form F-4 (File No. 333-199116), filed on 2 October 2014)                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.4    |   | Second   Deed of Amendment, dated 2 October 2014, between AMEC plc and Foster   Wheeler AG (incorporated by reference to Exhibit 2.4 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.5    |   | Merger   Agreement between A-FW International Investments GmbH, AMEC International   Investments BV and Foster Wheeler AG, dated 8 December 2014 (incorporated   by reference to Exhibit 10.29 to the Post-Effective Amendment No. 2   to the Registration Statement on Form F-4 (File No. 333-199116),   filed on 19 December 2014) |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.6    |   | Rules of   the AMEC Performance Share Plan, dated 5 May 2011 (incorporated by reference   to Exhibit 10.3 to the Registration Statement on Form F-4 (File   No. 333-199116), filed on 2 October 2014)                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.7    |   | AMEC   Group Management Team Bonus Plan Rules 2013, dated 13 February 2013   (incorporated by reference to Exhibit 10.16 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.8    |   | AMEC   Group Management Team Bonus Plan Rules 2014, dated 5 March 2014   (incorporated by reference to Exhibit 10.17 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.9    |   | Foster   Wheeler AG Omnibus Incentive Plan, Amended and Restated Effective as of 13   November 2014 (incorporated by reference to Exhibit 4.2 to the   Registration Statement on Form S-8 (File No. 333-200169), filed on   13 November 2014)                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.10   |   | Form of   Indemnification Agreement for directors of AMEC plc (incorporated by   reference to Exhibit 10.9 to the Registration Statement on Form F-4   (File No. 333-199116), filed on 2 October 2014)                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.11   |   | Simon   Naylor Letter of Indemnity, dated 11 January 2012 (incorporated by   reference to Exhibit 10.10 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.12   |   | John   Pearson Letter of Indemnity, dated 11 January 2012 (incorporated by   reference to Exhibit 10.11 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.13   |   | Indemnification   Agreement between Foster Wheeler Ltd. and Gary T. Nedelka, dated 6   January 2009                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                               |
| 4.14   |   | Employment   Agreement between AMEC plc and Samir Brikho, dated 25 April 2007   (incorporated by reference to Exhibit 10.12 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                                                                                                                 |

 

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| 4.15   |   | Employment Agreement   between AMEC plc and Ian McHoul, dated 2 July 2008 (incorporated by   reference to Exhibit 10.13 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                            |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                    |
| 4.16   |   | Employment Agreement   between AMEC plc and Simon Naylor, dated 20 December 2012 (incorporated   by reference to Exhibit 10.14 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                     |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.17   |   | Employment Agreement   between AMEC plc and John Pearson, dated 11 July 2006 (incorporated by   reference to Exhibit 10.15 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                         |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.18   |   | Employment   Agreement between Foster Wheeler Asia Pacific Pte. Ltd. and Roberto Penno,   effective as of 1 June 2009                                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.19   |   | First   Amendment to the Employment Agreement between Foster Wheeler Asia Pacific   Pte. Ltd. and Roberto Penno, effective as of 1 January 2011                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.20   |   | Second   Amendment to the Employment Agreement between Foster Wheeler Asia Pacific   Pte. Ltd. and Roberto Penno, effective as of 11 November 2013                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.21   |   | Employment   Agreement between Foster Wheeler North America Corp. and Gary T. Nedelka,   dated 6 January 2009                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.22   |   | First   Amendment to the Employment Agreement between Foster Wheeler North America   Corp. and Gary T. Nedelka, dated 21 December 2009                                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.23   |   | Second   Amendment to the Employment Agreement between Foster Wheeler North America   Corp. and Gary T. Nedelka, dated 30 August 2010                                                                                                                              |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.24   |   | Third   Amendment to the Employment Agreement between Foster Wheeler North America   Corp. and Gary T. Nedelka, dated 12 April 2011                                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.25   |   | Fourth   Amendment to the Employment Agreement between Foster Wheeler North America   Corp. and Gary T. Nedelka, effective 1 January 2013                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.26   |   | J.   Kent Masters Letter of Appointment, dated 2 October 2014 (incorporated   by reference to Exhibit 10.21 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                                        |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.27   |   | Stephanie   Newby Letter of Appointment, dated 2 October 2014 (incorporated by   reference to Exhibit 10.22 to the Registration Statement on   Form F-4 (File No. 333-199116), filed on 2 October 2014)                                        |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.28   |   | Coordination   and Settlement Agreement between AMEC plc and J. Kent Masters, dated 2   October 2014 (incorporated by reference to Exhibit 10.23 to the   Registration Statement on Form F-4 (File No. 333-199116), filed on   2 October 2014) |
|   |   |                                                                                                                                                                                                                                                                    |
| 4.29   |   | Mandate   Agreement between AMEC plc and J. Kent Masters, dated 2 October 2014   (incorporated by reference to Exhibit 10.26 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                     |

 

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| 4.30   |   | Mandate   Agreement between AMEC plc and Stephanie Newby, dated 2 October 2014   (incorporated by reference to Exhibit 10.27 to the Registration   Statement on Form F-4 (File No. 333-199116), filed on 2   October 2014)                                                                   |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                  |
| 8.1    |   | Subsidiaries   of Amec Foster Wheeler plc (incorporated by reference to the section of Amec   Foster Wheeler plc’s Annual Report on Form 20-F for the fiscal year ended 31   December 2014 titled “Principal subsidiaries and joint ventures”)                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                  |
| 12.1   |   | Certification   of Samir Brikho filed pursuant to Rule 13a-14(a) of the Securities   Exchange Act of 1934                                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                  |
| 12.2   |   | Certification   of Ian McHoul filed pursuant to Rule 13a-14(a) of the Securities   Exchange Act of 1934                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                  |
| 13.1   |   | Certification   of Samir Brikho furnished pursuant to Rule 13a-14(b) of the   Securities Exchange Act of 1934 (such certifications are not deemed filed for   purpose of Section 18 of the Securities Exchange Act of 1934 and not   incorporated by reference to any filing under the Securities Act) |
|   |   |                                                                                                                                                                                                                                                                                                                  |
| 13.2   |   | Certification   of Ian McHoul furnished pursuant to Rule 13a-14(b) of the   Securities Exchange Act of 1934 (such certifications are not deemed filed for   purpose of Section 18 of the Securities Exchange Act of 1934 and not   incorporated by reference to any filing under the Securities Act)   |
|   |   |                                                                                                                                                                                                                                                                                                                  |
| 15.1   |   | Consent   of Ernst & Young LLP, independent registered public accounting firm   to Amec Foster Wheeler plc                                                                                                                                                                                                   |

 

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** **

**SIGNATURE**

 

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this annual report on its behalf.

 

 
|               | AMEC FOSTER WHEELER PLC |
|--------------------|-------------------------|
|               |                    |
|               |                    |
|               | By:                     | /s/ Alison Yapp |
|               |                    | Alison Yapp |
|               |                    | General Counsel & Company Secretary |
|               |                    |
|               |                    |
| London, England    |                    |
|               |                    |
| 14 April 2015 |                    |

 

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