2021 ANNUAL REPORT
Driven by
Excellence
On the Cover
The New Bridge over the Richmond River
at Broadwater, Woolgoolga to Ballina
Pacific Highway Upgrade. See page 17.
Image courtesy of Transport for NSW
23
Management’s Discussion and Analysis (M-1)
Consolidated Financial Statements (F-1)
Chairman’s
Message
I am pleased to report that WSP continued to make
excellent progress in 2021. All our business sectors
worldwide performed well last year. Despite the
uncertain global situation, we can take pride in the
fact that WSP is positioned for further success.
I believe our 2019-2021 Global Strategic Plan
and related decisions underpinned last year’s
performance. As a result, we are entering a new
strategic planning cycle with a robust balance
sheet and strong franchises in Transportation &
Infrastructure, Earth & Environment and Property
& Buildings.
Last year, we consolidated our platform further,
committed to achieve net zero emissions by 2040,
welcomed colleagues from several acquisitions and
moved forward with our Future Ready® program.
On behalf of the Board, I would like to express my
sincere appreciation to the Management and our
employees for their tireless efforts in making WSP
such an outstanding company.
A Vibrant and Growing Company
WSP is all about people. Our success is directly
linked to our employees’ ingenuity, expertise
and passion. In that regard, we are very pleased
with the integration of Golder and of additional
companies into the WSP family.
These acquisitions reinforced our capacity in
many markets, especially Earth & Environment,
and provided a sense of positive energy
across WSP. Our business is based on sharing
intellectual knowledge, and now more than
ever, this principle increasingly applies to
climate change management, sustainability,
decarbonization and other ESG services.
Today, we are a vibrant and growing company
known for our maturity and entrepreneurship
in our global leadership role.
WSP is all about people. Our success
is directly linked to our employees’
ingenuity, expertise and passion.
* Future Ready® is registered in Canada, United States and New Zealand.
WSP Future Ready (Logo)® Is registered in Europe, Australia and in the United Kingdom
CHAIRMAN’S MESSAGE
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2021 ANNUAL REPORT
Today, we are a vibrant
and growing company
known for our maturity
and entrepreneurship in
our global leadership role.
Governance
As WSP’s stewards, the Board responsibly
complemented and challenged management
in 2021.
We have a strong governance framework which
successfully supports and protects our innovative
culture. We will remain focused on this important
dynamic as we grow.
Risk management
The last 24 months have shown that society in
general, including businesses of all kinds, must
expect the unexpected. As the most unlikely events
can create the highest risks, we recognize that it is
imperative to have a high standard of governance
supporting our diverse operations, agility and
resilience.
Our corporate culture and stewardship ensure
that we are vigilant in all matters of compliance to
ensure the wellbeing of all our stakeholders.
Leadership
The market expects us to be leaders in our industry;
we strive to meet this expectation which underpins
our global strategic ambitions. WSP has a history
of questioning the status quo, and we believe our
expertise can make a difference in shaping the
future. In my view, the best companies in the post-
pandemic world will be good corporate citizens,
acting with purpose and integrity.
Under Alexandre L’Heureux’s leadership as CEO,
the past year was characterized by consistency,
stability and growing strength. Our senior
management team remained largely intact while
adding several key appointments derived primarily
from internal advancement as well as talent joining
through acquisitions and recruitment.
Strategic Planning
As the final year of our strategic planning cycle,
2021 was marked by a number of important
milestones. We set and achieved ambitious goals,
even though the prospect of a pandemic was not on
the table when our plan was drawn up in 2018.
We take strategic plans seriously, and the 2022-
2024 cycle is no exception. Many stakeholders were
involved in the planning process, representing
different markets and geographies. I know they
invested a lot of time and energy. I would therefore
like to express my gratitude to everyone —
employees, clients, investors and partners— who
took part in this process.
The successful evolution of WSP is a tribute to
their efforts. Putting our knowledge to good use is
how we make a difference; building on our strong
foundation enables us to keep on growing.
Our Future Ready® approach continues to
differentiate us. We look at future trends, predict
how they will impact our work, and strive for
solutions with positive generational impact. We
will continue to invest in knowledge while sharing
our professional know-how and making it available
everywhere.
Driven by Excellence
I believe the title of this annual report – Driven by
Excellence – is a powerful description and perfectly
encapsulates what we are all about. Today, WSP is
regarded as a leading global consultancy firm where
people are proud to work on sustainable solutions
for all stakeholders.
We have the right platform to continue our
successful journey.
I would like to thank our employees, shareholders,
investors and all stakeholders for placing their trust
in WSP.
CHRIS COLE
CHAIRMAN OF THE BOARD
4
2021 ANNUAL REPORTPRESIDENT AND CEO’S MESSAGE President and
CEO’s Message
I am thrilled to provide this report on 2021.
Over the past year, we continued our disciplined
acquisition strategy, strengthened our ESG and
sustainability ambitions and ramped up our
support to clients and communities.
It was also the last year of WSP’s 2019-2021
strategic plan, entitled “Expanding Our Horizons”.
Despite world events, I am pleased to report that it
is exactly what we did.
In 2019, our business was led by our two
core sectors (Transportation & Infrastructure
and Property & Buildings), as well as by our
engineering and design services. Thanks to smart
diversification, organic growth and acquisition
strategy, we built a more resilient platform while
expanding our reach, offerings and expertise to
better serve our clients.
Following the addition of six acquisitions in 2021,
WSP continued to develop its leading Earth &
Environment franchise. Today our business is
more diversified than ever, striking a better balance
between our engineering, design and strategic
advisory services.
In 2021, we continued to make significant progress
across our four strategic pillars (Clients, People
& Culture, Expertise and Operational Excellence),
we deepened our commitment to a more
sustainable future.
In 2021, we continued to make
significant progress across our four
strategic pillars and deepened our
commitment to a sustainable future.
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2021 ANNUAL REPORT
PRESIDENT AND CEO’S MESSAGE Today, we take a common approach to thinking
generations ahead as we strive to fulfill our
promise to future-proof our clients and
communities. In light of global discussions about
the pandemic’s impact, our distinctive philosophy
has already proved its worth.
Strengthening Our Leadership in ESG
Sustainability is a core element of our business
strategy. In April 2021, we pledged to achieve net
zero emission across our value chain by 2040. We
also set science-based GHG emission reduction
targets, superseding the objectives in our 2019-
2021 Global Strategic Plan and aligning with the
most ambitious aims of the Paris Agreement. One
thing was essential to us: WSP’s commitment had
to be ambitious, credible and science-based, and
it had to resonate with our clients, employees and
shareholders.
Drawing on WSP’s expertise, we have an
opportunity to make a meaningful contribution
to reducing built environment emissions through
our design and advisory services. We believe
that embedding our Future Ready® approach
throughout the project delivery process will
significantly benefit climate change mitigation
while supporting our clients’ transition to a low-
carbon economy.
As we continue to advance our ESG agenda, we
are proud to garner recognition for our ongoing
efforts. In 2021, we were named one of Corporate
Knights’ Best 50 Corporate Citizens in Canada.
For the third year in a row, we were recognized as
the Most Sustainable Company in the Engineering
Industry by World Finance magazine. We were also
included in S&P’s 2022 Sustainability Yearbook as
a Member and Industry Mover, based on its 2021
Corporate Sustainability Assessment.
Given WSP’s expertise,
we have an opportunity
to make a meaningful
contribution to reducing
built environment
emissions through our
design and advisory
services.
Focusing on Our People
Since the beginning of the pandemic, work
environments and talent expectations have
evolved. Now more than ever, we must focus on
talent attraction and retention.
In light of the workplace changes our people have
faced, in 2021 we launched a global employee
engagement and feedback survey, in which
over 80% of our employees participated. This is
emblematic of our culture of openness: our people
feel empowered, enabled, safe and supported by
their managers and colleagues.
WSP is fundamentally a people business. For
that reason, investing in our employees’ personal
and professional success serves to further our
own business goals. In 2021, over 80% of our
leadership roles were filled internally through
career advancement or by onboarding talent via
acquisitions, exceeding our ambitious goal of 75%.
In addition to developing and adopting a common
job architecture, we rolled out a pathway model
with a view to assisting employees seeking career
development advice and insight into how they can
shape their future within WSP.
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2021 ANNUAL REPORTPRESIDENT AND CEO’S MESSAGE We will drive the energy transition
and response to climate change by
providing resilient and sustainable
solutions to our clients.
Delivering for Our Clients
Clients are the lifeblood of our company. Forging
strong relationships and interacting with our
clients are the twin keys to our success.
More than ever in 2021, providing insightful
advice, cutting-edge expertise and smart designs
paved the way for an industry-leading client
experience. We grew our key accounts and boosted
our client satisfaction by focusing on our major
clients. We also achieved favourable or excellent net
promoter scores in our primary regions.
Looking forward, it is clear to us that one of the
ways we can be most effective is through the
services and advice we provide to support our
clients’ transition to a low-carbon world. We will
drive the energy transition and respond to climate
change by devising resilient and sustainable
solutions for our clients.
Growing Through Acquisitions
In 2021, we completed six acquisitions, including
the transformative addition of Golder. Thanks to
Golder, we doubled the size of our environmental
sector to more than 14,000 professionals dedicated
to advancing the world’s green transition. We are
winning more and more projects in all regions and
across all sectors. Capitalizing on best practices,
we are now better equipped to help our clients face
their biggest challenges.
Additional acquisitions in 2021 helped us to
reinforce our market-leading position and
geographic footprint in the United States, with
the additions of tk1sc, EarthCon, Knight and
Englekirk, as well as in Switzerland with b+p
baurealisation.
Focusing on our key objectives, we executed
our strategy and grew the WSP family with 17
successful acquisitions during the 2019-2021
Global Strategic Plan while strengthening our
existing capabilities and expanding into new
geographic regions. More than ever, we offer a
broad array of services to clients around the world.
Delivering on Our Financial Ambitions
WSP delivered strong results in 2021. Organic
revenue growth in all segments met or exceeded
management’s outlook for the year. We also
achieved the financial ambitions set out in our
2019-2021 Global Strategic Plan.
Revenues and net revenues* for the year reached
$10.3 billion and $7.9 billion, up 16.8% and 14.7%
respectively compared to 2020. Our healthy
backlog* stood at $10.4 billion, representing 11.8
months of revenues, up 23.8% from one year
ago. We also reported an adjusted EBITDA* of
$1.32 billion, up 25.5%, compared to $1.05 billion
in 2020, surpassing expectations. Our adjusted
EBITDA margin* rose to 16.8% in 2021 from 15.4%
in 2020. Also, earnings before net financing expense
and income taxes increase by 57.7% to $724.6
million in 2021.
* Non-IFRS and other financial measures without standardized definitions under IFRS, which may not be comparable to similar measures used by other issuers. Refer to
section 4, “Financial Highlights” on page M-7 of the Management’s Discussion and Analysis, as well as section 22, “Glossary of segment reporting, non-IFRS and other financial
measures” on page M-50 of the Management’s Discussion and Analysis, for references to quantitative reconciliations of non-IFRS financial measures to the most directly
comparable IFRS measures, as well as to explanations of the composition and usefulness of non-IFRS and other financial measures. The Management’s Discussion and
Analysis is also available on SEDAR at www.sedar.com under WSP’s profile.
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2021 ANNUAL REPORTPRESIDENT AND CEO’S MESSAGE 2019-2021 Ambitions
Results
Net revenues
$8B to $9B
Annual net revenue growth
(organic and acquisitions)
Adjusted EBITDA margin
>10%
14.0% to
15.0%
Days sales outstanding (DSO)*
Less than 80
Net debt/adjusted EBITDA ratio*
1.0x to 2.0x
As regards other metrics, we are pleased to report
that we maintained strong days sales outstanding
(DSO) at 66 days, well below our outlook range
of 73 to 77 days. Free cash flow* of $646.1 million
for the year represented 1.4 times net earnings
attributable to shareholders. Cash inflows from
operating activities were $1.06 billion for the
year ended December 31, 2021, compared to $1.13
billion in 2020.
Entering a New Strategic Cycle
During 2021, we worked hard on our next strategic
cycle while tracking important market trends
and engaging with stakeholders, from employees
to regional leaders and clients to investors. The
publication of our 2022-2024 Global Strategic
Action Plan on March 9, 2022 would not have been
possible without their assistance and feedback.
We enter this new strategic cycle with good
momentum. Fuelled by our successful achievements
and our clear long-term vision, we will keep
building on our strong foundation. Our long-
term vision sets an ambitious destination while
capitalizing on transformational market trends.
In this context, I strongly believe we are well
positioned to make a significant impact on
our global and local communities as we face a
collective turning point in our climate, societies
and resources.
I invite you to review our 2022-2024 Global
Strategic Action Plan and to learn more about our
long-term vision and three-year action plan.
Thank you to our clients, shareholders and the
Board for their trust and continued support.
To our 55,300 employees, thank you for your
unwavering dedication and commitment to our
organization and for the work you do to improve
our communities. I look forward to continuing this
journey together and seizing the opportunities that
lie ahead.
ALEXANDRE L’HEUREUX
PRESIDENT AND CEO
* Non-IFRS and other financial measures without standardized definitions under IFRS, which may not be comparable to similar measures used by other issuers. Refer to
section 4, “Financial Highlights” on page M-7 of the Management’s Discussion and Analysis, as well as section 22, “Glossary of segment reporting, non-IFRS and other financial
measures” on page M-50 of the Management’s Discussion and Analysis, for references to quantitative reconciliations of non-IFRS financial measures to the most directly
comparable IFRS measures, as well as to explanations of the composition and usefulness of non-IFRS and other financial measures. The Management’s Discussion and
Analysis is also available on SEDAR at www.sedar.com under WSP’s profile.
8
2021 ANNUAL REPORTPRESIDENT AND CEO’S MESSAGE
2021 in Review
In 2021, we continued our disciplined
acquisition strategy, strengthened our ESG
and sustainability ambitions, and elevated
our support to clients and communities.
JANUARY 27
tk1sc Acquisition
The acquisition of tk1sc further consolidated
WSP’s Property and Buildings business in the
complex healthcare, life science and technology
markets in the western United States.
MARCH 25
Compliance Leader Verification
WSP earned the coveted Compliance Leader
Verification for 2021-2022 from the Ethisphere
Institute in recognition of its outstanding
commitment to implementing a best-in-class
ethics and compliance program.
APRIL 8
Golder Acquisition Closing
With the closing of the Golder acquisition,
WSP increased its workforce by approximately
7,000 people and became a leading global
environmental consulting firm with
approximately 14,000 professionals dedicated
to accelerating the world’s green transition.
FEBRUARY 22
Earth Consulting Group Acquisition
The acquisition of US-based EarthCon
added highly specialized technical expertise
in remediation to WSP’s existing
suite of services.
APRIL 7
Appointment of Marie-Claude Dumas as
President and CEO of WSP in Canada
Marie-Claude Dumas brings a proven
track record as a global engineering and
construction executive with over 20 years
of multi-disciplinary management and
consulting experience acquired with
various multinationals.
APRIL 15
Private Offering
WSP announced that it has priced an offering
of $500 million aggregate principal amount of
2.408% senior unsecured notes.
2021 IN REVIEW
2021 ANNUAL REPORT
APRIL 21
Net Zero Commitment
WSP announced ambitious climate action
through a commitment to achieve net zero
emissions across its value chain by 2040,
supported by science-based greenhouse
gas emissions reduction targets.
JUNE 21
Acquisition of Knight Partners in the US
This transaction bolstered our Transportation
and Infrastructure offering in the United States
thanks to Knight’s established brand strength,
namely in the Chicago area. The transaction
allowed Knight’s experimented team capable of
delivering program/construction management,
planning and design services at all project
stages for all client types to join forces with
WSP’s U.S. workforce.
JULY 7
World Finance Magazine
Sustainability Award
WSP was named the most sustainable company
in the engineering industry by World Finance
Magazine thanks to our commitment to
Environmental, Social and Governance (ESG).
OCTOBER 5
Appointment of Eric Peissel as Global
Director of Transport and Infrastructure
After a long and successful career in our
Canadian operations, Eric Peissel is now in
charge of spearheading the Global Strategy for
Transportation and Infrastructure.
APRIL 21
b+p baurealisation Acquisition
The acquisition of Zurich-based b+p
baurealisation expanded our service offering into
strategic advisory areas, in addition to increasing
our footprint in Switzerland.
JULY 6
Best 50 Corporate Citizens in Canada
WSP ranked 24 out of 271 Canadian companies,
reflecting our commitment and contribution
to ESG and the UN Sustainable
Development Goals.
AUGUST 10
ENR Rankings
For the first time since 2017, WSP achieved the
top spot in Engineering News-Record Magazine’s
List of Top 225 International Design Firms while
keeping our #1 position in the Buildings and
Transportation sector rankings.
OCTOBER 7
Englekirk Acquisition
This transaction added significant structural
engineering capabilities for the building sector,
drawing on Englekirk’s expertise designing
structures in high-seismic regions while
growing WSP’s structural engineering practice
on the West Coast.
2021 IN REVIEW
10
2021 ANNUAL REPORT
WSP Today
9,500
CANADA
16,000
AMERICAS
(US & LATAM)
20,100
EUROPE,
MIDDLE EAST,
INDIA & AFRICA
(EMEIA)
9,700
ASIA PACIFIC
(APAC)
Countries where
WSP is present*
Net Revenues by Region
34%
32%
17%
17%
AMERICAS
(US & LATAM)
EUROPE, MIDDLE EAST,
INDIA & AFRICA
(EMEIA)
CANADA
ASIA PACIFIC
(APAC)
Revenues by Market Sector
47%
23%
21%
9%
TRANSPORTATION &
INFRASTRUCTURE
EARTH &
ENVIRONMENT
PROPERTY &
BUILDINGS
POWER & ENERGY,
RESOURCES, INDUSTRY
* As of December 31, 2021.
WSP TODAY
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2021 ANNUAL REPORT
Financial
Highlights
$10.3 B
Revenues (CAD)
$7.9 B
Net Revenues (CAD)
3.3%
Organic growth in
Net Revenues
$473.6 M
Net Earnings (CAD)
$4.07
Net Earnings
Per Share (CAD)
$1.32 B
Adjusted EBITDA
(CAD)
$724.6 M
Earnings before net
financing expense and
income taxes
16.8%
Adjusted EBITDA
Margin
66
Days Sales
Outstanding (DSO)
$10.4 B
Backlog (CAD)
We had set ambitious goals, and thanks to the ingenuity of
our people, we’re pleased to report solid financial results
meeting or exceeding Management’s outlook for the year.
FINANCIAL HIGHLIGHTS
12
2021 ANNUAL REPORT
2022-2024 Global
Strategic Action Plan
On March 9, 2022, WSP unveiled its 2022-2024 Global
Strategic Action Plan which directs the next phase
of our evolution, and introduces a long-term vision
that provides us with an aspirational destination.
Long-Term Vision
We aspire to become the undisputed leader in our industry. Looking beyond 2024, we aim to double in
size sustain mid-to-high single-digit net revenue organic growth and achieve adjusted EBIDTA margin in
excess of 20%.
Change
Agent
Trusted
Partner
Employer
of Choice
WSP is a positive
and bold agent
of change in our
communities.
Our professionals,
clients, suppliers
and shareholders
seek us out.
We attract the brightest
minds to solve our
clients’ most complex
challenges.
Diversity
Advocate
We raise up and
empower the
diversity of our
communities.
2022-2024 GLOBAL STRATEGIC ACTION PLAN
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2021 ANNUAL REPORT Key ESG / Sustainability Ambitions by 2024
Our commitments to ESG are fundamental and non-negotiable.
40%
Decrease in absolute scope
1 and 2 (operations)
market-based GHG emissions
5%
Year-over-year increase in the
representation of women and
under-represented groups
15%
Decrease in absolute scope 3
(supply chain) GHG emissions
100% Integration of ESG criteria as part
of global leader compensation
>50%
Clean revenues, defined as
having a positive impact on the
environment and supporting
the UN SDGs
10% Decrease in the total recordable
incident rate per year
Key Financial Ambitions by 2024
Our ambition is to grow net revenues, adjusted EBITDA and adjusted net earnings.
>$10B
Net revenues (CAD)
1x-2x
Net debt to adjusted
EBITDA ratio
>5%
Annual organic
net revenue growth
>100%
Free cash flow to
net earnings
17.5-18.5% Adjusted EBITDA margin
$150-200M Investment in digital
tools and systems (CAD)
2022-2024 GLOBAL STRATEGIC ACTION PLAN
14
2021 ANNUAL REPORT Our 2022-2024 Global Strategic Action Plan outlines
how we will make significant progress towards our
long-term vision by evolving our core pillars.
People and Culture
Expertise
Foster the ingenuity of our people
Create a fulfilling and inclusive environment
Invest in career and professional development
Leverage our collective talent
Lead through technical excellence
and expertise
Advance our core sectors and expand in
new areas
Accelerate digital expertise and solutions
Continue our disciplined focus on acquisition
strategy
Clients
Operational Excellence
Elevate the standard of client experience
Mature our enterprise-wide client program
Achieve industry-leading client engagement
and experience
Drive leading performance and efficiency
through Transformation
Simplify our way of working
Enhance project delivery
Align our platform and processes
Boost our digital platform and evolve our
workplace
For more information on our
2022-2024 Global Strategic Action Plan, please visit wsp.com
2022-2024 GLOBAL STRATEGIC ACTION PLAN
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2021 ANNUAL REPORT Our Projects
Our expertise is driven by our passion for solving
client-related challenges through innovative
engineering and advice. Here is a selection of
great projects from around the world.
OUR PROJECTS
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2021 ANNUAL REPORT
Delivering Freshwater
TSEUNG KWAN O DESALINATION PLANT, HONG KONG
Image: Water Supplies Department, HKSAR Government
WSP’s engineers are working on a desalinization plant designed to provide Hong Kong with 135,000 m3
of freshwater per day, thus enhancing the city’s climate resilience. Working alongside AJC Joint Venture
and the Water Supplies Department, WSP is delivering an array of future-ready services. Innovation is the
watchword, as seen in efforts to minimize seawall impacts and flooding risks. Green features, including
the use of renewable energy, rainwater harvesting, solar panels, smart street lighting poles and roof
greenery, will contribute to a sustainable built environment.
Making Travel Safer
WOOLGOOLGA TO BALLINA PACIFIC
HIGHWAY UPGRADE, AUSTRALIA
Working jointly with Laing O’Rourke as Pacific
Complete, WSP was a delivery partner for the
Woolgoolga to Ballina Pacific Highway upgrade,
the final stretch to be expanded to four lanes.
Overseen by Transport for NSW, the 155 km-long
project includes nine interchanges, in addition
to 170 bridges and 350 fauna connections. In
addition to making travel much safer, the upgrade
will reduce drive times while improving local
community amenities. We helped achieve strong
Aboriginal participation – 1 million hours across
300 Indigenous people. This project won an
International Road Federation award for ground
engineering.
OUR PROJECTS
17
Image: Transport for NSW
2021 ANNUAL REPORT Creating Iconic Landmarks
ADDRESS RESIDENCES JUMEIRAH RESORT,
DUBAI, UNITED ARAB EMIRATES
WSP was appointed by Mirage Leisure &
Development as the lead consultant, architect of
record, structural engineer, security consultant,
and fire & life safety consultant for Address
Residences Jumeirah Resort. Designed by
Killa Architectural Design, WSP helped solve
engineering complexities of the project which
included hoisting a 650-tonne skybridge to
the top of the 77-storey structure. Inaugurated
in 2021, Address Residences Jumeirah Resort
– home to the world’s highest infinity pool –
offers breathtaking views across notable Dubai
landmarks such as Jumeirah Beach Residence,
Palm Jumeriah, and Bluewaters Island.
Designing Healthcare
NEW DUNEDIN HOSPITAL, NEW ZEALAND
WSP is providing civil engineering, seismic restraint and construction monitoring services on New
Zealand’s largest hospital development, showcasing its ability to provide critical engineering design for
complex healthcare projects. The team must ensure that the sewer/stormwater systems can accommodate
increased demand, made possible in part by clever use of soft landscaping. Since the new facility requires
72-hour self-sufficiency in the event of an earthquake, water storage tanks must also be constructed on
site. This project is in the design phase.
Working for Safety
TAILINGS MANAGEMENT FACILITY FOR QB2, CHILE
WSP Golder designed and is providing quality
assurance and engineer of record services for
the tailings management facility (TMF) at Teck
Resources’ Quebrada Blanca Phase 2 Project
(QB2), in Chile. QB2 is one of the world’s largest
undeveloped copper resources. The 140,000 tpd
operation has a 120 m high starter dam that will
be raised to 310 m during 25 years of operation. Its
robust design is aligned with the global industry
standard focused on safety.
OUR PROJECTS
Image: Teck
19
2021 ANNUAL REPORT Supporting the Future
KATTEGAT SOUTH – STRATEGIC
SUPPORT, SWEDEN
As environmental consultant,
WSP supported Vattenfall during
the consultation/permitting
process for the Kattegat
South offshore wind farm
(southwest Sweden). The project
is destined to be Northern
Europe’s largest wind farm,
with a capacity corresponding
to 2.3% of Sweden’s current
total energy production. WSP
prepared the consultation and
permit application documents,
including environmental impact
assessments for the wind farm
and for Natura 2000, a European
Union-supported network of
nature protection areas for
rare and endangered species.
Fish ecology and commercial
fisheries studies were also
conducted.
OUR PROJECTS
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2021 ANNUAL REPORT Finding the Way
OLD OAK COMMON STATION DESIGN FOR H2, UNITED KINGDOM
Image: HS2
Designed by WSP and architects WilkinsonEyre, Old Oak Common station in northwest London will
be a super-hub, connecting to central London and Heathrow Airport, as well as to HS2 and mainline rail
services extending up to Scotland. The innovative use of virtual reality is a game-changer: CAD drawings
were used to create an immersive environment replicating the station design. Members of the public were
invited to navigate through this “digital twin” while surrounded by 5,000 virtual passengers. This project
demonstrated how transformative virtual reality can be.
Decarbonizing Buildings
MODERNIZATION OF THE NATIONAL
CAPITAL REGION’S DISTRICT ENERGY
SYSTEM, CANADA
As part of Innovate Energy, a
private partner consortium, WSP
is converting the steam heat used
in 80 government buildings in
the National Capital Region to a
more energy-efficient hot water-
based system. The goal is to reduce
greenhouse gas emissions in the
Ottawa/Gatineau area. Built 50-100
years ago, the original system uses
outdated technologies. During the
construction period (through to
2025), Innovate Energy will design
and build the new system while
operating the existing facilities.
Upon completion, GHG emissions
will be reduced by 63%.
OUR PROJECTS
21
2021 ANNUAL REPORT Restoring Water Quality
STORMWATER MANAGEMENT
IN FLORIDA’S EVERGLADES, USA
In November 2021, the South Florida
Water Management District (SFWMD)
marked the completion of the C-44
Reservoir/Stormwater Treatment
Area, designed to restore and preserve
water quality within and around the
Everglades. WSP served as program/
construction manager for this project,
which is the largest environmental
restoration in U.S. history. The ground
breaking solution combines engineered
structures and nature-based solutions
on a massive scale – in the form of
6,300 acres of wetlands, 32 miles
of berms, 30 miles of canals and 63
water control structures – to remove
pollutants and improve water quality,
provide ecological uplift, and support
the health and economic vitality of
communities in the region.
OUR PROJECTS
22
2021 ANNUAL REPORT
WSP Global Inc.
Management’s
Discussion
and Analysis
For the fourth quarter and
year ended December 31, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS
M-1
2021 ANNUAL REPORT
ABOUT US
As one of the world’s leading professional services firms, WSP
provides strategic advisory, engineering and design services to
clients in the Transportation & Infrastructure, Earth & Environment,
Property & Buildings, Power & Energy, Resources, and Industry
sectors. WSP's global experts include advisors, engineers,
environmental specialists, scientists, technicians, architects and
planners, in addition to other design and program management
professionals. Our talented people are well positioned to deliver
successful and sustainable projects, wherever our clients need us.
HEAD OFFICE
WSP GLOBAL INC.
1600 RENE-LEVESQUE BLVD WEST, 11th FLOOR
MONTREAL, QC H3H 1P9
CANADA
wsp.com
TABLE OF CONTENTS
M-3
1 MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................................... M-4
2 NON-IFRS AND OTHER FINANCIAL MEASURES .............................................................. M-4
3
4
5
6
7
8
9
CORPORATE OVERVIEW ........................................................................................................... M-5
FINANCIAL HIGHLIGHTS ............................................................................................................ M-7
EXECUTIVE SUMMARY ............................................................................................................... M-8
KEY EVENTS .................................................................................................................................... M-9
SEGMENT OPERATIONAL REVIEW ........................................................................................ M-11
FINANCIAL REVIEW ..................................................................................................................... M-16
LIQUIDITY ........................................................................................................................................ M-24
10 EIGHT QUARTER SUMMARY .................................................................................................... M-27
11
SELECTED ANNUAL INFORMATION ..................................................................................... M-28
12 GOVERNANCE ............................................................................................................................... M-28
13 CRITICAL ACCOUNTING ESTIMATES .................................................................................... M-29
14 SIGNIFICANT ACCOUNTING POLICIES ................................................................................ M-30
15 FINANCIAL INSTRUMENTS ....................................................................................................... M-30
16 RELATED PARTY TRANSACTIONS ......................................................................................... M-31
17 OFF-BALANCE SHEET AGREEMENTS .................................................................................. M-31
18 CONTRACTUAL OBLIGATIONS ................................................................................................ M-31
19 FORWARD-LOOKING STATEMENTS ..................................................................................... M-31
20 RISK FACTORS ............................................................................................................................... M-33
21 ADDITIONAL INFORMATION ................................................................................................... M-50
22 GLOSSARY OF SEGMENT REPORTING, NON-IFRS AND OTHER FINANCIAL
MEASURES ...................................................................................................................................... M-50
WSP Global Inc.
Management's Discussion and Analysis
2021
M-4
1 MANAGEMENT’S DISCUSSION AND
ANALYSIS
The following management’s discussion and analysis (“MD&A”) of the consolidated financial position and consolidated
results of operations, dated March 9, 2022, is intended to assist readers in understanding WSP Global Inc.
(the “Corporation” or “WSP”) and its business environment, strategies, performance and risk factors. This MD&A should
be read together with the Corporation's audited consolidated financial statements and accompanying notes for the year
ended December 31, 2021. The Corporation’s audited consolidated financial statements for the year ended December 31,
2021 have been prepared in compliance with International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board (“IASB”). All amounts shown in this MD&A are expressed in Canadian dollars,
unless otherwise indicated. All quarterly information disclosed in this MD&A is based on unaudited figures.
This MD&A focuses on the Corporation’s annual and quarterly results for the year and fourth quarter ended December 31,
2021. The Corporation’s second and third quarters are always comprised of 13 weeks of operations. However, the number
of weeks of operations in the first and fourth quarters will vary as the Corporation has a statutory December 31 year end.
The fourth quarter results include the period from September 26, 2021 to December 31, 2021 and the comparative fourth
quarter results include the period from September 27, 2020 to December 31, 2020.
In this MD&A, references to the “Corporation”, “we”, “us”, “our” and “WSP” or “WSP Global” refer to WSP Global Inc.
Depending on the context, this term may also include subsidiaries and associated companies.
2 NON-IFRS AND OTHER FINANCIAL
MEASURES
The Corporation reports its financial results in accordance with IFRS. WSP uses a number of financial measures when
assessing its results and measuring overall performance. Some of these financial measures are not calculated in accordance
with IFRS. Regulation 52-112 respecting Non-IFRS and Other Financial Measures Disclosure (“Regulation 52-112”)
prescribes disclosure requirements that apply to the following types of measures used by the Corporation:
non-IFRS financial measures;
i.
ii. non-IFRS ratios;
iii.
iv. capital management measures; and
v.
supplemental financial measures.
total of segments measures;
In this MD&A, the following non-IFRS and other financial measures are used by the Corporation: net revenues; total
adjusted EBITDA by segment; total adjusted EBITDA margin by segment; adjusted EBITDA; adjusted EBITDA margin;
adjusted net earnings; adjusted net earnings per share; backlog; free cash flow; days sales outstanding (“DSO”); and net
debt to adjusted EBITDA ratio. These measures are defined in section 22, “Glossary of segment reporting, non-IFRS and
other financial measures” and reconciliations to IFRS measures can be found in section 8, “Financial Review” and section 9,
“Liquidity”.
Management of the Corporation (“Management”) believes that these non-IFRS and other financial measures provide useful
information to investors regarding the Corporation’s financial condition and results of operations as they provide
additional key metrics of its performance. These non-IFRS and other financial measures are not recognized under IFRS, do
not have any standardized meaning prescribed under IFRS and may differ from similarly-named measures as reported by
other issuers, and accordingly may not be comparable. These measures should not be viewed as a substitute for the related
financial information prepared in accordance with IFRS.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-5
3 CORPORATE OVERVIEW
As one of the world’s leading professional services firms, WSP provides strategic advisory, engineering and design services
to clients in the Transportation & Infrastructure, Earth & Environment, Property & Buildings, Power & Energy, Resources
and Industry sectors. WSP experts include advisors, engineers, environmental specialists, scientists, technicians, architects
and planners, in addition to other design and program management professionals. With approximately 55,300 talented
people globally, WSP is favourably positioned to deliver successful and sustainable projects, wherever clients need us.
The Corporation’s business model is centered on maintaining a leadership position in each of its end markets and the
regions in which it operates by establishing a strong commitment to, and recognizing the needs of, surrounding
communities, as well as local and national clients. WSP offers a variety of professional services throughout all project
execution phases, from the initial development and planning studies through to the project and program management,
design, construction management, commissioning and maintenance phases.
Under this business model, the Corporation benefits from regional offices with a full service offering. Functionally, sector
leaders work together with regional leaders to develop and coordinate markets served, combining local knowledge and
relationships with nationally recognized expertise. The Corporation has developed a multidisciplinary team approach
whereby employees work closely with clients to develop optimized solutions.
The Corporation believes it has the capability and the depth of expertise to transform clients’ visions into realities that are
sustainable in every sense - commercially, technically, socially and environmentally.
The market sectors in which the Corporation operates are described below.
•
•
•
Transportation & Infrastructure: The Corporation’s experts advise, plan, design and manage projects for rail
transit, aviation, highways, bridges, tunnels, water, maritime and urban infrastructure. Public and private sector
clients, together with construction contractors and other partners, seek WSP's expertise around the world to
create mid and long-term transport and infrastructure strategies, and to provide guidance and support
throughout the life-cycle of a wide range of projects and assets. As WSP offers comprehensive, innovative and
value-oriented solutions to assist clients in achieving their desired outcomes, the Corporation takes great pride in
solving clients’ toughest problems. WSP offers a full range of services locally with extensive global experience to
successfully deliver projects, helping clients overcome challenges and respond to emerging areas in new mobility,
resiliency, decarbonization, social equity, digital project and design.
Earth & Environment: The Corporation has specialists working with and advising businesses and governments in
all key areas of earth sciences and environmental consultancy, including Environmental, Social and Governance
(“ESG”) matters. These experts deliver a wide range of environmental services, including air, land, water, health
and climate change. They work with and advise clients on environmental matters ranging from due diligence,
permitting approvals and regulatory compliance, to consulting on management of waste and hazardous materials,
land remediation, geotechnical engineering, environmental and social impact assessments, and employee health
and safety. WSP's reputation has been built on helping clients worldwide mitigate risk, manage and reduce
impacts, and maximize opportunities related to sustainability, climate change, energy use and the environment.
The services are offered at every stage of the project or asset's life-cycle from planning to decommissioning, and
span various service areas like field data collection and site-based services, to advisory services to help our clients
make the best ESG decisions.
Property & Buildings: WSP is a world-leading provider of technical and advisory services with a track record in
delivering buildings of the highest quality. The Corporation can be involved at every stage of a project’s life-cycle,
from the business case, through design and construction, to asset management and refurbishment. The
Corporation has teams of technical experts across the globe delivering engineering and consultancy services
ranging from decarbonisation strategies and digital building design to structural and mechanical, electrical, and
plumbing (“MEP”) engineering. The Corporation is an expert in enabling clients to maximize the outcome of
their projects in sectors from high-rise to healthcare, stadia to stations and commercial to cultural.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-6
•
•
•
Resources: The Corporation has the scale and expertise to support all its worldwide resource clients. In mining,
WSP's experts work with clients throughout the mine life-cycle – from exploration and development, through
operations and closure. WSP’s mining expertise spans the major service areas of resource geology, mine
engineering, mine waste, stability, mine water, mine environment, mineral processing, mine infrastructure and
mine closure. In oil and gas, WSP delivers engineering and environmental services to companies operating in
upstream exploration and production, midstream transportation and storage, or downstream refining and
distribution. The Corporation supports its clients through the full life-cycle of projects, from permitting, planning
and design to remediation and decommissioning of assets.
Power & Energy: The Corporation offers energy sector clients complete solutions for all aspects of their projects,
whether they are large-scale power plants, smaller on-site facilities or retrofitting and efficiency programs, with
an aim to reduce energy demand and deliver schemes to create a sustainable future. WSP's experts can advise and
collaborate on every stage of a project, from pre-feasibility to design, operation, maintenance and
decommissioning. They offer long-term operational management support services from the first feasibility
studies, providing advice on aspects ranging from technical, financial and environmental issues, to engineering
design and energy simulations.
Industry: The Corporation works in almost every industrial sector including food and beverages, pharmaceutical
and biotechnology, automotive and chemicals. WSP's experts offer a variety of skills with a deep understanding of
industrial and energy processes, and the engineering expertise required to plan, design, build and operate a new
plant, or to automate equipment in an existing industrial facility. A full range of consulting and engineering
services is offered within multiple disciplines that span all stages of a project - from strategic studies, concept
design and productivity analysis, to serving as an owner’s engineer at each stage of an EPCM contract.
In addition to these sectors, the Corporation offers the highly specialized strategic advisory services listed below:
•
Planning and Advisory Services: The Corporation helps clients make informed decisions during various stages
of the project life-cycle, taking into consideration changing economic, environmental and social factors, evolving
government priorities and emerging technologies. To stay competitive and effectively manage and develop their
infrastructure and property assets, public and private sector organizations are looking to gain access to more
refined data and “lessons learned” from experts who help drive client success around the globe. The Corporation
not only provides local expertise, but also offers international benchmarks and best practice solutions based on its
extensive experience. WSP's team blends the technical skills of its global network with results-oriented business
acumen, to provide effective and sustainable strategies that also contribute to the advancement of the
communities where WSP is present.
• Management Services: The Corporation’s professionals help clients assess and define their goals, as well as the
technical, environmental and commercial realities and challenges they face. Coupled with the Corporation’s
integrated service offerings, this helps the Corporation build strategic relationships with clients. WSP supports
them throughout the planning, implementation and commissioning stages of their projects, including during
times of emergency. With a focus on cost, schedule, quality and safety, and using best-in-class management
processes and techniques, WSP can mobilize the right team from anywhere in the organization across the world
to execute projects of varying sizes and complexity.
•
Technology and Sustainability Services: The Corporation’s professionals work throughout the life-cycle of a
project to offer innovative solutions with a strong focus on change management and executive engagement. As
significant technological advancement offers the opportunity to improve the way we live, commute, and travel, it
also sheds a new light on how property and infrastructure owners need to adapt and embrace the changes. The
Corporation's Technology Services experts integrate the use of digital solutions and software to enhance
engineering, infrastructure, buildings and environmental projects. In addition, as the world faces significant
challenges related to population growth, resource demands and constraints, and extreme weather events that
impact the resiliency and sustainability of communities, the Corporation remains committed to integrating the
principles of sustainability into WSP's work in planning, designing and managing both property and
infrastructure.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-7
4 FINANCIAL HIGHLIGHTS
(in millions of dollars, except percentages, per share data, DSO and ratios)
Revenues
Net revenues(1)
Earnings before net financing expense and income taxes
Adjusted EBITDA(2)
Adjusted EBITDA margin(3)
Net earnings attributable to shareholders of WSP Global Inc.
Basic net earnings per share attributable to shareholders
Adjusted net earnings(2) (4)
Adjusted net earnings per share(3) (4)
Cash inflows from operating activities
Free cash flow(2)
As at
Backlog(5)
DSO(5)
Net debt to adjusted EBITDA ratio(6)
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
Years ended
December 31,
2020
$2,891.0
$2,147.4
$185.2
$361.2
16.8 %
$126.7
$1.08
$171.7
$1.46
$513.2
$369.9
$2,248.3
$1,688.3
$105.3
$262.1
15.5 %
$68.9
$0.61
$93.0
$0.82
$381.8
$264.5
$10,279.1
$7,869.6
$724.6
$1,322.5
16.8 %
$473.6
$4.07
$592.9
$5.09
$1,060.1
$646.1
$8,803.9
$6,859.1
$459.4
$1,053.7
15.4 %
$276.0
$2.51
$394.6
$3.59
$1,125.1
$735.3
December 31,
2021
December 31,
2020
$10,425.6
66 days
0.6
$8,421.3
63 days
0.1
(1) Total of segments measure. Refer to section 8.1, “Net revenues” for a reconciliation to revenues.
(2)
(3)
Non-IFRS financial measure without a standardized definition under IFRS, which may not be comparable to similar measures used by other issuers.
Refer to sections 8.3, “Adjusted EBITDA”, 8.8, “Adjusted net earnings”, 9.1, “Operating activities and free cash flow”, as well as section 22, “Glossary
of segment reporting, non-IFRS and other financial measures”, for quantitative reconciliations to the most directly comparable IFRS measures, as
well as explanations of the composition and usefulness of these non-IFRS financial measures.
Non-IFRS ratio without a standardized definition under IFRS, which may not be comparable to similar ratios used by other issuers. Adjusted EBITDA
margin is defined as adjusted EBITDA expressed as a percentage of net revenues. Adjusted net earnings per share is the ratio of adjusted net
earnings divided by the basic weighted average number of shares outstanding for the period. Refer to section 22, “Glossary of segment reporting,
non-IFRS and other financial measures” for references to the non-IFRS financial measures which are components of these non-IFRS ratios, and the
use of these non-IFRS ratios.
(4) Management has amended its definition of adjusted net earnings, effective January 1, 2021, to exclude amortization of intangible assets related to
(5)
(6)
acquisitions. The comparative periods have been restated. Refer to section 8.8, “Adjusted net earnings” for further explanation.
Supplemental financial measure. Backlog represents future revenues stemming from existing signed contracts to be completed. DSO represents the
average number of days to convert the Corporation's trade receivables (net of sales taxes) and costs and anticipated profits in excess of billings into
cash, net of billings in excess of costs and anticipated profits.
This capital management measure is the ratio of net debt to adjusted EBITDA for the trailing twelve-month period. Net debt is defined as long-term
debt, including current portions but excluding lease liabilities, and net of cash.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-8
5 EXECUTIVE SUMMARY
WSP delivered very strong results in 2021, with organic net revenue growth in all segments, as well as significant growth
in backlog (10.1% organic growth), adjusted EBITDA (up 25.5% or 140 basis points) and adjusted net earnings per share
(up 41.8%).
Fourth quarter 2021 financial highlights
•
•
•
•
•
•
•
•
Revenues and net revenues for the quarter reached $2.9 billion and $2.1 billion, up 28.6% and 27.2%, respectively,
compared to Q4 2020. Organically, net revenues grew 9.7% in the quarter.
Backlog as at December 31, 2021 stood at $10.4 billion, with substantial order intake of $3.3 billion in the quarter.
Adjusted EBITDA in the quarter of $361.2 million, up 37.8%, compared to $262.1 million in Q4 2020.
Adjusted EBITDA margin for the quarter reached 16.8%, compared to 15.5% in Q4 2020, an increase of 130 basis points,
attributable to the strong performance of the platform and solid contribution from recent acquisitions.
Earnings before net financing expense and income taxes in the quarter of $185.2 million, up $79.9 million, or 75.9%,
compared to Q4 2020, mainly attributable to higher adjusted EBITDA.
Adjusted net earnings for the quarter of $171.7 million, or $1.46 per share, up $78.7 million and $0.64, respectively,
compared to Q4 2020. The respective increases of 84.6% and 78.0% in these metrics are mainly attributable to higher
adjusted EBITDA.
Net earnings attributable to shareholders for the quarter of $126.7 million, or $1.08 per share, up 83.9% and 77.0%,
respectively, when compared to Q4 2020. The increase is mainly attributable to higher adjusted EBITDA, partially
offset by higher amortization of intangible assets and net financing expense.
Quarterly dividend declared of $0.375 per share, or $44.2 million, with a 51.5% Dividend Reinvestment Plan (“DRIP”)
participation.
Fiscal year 2021 financial highlights
•
•
•
•
•
Revenues and net revenues for the year reached $10.3 billion and $7.9 billion, up 16.8% and 14.7%, respectively,
compared to 2020. The Golder Acquisition was the main contributor to the acquisition growth in net revenues of
15.3%, while net revenue organic growth of 3.3% was in line with Management's previously disclosed outlook.
Backlog as at December 31, 2021 stood at $10.4 billion, representing 11.8 months of revenues, up 23.8% in the year. On
a constant currency basis, backlog grew organically by 10.1% compared to backlog as at December 31, 2020.
Adjusted EBITDA in the year of $1.32 billion, up 25.5%, compared to $1.05 billion in 2020. Adjusted EBITDA exceeded
the higher end of Management's most recent outlook range.
Adjusted EBITDA margin increased to 16.8% in 2021, compared to 15.4% in 2020, an increase of 140 basis points. The
improvement in adjusted EBITDA margin is attributable to the strong performance of the platform and solid
contribution from recent acquisitions.
Earnings before net financing expense and income taxes in 2021 of $724.6 million, up 57.7% compared to 2020, mainly
due to higher adjusted EBITDA and lower acquisition, integration and reorganization costs.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-9
•
•
•
•
•
•
•
Adjusted net earnings in 2021 of $592.9 million, or $5.09 per share, up $198.3 million or $1.50 per share, compared to
2020. The respective increases of 50.3% and 41.8% in these metrics are mainly attributable to higher adjusted EBITDA.
Net earnings attributable to shareholders of $473.6 million in 2021, or $4.07 per share, up $197.6 million, or $1.56 per
share, compared to 2020. The increase was mainly due to higher adjusted EBITDA and lower acquisition, integration
and reorganization costs, partially offset by higher amortization and depreciation expense.
DSO as at December 31, 2021 stood at 66 days, compared to 63 days as at December 31, 2020, significantly
outperforming Management's most recent outlook range of 73 to 77 days.
Free cash flow of $646.1 million for the year, representing 1.4 times net earnings attributable to shareholders.
Cash inflows from operating activities of $1.06 billion in the year ended December 31, 2021, compared to $1.13 billion
in 2020. The variance is mainly due to the fact that 2020 benefitted from a deferral of income tax and other
remittances in some jurisdictions.
The net debt to adjusted EBITDA ratio stood at 0.6x, compared to 0.1x as at December 31, 2020, increasing mainly due
to the acquisition of Golder Associates. The ratio is well below Management's target of 1.0 to 2.0, due to strong free
cash flow in 2021.
Full year dividend declared of $1.50 per share, or $174.9 million, with cash payout of $81.9 million or 46.8% as a result
of the DRIP participation.
6 KEY EVENTS
The following are highlights from January 1, 2021 to March 9, 2022, the date of the MD&A for the year ended December 31,
2021.
COVID-19 pandemic
The Corporation continues to actively monitor the COVID-19 pandemic and WSP operates without significant interruption.
While certain WSP locations remain in various stages of lockdown, signs of normalcy are returning in a number of
locations. Our regional management teams are rolling out hybrid return-to-office programs and our teams have resumed a
modified travel schedule. Our focus is on developing competitive, flexible, agile, yet structured work environments that
capitalize on the lessons we have learned about being productive with a largely remote workforce, as well as maximizing
in-person team engagement. WSP's primary objective remains to ensure the health, safety and wellbeing of its employees
and families, of its clients and of the communities in which it operates while remaining focused on delivering on client
expectations and pursuing new assignments.
Golder Acquisition
On April 7, 2021, WSP completed the acquisition of Enterra Holdings Ltd., the holding company of Golder Associates
(“Golder” and the “Golder Acquisition”). Golder is an engineering and consulting firm with 60 years of experience in the
geosciences sector; a global engineering firm focused on earth and environmental conditions. Golder provides
engineering, remediation, regulatory & compliance, design and environmental services to clients in the mining,
manufacturing, oil & gas, power and infrastructure industries. Golder operates in 155 offices with approximately 7,000
employees across more than 30 countries globally. The aggregate cash consideration paid in connection with the Golder
Acquisition was US$1.2 billion (C$1.5 billion).
WSP Global Inc.
Management's Discussion and Analysis
2021
M-10
Private placements and financing arrangements
On January 14, 2021, the Corporation closed the private placements of subscription receipt financings to fund a portion of
the Golder Acquisition purchase price. The Corporation issued an aggregate of 3,333,898 subscription receipts (the
“Subscription Receipts”) from treasury at a price of $92.98 per Subscription Receipt by way of a private placement to each
of GIC Pte. Ltd. (“GIC”) and British Columbia Investment Management Corporation (“BCI”), for aggregate gross proceeds of
approximately $310.0 million (the “Private Placements”). Upon completion of the Golder Acquisition on April 7, 2021, each
of GIC and BCI received one common share of WSP for each Subscription Receipt held, plus an amount per common share
equal to any dividend payable by WSP on the common shares between the date of issuance of the Subscription Receipts
and the closing of the Golder Acquisition.
The Golder Acquisition and other related transaction costs were financed using the proceeds from the Corporation's
Private Placements and new bank financing term loans entered into on January 29, 2021.
On April 19, 2021, WSP issued senior unsecured notes at par for aggregate gross proceeds of $500 million, due April 19, 2028
(the “Notes”). The Notes bear interest at a fixed rate of 2.408% per annum, payable semiannually until maturity on the 19th
day of April and October in each year beginning on October 19, 2021. The Notes were assigned rating of BBB (high), with a
stable trend, by DBRS Morningstar. On April 23, 2021, the Corporation used the net proceeds of the offering to repay
existing indebtedness.
Other acquisitions
In January 2021, WSP acquired tk1sc, a 240-employee mechanical, electrical and plumbing engineering firm based in
California, US. The acquisition of tk1sc further expands WSP’s building sector capabilities in the complex US healthcare
and science and technology markets.
In February 2021, WSP acquired Earth Consulting Group, Inc. (“EarthCon”), a 90-employee US-based environmental and
engineering consulting firm. The acquisition of EarthCon adds highly specialized technical expertise in remediation to
WSP’s existing suite of services further strengthening WSP’s capabilities in strategic environmental engineering and
consulting services, compliance, due diligence, and data management, while expanding its geographic presence in the
southeastern US.
In April 2021, WSP acquired b+p baurealisation (“b+p”), a 100-employee engineering and consulting firm based in Zurich,
Switzerland. B+p offers primarily project & construction management and cost management services to both public and
private sector clients.
In June 2021, WSP acquired Knight Partners, LLC (“Knight”), a 150-employee engineering and consulting firm based in
Illinois, US. The acquisition of Knight complements WSP's service offerings in the transportation market sector, delivering
planning, design and program and construction management at multiple project stages for various client types.
In October 2021, WSP acquired Englekirk Structural Engineers, a 90-employee consulting firm based in California, US,
adding significant capabilities in structural engineering for the buildings sector, with expertise designing structures in
high-seismic regions, while growing WSP’s structural engineering practice on the US West Coast.
These five acquisitions were financed using WSP’s available cash and credit facilities.
Leadership announcements
In April 2021, Marie-Claude Dumas was named President and CEO of WSP in Canada. Since joining WSP in January 2020,
Ms. Dumas had served as Global Director, Major Projects & Programs/Executive Market Leader – Quebec, working closely
with our Global and Canadian operations and leadership.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-11
In May 2021, Megan Van Pelt was named Chief Human Resources Officer. Ms. Van Pelt joined WSP in 2017 as Chief Human
Resources Officer for WSP in the US. With over 20 years of experience in human resources, she brings proven expertise in
directing Human Resources programs.
Wendy Stoveland was appointed to the role of Global Communications Director, Senior Vice President in June 2021.
Ms. Stoveland has three decades of experience in the field and served as Golder’s Global Director of Communications from
2016-2021.
In September 2021, Dean McGrail was appointed Chief Executive Officer of WSP in the Middle East, replacing Greg Kane,
who assumed the role of Chief Operating Officer of WSP in Australia. Mr. McGrail previously held the role of Managing
Director of Property & Buildings for the Middle East business.
Effective October 2021, WSP appointed two successors to replace Magnus Meyer, who previously held the dual role of
WSP’s CEO for the Nordics and Managing Director, Central Europe. Anna-Lena Öberg-Högsta was named CEO of the Nordics
and Eric van den Broek as CEO for Central Europe. Ms. Öberg-Högsta formerly served as Golder’s Regional President for
Europe and the Nordics. Mr. van den Broek most recently served and will continue to serve as WSP’s Managing Director for
the Netherlands.
In October 2021, Eric Peissel was named Global Director of Transportation & Infrastructure. Since joining WSP in 2001,
Mr. Peissel has held many senior transportation leadership roles across Canada, most recently as the Canadian Executive
Vice President and Global Manager for Transportation and Infrastructure Networks.
7 SEGMENT OPERATIONAL REVIEW
The Corporation’s reportable segments are: Canada, Americas (US and Latin America), EMEIA (Europe, Middle East, India
and Africa) and APAC (Asia Pacific, comprising Australia, New Zealand and Asia). Segment performance is measured using
net revenues and adjusted EBITDA by segment.
CANADA
(in millions of dollars, except percentages and number of
employees)
Net revenues
Organic growth
Acquisition growth
Divestiture impact
Adjusted EBITDA by segment
Adjusted EBITDA margin by segment
$76.6
21.2 %
$51.0
22.7 %
As at
Backlog
Organic backlog growth in the year
Approximate number of employees
bps: basis points
Net revenues
Fourth quarters ended
Years ended
December 31,
2021
December 31,
2020
Variance
December 31,
2021
December 31,
2020
Variance
$360.6
$224.7
60.5 %
13.8 %
46.7 %
— %
50.2 %
(150) bps
$1,304.5
$952.1
$272.0
20.9 %
$183.2
19.2 %
37.0 %
8.1 %
31.9 %
(3.0) %
48.5 %
170 bps
December 31,
2021
December 31,
2020
Variance
$1,817.3
$1,022.4
9,500
7,000
77.7 %
13.6 %
35.7 %
In the quarter ended December 31, 2021, net revenues in Canada were $360.6 million, an increase of $135.9 million, or
60.5%, compared to the same quarter in 2020. Acquisition growth and organic growth were 46.7% and 13.8%, respectively.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-12
In the year ended December 31, 2021, net revenues in Canada were $1.3 billion, an increase of $352.4 million, or 37.0%,
compared to 2020. Acquisition growth and organic growth were 31.9% and 8.1%, respectively.
Organic growth reached the high end of Management's outlook assumptions of mid-single-digit growth for 2021. This
healthy improvement is mainly due to continued positive momentum stemming from most market sectors.
Acquisition growth is due to the Golder Acquisition completed in April 2021. The divestiture impact of 3.0% in 2021 relates
mainly to the reorganization of a business into a joint venture in the third quarter of 2020.
The Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for 89% of
net revenues for the year ended December 31, 2021. Public sector clients accounted for 33% of net revenues, for the same
period.
Backlog
Backlog increased significantly compared to December 31, 2020, due to the Golder Acquisition, as well as organic growth of
13.6%.
Adjusted EBITDA margin
For the quarter ended December 31, 2021, adjusted EBITDA margin in Canada decreased 150 bps, mainly due to
government subsidies received in the fourth quarter of 2020, as well as lower levels of office lock-downs and COVID-19
travel restrictions in 2021. For the year ended December 31, 2021, adjusted EBITDA margin in Canada increased 170 bps,
mainly due to increased productivity and the higher margin profile of the Golder business.
AMERICAS
(in millions of dollars, except percentages and number of
employees)
Net revenues
Organic growth*
Acquisition growth*
Foreign currency exchange impact**
Adjusted EBITDA by segment
Adjusted EBITDA margin by segment
As at
Backlog
Organic backlog growth in the year
Approximate number of employees
Fourth quarters ended
Years ended
December 31,
2021
December 31,
2020
Variance
December 31,
2021
December 31,
2020
Variance
$763.3
$578.8
$148.3
19.4 %
$111.0
19.2 %
31.9 %
9.9 %
27.1 %
(5.1) %
33.6 %
20 bps
$2,709.2
$2,372.8
$533.1
19.7 %
$436.2
18.4 %
14.2 %
2.6 %
19.6 %
(8.0) %
22.2 %
130 bps
December 31,
2021
December 31,
2020
Variance
$4,536.5
$4,017.8
16,000
12,900
12.9 %
7.6 %
24.0 %
Organic growth and acquisition growth are calculated based on local currencies.
*
** Foreign currency exchange impact represents the foreign currency exchange component to convert net revenues in local currencies into the
Canadian equivalent amount, net of organic growth, acquisition growth and divestiture impact.
bps: basis points
Net revenues
In the quarter ended December 31, 2021, net revenues in the Americas reportable segment were $763.3 million, an increase
of $184.5 million, or 31.9%, compared to the same quarter in 2020. Acquisition growth and organic growth were 27.1% and
9.9%, respectively, both on a constant currency basis.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-13
In the year ended December 31, 2021, net revenues in the Americas reportable segment stood at $2.7 billion, an increase of
$336.4 million, or 14.2%, compared to 2020. Acquisition growth and organic growth were 19.6% and 2.6%, respectively, both
on a constant currency basis.
In the fourth quarter and year ended December 31, 2021, organic growth stemmed from both the US and Latin American
operations, slightly lower than Management's outlook assumptions, due to delays in public sector infrastructure spending
in our US operations. The organic growth in both periods was partially offset by negative impacts of foreign exchange
principally due to the appreciation of the Canadian dollar against the US dollar.
Acquisition growth in the quarter and year stems mainly from the acquisitions of Golder in April 2021, kW Mission Critical
Engineering in December 2020, tk1sc in January 2021, Earthcon in February 2021, Knight in June 2021 and Englekirk
Structural Engineers in October 2021.
The Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for 95% of
net revenues for the year ended December 31, 2021. Public sector clients accounted for 60% of net revenues, for the same
period.
Backlog
Backlog for the Americas segment increased compared to December 31, 2020, due to acquisition growth and organic
growth, partially offset by the negative impacts of foreign exchange rates. Organically, backlog grew 7.6% in the year,
mainly due to substantial order intake in our US operations in the fourth quarter.
Adjusted EBITDA margin
In the quarter ended December 31, 2021, adjusted EBITDA margin for the Americas segment increased 20 bps as compared
to the corresponding quarter in 2020, mainly due to higher margin profile of the Golder business in both the US and Latin
America and other recent US acquisitions.
In the year ended December 31, 2021, adjusted EBITDA margin for the Americas segment increased 130 bps as compared to
2020, mainly due to the higher margin profile of the Golder business in both the US and Latin America and of other recent
US acquisitions, increased productivity, as well as realized gains on foreign exchange hedges in 2021 versus losses in 2020.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-14
EMEIA
(in millions of dollars, except percentages and number of
employees)
Net revenues
Organic growth*
Acquisition growth*
Divestiture impact*
Foreign currency exchange impact**
Adjusted EBITDA by segment
Adjusted EBITDA margin by segment
As at
Backlog
Organic backlog growth in the year
Approximate number of employees
Fourth quarters ended
Years ended
December 31,
2021
December 31,
2020
Variance
December 31,
2021
December 31,
2020
Variance
$658.1
$600.8
$92.3
14.0 %
$69.5
11.6 %
9.5 %
5.9 %
8.3 %
(0.2) %
(4.5) %
32.8 %
240 bps
$2,528.4
$2,378.4
$370.3
14.6 %
$316.9
13.3 %
6.3 %
2.5 %
5.6 %
(0.3) %
(1.5) %
16.9 %
130 bps
December 31,
2021
December 31,
2020
Variance
$2,442.5
$2,043.9
20,100
18,500
19.5 %
10.8 %
8.6 %
Organic growth, acquisition growth and divestiture impact are calculated based on local currencies.
*
** Foreign currency exchange impact represents the foreign currency exchange component to convert net revenues in local currencies into the
Canadian equivalent amount, net of organic growth, acquisition growth and divestiture impact.
bps: basis points
Net revenues
In the quarter ended December 31, 2021, net revenues in the EMEIA reportable segment were $658.1 million, an increase of
$57.3 million, or 9.5%, compared to Q4 2020. Acquisition growth and organic growth were 8.3% and 5.9%, respectively, both
on a constant currency basis.
In the year ended December 31, 2021, net revenues in the EMEIA operating segment stood at $2.5 billion, an increase of
$150.0 million, or 6.3%, compared to 2020. Acquisition growth and organic growth were 5.6% and 2.5%, respectively, both
on a constant currency basis. Organic growth for the year was in line with Management's outlook assumptions.
In the quarter and year, organic growth was led by the economic recovery in the UK, which saw its third consecutive
quarter of double-digit organic growth, and good performance across all market sectors in the Middle East, partially offset
by lower results in the Nordics. The organic growth in the quarter was partially offset by negative impacts of foreign
exchange principally due to the appreciation of the Canadian dollar against the Swedish krona and pound sterling.
In the quarter and year, acquisition growth stemmed mainly from the Golder Acquisition, as well as the acquisition of b+p,
both completed in April 2021.
The Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for 91% of
net revenues for the year ended December 31, 2021. Public sector clients accounted for 55% of net revenues, for the same
period.
Backlog
Backlog for the EMEIA reportable segment increased mainly due to organic growth of 10.8%, when compared to
December 31, 2020, predominantly driven by significant order intake in the Nordics and the UK. Additionally, acquisition
growth in backlog was due to the acquisitions of Golder and b+p.
WSP Global Inc.
Management's Discussion and Analysis
2021
Adjusted EBITDA margin
In the quarter ended December 31, 2021, adjusted EBITDA margin for the EMEIA segment increased compared to the
corresponding period in 2020, mainly due to productivity improvement and to a lower fourth quarter of 2020 explained by
margin erosion on certain contracts and additional accrual for discretionary employee compensation.
In the year ended December 31, 2021, adjusted EBITDA margin for the EMEIA segment increased compared to 2020, mainly
due to increased productivity and favorable market conditions in the UK and the Middle East.
M-15
APAC
(in millions of dollars, except percentages and number of
employees)
Fourth quarters ended
Net revenues
Organic growth*
Acquisition growth*
Foreign currency exchange impact**
Adjusted EBITDA by segment
Adjusted EBITDA margin by segment
As at
Backlog
Organic backlog growth in the year
Approximate number of employees
December 31,
2021
December 31,
2020
Variance
December 31,
2021
December 31,
2020
$365.4
$284.0
$72.3
19.8 %
$51.7
18.2 %
28.7 %
14.2 %
18.8 %
(4.3) %
39.8 %
160 bps
$1,327.5
$1,155.8
$246.3
18.6 %
$202.7
17.5 %
Years ended
Variance
14.9 %
2.3 %
12.6 %
— %
21.5 %
110 bps
December 31,
2021
December 31,
2020
Variance
$1,629.3
$1,337.2
9,700
8,600
21.8 %
13.2 %
12.8 %
Organic growth (contraction) and acquisition growth are calculated based on local currencies.
*
** Foreign currency exchange impact represents the foreign currency exchange component to convert net revenues in local currencies into the
Canadian equivalent amount, net of organic growth, acquisition growth and divestiture impact.
bps: basis points
Net revenues
In the quarter ended December 31, 2021, net revenues in the APAC reportable segment were $365.4 million, an increase of
$81.4 million, or 28.7%, when compared to the same quarter in 2020. Acquisition growth and organic growth were 18.8%
and 14.2%, respectively, both on a constant currency basis.
In the year ended December 31, 2021, net revenues in the APAC reportable segment stood at $1.3 billion, an increase of
$171.7 million, or 14.9%, when compared to 2020. Acquisition growth and organic growth were 12.6% and 2.3%,
respectively, both on a constant currency basis.
The organic growth in the quarter spanned the region, and was driven mainly by better market conditions in Australia and
Asia, as well a lower fourth quarter of 2020 due to cumulative adjustments to account for margin erosion in certain
projects mostly in Asia. The organic growth in the quarter was partially offset by negative impacts of foreign exchange
principally due to the appreciation of the Canadian dollar against the Australian dollar.
The organic growth in the year is in line with Management's outlook assumptions for the region. Organic growth in Asia
and New Zealand was partially offset by Australia, where demobilization-at-completion of certain large projects in the
Transportation & Infrastructure market sector affected net revenues in the first half of 2021.
Acquisition growth is due to the Golder Acquisition completed in April 2021.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-16
The Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for 93% of
net revenues for the year ended December 31, 2021. Public sector clients accounted for 53% of net revenues, for the same
period.
Backlog
Backlog for the APAC segment increased mainly due to organic growth of 13.2% compared to December 31, 2020, across the
region. Additionally, acquisition growth in backlog was due to the Golder Acquisition.
Adjusted EBITDA margin
In the quarter and year ended December 31, 2021, adjusted EBITDA margin for the APAC reportable segment increased,
relative to the comparable periods in 2020. The increase in the quarter is mainly attributable to our New Zealand and Asian
operations, while the increase for the year is mainly due to our Australian operations, including the impact of the higher
margin profile of the Australian Golder business.
8 FINANCIAL REVIEW
(in millions of dollars, except number of shares and per share data)
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
Revenues
Personnel costs
Subconsultants and direct costs
Other operational costs
Depreciation of right-of-use assets
Amortization of intangible assets
Depreciation of property and equipment
Acquisition, integration and reorganization costs
ERP implementation costs
Exchange loss (gain)
Share of income of associates and joint ventures, net of tax
Earnings before net financing expense and income taxes
Net financing expense
Earnings before income taxes
Income tax expense
Net earnings
Net earnings attributable to:
Shareholders of WSP Global Inc.
Non-controlling interests
Basic net earnings per share attributable to shareholders
Diluted net earnings per share attributable to shareholders
$2,891.0
$1,582.1
$743.6
$218.0
$65.5
$46.8
$29.8
$23.6
$6.8
($3.8)
($6.6)
$185.2
$14.3
$170.9
$44.1
$126.8
$2,248.3
$1,292.2
$560.0
$144.5
$71.0
$25.0
$25.2
$30.3
$—
$0.1
($5.3)
$105.3
$1.9
$103.4
$33.4
$70.0
$10,279.1
$5,851.2
$2,409.5
$745.8
$265.8
$139.1
$113.6
$60.8
$6.8
($18.6)
($19.5)
$724.6
$79.5
$645.1
$171.0
$474.1
$126.7
$0.1
$1.08
$1.07
$68.9
$1.1
$0.61
$0.61
$473.6
$0.5
$4.07
$4.05
Years ended
December 31,
2020
$8,803.9
$5,221.8
$1,944.8
$606.1
$268.3
$104.7
$103.3
$103.4
$—
$10.3
($18.2)
$459.4
$73.5
$385.9
$108.5
$277.4
$276.0
$1.4
$2.51
$2.50
Basic weighted average number of shares
117,661,970
113,472,584
116,479,695
110,020,798
Diluted weighted average number of shares
118,082,536
113,751,792
116,901,686
110,263,100
WSP Global Inc.
Management's Discussion and Analysis
2021
M-17
8.1 NET REVENUES
(in millions of dollars, except percentages)
Canada
Americas
EMEIA
APAC
Total
Fourth quarters of 2021 vs 2020
Net revenues - 2021
Net revenues - 2020
Net change %
Organic growth*
Acquisition growth*
Divestiture impact*
Foreign currency exchange impact**
Net change %
$360.6
$224.7
60.5 %
13.8 %
46.7 %
— %
— %
60.5 %
$763.3
$578.8
31.9 %
9.9 %
27.1 %
— %
(5.1) %
31.9 %
$658.1
$600.8
9.5 %
5.9 %
8.3 %
(0.2) %
(4.5) %
9.5 %
$365.4
$284.0
28.7 %
14.2 %
18.8 %
— %
(4.3) %
28.7 %
$2,147.4
$1,688.3
27.2 %
9.7 %
21.8 %
(0.1) %
(4.2) %
27.2 %
(in millions of dollars, except percentages and number of employees)
Canada
Americas
EMEIA
APAC
Total
Fiscal years 2021 vs 2020
Net revenues - 2021
Net revenues - 2020
Net change %
Organic growth*
Acquisition growth*
Divestiture impact*
Foreign currency exchange impact**
Net change %
Approximate number of employees - December 31, 2021
Approximate number of employees - December 31, 2020
Net change %
$1,304.5
$952.1
37.0 %
8.1 %
31.9 %
(3.0) %
— %
37.0 %
9,500
7,000
35.7 %
$2,709.2
$2,372.8
$2,528.4
$2,378.4
$1,327.5
$1,155.8
$7,869.6
$6,859.1
14.2 %
6.3 %
14.9 %
14.7 %
2.6 %
19.6 %
— %
(8.0) %
14.2 %
16,000
12,900
24.0 %
2.5 %
5.6 %
(0.3) %
(1.5) %
6.3 %
As at
20,100
18,500
8.6 %
2.3 %
12.6 %
— %
— %
14.9 %
9,700
8,600
12.8 %
3.3 %
15.3 %
(0.6) %
(3.3) %
14.7 %
55,300
47,000
17.7 %
Organic growth, acquisition growth and divestiture impact are calculated based on local currencies.
*
** Foreign currency exchange impact represents the foreign currency exchange component to convert net revenues in local currencies into the
Canadian equivalent amount, net of organic growth, acquisition growth and divestiture impact.
During the fourth quarter of 2021, the Corporation achieved net revenues of $2.1 billion, up 27.2% compared to the fourth
quarter of 2020. The increase was driven by acquisition growth of 21.8%, across all segments, as well as overall organic
growth of 9.7%, mainly in the US, Canada, the UK, Australia and Asia, with all segments showing positive organic growth.
In the year ended December 31, 2021, net revenues increased to $7.9 billion, up 14.7% over 2020. The Golder Acquisition
was the main contributor to the acquisition growth of 15.3%, while organic growth of 3.3%, in line with Management's
outlook, was mainly led by Canada and the UK.
The increase in the number of employees is mainly due to the addition of employees from acquisitions completed in 2021.
Refer to section 7, “Segment operational review” for further analysis of net revenues by segment.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-18
Reconciliation of net revenues
The Corporation’s financial performance and results should be measured and analyzed in relation to fee-based
revenues, or net revenues, since direct recoverable costs can vary significantly from contract to contract and are not
indicative of the performance of the professional consulting services business.
(in millions of dollars)
Revenues
Less: Subconsultants and direct costs
Net revenues(1)
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
$2,891.0
$743.6
$2,147.4
$2,248.3
$560.0
$1,688.3
$10,279.1
$2,409.5
$7,869.6
Years ended
December 31,
2020
$8,803.9
$1,944.8
$6,859.1
(1) Total of segments measure. Refer to section 22, “Glossary of segment reporting, non-IFRS and other financial measures”.
8.2 BACKLOG
(in millions of dollars)
Backlog, as at December 31, 2020
Revenues
Organic order intake
Net order intake through business acquisition
Foreign exchange movement
Backlog, as at December 31, 2021
Organic backlog growth in the year
Canada
$1,022.4
Americas
$4,017.8
EMEIA
$2,043.9
APAC
$1,337.2
Total
$8,421.3
$(1,690.3)
$(3,955.7)
$(3,070.2)
$(1,562.9)
$(10,279.1)
$1,829.6
$655.2
$0.4
$1,817.3
13.6 %
$4,243.0
$498.7
$(267.3)
$4,536.5
7.6 %
$3,285.7
$215.6
$(32.5)
$2,442.5
10.8 %
$1,734.7
$11,093.0
$131.6
$(11.4)
$1,501.1
$(310.8)
$1,629.3
$10,425.6
13.2 %
10.1 %
As at December 31, 2021, backlog stood at $10.4 billion, representing 11.8 months of revenues(1), an increase of 23.8% as
compared to December 31, 2020. In the year ended December 31, 2021, acquisition growth of 18.6%, mainly due to the
Golder Acquisition, was a key driver of the increase in all reportable segments. Organically and on a constant currency
basis, backlog grew significantly by 10.1% compared to backlog as at December 31, 2020. Since the beginning of the year,
we have seen positive momentum in all regions and the fourth quarter has seen a substantial increase in order intake
amounting to $3.3 billion, led by the Americas reportable segment where the pipeline of opportunities remains strong. In
2021, the volume of unfunded contract awards not yet included in backlog has increased by approximately 70% as
compared to December 31, 2020.
(1)
Based on revenues for the trailing twelve-month period, incorporating a full twelve months of revenues for all acquisitions.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-19
Total
$2,147.4
$389.5
18.1 %
$28.3
$361.2
Total
$1,688.3
$283.2
16.8 %
$21.1
$262.1
Total
$7,869.6
$1,421.7
18.1 %
$99.2
$1,322.5
Total
$6,859.1
$1,139.0
16.6 %
$85.3
$1,053.7
8.3 ADJUSTED EBITDA
Fourth quarter ended December 31, 2021
(in millions of dollars, except percentages)
Canada
Americas
Net revenues
Adjusted EBITDA by segment(1)
Adjusted EBITDA margin by segment(1)
Head office corporate costs
Adjusted EBITDA(2)
$360.6
$76.6
21.2 %
$763.3
$148.3
19.4 %
EMEIA
$658.1
$92.3
14.0 %
APAC
$365.4
$72.3
19.8 %
Fourth quarter ended December 31, 2020
(in millions of dollars, except percentages)
Canada
Americas
Net revenues
Adjusted EBITDA by segment(1)
Adjusted EBITDA margin by segment(1)
Head office corporate costs
Adjusted EBITDA(2)
(in millions of dollars, except percentages)
Net revenues
Adjusted EBITDA by segment(1)
Adjusted EBITDA margin by segment(1)
Head office corporate costs
Adjusted EBITDA(2)
$224.7
$51.0
22.7 %
$578.8
$111.0
19.2 %
EMEIA
$600.8
$69.5
11.6 %
Year ended December 31, 2021
Canada
$1,304.5
$272.0
20.9 %
Americas
$2,709.2
$533.1
19.7 %
EMEIA
$2,528.4
$370.3
14.6 %
Year ended December 31, 2020
APAC
$284.0
$51.7
18.2 %
APAC
$1,327.5
$246.3
18.6 %
APAC
$1,155.8
$202.7
17.5 %
(in millions of dollars, except percentages)
Canada
Americas
Net revenues
Adjusted EBITDA by segment(1)
Adjusted EBITDA margin by segment(1)
Head office corporate costs
Adjusted EBITDA(2)
$952.1
$183.2
19.2 %
$2,372.8
$436.2
18.4 %
EMEIA
$2,378.4
$316.9
13.3 %
(1) Total adjusted EBITDA by segment and total adjusted EBITDA margin by segment, presented in the “total” column of the table, are total of segments
measures.
(2) Non-IFRS financial measure.
Total adjusted EBITDA by segment and total adjusted EBITDA margin by segment stood at $389.5 million and 18.1%,
respectively, for the fourth quarter ended December 31, 2021, compared to $283.2 million and 16.8%, respectively, for the
corresponding period in 2020.
For the year ended December 31, 2021, total adjusted EBITDA by segment and total adjusted EBITDA margin by segment
stood at $1.4 billion and 18.1%, respectively, compared to $1.1 billion and 16.6%, respectively, in 2020.
In both the quarter and the year, adjusted EBITDA and adjusted EBITDA margins increased largely due to the strong
performance of the WSP platform and the strong contribution of recent acquisitions. In the year, realized gains on foreign
exchange hedges in 2021 versus losses in 2020 also contributed to the increase in EBITDA. The variance explanations by
segment are described in section 7, “Segment operational review”.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-20
Head office corporate costs for the fourth quarter and year ended December 31, 2021 stood at $28.3 million and
$99.2 million, respectively, in line with Management's outlook assumptions, but higher than the comparable periods in
2020 mainly due to the long-term incentive plans.
Reconciliation of adjusted EBITDA
Management analyzes the Corporation’s financial performance in relation to adjusted EBITDA as it believes this metric
allows comparability of operating results from one period to another. These measures exclude the effects of items that
primarily reflect the impact of long-term investment and financing decisions, rather than the results of day-to-day
operations. The following table reconciles this metric to the most comparable IFRS measure:
(in millions of dollars)
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
Years ended
December 31,
2020
Earnings before net financing expense and income taxes
$185.2
$105.3
Acquisition, integration and reorganization costs
ERP implementation costs
Depreciation of right-of-use assets
Amortization of intangible assets
Depreciation of property and equipment
Share of depreciation and taxes of associates
Interest income
Adjusted EBITDA*
* Non-IFRS financial measure.
$23.6
$6.8
$65.5
$46.8
$29.8
$2.1
$1.4
$30.3
$—
$71.0
$25.0
$25.2
$3.7
$1.6
$724.6
$60.8
$6.8
$265.8
$139.1
$113.6
$9.4
$2.4
$459.4
$103.4
$—
$268.3
$104.7
$103.3
$9.4
$5.2
$361.2
$262.1
$1,322.5
$1,053.7
WSP Global Inc.
Management's Discussion and Analysis
2021
M-21
8.4 EARNINGS BEFORE NET FINANCING EXPENSE AND
INCOME TAXES
The following table summarizes selected operating results expressed as a percentage of net revenues.
(percentage of net revenues)
Net revenues
Personnel costs
Other operational costs
Exchange loss (gain) and interest income
Share of earnings of associates and joint ventures before
depreciation and income taxes
Adjusted EBITDA margin
Depreciation of right-of-use assets
Depreciation of property and equipment
Amortization of intangible assets
Acquisition, integration and reorganization costs and ERP
implementation costs
Share of depreciation and taxes of associates
Earnings before net financing expense and income taxes
Net financing expense
Income tax expense
Net earnings
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
Years ended
December 31,
2020
100.0 %
73.7 %
10.1 %
(0.2) %
(0.4) %
16.8 %
3.1 %
1.4 %
2.2 %
1.4 %
0.1 %
8.6 %
0.7 %
2.0 %
5.9 %
100.0 %
76.5 %
8.6 %
(0.1) %
(0.5) %
15.5 %
4.2 %
1.5 %
1.5 %
1.8 %
0.2 %
6.2 %
0.1 %
2.0 %
4.1 %
100.0 %
74.4 %
9.5 %
(0.3) %
(0.4) %
16.8 %
3.4 %
1.4 %
1.8 %
0.9 %
0.1 %
9.2 %
1.0 %
2.2 %
6.0 %
100.0 %
76.1 %
8.8 %
0.1 %
(0.4) %
15.4 %
3.9 %
1.5 %
1.6 %
1.5 %
0.1 %
6.7 %
1.1 %
1.6 %
4.0 %
In the fourth quarter of 2021, adjusted EBITDA margin increased to 16.8%, compared to 15.5% for the fourth quarter of
2020. For the year ended December 31, 2021, adjusted EBITDA margin increased to 16.8%, compared to 15.4% in 2020. The
increases are largely due to lower personnel costs, as a result of the strong performance of the WSP platform and the
strong contribution of recent acquisitions. In the year, realized gains on foreign exchange hedges in 2021 versus losses in
2020 also contributed to the increase in EBITDA.
In the fourth quarter and year ended December 31, 2021, earnings before net financing expense and income taxes
increased as a percentage of net revenues, mainly due to higher adjusted EBITDA. As a percentage of net revenues, total
amortization and depreciation was lower in both the quarter and the full year. In the year ended December 31, 2021,
acquisition, integration and reorganization costs were lower mainly due to 2020 severance costs stemming from
adjustments to cost structures and a gain on sale of an investment in an associate in 2021.
These variances are explained in further detail below.
Personnel costs
Personnel costs include payroll costs for all employees related to the delivery of consulting services and projects, as well as
administrative and corporate staff.
For the quarter and year ended December 31, 2021, despite inflation pressure, personnel costs decreased as a percentage of
net revenues, as compared to the corresponding periods in 2020, mainly attributable to the strong performance of our
existing businesses and the higher margin profile of recent acquisitions.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-22
During the fourth quarter and year ended December 31, 2021, the Corporation recorded government subsidies of
$0.9 million and $14.4 million, respectively ($28.2 million and $53.0 million, respectively, during the corresponding periods
in 2020), mostly offset by additional discretionary employee compensation.
Other operational costs
Other operational costs include fixed costs such as, but not limited to, non-recoverable client service costs, technology
costs, professional insurance costs and office space related costs (mainly utilities and maintenance costs).
Other operational costs for the quarter and year ended December 31, 2021, as a percentage of net revenues, were higher
than the comparable periods in 2020, mainly due to the fact that prior to achieving full integration and synergies,
corporate costs of recently acquired businesses are higher proportionate to net revenues.
Exchange gains and losses and interest income
In the quarter and year, operational foreign exchange gains of $3.8 million and $18.6 million, respectively, had a positive
impact in 2021, as compared to losses of $0.1 million and $10.3 million, respectively, in the corresponding periods in 2020.
This variance is mainly attributable to the US dollar.
Depreciation and amortization
Depreciation of right-of-use assets, as a percentage of net revenues, decreased in both the quarter and year ended
December 31, 2021 when compared to the corresponding periods in 2020, mainly due to lease terminations and lease
modifications in connection with office closures and downsizing, as the Corporation achieves synergies with newly
acquired businesses and works toward a hybrid workplace model. Amortization of intangible assets, as a percentage of net
revenues, increased in both periods, when compared to the corresponding periods in 2020, mainly due to intangible assets
recognized as part of the Golder Acquisition.
Acquisition, integration and reorganization costs and ERP implementation costs
Acquisition, integration and reorganization costs include, if and when incurred, transaction and integration costs related
to business acquisitions, any gains or losses on disposals of non-core assets, outsourcing program costs pertaining mainly
to redundancy and transition costs resulting from the outsourcing of the Corporation’s infrastructure or other functions,
restructuring costs, and severance costs stemming from adjustments to cost structures. In the table above, these costs are
combined with ERP implementation costs.
Acquisition, integration and reorganization costs and ERP implementation costs are components of financial performance
which the Corporation believes should be excluded in understanding its underlying operational financial performance,
and are therefore presented separately in its consolidated statement of earnings.
The Corporation incurred acquisition, integration and reorganization costs of $23.6 million and $60.8 million, respectively,
in the quarter and year ended December 31, 2021, compared to $30.3 million and $103.4 million, respectively, in the
corresponding periods in 2020. The decrease for the year in 2021 is mainly due to 2020 severance costs stemming from
adjustments to cost structures, as well as a gain in 2021 on sale of an associate. Acquisition, integration and reorganization
costs for the year were in line with Management's outlook range of $55 million to $65 million.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-23
8.5 FINANCING EXPENSES
Net financing expense for the fourth quarter ended December 31, 2021 was higher than the fourth quarter of 2020, mainly
attributable to lower non-cash gains in value of investments related to a US-employees' deferred compensation plan, lower
gains from derivative financial instruments, and higher interest on long-term debt.
For the year ended December 31, 2021, net financing expense was higher than in 2020, mainly due to losses from derivative
financial instruments in 2021 compared to gains in 2020, partially offset by lower interest on lease liabilities, long-term
debt and other interest and bank charges.
8.6 INCOME TAXES
In the fourth quarter of 2021, an income tax expense of $44.1 million was recorded on earnings before income taxes of
$170.9 million, representing an effective income tax rate of 25.8%.
For the year ended December 31, 2021, an income tax expense of $171.0 million was recorded on earnings before income
taxes of $645.1 million representing an effective income tax rate of 26.5%, within Management's outlook range for 2021.
8.7 NET EARNINGS
In the fourth quarter of 2021, the Corporation’s net earnings attributable to shareholders increased to $126.7 million, or
$1.07 per share on a diluted basis, compared to $68.9 million, or $0.61 per share on a diluted basis for the comparable
period in 2020. The increase is mainly attributable to higher adjusted EBITDA, partially offset by higher amortization of
intangible assets and net financing expense.
For the year ended December 31, 2021, the Corporation’s net earnings attributable to shareholders were $473.6 million, or
$4.07 per share, compared to $276.0 million, or $2.51 per share in 2020. The increase is mainly due to higher adjusted
EBITDA and lower acquisition, integration and reorganization costs, partially offset by higher amortization and
depreciation expense.
8.8 ADJUSTED NET EARNINGS
Management has amended its definition of adjusted net earnings, effective January 1, 2021, to exclude amortization of
intangible assets related to acquisitions. The amendment was made in the context of the Golder Acquisition completed in
April 2021. The comparative period results have been restated to apply the current definition.
Management believes that adjusted net earnings and adjusted net earnings per share should be taken into consideration in
assessing the Corporation's performance against its peer group. In the context of highly acquisitive companies or
consolidating industries such as engineering and construction, this non-IFRS measure isolates amortization of intangible
assets related to acquisitions (created from the allocation of purchase price between goodwill and intangible assets). In
addition, this non-IFRS financial measure is adjusted for certain non-cash items related to market volatility, which are
inherently unpredictable.
Adjusted net earnings stood at $171.7 million, or $1.46 per share, in the fourth quarter of 2021, compared to $93.0 million,
or $0.82 per share, in Q4 2020. In the year ended December 31, 2021, adjusted net earnings stood at $592.9 million, or $5.09
per share, compared to $394.6 million, or $3.59 per share, in 2020. The increases in these metrics are mainly attributable to
higher adjusted EBITDA.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-24
Reconciliation of adjusted net earnings
The following table reconciles this metric to the most comparable IFRS measure:
(in millions of dollars, except per share data)
Net earnings attributable to shareholders
Amortization of intangible assets related to acquisitions
Acquisition, integration and reorganization costs
ERP implementation costs
Gains on investments in securities related to deferred
compensation obligations
Unrealized (gains) losses on derivative financial instruments
Income taxes related to above items
Adjusted net earnings*
Adjusted net earnings per share*
* Non-IFRS financial measure or non-IFRS ratio.
9 LIQUIDITY
(in millions of dollars)
Cash inflows from operating activities
Cash inflows (outflows) from financing activities
Cash outflows from investing activities
Effect of exchange rate change on cash
Change in net cash and cash equivalents
Dividends paid to shareholders of WSP Global Inc.
Net capital expenditures*
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
Years ended
December 31,
2020
$126.7
$32.1
$23.6
$6.8
$(4.0)
$(1.7)
$(11.8)
$171.7
$1.46
$68.9
$17.8
$30.3
$—
$(11.6)
$(7.5)
$(4.9)
$93.0
$0.82
$473.6
$95.1
$60.8
$6.8
$(14.0)
$7.7
$(37.1)
$592.9
$5.09
$276.0
$77.5
$103.4
$—
$(15.8)
$(11.5)
$(35.0)
$394.6
$3.59
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
Years ended
December 31,
2020
$513.2
$(138.3)
$(76.1)
$(4.6)
$294.2
$(20.1)
$(60.6)
$381.8
$(453.8)
$(85.2)
$(0.3)
$(157.5)
$(19.7)
$(29.7)
$1,060.1
$790.2
$(1,344.9)
$(13.8)
$491.6
$(80.6)
$(110.8)
$1,125.1
$(746.3)
$(185.3)
$3.9
$197.4
$(88.3)
$(88.5)
* Capital expenditures pertaining to property and equipment and intangible assets, net of proceeds from disposal and lease incentives received.
9.1 OPERATING ACTIVITIES AND FREE CASH FLOW
Cash flows from operating activities
The decrease in cash inflows from operating activities in the year ended December 31, 2021 is mainly due to the fact that
2020 benefitted from a deferral of income tax and other remittances in some jurisdictions. In addition, organic growth in
revenues in 2021 resulted in an increased investment in working capital.
Free cash flow
The free cash inflow for the year ended December 31, 2021 was $646.1 million, compared to $735.3 million in 2020. Free
cash inflows represent 1.4 times net earnings attributable to shareholders. Lower free cash flow in 2021 was mainly driven
by the fact that 2020 benefitted from a deferral of income tax and other remittances in some jurisdictions. In addition,
organic growth in revenues in 2021 resulted in an increased investment in working capital.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-25
Reconciliation of free cash flow
Free cash flow is an indication of the Corporation’s continuing capacity to generate discretionary cash from operations.
It represents cash flows for the period available to the suppliers of capital, which are the Corporation’s creditors and
shareholders. The free cash flow metric should be reviewed year-over-year as opposed to quarter-to-quarter as the
timing of investments in capital expenditure initiatives and management of working capital can have an impact in the
shorter term.
(in millions of dollars)
Cash inflows from operating activities
Lease payments in financing activities
Net capital expenditures*
Free cash flow**
Fourth quarters ended
December 31,
2021
December 31,
2020
December 31,
2021
$513.2
$(82.7)
$(60.6)
$369.9
$381.8
$(87.6)
$(29.7)
$264.5
$1,060.1
$(303.2)
$(110.8)
$646.1
Years ended
December 31,
2020
$1,125.1
$(301.3)
$(88.5)
$735.3
* Capital expenditures pertaining to property and equipment and intangible assets, net of proceeds from disposal and lease incentives received.
** Non-IFRS financial measure.
9.2 FINANCING ACTIVITIES
In the fourth quarter of 2021, cash outflows from financing activities of $138.3 million were mainly due to lease payments,
net repayments of borrowings under credit facilities, and dividends paid to shareholders of the Corporation.
In the year ended December 31, 2021, cash inflows from financing activities of $790.2 million were due to issuance of senior
unsecured notes, net proceeds of borrowings under credit facilities and issuance of common shares, partially offset by
lease payments.
9.3 INVESTING ACTIVITIES
In the fourth quarter of 2021, cash outflows used for investing activities relate mainly to net capital expenditures and
business acquisitions.
In the year ended December 31, 2021, cash outflows used for investing activities relate mainly to business acquisitions.
Cash outflows used for investing activities were higher due to more business acquisitions in 2021 compared to 2020. Net
capital expenditures in 2021 came in below Management's outlook range of $150 million to $170 million.
9.4 NET DEBT TO ADJUSTED EBITDA RATIO
As at December 31, 2021, the Corporation’s statement of financial position remained strong, with a net debt position of
$849.3 million and a net debt to adjusted EBITDA ratio of 0.6x.
The net debt to adjusted EBITDA ratio increased following the closing of the Golder Acquisition. To finance a portion of the
purchase price of the Golder Acquisition, which closed on April 7, 2021, the Corporation drew on its US$960 million
committed bank financing facility in the form of term loans with various maturity dates up to April 2025.
Additionally, on April 19, 2021, WSP issued senior unsecured notes at par for aggregate gross proceeds of $500 million, due
April 19, 2028 (the “Notes”). The Notes bear interest at a fixed rate of 2.408% per annum, payable semiannually until
maturity on the 19th day of April and October in each year beginning on October 19, 2021. In April 2021, the Corporation
used the net proceeds of the offering to repay existing indebtedness.
WSP Global Inc.
Management's Discussion and Analysis
2021
9.5 CAPITAL RESOURCES
(in millions of dollars)
Cash and cash equivalents
Available syndicated credit facility
Other operating credit facilities
Available short-term capital resources
M-26
As at
December 31, 2021 December 31, 2020
$927.4
$1,442.9
$182.4
$2,552.7
$437.1
$1,453.1
$128.1
$2,018.3
The Corporation believes that its cash flows from operating activities, combined with its available short-term capital
resources, will enable it to support its continued growth strategy, its working capital requirements and planned capital
expenditures.
9.6 CREDIT FACILITIES
The Corporation has in place, as at December 31, 2021, a credit facility with a syndicate of financial institutions providing
for a maximum amount of US$1,400 million and a US$750 million fully committed bank financing with maturities up to
December 2025. The US$1,400-million credit facility is available for general corporate purposes and for financing business
acquisitions. The US$750-million credit facility was used to finance a portion of the purchase price of the Golder
Acquisition.
Under these credit facilities, the Corporation is required, among other conditions, to respect certain covenants calculated
on a consolidated basis. The main covenants are in regard to its consolidated net debt to consolidated adjusted EBITDA and
the fixed charge coverage ratios. These terms and ratios are defined in the credit facility agreements and do not
correspond to the Corporation’s metrics described in section 22, “Glossary of segment reporting, non-IFRS and other
financial measures”, or to other terms used in this MD&A. Management reviews compliance with these covenants on a
quarterly basis in conjunction with filing requirements under its credit facilities. All covenants were met as at
December 31, 2021.
9.7 DIVIDENDS
On November 9, 2021, the Corporation declared a quarterly dividend of $0.375 per common share to holders of common
shares on record as of December 31, 2021, which was paid on January 17, 2022. The total amount of the dividend for the
fourth quarter of 2021 was $44.2 million, paid subsequent to the end of the year.
Following the payment of dividends declared on November 4, 2020, February 24, 2021, May 12, 2021 and August 10, 2021,
$92.6 million was reinvested in 696,892 common shares under the DRIP during the year ended December 31, 2021.
Subsequent to the end of the year, holders of 60,695,657 common shares, representing 51.5% of all outstanding shares as at
December 31, 2021, elected to participate in the DRIP. As a result, on January 17, 2022, $22.8 million of the fourth quarter
dividend was reinvested in common shares of the Corporation. The net cash outflow on January 17, 2022 for the fourth
quarter dividend payment was $21.4 million.
The Board of Directors of the Corporation (the “Board”) has determined that the current level of quarterly dividend is
appropriate based on the Corporation’s current earnings and operational financial requirements. The dividend is currently
expected to remain at this level subject to the Board’s ongoing assessment of the Corporation’s future cash requirements,
financial performance, liquidity, and other factors that the Board may deem relevant. The actual amount of any dividend,
as well as each declaration date, record date and payment date, is subject to the discretion of the Board. Some of the
information in this section constitutes forward-looking information. Please refer to section 19, “Forward-Looking
Statements”, of this MD&A.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-27
9.8 STOCK OPTIONS
As at March 8, 2022, 729,314 stock options were outstanding at exercise prices ranging from $41.69 to $180.65.
10 EIGHT QUARTER SUMMARY
(in millions of dollars, except per share data)
Results of operations
Revenues
Net revenues
Adjusted EBITDA*
2021
2020
Fiscal
year
2021
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Fourth quarter
ended
December 31
Third quarter
ended
September 25
Second quarter
ended June 26
First quarter
ended March 26
Fourth quarter
ended
December 31
Third quarter
ended
September 26
Second quarter
ended June 27
First quarter
ended March 28
$10,279.1
$2,891.0
$2,650.2
$2,633.1
$2,104.8
$2,248.3
$2,137.8
$2,207.8
$2,210.0
$7,869.6
$2,147.4
$2,026.6
$2,028.8
$1,666.8
$1,688.3
$1,687.6
$1,747.1
$1,736.1
$1,322.5
$361.2
$377.7
$342.6
$241.0
$262.1
$297.1
$276.1
$218.4
Net earnings attributable to shareholders
$473.6
$126.7
$139.0
$120.0
Basic net earnings per share**
Diluted net earnings per share**
$1.08
$1.18
$1.03
$1.07
$1.18
$1.02
$87.9
$0.77
$0.77
$68.9
$104.3
$88.6
$0.61
$0.92
$0.83
$0.61
$0.92
$0.83
$14.2
$0.13
$0.13
Backlog
Dividends
$10,425.6 $10,032.4
$9,632.4
$8,430.9
$8,421.3
$8,505.8
$8,611.0
$8,481.0
Dividends declared
$175.0
$44.2
$44.1
$44.0
$42.7
$42.5
$42.5
$42.4
$39.8
Dividends declared, per share
$1.50
$0.375
$0.375
$0.375
$0.375
$0.375
$0.375
$0.375
$0.375
Non-IFRS financial measure.
*
** Quarterly net earnings per share are not additive and may not equal the annual net earnings per share reported. This may be a result of the effect of
shares issued on the weighted average number of shares, as well as the impact of dilutive options.
The Corporation's quarterly earnings and revenue measures are, to a certain degree, affected by seasonality. The third and
fourth quarters historically generate the largest contribution to net revenues and adjusted EBITDA, and the first quarter
the least. The Corporation's cash flows from operations are also, to a certain degree, subject to seasonal fluctuations, with
the fourth quarter historically generating a higher amount of cash flows from operations. It is currently not possible to
reliably estimate the impact of the COVID-19 pandemic on the Corporation’s historical seasonality trends described above.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-28
11 SELECTED ANNUAL INFORMATION
For the years ended December 31
(in millions of dollars, except per share data)
Revenues
Net revenues
Net earnings attributable to shareholders of WSP Global Inc.
Net earnings per share attributable to shareholders of WSP Global Inc.
Basic
Diluted
As at December 31
Total assets
Non-current financial liabilities (1)
Dividends declared per share to holders of common shares of WSP Global Inc.
(1) Financial liabilities consist of long-term debt and lease liabilities, excluding current portions.
2021
2020
2019
$10,279.1
$7,869.6
$473.6
$4.07
$4.05
2021
$11,250.4
$2,245.4
$1.50
$8,803.9
$6,859.1
$276.0
$2.51
$2.50
2020
$8,837.4
$1,062.6
$1.50
$8,916.1
$6,886.3
$286.5
$2.72
$2.71
2019
$8,676.1
$1,930.8
$1.50
Revenues and net revenues were stable from 2019 to 2020, as the impact of the COVID-19 pandemic were mostly offset by
acquisition growth. In 2021, the Golder Acquisition was the main contributor to the acquisition growth of 15.3%, while
organic growth of 3.3%, in line with Management's outlook, was mainly led by Canada and the UK.
Net earnings attributable to shareholders and net earnings per share attributable to shareholders decreased from 2019 to
2020 mainly due to higher acquisition, integration and reorganization costs, partially offset by lower net financing
expense. Net earnings attributable to shareholders and net earnings per share attributable to shareholders increased from
2020 to 2021 mainly due to higher adjusted EBITDA and lower acquisition, integration and reorganization costs, partially
offset by higher amortization and depreciation expense.
From December 31, 2019 to December 31, 2020 total assets remained stable, while non-current financial liabilities
decreased due mainly to the repayment of a portion of indebtedness under credit facilities following strong free cash flow
in 2020 and the equity financing completed in the second quarter of 2020. From December 31, 2020 to December 31, 2021
total assets and non-current financial liabilities increased mainly due to business acquisitions.
12 GOVERNANCE
Internal controls over financial reporting
The Corporation’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) are responsible for establishing and
maintaining disclosure controls and procedures (“DC&P”) and have caused them to be designed under their supervision to
provide reasonable assurance that:
• Material information related to the Corporation is made known to them by others, particularly during the period
•
in which the annual filings are being prepared; and
Information required to be disclosed by the Corporation in its annual filings, interim filings or other reports filed
or submitted by it under securities legislation is recorded, processed, summarized and reported within the time
periods specified in securities legislation.
The CEO and CFO have evaluated or caused to be evaluated under their supervision, the effectiveness of the Corporation’s
DC&P and based on the evaluation, the CEO and CFO have concluded that the design and operation of the Corporation’s
DC&P were effective as at December 31, 2021.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-29
The CEO and CFO are also responsible for establishing and maintaining internal controls over financial reporting (“ICFR”)
and have designed ICFR or have caused ICFR to be designed under their supervision using the Internal Control - Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 COSO Framework), to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with IFRS.
The CEO and CFO have evaluated or caused to be evaluated under their supervision, the effectiveness of the Corporation’s
ICFR and based on their evaluation, the CEO and CFO have concluded that ICFR were designed and operated effectively as
at December 31, 2021.
Due to the inherent limitations of DC&P and ICFR, Management does not expect that DC&P and ICFR can prevent or detect
all errors or intentional misstatements resulting from fraudulent activities.
The CEO and the CFO have limited the scope of their design of DC&P and ICFR to exclude controls, policies and procedures
of Golder, which was acquired on April 7, 2021, as permitted by the Canadian Securities Administrators’ National
Instrument 52-109 - Certification of Disclosure in Issuers' Annual and Interim Filings for 365 days following an acquisition.
Note 5, Business acquisitions, of the Corporation's audited consolidated financial statements for the year ended
December 31, 2021 present summary financial information with respect to Golder.
There were no changes in the Corporation’s ICFR that occurred during the period beginning on September 26, 2021 and
ended on December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Corporation’s
ICFR. Nevertheless, the measures taken by the Corporation in response to the COVID-19 pandemic and in compliance with
public authority recommendations, including the fact that many of its employees are working remotely, may have an
impact on the performance of some internal controls. As such, the Corporation has been continually monitoring and
assessing the effects of the COVID-19 pandemic on its DC&P and ICFR, while reiterating the importance of internal controls
and maintaining frequent communication across the organization at all levels, in order to maintain a strong control
environment and to make any appropriate adjustments.
Responsibilities of the Board of Directors
The Board has oversight responsibilities for reported financial information. Accordingly, the Board of WSP has reviewed
and approved, upon recommendation of the Audit Committee of the Corporation, this MD&A and the audited consolidated
financial statements for the year ended December 31, 2021, before their publication.
13 CRITICAL ACCOUNTING ESTIMATES
The preparation of the financial statements requires Management to make judgments, assumptions and estimates in
applying the Corporation's accounting policies. Critical accounting estimates are those which are highly uncertain at the
time they are made and where different reasonably likely estimates, or reasonably likely changes in estimates from period
to period, would have a material impact on the Corporation's financial condition or results of operations.
Estimates and assumptions are continually evaluated and are based on historical trends and other factors, including
expectations of future events that are likely to materialize under reasonable circumstances. Actual results will differ from
estimates used, and such differences could be material.
The Corporation's most critical accounting estimates are discussed in note 4, Critical accounting estimates and judgments,
to the Corporation's audited consolidated financial statements for the year ended December 31, 2021.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-30
14 SIGNIFICANT ACCOUNTING POLICIES
NEW ACCOUNTING POLICIES AND CHANGES IN ACCOUNTING
POLICY EFFECTIVE IN 2021
The following amendments to existing standards have been adopted by the Corporation on January 1, 2021 and had no
material impacts on the Corporation’s consolidated financial statements.
Configuration or customization costs in a cloud computing arrangement
(IAS 38 Intangible assets)
In April 2021, the IFRS Interpretations Committee ("IFRIC") finalized its agenda decision Configuration or Customization Costs
in a Cloud Computing Arrangement (IAS 38 Intangible Assets), which clarified customers' accounting for configuration or
customization costs related to cloud computing arrangements. As set out in the IFRIC agenda decision, costs incurred in
configuring or customizing software in a cloud computing arrangement can only be recognized as intangible assets if the
activities create an intangible asset that the entity controls and the intangible asset meets the recognition criteria.
Management finalized its assessment of the impact of this agenda decision and concluded that costs related to the cloud-
based ERP system recently initiated by the Corporation does not meet the criteria for capitalization and accordingly, these
costs, along with other implementation costs, are expensed as incurred.
Interest rate benchmark reform - Phase 2
In August 2020, the IASB issued Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 to address issues that arise
from the implementation of the interest rate benchmark reforms, including the replacement of one benchmark with an
alternative one. The Phase 2 amendments require an entity to prospectively cease to apply the Phase 1 reliefs to a non
contractually specified risk component at the earlier of when changes are made to the non contractually specified risk
component, or when the hedging relationship is discontinued. No end date was provided in the Phase 1 amendments for
risk components. The Phase 2 amendments provide additional temporary reliefs from applying specific IAS 39 and IFRS 9
hedge accounting requirements to hedging relationships directly affected by IBOR reform.
RECENT STANDARDS, AMENDMENTS AND INTERPRETATIONS
NOT YET EFFECTIVE AND NOT APPLIED
Refer to note 3, Accounting policy developments, to the Corporation's audited consolidated financial statements for the
year ended December 31, 2021, for further details.
15 FINANCIAL INSTRUMENTS
The Corporation’s financial assets include cash, trade receivables and other receivables. The Corporation's financial
liabilities include accounts payable and accrued liabilities, dividends payable to shareholders, lease liabilities, and long-
term debt.
The Corporation uses derivative financial instruments to manage its exposure to fluctuations of foreign currency exchange
rates. It does not hold or use any derivative instruments for trading or speculative purposes. Refer to note 14, Financial
instruments, to the Corporation's audited consolidated financial statements for the year ended December 31, 2021 for a
description of the Corporation's hedging activities.
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Management's Discussion and Analysis
2021
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The Corporation's financial instruments expose the Corporation primarily to foreign exchange, credit, liquidity and
interest rate risks. Refer to section 20, "Risk factors", as well as note 14, Financial instruments, to the Corporation's
audited consolidated financial statements for the year ended December 31, 2021, for a description of these risks and how
they are managed, as well as for a description of how fair values are determined.
16 RELATED PARTY TRANSACTIONS
The Corporation's related parties, as defined by IFRS, are its joint operations, joint ventures, associates and key
management personnel. A description of any material transactions with these related parties is included in note 30,
Related party transactions, to the Corporation's audited consolidated financial statements for the year ended December 31,
2021.
17 OFF-BALANCE SHEET AGREEMENTS
The Corporation does not engage in the practice of off-balance sheet financing, except for the use of letters of credit.
18 CONTRACTUAL OBLIGATIONS
The Corporation is committed under the terms of contractual obligations with various expiration dates, primarily for the
rental of office space and computer equipment. The following table provide a summary of the timing of Corporation’s
undiscounted long-term contractual obligations as at December 31, 2021:
(in millions of dollars)
Long-term debt
Lease liabilities
2022
$326.2
$294.1
2023
$180.1
$237.5
2024 and
thereafter
$1,347.0
$718.3
Total
$1,853.3
$1,249.9
Management expects the Corporation's cash flows from its operations and amounts available under credit facilities will be
sufficient to meet its contractual obligations in the future.
19 FORWARD-LOOKING STATEMENTS
In addition to disclosure of historical information, the Corporation may make or provide statements or information in this
MD&A that are not based on historical facts and which are considered to be forward-looking information or forward-
looking statements under Canadian securities laws. Such statements relate to future events or future performance and
reflect the expectations of Management regarding the growth, results of operations, performance and business prospects
and opportunities of the Corporation or its industry.
This MD&A may contain forward-looking statements. Forward-looking statements can typically be identified by
terminology such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “forecast”,
“project”, “intend”, “target”, “potential”, “continue” or the negative of these terms or terminology of a similar nature.
Such forward-looking statements reflect current beliefs of Management and are based on certain factors and assumptions
as set forth in this MD&A, which by their nature are subject to inherent risks and uncertainties. While the Corporation
considers these factors and assumptions to be reasonable, actual events or results could differ materially from the results,
predictions, forecasts, conclusions or projections expressed or implied in the forward-looking statements.
Forward-looking statements made by the Corporation are based on a number of assumptions believed by the Corporation
to be reasonable as at the date such statements were made, including assumptions set out through this MD&A and
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Management's Discussion and Analysis
2021
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assumptions about general economic and political conditions; the state of the global economy and the economies of the
regions in which the Corporation operates; the state of and access to global and local capital and credit markets; the
anticipated impacts of the COVID-19 pandemic on the Corporation’s businesses, operating results, cash flows and/or
financial condition, including the effect of measures implemented as a result of the COVID-19 pandemic; the expected
benefits of the Golder Acquisition and other acquisitions, and the expected synergies to be realized as a result thereof;
interest rates; working capital requirements; the collection of accounts receivable; the Corporation obtaining new contract
awards; the type of contracts entered into by the Corporation; the anticipated margins under new contract awards; the
utilization of the Corporation’s workforce; the ability of the Corporation to attract new clients; the ability of the
Corporation to retain current clients; changes in contract performance; project delivery; the Corporation’s competitors;
the ability of the Corporation to successfully integrate acquired businesses; the acquisition and integration of businesses in
the future; the Corporation’s ability to manage growth; external factors affecting the global operations of the Corporation;
the state of the Corporation’s backlog; the joint arrangements into which the Corporation has or will enter; capital
investments made by the public and private sectors; relationships with suppliers and subconsultants; relationships with
management, key professionals and other employees of the Corporation; the maintenance of sufficient insurance; the
management of environmental and health and safety risk; the sufficiency of the Corporation’s current and planned
information systems, communications technology and other technology; compliance with laws and regulations; future
legal proceedings; the sufficiency of internal and disclosure controls; the regulatory environment; impairment of goodwill;
foreign currency fluctuation; the tax legislation and regulations to which the Corporation is subject and the state of the
Corporation’s benefit plans. If these assumptions prove to be inaccurate, the Corporation’s actual results could differ
materially from those expressed or implied in forward-looking statements.
In evaluating these forward-looking statements, investors should specifically consider various risk factors, which, if
realized, could cause the Corporation's actual results to differ materially from those expressed or implied in forward-
looking statements. Such risk factors include, but are not limited to, the following risk factors discussed in greater detail in
section 20, “Risk factors” : “Impact of the COVID-19 Pandemic”; “Health and Safety Risks and Hazards”; “Non-Compliance
with Laws or Regulations”; “Systems, Network Infrastructure and Data Failure, Interruption and Breach”; “Availability and
Retention of Qualified Professional Staff”; “Adequate Utilization of Workforce”; “Global Operations”; “Competition in the
Industry”; “Professional Services Contracts”; “Revenues from Contracts with Government Agencies”; “Challenges
Associated with Size”; “Growth by Acquisitions”; “Acquisition Integration and Management”; “Controls and Disclosure”;
“Current or Future Legal Proceedings”; “Reputation”; “Extreme Weather Conditions and the Impact of Natural or Other
Disasters”; “Ecological and Social Impacts of Projects”; “Implications of Setting and Announcing ESG Targets”; “Work
Stoppage and Labour Disputes”; “Joint Arrangements”; “Reliance on Suppliers and Subconsultants”; “Economic
Environment”; “Changes to Regulations”; “Insurance Limits”; “Changes to Backlog”; “Protection of Intellectual Property
Rights”; “Deterioration of Financial Position or Net Cash Position”; “Working Capital Requirements”; “Accounts
Receivable”; “Increased Indebtedness and Raising Capital”; “Impairment of Long-Lived Assets”; “Foreign Currency
Exposure”; “Income Taxes”; “Underfunded Defined Benefits Obligations”; “Potential Dilution and Share Price Volatility”;
“Risks Related to Forward-Looking Statements”; as well as other risks detailed from time to time in reports filed by the
Corporation with securities regulators or securities commissions or other documents that the Corporation makes public,
which may cause events or results to differ materially from the results expressed or implied in any forward-looking
statement.
The Corporation cautions that the foregoing list of risk factors is not exhaustive. There can be no assurance that actual
results will be consistent with forward-looking statements. The Corporation does not take any responsibility to update or
revise forward-looking information even if new information becomes available, unless legislation requires us to do so.
Readers should not place undue reliance on forward-looking statements. The Corporation may also make oral forward-
looking statements from time to time. The Corporation advises that the above paragraphs and the risk factors set forth in
section 20, “Risk factors” of this MD&A should be read for a description of certain factors that could cause the actual
results of the Corporation to differ materially from the results expressed or implied in any oral forward-looking
statements.
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Management's Discussion and Analysis
2021
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20 RISK FACTORS
The Corporation is subject to a number of risks and uncertainties and is affected by a number of factors which could have a
material adverse effect on the Corporation’s business, financial condition, operating results, future prospects or
achievement of its 2022-2024 Global Strategic Plan. These risks should be considered when evaluating an investment in the
Corporation and may, among other things, cause a decline in the price of the Corporation's shares or adversely affect the
Corporation’s ability to declare and/or pay dividends on the shares.
This section describes the risks Management considers as the most material to the Corporation's business. This is not,
however, a comprehensive list of the potential risks the Corporation currently faces, or could eventually face. Risks and
uncertainties not presently known to the Corporation or that the Corporation currently considers as not material could
become material in the future or impair its business operations, cause a decline in the price of shares or adversely affect
the Corporation’s ability to declare and/or pay dividends on the shares.
RISKS RELATED TO THE BUSINESS
Impact of the COVID-19 Pandemic
Global economic recovery from the effects of the COVID-19 pandemic is progressing; however, given the possibility of new
variants and global imbalances with respect to immunization, COVID-19 could still impact the Corporation’s capital
resources and liquidity in the future, including the availability of financing on attractive terms, if at all. Any business
deterioration, contract cancellations or terminations, or market pressures could cause the Corporation’s sales, earnings
and cash flows to decline below its current projections and may lead to impairment of goodwill and intangibles. The
likelihood and magnitude of such impacts are inherently difficult to predict, though economic stimulus in many of our
geographies should mitigate such impacts.
The containment efforts taken by authorities worldwide to fight this health crisis, including implementation of travel
bans, border closings, quarantine periods, capacity limits and social distancing, as well as considerable general concern
and uncertainty, have diminished somewhat, but could lead to disruption in the future if new measures are put in place or
if planned reopenings slow down.
The long-term effects of the mitigation measures implemented in light of the COVID-19 pandemic, including flexible
working arrangements, may impact not only the Corporation’s business and operations but also its workforce’s overall
engagement, outlook and productivity. Additional long-terms effects of the COVID-19 pandemic may also increase the
level of other risks the Corporation is already subject to, and which are described below, all of which may negatively
impact the Corporation's business, financial performance and financial position.
Furthermore, the global supply chain disruption has caused worldwide shortages and price increases of certain goods and
services. Although the global supply chain is beginning to show signs of recovery, the effects and severity of this supply
chain disruption on the global economy could impact the Corporation’s ability to procure certain goods and services
necessary to adequately render its services.
As the Corporation continues to monitor the issues raised by the COVID-19 pandemic, it may take further actions that alter
its business operations as may be required by governmental authorities, or that it determines are in the best interests of its
employees, clients, partners and shareholders, and the Corporation cannot accurately predict the potential effects any
such alterations or modifications may have on its business, including the impact on its financial results. The imposition of
further restrictive measures by governmental authorities to contain the COVID-19 virus and its variants, a prolonged
period during which any current or future measures are kept in place or the imposition of further restrictions or
conditions on the Corporation's ability to fully reopen its offices or access to project sites could have an adverse impact on
its business, financial position, results of operations and cash flows, the extent and duration of which is highly uncertain,
cannot be predicted and will depend on many factors beyond the Corporation’s control and knowledge.
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Management's Discussion and Analysis
2021
M-34
Health and Safety Risks and Hazards
The Corporation’s health, safety and wellbeing systems, processes and policies are aimed at reducing risks to employees,
subconsultants and others; however, work sites can put employees and others in proximity with large equipment, moving
vehicles, dangerous processes or highly regulated materials in challenging or remote locations which may increase the risk
to health and safety. Failure to implement or follow appropriate safety procedures by the Corporation or others could
result in personal injury, illness or loss of life to people, or environmental and other damage to the Corporation’s property
or the property of others.
On some project sites, the Corporation may be responsible for safety and, accordingly, it has an obligation to implement
effective safety procedures. Project sites can present significant health and safety risks to our employees.
In the ordinary course of the Corporation’s business, the Corporation's employees frequently make professional judgments
and recommendations about environmental and engineering conditions of project sites for the Corporation's clients. The
Corporation may be deemed to be responsible for these professional judgments and recommendations if they are later
determined to be inaccurate or result in injury or damage. Unsafe work conditions also have the potential of increasing
employee turnover, increasing project and operating costs and could negatively impact the awarding of new contracts.
The Corporation could also be exposed to substantial security costs in order to maintain the safety of its personnel as well
as to civil and/or statutory liability to employees and to reputational harm arising from injuries or deaths because of
inadequate health and safety policies and practices. The Corporation cannot fully protect against all these risks, nor are all
these risks insurable. The Corporation may become liable for damages arising from these events against which it cannot
insure or against which it may elect not to insure for various reasons.
The Corporation operates in all regions across the world in a global capacity, working in some very high risk and
challenging environments and geographies, which present numerous risks including security issues, political unrest,
country stability and varying degrees of medical risk to personnel, all combined with differing cultures, regional legislative
requirements and regional operating standards. Acts of terrorism and threats of armed conflicts in or around various areas
in which the Corporation operates could limit or disrupt markets and its operations, including disruptions resulting from
the evacuation of personnel, cancellation of contracts, or the loss of key employees, contractors or assets. Furthermore,
the Corporation risks incurring additional costs on projects that have sustained environmental, health, and safety hazards
because they may require additional time to complete or because employee time may be lost due to injury.
In addition, the Corporation’s employees have been increasingly exposed to wellbeing risks as a result of COVID-19 and
others contributing factors, which may lead to deteriorating work-life balance, reduction in productivity, decline in
workforce mental and physical health, increase in absenteeism, work incidents and accidents. This may impact the
delivery of our professional services and consequently adversely impact the Corporation’s business objectives and
financial position.
Non-Compliance with Laws or Regulations
The Corporation faces risks relating to non-compliance with laws, regulations, rules and other current, new or changing
legal requirements enforced by governments or other authorities, including with respect to trade restrictions, export
control, false claims, protection of classified information, lobbying or similar activities, securities, antitrust, data privacy,
tax, environmental and labour relations, as well as laws related to corruption, anti-competitive acts, illegal political
contributions, and ethics-related issues, which could have a significant adverse impact on the Corporation. Although the
Corporation has control measures and policies to mitigate these risks, including an anti-corruption compliance program,
these control measures and policies have inherent limitations, including human error, and could be intentionally
circumvented or become inadequate as conditions change. Moreover, the coordination of the Corporation’s activities to
address the broad range of complex legal and regulatory environments in which it operates presents significant
challenges. The Corporation's control measures may not be sufficiently effective to protect it from the consequences of
such acts committed by its current and former directors, officers, employees, consultants, agents and/or partners,
corruption in connection with its operations and ethics-related issues. Accordingly, fraud, corruption and other reckless or
criminal acts may occur and remain undetected, resulting in a loss of assets and/or misstatement in the Corporation’s
financial statements and related public disclosure.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-35
Moreover, fraud, corruption, illegal political contributions, non-compliance with previously enacted or proposed laws or
regulations, anti-competitive or other reckless acts or criminal acts or misconduct by the Corporation’s current or former
directors, officers, employees, consultants, agents and/or partners, including those of businesses acquired by the
Corporation, could subject the Corporation to fines and penalties, criminal, civil and administrative legal sanctions and
suspension from its ability to bid, enter into or perform public or private contracts, resulting in reduced revenues and
profits, and could materially damage the Corporation's business, operating results, financial condition, reputation, brand,
expansion effort, and ability to attract and retain employees and clients, and may have a negative impact on the market
price of the Corporation’s shares. The institution of formal charges with respect to any such circumstances by appropriate
governmental authorities may have to be immediately accounted for in the results of the Corporation and may have a
material adverse impact on the assets, liabilities, revenues and goodwill of the Corporation.
As part of its global business dealings with different governmental bodies, entities and agencies in each of the countries in
which the Corporation operates, WSP must also comply with complex public procurement laws and regulations aimed at
ensuring that public sector bodies award and manage contracts in a transparent, competitive, efficient and non-
discriminatory manner in these jurisdictions. These rules can also provide for verification processes and disclosure
requirements, as well as address national security concerns, among other matters. WSP can be subject to audits and
investigations by government departments and agencies with respect to compliance with these rules. Non-compliance
with these requirements may result in the Corporation incurring penalties and sanctions, including contract termination,
suspension of payments, suspension or debarment from doing business with the government, and fines. In addition, WSP
may be required to obtain authorizations or certifications in order to enter into contracts with governmental bodies,
entities and agencies in certain jurisdictions, which authorizations or certifications may be revoked in a variety of
circumstances, including at the discretion of a governmental authority or if the Corporation or its affiliates or directors or
officers are convicted of an offense. If the Corporation fails to comply with these laws and regulations or the terms of these
authorizations or certifications or if the Corporation, its directors, officers, employees or agents commit legal violations or
misconduct specified in any of these rules, the Corporation could be subject to mandatory or discretionary exclusion or
suspension, on a permanent or temporary basis, from contracting with these governmental bodies, entities and agencies
or within certain jurisdictions, in addition to termination of certain government contracts, fines, penalties and other
sanctions that could be imposed on the Corporation. Upon conviction of an offense, the Corporation could be debarred
from participating in procurements with governmental bodies, entities and agencies for extended periods of time and
suffer significant damage to its reputation. The disqualification of the Corporation from public contracts, the conviction of
the Corporation with respect to certain offenses or the institution of formal charges with respect to such offenses in any
jurisdiction in which it has operations or carries out business activities could impact its ability to bid, enter into or
perform public contracts or subcontracts in that and other jurisdictions, any of which may adversely affect the
Corporation’s business.
In certain jurisdictions in which the Corporation operates, the Corporation is also subject to legislation that grants
governmental authorities exceptional measures for the reimbursement and recovery of amounts improperly obtained as a
result of fraud or fraudulent tactics in the course of the tendering, awarding or management of public contracts. In
connection with a reimbursement or settlement under such legislation, a number of conditions may be imposed on the
Corporation and the Corporation may be required to undergo certain changes to its business practices which could impose
additional costs on the Corporation and adversely affect its ability to pursue business opportunities.
The services provided by the Corporation are also subject to numerous environmental protection laws and regulations that
are complex and stringent. Significant fines, penalties and other sanctions may be imposed for non-compliance with
environmental laws and regulations, and some environmental laws provide for joint and several strict liabilities for
remediation of releases of hazardous substances, rendering a person liable for environmental damage, without regard to
negligence or fault on the part of such person. These laws and regulations may expose the Corporation to liability arising
out of the conduct of operations or conditions caused by others, and in certain cases for acts of the Corporation that were
in compliance with all applicable laws at the time these acts were performed. Failure to comply with environmental laws
and regulations could have a material adverse impact on our business, financial condition and result of operations.
Across its global operations and in connection with its M&A activities, the Corporation must comply with numerous
privacy and data protection laws and regulations applicable in multiple jurisdictions designed to protect personal
information. As the global data protection landscape continues to evolve, and new laws emerge and increasingly conflict
WSP Global Inc.
Management's Discussion and Analysis
2021
M-36
among the various countries in which the Corporation operates, the Corporation is impacted by greater compliance risk
and cost. Failing to protect privacy and personal information in compliance with those laws, including the EU and UK
General Data Protection Regulation (GDPR), the Canadian federal Personal Information Protection and Electronic
Documents Act (PIPEDA) and the California Consumer Privacy Act (CCPA), could result in the Corporation being subject to
significant regulatory penalties, legal liability and remediation costs.
Systems, Network Infrastructure and Data Failure, Interruption and Breach
In order to operate properly, ensure adequate service delivery to its clients and meet its business objectives, the
Corporation relies heavily on information technologies. Within these technologies, the Corporation processes proprietary
information relating to its business, client information and information in relation to other third parties. This may include
proprietary, sensitive and personal information limited to the nature of professional services it provides and personal
information relating to employees.
The Corporation faces numerous threats that are constantly evolving, increasingly sophisticated and increasingly difficult
to detect and successfully defend against. This includes cyber threats from criminal hackers, ransomware, denial of
service and other forms of malicious attacks, hacktivists, state sponsored organizations and industrial espionage, phishing
and other social engineering techniques, physical or electronic security breaches, computer viruses, unauthorized access,
employee misconduct, human or technological errors, or similar events or disruptions. Any of these threats may lead to
system interruptions, delays, and loss of critical data and expose the Corporation, clients, or other third parties to
potential liability, litigation, and regulatory action, as well as the loss of client confidence, loss of existing or potential
clients, loss of sensitive government contracts, damage to brand and reputation, financial reporting capabilities and other
financial loss.
The Corporation relies on industry-accepted security measures and technical and organizational controls to protect its
information and information technology systems. The Corporation may be required to allocate increasingly and
significant resources, and additional security measures, to protect against the cyber threats referenced above.
The Corporation’s operations could be interrupted or delayed if the Corporation is unable to continually and adequately
maintain its information technologies, to scale and add software and hardware, to effectively upgrade its systems and
network infrastructure, to maintain key information technology personnel, and take other steps to improve the efficiency
of and protect its systems.
The Corporation relies on third-party software and services to support its delivery of professional services to clients such
as design, collaboration and project management, and to support the Corporation’s accounting and financial information
systems. While the Corporation selects third-party vendors carefully, it does not control their actions. Any technology
services provided by a third party, including contractors, business partners, vendors and other third parties, may be
subject to breakdowns, disruption in information and communication services, inability to handle current or higher
volumes, cyber-attacks, security and data breaches. These risks could have a material adverse effect on the Corporation’s
operations and its ability to deliver services to clients. Furthermore, the Corporation may incur additional costs to
remediate errors or failures by third parties.
The number of employees working remotely and using online collaboration systems has significantly increased as a result
of the global pandemic. Investment in systems and infrastructure has facilitated this transition and has minimized the
impact to productivity, however remote working increases the Corporation’s exposure to cybersecurity threats such as
physical device loss, data leakage and account compromise through phishing.
The Corporation’s digital services are permanently in an evolving state and increasingly utilize emerging technologies
such as cloud computing, machine learning and artificial intelligence. In addition, our client deliveries increasingly use
innovative technologies such as SMART buildings and automated robotics. These technologies come with additional risks
that require investment to protect their use, and any cybersecurity incident of these systems may expose the Corporation
and its clients to remediation and litigation costs.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-37
Availability and Retention of Qualified Professional Staff
There is strong competition for qualified technical and management personnel in the sectors in which the Corporation
competes. The Corporation’s success depends in part on its continued ability to attract and retain qualified and skilled
engineers and other professional staff and to establish and execute an effective succession plan. Over the years, a
significant shortage of engineers has developed in some markets which resulted in continued upward pressure on
professional compensation packages. There can be no assurance that the Corporation will be able to attract, hire and
retain sufficient qualified management personnel, engineers and other professional staff necessary to continue to
maintain and grow its business. Furthermore, some of the Corporation’s personnel hold government granted clearance in
certain regions that may be required in order to work on specific government projects. If the Corporation were to lose
some or all of these personnel, such staff would be difficult to replace. Loss of the services of, or failure to recruit, qualified
technical and leadership personnel with governmental clearances could limit the Corporation’s ability to successfully
complete existing projects and/or compete for new projects requiring such clearances.
When the Corporation’s key personnel retire or otherwise depart the Corporation, the roles and responsibilities of such
employees need to be filled, which require that the Corporation devote time and resources to identify, hire and integrate
new employees. If the Corporation's succession plan fails to identify those individuals with high potential or to develop
these key individuals, it may be unable to replace key members who retire or leave the Corporation and may be required to
expend significant time and resources to recruit and/or train new employees. The inability to attract, hire and retain
sufficient numbers of qualified management personnel, engineers and other professional staff as well as to establish and
execute an effective succession plan could limit the Corporation’s ability to successfully complete existing projects and
compete for new projects, which could adversely affect the Corporation’s ability to sustain and increase revenues and its
future results.
Over the past several years, as attention to issues of societal inequity and racial injustice have increased globally, the
Corporation has continued to emphasize its commitment to inclusion, equity and diversity. The Corporation is committed
to promoting a culture that empowers its people through a work environment where inclusion, equity and diversity are
expected and valued. Although the Corporation has set inclusion, equity and diversity standards that are to be observed by
its employees when conducting business, the Corporation remains subject to the risk of misconduct, non-compliance or
other improper behaviour by its employees, agents or partners.
Adequate Utilization of Workforce
The cost of providing its services, including the extent to which the Corporation utilizes its workforce, affects its
profitability. The rate at which the Corporation utilizes its workforce is affected by a number of factors, including:
•
•
•
•
•
its ability to transition employees from completed projects to new assignments and to hire and integrate new
employees;
its ability to forecast demand for its services and thereby maintain an appropriate headcount in each of its
geographies;
its ability to manage attrition;
its need to devote time and resources to training, business development, professional development, and other
non-chargeable activities; and
its ability to match the skill sets of its employees to the needs of the marketplace.
If the Corporation does not utilize its workforce effectively, it could impact employee attrition, safety and project
execution, which could result in a decline in future profitability.
Global Operations
The Corporation's business is dependent on the continued success and growth of its global operations, which subjects the
Corporation to a variety of risks, including:
•
general social, economic and political conditions or instability in one or more specific markets and/or globally,
including recessions, political changes or disruptions and other economic crises in one or more markets in which
the Corporation operates;
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Management's Discussion and Analysis
2021
M-38
•
•
•
•
•
•
•
•
•
risks related to complying with a wide variety of local, national, and international laws, regulations and policies,
together with potential adverse or significant changes in laws and regulatory framework and practices;
changes in local government trade policies affecting the markets for the Corporation’s services;
difficulty or expense in enforcing contractual rights due to a lack of a developed legal system or other factors in
certain jurisdictions;
difficulties and costs of staffing and managing global operations and changes in labour conditions;
difficulties, delays and expenses that may be experienced or incurred in connection with the movement of
personnel through the customs and immigration authorities of various jurisdictions;
a greater risk of uncollectible accounts and longer collection cycles;
fluctuations in exchange rates;
changes in regulatory practices, tariffs and taxes;
foreign ownership restrictions with respect to operations in certain countries or the risk that such restrictions
will be adopted in the future;
• multiple and possibly overlapping tax structures;
•
exchange controls and other funding restrictions and limitations on the Corporation’s ability to repatriate cash,
funds or capital invested or held in certain jurisdictions where the Corporation operates;
international hostilities, civil unrest, force majeure, war, terrorism and other armed conflict; and
cultural, logistical and communications challenges.
•
•
Competition in the Industry
In a people-based industry, the Corporation operates in highly competitive markets and has numerous competitors for all
of the services it offers. Size and characteristics of competitors vary widely with the type of service they provide, the
geographic area and the industry. Some of the Corporation’s competitors have longer operating histories, greater brand
recognition, larger customer bases and have achieved substantially more market penetration in certain of the areas or
locations in which the Corporation competes.
In addition, some of the Corporation’s competitors have substantially more financial resources and/or financial flexibility
and marketing resources than the Corporation in certain markets. Other competitors are smaller and more specialized and
concentrate their resources in particular areas of expertise.
Moreover, the technical and professional aspects of some of the Corporation’s services generally do not require large
upfront capital expenditures and provide limited barriers against new competitors. The Corporation’s competitors may
also consolidate or establish teaming or other relationships among themselves or with third parties to increase their
ability to address customers’ needs.
In the midst of rapid technological development, the Corporation must continue to anticipate changes in its clients’ needs
and to do so, must adapt its services so that it maintains and improves its competitive advantage. If the Corporation does
not continue to innovate and leverage technology advancements, fails to adequately develop or implement its business
and sales strategies or inadequately manages its projects, its ability to retain existing clients and attract new clients may
be adversely affected. These competitive forces may result in our inability to win bids for future projects, increased margin
pressure and loss of revenue, profitability and market share, which if significant, could have a material adverse effect on
the Corporation’s business, reputation, financial condition and results of operations.
Professional Services Contracts
Most of the Corporation’s revenues come from fixed-price contracts and cost-plus contracts with ceilings. Under fixed-
price contracts, the Corporation agrees to perform either all or a specified portion of work under the contract for a
fixed fee which could expose the Corporation to a greater risk of cost overruns. Fixed-price contracts and cost-plus
contracts with ceilings are established in part on partial or incomplete designs, cost and scheduling estimates that are
based on a number of assumptions, including those about future economic conditions, commodity and other materials
pricing and availability of labour, equipment and materials and other requirements. If these assumptions prove
inaccurate or if unexpected changes arise, then cost overruns may occur and the Corporation could experience reduced
profits or, in some cases, a loss for that project.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-39
Increasing the volume of fixed-price contracts and cost-plus contracts with ceilings and/or increasing size of such
contracts would increase the Corporation’s exposure to these risks and if the project is significant, or there are one or
more issues that impact multiple projects, costs overruns could have a material adverse impact on the Corporation’s
business, financial condition and results of operations.
In addition, the Corporation partners with construction delivery partners on engineering, procurement and
construction (“EPC”) projects. In such cases, the Corporation assumes design, certain procurement and construction
risks, except for any risks that are contractually assumed by the client. Losses under EPC projects could adversely affect
the Corporation’s business, operating results and financial condition.
The Corporation may have pending claims made to clients under some of its contracts for payment of work performed
beyond the initial contractual requirements. In general, the Corporation cannot guarantee that such claims will be
approved by its clients in whole, in part, or at all. If these claims are not approved, the Corporation’s revenues may be
reduced in future periods or a dispute could arise which could be detrimental to the Corporation.
Moreover, in certain instances, the Corporation may provide a guarantee to a client that it will complete a project by a
certain date. As such, the Corporation may incur additional costs should the project be managed ineffectively or should
it subsequently fail to meet the scheduled completion date for any other reason. Projects that are not completed on
schedule further reduce profitability. Staff must continue to work on such projects for longer than anticipated; this
may prevent them from pursuing and working on new or other projects. Projects that are over budget or not on
schedule may also lead to client dissatisfaction and adversely impact the Corporation’s reputation. A project’s revenues
could also be reduced should the Corporation be required to pay liquidated damages in connection with contractual
penalty provisions. Such damages can be substantial and can accrue on a daily basis.
In addition, certain contract bidding frameworks are inherently stringent and inflexible, which limits the ability of a
bidder or tenderer to negotiate certain contractual terms and conditions. These types of contracts could potentially
expose the Corporation to significant additional risks or costs that could adversely affect the profitability of the
Corporation’s projects.
Revenues from Contracts with Government Agencies
The demand for the Corporation’s services is affected by the level of government funding that is allocated for rebuilding,
improving, and expanding infrastructure systems. The Corporation derives a significant portion of its revenues from
governments or government-funded projects and expects to continue to do so in the future. Significant changes in the
level of government funding, the short-term and long-term impacts of the COVID-19 pandemic (including future
budgetary constraints and concerns regarding deficits), economic crisis, changing political priorities, changes in
governments or delays in projects caused by political deadlock, may adversely affect the Corporation’s business, prospects,
financial condition and results of operations.
The success and further development of the Corporation’s business depend, in part, on the continued funding of these
government programs and on the Corporation’s ability to participate in these programs. However, governments may not
have available resources to fund these programs or may decide not to fund these programs for diverse political reasons.
Most government contracts are awarded through a rigorous competitive process which may result in the Corporation
facing significant additional pricing pressure, uncertainties, and additional costs. As such:
•
•
•
Government contracts in most regions are based on strict regulatory and statutory foundations of public
procurement. Non-compliance with these regulatory requirements by the Corporation may result in termination
of contracts, suspension or debarment from future governmental projects and/or other sanctions including the
imposition of penalties or fines.
Government contracts are typically subject to renewal or extensions annually, and thus the Corporation cannot
be assured of its continued work under these contracts in the future.
Government agencies can typically terminate these contracts at their convenience or render the Corporation
ineligible to contract with such government agencies in the future. The Corporation may incur costs in
connection with the termination of these contracts and suffer a loss of business.
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•
In certain markets, contracts with government agencies are subject to substantial regulation and audit of the
actual costs incurred. These audits can result in a determination that a rule or regulation has been violated or that
adjustments are necessary to the amount of contract costs the Corporation believes are reimbursable by the
agencies and the amount of overhead costs allocated to the agencies. Consequently, there may be a downward
adjustment to the Corporation’s revenues if costs already recognized exceed the contractual entitlements, as
audited by the relevant government agency.
Our inability to win new contracts or be awarded additional work under existing contracts could have a material adverse
impact on the Corporation's business, financial condition and results of operations.
Challenges Associated with Size
In recent years, the Corporation has significantly increased in size and, as at December 31, 2021, had approximately
55,300 employees globally. The Corporation must effectively communicate, monitor and manage its culture, values,
standards, internal controls and policies throughout the larger organization. The Corporation may not be able to
achieve its strategic objectives if it does not overcome the challenges associated with managing cultural diversity and
the particularities of local markets. Cultural differences in various countries may also present barriers to introducing
new ideas or aligning WSP’s vision and strategy throughout the organization.
In addition, the size and scope of the Corporation’s operations heighten the possibility that it will have employees who
engage in unlawful or fraudulent activity, or otherwise expose it to business or reputational risks, despite the
Corporation's efforts to provide training and maintain controls to prevent such instances. If the Corporation cannot
overcome these obstacles, it may not be able to achieve its growth and profitability objectives and/or it may suffer
reputationally. In addition, from time to time, the Corporation has made, and may continue to make, changes to its
operating model, including how it is organized, to adapt to the needs and size of its business evolution. If the
Corporation does not successfully and timely implement any such changes, its business and results of operation may be
negatively impacted.
Growth by Acquisitions
A key part of our growth strategy is through M&A activities; that is, acquiring firms that align with our strategic objectives
and/or that operate in geographies and/or specialties that are complementary to our existing operations. Management
believes that growth through acquisitions can enhance the Corporation’s value proposition and can accelerate our ability
to achieve our strategic objectives. However, a variety of factors may adversely affect the anticipated benefits of a given
acquisition or prevent these from materializing to the extent envisaged or from occurring within the time periods
forecasted by the Corporation. Cultural differences, including but not limited to differences in corporate cultures, may also
present barriers to the success of the integration plans of the acquisitions completed by the Corporation. In addition,
entities the Corporation acquires may have liabilities, contingencies, incompatibilities or other obstacles to successful
integration that the Corporation failed to discover or was unable to accurately quantify in the due diligence conducted
prior to completion of an acquisition and which could have a material adverse effect on the Corporation’s business,
financial condition or future prospects.
In addition, it may prove increasingly challenging to identify attractive targets for acquisitions, and such firms may only
be available with pricing and/or other terms and conditions that are unfavourable, which may negatively impact our
ability to successfully pursue our growth strategy.
Further, the Corporation may enter into new markets or make available new service offerings, including as a result of its
M&A activities. This carries risks that the Corporation may struggle to efficiently or effectively exploit such new markets
or services and/or to comply with laws and regulations applicable thereto, or it may misjudge market readiness for such
new offerings.
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Acquisition Integration and Management
Achievement of the benefits of acquisitions depends in part on successfully consolidating functions, integrating and
leveraging operations, procedures, systems, and personnel in a timely and efficient manner, as well as the Corporation’s
ability to share knowledge and realize revenues, synergies and other growth opportunities from combining acquired
businesses and operations with those of WSP. Failure by the Corporation to effectively and timely integrate acquired
businesses, including the integration of personnel, culture, values, operations, standards, controls, procedures, policies
and systems, including IT systems, could lead to, among other matters: a failure to realize anticipated benefits of one or
more acquisitions, including cost savings, synergies, business opportunities and growth opportunities; unanticipated
operational problems, expenses, liabilities and claims; the loss or disengagement of certain key personnel; and an increase
in the risks to which the Corporation is subject. The successful integration of an acquired business is subject to the risk
that personnel and professionals from the acquired business and the Corporation may not be able to work together
successfully, which could affect morale and the Corporation’s operations. In particular, the Corporation may seek to
require as a condition of completion of one or more acquisitions that key personnel and professionals from the acquired
business enter into employment agreements for specified post-acquisition periods and/or non-competition undertakings;
however, there are risks that such commitments will not be respected or that the personnel and professionals subject to
same or other personnel and professionals will not be successfully integrated as productive contributors to the
Corporation’s business. In addition, all acquisitions carry the risk of the potential loss of key personnel.
Integration requires the dedication of substantial management effort, time and resources, which may divert
Management’s focus and resources from other strategic opportunities (including other potential acquisitions) and from
operational matters during the integration process. The acquisition integration process may also result in the
disruption of ongoing business, client, employee and other relationships that may adversely affect the Corporation’s
ability to achieve the anticipated benefits of a given acquisition, including the ability to realize the anticipated
synergies from combining the acquired business into WSP. In particular, major clients of the acquired businesses may
not be retained following the acquisition of such businesses. The Corporation may not ever realize the full benefits of
an acquisition, including the synergies, cost savings, or sales or growth opportunities.
There is no assurance that the Corporation will be able to successfully integrate its acquisitions. Each year, the
Corporation incurs acquisition-related integration costs which may be material.
In addition, the overall integration may result in unanticipated operational problems, including the Corporation’s own
operational, financial and management systems which may be incompatible with or inadequate to effectively integrate
and manage the acquired businesses.
Controls and Disclosure
Inherent limitations to the Corporation’s internal or disclosure controls could result in a material misstatement of
financial information, which could cause the Corporation to incur incremental compliance costs, fail to meet its public
reporting requirements or require a restatement of its financial statements. The Corporation maintains accounting
systems and internal controls over its financial reporting and disclosure controls and procedures. There are inherent
limitations to any control framework, as controls can be circumvented by acts of individuals, intentional or not, by
collusion of two or more individuals, by management override of controls, by lapses in judgment and breakdowns
resulting from human error. There are no systems or controls that can provide absolute assurance that all fraud, errors,
circumvention of controls or omission of disclosure can and will be prevented or detected. Such fraud, errors,
circumvention of controls or omission of disclosure could result in a material misstatement of financial information. Also,
projections of any evaluation of the effectiveness of controls to future periods are subject to the risk that controls may
become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may
deteriorate. Inadequate controls could also result in fraud and inappropriate decision-making based on non-current
internal financial information. Inadequate internal or disclosure controls may also have a material adverse impact on the
assets, liabilities, revenues, expenses, and reputation of the Corporation.
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Current or Future Legal Proceedings
In the ordinary course of conducting its business, the Corporation is threatened from time to time with, or named as a
defendant in, or may become subject to, various legal proceedings. These legal proceedings often allege professional errors
and omissions or other incidents that may occur during project delivery.
As part of its service offerings, the Corporation also issues reports and opinions to clients based on its professional
engineering expertise, as well as its other professional credentials, in compliance with applicable laws, regulations and
professional standards. The Corporation could be liable to third parties who use or rely upon such reports or opinions even
if the Corporation is not contractually bound to those third parties.
In addition, legal proceedings may result from the business historically carried on by the Corporation’s predecessors as
well as employees’ or former employees’ failure to comply with applicable laws and regulations.
On December 27, 2019, over 100 plaintiffs filed suit in the US District Court for Washington, DC against a number of US
government contractors, including The Louis Berger Group, Inc. and Louis Berger International, Inc. (collectively, “LB”)
which the Corporation acquired in December 2018, alleging that between 2009 and 2017, LB had violated the Anti-
Terrorism Act. The Corporation is of the view that LB has a strong defense on both the legal aspects of the litigation and
the factual underpinnings in this complex and rarely litigated statute. Preliminary motions to dismiss the proceedings
have been filed by the Defendants. However, the Corporation cannot, at this preliminary stage, predict the outcome of this
suit, potential losses or the impact on its reputation.
Defending lawsuits of this nature or arising out of any of the services provided by the Corporation could require
substantial attention from Management, necessitate financial resources to defend such claims and/or result in
significant attorney fees, damage awards and the imposition of significant fines, penalties or injunctive relief for which
the Corporation may not be fully insured and which could harm its reputation, thereby affecting its ability to bid on
and/or obtain future projects and retain qualified employees. Even if the Corporation is successful or if it is fully
indemnified or insured, such lawsuits could damage the Corporation’s reputation and make it more difficult to compete
effectively or obtain adequate insurance in the future. In addition, the institution of proceedings against the
Corporation may have to be immediately accounted for in the results of the Corporation and may have a material
adverse impact on the assets, liabilities, revenues and/or goodwill of the Corporation, the magnitude of which the
Corporation may not predict.
Reputation
To remain competitive, the Corporation depends to a large extent on its relationships with its clients and its reputation
for high-quality professional services and as a professional services firm that complies with the highest ethical
standards. This positive reputation plays an important role in the Corporation’s long-term success and is crucial for it
to continue to compete effectively and maintain its goodwill. The failure of the Corporation to meet its clients’
expectations in the course of a project, including the possibility of a catastrophic failure or incident affecting such a
project, could have a negative impact on how it is perceived in the market. The Corporation has already made specific
disclosures about investigations, allegations and findings of inappropriate conduct with respect to some of its activities,
directors, officers and employees. Further, the Corporation’s failure to comply with applicable laws, regulations or
generally recognized and accepted guidelines on corporate, environmental, social and governance responsibilities,
failure to adequately report on or meet its environmental, social and governance objectives, or commitment of any acts
of misconduct or corruption, illegal political contributions, alleged or proven non-compliance with laws or regulations,
anti-competitive or criminal acts or other ethics-related acts or omissions by its officers, directors, employees,
subconsultants, contractors, agents, third party suppliers and/or partners could negatively impact the Corporation’s
reputation. Harm to the Corporation’s reputation could also arise from a number of other factors, including questions
surrounding competence, data breaches, actual or alleged quality, timing or performance issues on its projects, a poor
health and safety record or the accuracy and quality of financial reporting and public disclosure. Any negative publicity
about, or significant damage to, the Corporation’s reputation and image could have an adverse impact on client,
employee and investor perception and confidence and may result in the cancellation of current projects and adversely
impact its ability to obtain future projects, affect the Corporation’s ability to attract or retain qualified personnel, or
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negatively impact the Corporation’s relationship with its investors and potential investors, all of which could
materially and adversely affects its revenues and profitability. Also, the pervasiveness and viral nature of social media
could exacerbate any negative publicity with respect to the Corporation's business.
Extreme Weather Conditions and the Impact of Natural or Other Disasters
As an organization providing consultancy services with no significant real estate assets, the Corporation believes its
financial exposure to acute physical impacts from climate change is limited. However, there is the potential that changes
in climate such as extreme weather events, storm-related flooding or extended drought could disrupt its clients’ projects
and its work, namely its IT systems and the ability of its employees to travel, particularly in locations near or at sea level.
Generally, the Corporation occupies modern offices in well-connected locations. It also has significant regional, national
and global presence to ensure that all offices would not be disrupted by adverse climate impacts. Business continuity
procedures, as well as the diverse geography of the Corporation’s locations, enable employees to work from other offices,
which minimizes operational disruptions and keeps productivity losses to a minimum. In addition, the Corporation’s
revenues are not concentrated in one specific region, which prevents regional disruptions from unduly influencing its
global operations.
However, the Corporation does conduct outdoor field activities in the course of its projects, including but not limited to
professional surveying, resident engineering services, field data surveys and collection, archeology, geotechnical
investigations and exploratory geological or geo-environmental drilling, construction oversight and inspection, and plant
start-up, testing and operations. Extreme weather events may hinder the ability of its field employees to perform their
work, which may result in delays or loss of revenues, while certain costs continue to be incurred.
Ecological and Social Impacts of Projects
WSP works in industries including Transportation & Infrastructure, Property & Buildings and Power & Energy, where
related projects may impact the environment or local communities. Such impacts may include a reduction in biodiversity,
deforestation, water pollution and loss of territories claimed by certain groups. Beyond abiding by all applicable laws and
regulations, the Corporation’s clients must gain social acceptance for its projects from a wide number of stakeholders.
Failure to involve concerned citizens and impacted communities in decision-making could lead to negative publicity,
protests, litigation, policy changes, or even cancellation of projects, which could adversely impact the Corporation’s
business, financial condition, or its reputation.
Implications of Setting and Announcing ESG Targets
Through its designs and advisory services, as well as through its own actions, WSP is committed to helping address and
solve some of the most pressing environmental and social issues. The Corporation has pledged to reduce its greenhouse
gas (“GHG”) emissions, create a more inclusive and diverse workplace and protect the health, safety and wellbeing of our
workforce, among other Environmental, Social and Governance (“ESG”) commitments.
The achievement of these goals is subject to some risks and uncertainties, notably for targets that are not under the
Corporation’s direct control, such as the GHG emissions reductions of its business partners and suppliers (also known as
Scope 3 emissions).
If the Corporation misses its stated ESG targets, this could have financial and reputational repercussions. For example, the
Corporation’s activities are rated by ESG rating agencies, and the resulting scores and rankings are used as an investment
tool, notably among institutional investors. Failure by WSP to reach its ESG targets could potentially lead to downgrades in
its ratings, which could influence investor behaviour.
Work Stoppage and Labour Disputes
As at December 31, 2021, employees predominantly in the Nordics, Brazil and Continental Europe, representing less
than 13% of the Corporation’s total employees and the vast majority of the Corporation’s unionized employees, were
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covered by collective bargaining agreements. Although the Corporation believes that it has good relations with its
employees, the Corporation has in the past experienced labour disputes with its employees and could experience such
conflicts in the future which could lead to strikes, loss of productivity, project interruptions, financial losses or
damages to the Corporation’s reputation as an employer of choice. A lengthy strike or other work stoppages, caused by
or involving unionized or non-unionized employees, in connection with any of the Corporation’s projects could have a
material adverse effect on the Corporation.
Joint Arrangements
As part of its business strategy, the Corporation may enter into certain contracts through joint arrangements with
unaffiliated third parties such as joint ventures, partnerships or other strategic alliances. The success of the
Corporation’s joint arrangements depends, in part, on the satisfactory performance by its partners of their respective
obligations. The failure or unwillingness of any partner in a joint arrangement to perform its obligations or to provide
the required levels of financial support could impose financial and performance obligations on the Corporation that
could result in increased costs and adversely affect the Corporation’s reputation, business and financial condition. If
these circumstances occur, the Corporation may be required to pay financial penalties or liquidated damages, provide
additional services outside of its responsibilities, or make additional investments to ensure adequate performance and
delivery of the contracted services. Under agreements with joint and several (or solidary) liabilities with our contract
partners, the Corporation could be liable for both its own obligations and those of its partners. These circumstances
could also lead to disputes and litigation with the Corporation’s partners or clients.
Reliance on Suppliers and Subconsultants
The Corporation engages with a large number of third-party suppliers and subconsultants. The proper and profitable
completion of some contracts depends to a large extent on the satisfactory performance of the subconsultants that
complete different elements of the work delivered by the Corporation to its clients. If these subconsultants do not perform
to acceptable standards or fail to deliver as per the agreed schedule, the Corporation may be required to hire other
subconsultants in order to complete the subcontracted deliverables and the Corporation’s ability to fulfill its obligations
may be jeopardized, which may add additional costs to a contract, may impact profitability on a specific job and in certain
circumstances may lead to significant losses and claims.
The failure of the Corporation to adequately and proportionately flow down its contractual liability to its suppliers and
subconsultants and the failure of any such third party, supplier or subconsultant to deliver on their contractual
commitments could have an adverse effect on the Corporation’s business, reputation, prospects, financial condition and
results of operations.
Economic Environment
Demand for the Corporation’s services can be impacted by economic factors and events. Global and local capital and credit
markets and global and local economies may experience significant uncertainty, characterized by the bankruptcy, failure,
collapse or transactions in one or more market sectors, including financial institutions, and a considerable level of
intervention from governments and international organizations around the world. Economic conditions in any of the
markets in which the Corporation operates may be weak and may remain weak or become weaker in the future. Although
economic growth may be rebounding in some regions of the world, many markets remain fragile and could again enter
periods of negative economic growth, including as a result of the COVID-19 pandemic. In addition, many governments
used, or continue to use, significant levels of fiscal stimulus in an attempt to avoid recessions and now have significant and
growing debts and deficits that may require actions such as spending cuts and higher taxes. These conditions may impact
demand for the Corporation’s services by public and private entities. Demand for the Corporation’s services may also be
vulnerable to reductions in private industry spending resulting from sudden economic downturns or changes in
commodity prices such as oil, natural gas or metals, which may result in clients delaying, curtailing or cancelling proposed
and existing projects, in some cases with little or no prior notice. Any of these conditions may adversely affect the demand
for the Corporation’s services, which may negatively affect its business, financial condition and results of operations.
In addition, currency and interest rate fluctuations, financial market volatility or credit market disruptions may limit
the Corporation’s access to capital and may also negatively affect the ability of the Corporation’s customers to obtain
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credit to finance their businesses on acceptable terms. If the operating and financial performance of the Corporation’s
customers deteriorates or if they are unable to make scheduled payments or obtain credit, the Corporation’s customers
may not be able to pay the Corporation. Any inability of customers to pay the Corporation for its services may
adversely affect its backlog, earnings and cash flows.
Lastly, rising inflation, interest rates and construction costs could reduce the demand for the Corporation’s services in
the markets in which it operates or may operate in the future. The Corporation also generally bears the risk of rising
inflation in connection with fixed-price contracts. In addition, if the Corporation expands its business into markets or
geographic areas in which fixed-price work is more prevalent, inflation may have a larger impact on the Corporation’s
results of operations.
Changes to Regulations
A portion of the Corporation’s professional services business is generated directly or indirectly as a result of laws and
regulations. Changes in such regulations could affect the Corporation’s business more significantly than they would
affect other professional services firms. Accordingly, changes to the number or scope of these laws and regulations
could significantly reduce the size of its market sector in such market.
Compliance with information security standards such as NIST, DFAR and ISO27001, etc. are increasing the requirements to
bid for projects. Inability to meet such requirements would limit our ability to pursue certain business opportunities.
Further, the Corporation provides services that may be highly sensitive or that may relate to critical national security
matters; if a security breach were to occur, our ability to procure future government contracts could be severely limited.
The precautions the Corporation takes to prevent and detect these activities may not be effective and the Corporation
could face unknown risks or losses.
Insurance Limits
The Corporation maintains comprehensive insurance coverage for various aspects of its business and operations, to
provide indemnity for its losses and liabilities. The Corporation’s insurance programs are subject to varying coverage
limits, retentions as well as exclusions that are customary or reasonable given the cost of procuring insurance, and current
operating conditions, and other relevant considerations. As a result, the Corporation may be subject to future liability for
which it is only partially insured, or completely uninsured. The Corporation is of the view that its insurance programs
address all material insurable risks and provides coverage that is in accordance with what would be maintained by a
prudent operator of a similar business. However, there can be no guarantee that such insurance will continue to be offered
on economically feasible terms, that all events that could give rise to a loss or liability are or will be insurable, or that the
amounts of insurance will always be sufficient to cover every loss or claim that may occur involving the Corporation’s
assets or operations.
Changes to Backlog
The Corporation cannot guarantee that the revenues projected in its backlog will be realized or, if realized, will result in
profits. Projects may remain in the backlog for an extended period of time. In addition, project delays, suspensions,
terminations, cancellations, reductions in scope or other adjustments do occur from time to time in the Corporation’s
industry due to considerations beyond its control and may have a material impact on the value of reported backlog with a
corresponding adverse impact on future revenues and profitability. Future project cancellations and scope adjustments
could further reduce the dollar amount of the backlog and the revenues that the Corporation actually receives.
In addition, most of the Corporation’s contracts contain “termination for convenience” or termination upon short notice
provisions, which permit the client to terminate or cancel the contract at its convenience upon providing the
Corporation with notice of a specified period of time before the termination date or paying the Corporation equitable
compensation or both, depending on the specific contract terms. In the event a significant number of the Corporation’s
clients were to avail themselves of such “termination for convenience” provisions, or if one or more significant contracts
were terminated for convenience, the Corporation’s reported backlog would be adversely affected with a corresponding
adverse impact on expected future revenues and profitability. Although the Corporation’s revenues do not materially
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depend on any specific client, there can be no assurance that the Corporation will be able to retain its relationships with
its largest clients.
If a significant backlog adjustment occurs, the Corporation could incur costs resulting from reductions in staff that
would have the effect of reducing its net earnings.
Protection of Intellectual Property Rights
Where appropriate, the Corporation seeks to protect its technology, including trademarks, patents, and industrial designs,
by relying on licensing and other mechanisms available under applicable law as well as by implementing the proper legal
contractual arrangement and non-disclosure agreements. However, the Corporation may not be able to fully protect its
intellectual property rights or detect unauthorized use of same, which can disturb operations and adversely impact the
Corporation’s capacity to differentiate itself from its competitors.
Clients and third parties occasionally provide the Corporation with access to their technology and intellectual property,
and although the Corporation takes reasonable steps to protect such information from improper use or distribution, there
is a risk that it may not be adequately protected. In addition, the Corporation publishes numerous articles and reports, in a
variety of websites, journals or magazines and may, even unintentionally, entail copyright infringement. The Corporation
may face allegations or claims by clients and third parties of infringement, misappropriation or other violations of their
intellectual property rights that could result in costly litigation and substantially harm our business, financial results and
overall reputation.
RISKS RELATED TO THE CORPORATION'S LIQUIDITY, CAPITAL
RESOURCES AND FINANCIAL POSITION
Deterioration of Financial Position or Net Cash Position
The Corporation relies both on its cash position as well as on the bank, credit and capital markets to provide a portion
of its capital requirements and it is, in certain instances, required to obtain bank guarantees, letters of credit and/or
performance and payment bonds as a means to secure its various contractual obligations. Significant instability or
disruptions of the capital markets, including the credit markets, or a deterioration in or weakening of its financial
position, including its net cash position, due to internal or external factors, could restrict or prohibit the Corporation’s
access to, or significantly increase the cost of one or more of these financing sources, including credit facilities, the
issuance of long-term debt (such as the issuance of debentures, bonds or notes), or the availability of bank guarantees,
letters of credit and/or bonding to guarantee its contractual and project obligations.
There can be no assurance that the Corporation will maintain an adequate net cash position and generate sufficient
cash flow from operations to fund its operations and liquidity needs, service its debt and/or maintain its ability to
obtain and secure bank guarantees.
A draw on letters of credit or bank guarantees by one or more third parties could, among other things, significantly
reduce the Corporation’s cash position and have a material adverse effect on its business and results of operations.
Working Capital Requirements
The Corporation may have significant working capital requirements, which if unfunded could negatively impact its
business, financial condition and cash flows. In some cases, the Corporation may require significant working capital to
finance the performance of engineering and other work on certain projects before it receives payment from clients. In
other cases, the Corporation is contractually obligated to its clients to fund working capital on projects. Increases in
working capital requirements could negatively impact the Corporation’s business, financial condition and cash flows.
Further, significant deterioration of the current global economic and credit market environment could challenge the
Corporation’s efforts to maintain a diversified asset allocation with credit worthy financial institutions.
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In addition, the Corporation may invest some of its cash in longer-term investment opportunities, including the
acquisition of other entities or operations, capital expenditures, the reduction of certain liabilities such as unfunded
pension liabilities and/or repurchases of the Corporation’s outstanding shares. To the extent the Corporation uses cash
for such other purposes, the amount of cash available for the working capital needs described above would be reduced.
Accounts Receivable
As is common in the professional services industry, the Corporation carries a high level of accounts receivable on its
balance sheet. This value is spread among numerous contracts and clients. While the Corporation performs regular
reviews of accounts receivable to identify clients with overdue payments and resolve issues causing any delays, including
issues relating to the financial capacity of such clients, there can be no assurance that outstanding accounts receivable will
be paid on a timely basis or at all. The non-payment of accounts receivable may have an adverse impact on the
Corporation’s financial condition and profitability. While the Corporation maintains provisions to account for projected
collection issues, such provisions are based on estimates and projections which may differ significantly from actual results.
The Corporation’s credit risk is principally attributable to its trade receivables. The amounts presented in the balance
sheet are net of expected credit losses, estimated by Management and based, in part, on the age of the specific
receivable balance and the current and expected collection trends. Generally, although credit is extended following an
evaluation of creditworthiness, the Corporation does not require collateral or other security from customers for trade
accounts receivable. Large uncollectible accounts receivable balances could have a material adverse effect on the
Corporation’s financial condition.
Increased Indebtedness and Raising Capital
The Corporation may draw on its credit facilities or may issue other debt instruments, such as bonds, to fund its
activities, including acquisitions it may complete from time to time. Depending on its level of indebtedness, the
Corporation could be required to dedicate an important part of its cash flow to making interest and capital payments
on its indebtedness, which could have other important consequences for investors, including the following:
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it may limit the Corporation’s ability to make investments that are important to its growth and strategies while
meeting its other cash needs or obtain additional financing for working capital, capital expenditures, debt service
requirements, acquisitions and general corporate or other purposes;
certain of the Corporation’s borrowings are at variable interest rates and expose the Corporation to the risk of
increased interest rates;
it may limit the Corporation’s ability to adjust to changing market conditions and place the Corporation at a
competitive disadvantage compared to its competitors that have less debt;
it may negatively impact the Corporation’s credit ratings;
the Corporation may not be able to declare and pay dividends on its shares; and
the Corporation may be vulnerable in a downturn in general economic conditions.
Under the terms of the contracts governing its indebtedness, the Corporation is permitted to incur additional debt in
certain circumstances. However, doing so could increase the risks described above. Under its credit facility and trust
indenture, the Corporation is required, among other conditions, to respect certain covenants on a consolidated basis.
The main covenants are in regard to its consolidated funded debt to consolidated adjusted EBITDA and the interest
coverage ratios, which are non-IFRS measures. Management reviews compliance with these covenants on a quarterly
basis in conjunction with filing and reporting requirements under its credit facility and trust indenture.
If the Corporation is unable to obtain capital on acceptable terms in order to fund its growth strategy, the Corporation
may be required to reduce the scope of its anticipated expansion, which may negatively affect its business strategy,
future competitiveness and results of operations. Using internally generated cash or taking on high levels of debt to
complete acquisitions could substantially limit the Corporation’s operational and financial flexibility. The extent to
which the Corporation will be able or willing to issue equity as a means of financing acquisitions will depend on the
market value of its shares from time to time and the willingness of potential sellers to accept its shares as full or partial
consideration. The Corporation may also be required to incur additional debt if it acquires another business, which
could increase its debt repayment obligations and have a negative impact on future liquidity and profitability.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-48
In addition, the Corporation may also be required to raise additional capital in the public or private markets to support
its strategy and operational needs in the future. The availability of future financing will depend on prevailing market
conditions, and the acceptability of financing terms offered. There can be no assurance that future financing will be
available, or available on acceptable terms, in an amount sufficient to fund its needs, especially during periods of
economic downturn.
Impairment of Long-Lived Assets
Because the Corporation has grown in part through acquisitions, goodwill and intangible assets represent a substantial
portion of the Corporation’s assets. As at December 31, 2021, the Corporation had $4.8 billion of goodwill, representing
42% of its total assets of $11.3 billion. Under IFRS, the Corporation is required to test goodwill and indefinite-lived
intangible assets carried in its consolidated statement of financial position for possible impairment on an annual basis;
the Corporation uses a fair value approach. The Corporation has chosen to perform its annual impairment review of
goodwill on the first day of the Corporation’s fourth quarter of its fiscal year. The Corporation is also required to test
long-lived assets for impairment between annual tests if events occur or circumstances change that would more likely
than not reduce the fair value of a Cash Generating Unit ("CGU") below its book value, which would mean the value of
the acquired assets has fallen below what the Corporation generally paid for them. These events or circumstances could
include a significant change in the business climate, including a significant sustained decline in a CGU’s market value,
legal factors, operating performance indicators, competition, sale or disposition of a significant portion of its business,
potential government actions toward its facilities, and other factors. If the recoverable amount of a CGU is less than its
carrying value, the Corporation could be required to record an impairment charge. The amount of any impairment
could be significant and could have a material adverse impact on the Corporation’s financial condition and results of
operations for the period in which the charge is taken.
Foreign Currency Exposure
Foreign currency risk is the risk that fair value of an asset or liability or future cash flows will fluctuate because of
changes in foreign exchange rates, and where a change in exchange rates would have a direct impact on net earnings of
the Corporation. The Corporation operates internationally which significantly increases its exposure to the foreign
currency risk arising from its operating activities denominated in various currencies including US dollars, pounds
sterling, Swedish kronas and Australian dollars and to its net assets in foreign operations. A significant portion of the
Corporation’s earnings and net assets is denominated in multiple foreign currencies, including US dollar, pound
sterling, Swedish krona and Australian dollars. Accordingly, fluctuations in exchange rates between the Canadian dollar
and such currencies may have an adverse effect on the Corporation’s results and financial condition. Future events that
may significantly increase or decrease the risk of future movement in the exchange rates for these currencies cannot
be predicted.
Future cash flows in a foreign currency carry the risk that the foreign currency will fluctuate in value before the
transaction in question is completed and the currency is exchanged into the Corporation’s functional currency. In
situations where revenues and costs are transacted in different currencies, the Corporation sometimes enters into
foreign exchange contracts in order to limit its exposure to fluctuating foreign currencies.
Income Taxes
The Corporation is subject to income taxes in various foreign jurisdictions. The tax legislation, regulation and
interpretation that apply to its operations are continually changing. In addition, deferred income tax benefits and
liabilities are dependent on factors that are inherently uncertain and subject to change, including future earnings,
future tax rates, and anticipated business mix in the various jurisdictions in which the Corporation operates.
Significant judgment is required in determining required provision for income taxes and Management uses accounting
and fiscal principles to determine income tax positions that it believes are likely to be sustained by applicable tax
authorities. However, there is no assurance that the Corporation's tax benefits or tax liability will not materially differ
from its estimates or expectations. In the ordinary course of business, there are many transactions and calculations
where the ultimate tax determination is uncertain. The Corporation is regularly under audit by tax authorities. It is
these tax authorities that will make the final determination of the actual amounts of taxes payable or receivable, of any
deferred income tax benefits or liabilities and of income tax expense that the Corporation may ultimately recognize.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-49
Although Management believes that its income tax estimates and tax positions are reasonable, they could be materially
affected by many factors including the final outcome of tax audits and related litigation, the introduction of new
income tax accounting standards, legislation, regulations, and related interpretations, the Corporation’s global mix of
earnings, the realizability of deferred income tax assets and changes in uncertain tax positions. Any of the above
factors could have a material adverse effect on the Corporation's net income or cash flows by affecting its operations
and profitability, the availability of tax credits, the cost of the services it provides, and the availability of deductions for
operating losses as the Corporation grows its business. An increase or decrease in the Corporation’s effective income
tax rate could have a material adverse impact on its financial condition and results of operations.
Underfunded Defined Benefits Obligations
The Corporation may be required to contribute additional cash to meet any underfunded benefit obligations associated
with retirement and post-retirement employee benefit plans managed by the Corporation. Such contributions are
generally determined by calculating the projected benefit obligations of a plan, minus the fair value of such plan assets.
In the future, the Corporation’s benefit plan obligations may increase or decrease depending on, among other things,
changes in life expectancy, interest rates and asset performance. If the Corporation is required to contribute a
significant amount to cover deficit under underfunded benefit plans, the Corporation’s cash flows may be materially
and adversely affected.
Changing economic conditions and demographics may result in significant increases in the Corporation’s funding
obligations thereby reducing the availability of such funds for other corporate purposes, which could have a material
adverse effect on the Corporation’s business, financial condition and results of operations.
RISKS RELATED TO THE SHARES OF THE CORPORATION
Potential Dilution and Share Price Volatility
The Corporation’s articles permit the issuance of an unlimited number of common shares and an unlimited number of
preferred shares, issuable in series. In order to successfully finance and complete targeted acquisitions or to fund its
operations, capex, or other activities, the Corporation may issue additional equity securities or securities convertible into
common shares that could dilute share ownership. The dilutive effect of these issuances may adversely affect the
Corporation’s ability to obtain additional capital or impair the Corporation’s share price. WSP cannot predict the
likelihood or size of future equity issuances or the effect that such future issuances may have on the market price of the
Corporation’s securities. Issuances of a substantial number of additional common shares (or securities convertible into
common shares), or the perception that such issuances could occur, may adversely affect the prevailing market price for
the common shares.
Share prices are inherently volatile, and the market price of our common shares is accordingly subject to wide fluctuations
in response to numerous factors, many of which are beyond our control, and in some cases heightened in the context of
the COVID-19 pandemic and related uncertainty. Such factors include, but are not limited to, announcements or rumors
surrounding new strategic initiatives or other material information, actual or anticipated fluctuations in our operating
results, sales of common shares in the marketplace, changes in forecasts, estimates or recommendations of securities
research analysts regarding our future operating results or financial performance, changes in the economic performance
or market valuations of other issuers that investors deem comparable to WSP, arrivals or departures of our executive
officers and other key personnel, the declaration and payment of dividends, news reports relating to trends, concerns,
technological or competitive developments, the impact of various tax laws or rates and general market conditions or the
worldwide economy. In certain circumstances, stock markets experience significant price and volume fluctuations which
are entirely unrelated to the operating performance of the affected companies. There can be no assurance that the market
price of the common shares will not experience significant fluctuations in the future, including fluctuations that are
unrelated to our performance.
In addition, the Corporation is subject to a number of risks and uncertainties, including those described in this
section 20, “Risk Factors”, which if they were to materialize, could cause a decline in the price of the Corporation’s
publicly traded shares.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-50
RISKS RELATED TO FORWARD-LOOKING STATEMENTS
The forward-looking statements included in this MD&A relating to, among other things, the Corporation’s future
results, performance, achievements, prospects, targets, intentions or opportunities or the markets in which the
Corporation operates and the other statements listed in ‘‘Forward-Looking Statements’’, are based on opinions,
assumptions and estimates made by Management in light of its experience and perception of historical trends, current
conditions and expected future developments, as well as other factors that the Corporation believes are appropriate
and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will
prove to be correct. The Corporation’s actual results in the future may vary significantly from the historical and
estimated results and those variations may be material. The Corporation makes no representation that its actual results
in the future will be the same, in whole or in part, as those included in this MD&A. See section 19, ‘‘Forward-Looking
Statements”.
21 ADDITIONAL INFORMATION
Additional information regarding the Corporation is available on our Website at www.wsp.com and on SEDAR at
www.sedar.com. The Corporation's Annual Information Form for the year ended December 31, 2021 is available on these
websites.
The common shares of the Corporation are traded on the Toronto Stock Exchange under the symbol “WSP”. As at
December 31, 2021, the Corporation had 117,783,015 common shares outstanding. As at March 8, 2022, the Corporation had
117,916,486 common shares outstanding.
The Corporation has no other shares outstanding.
22 GLOSSARY OF SEGMENT REPORTING,
NON-IFRS AND OTHER FINANCIAL
MEASURES
Net revenues
Net revenues is defined as revenues less direct costs for subconsultants and other direct expenses that are recoverable
directly from clients.
Net revenues is a segment reporting measure and a total of segments measure, without a standardized definition within
IFRS, which may not be comparable to similar measures presented by other issuers.
Management analyzes the Corporation's financial performance in relation to fee-based revenues, or net revenues, since
direct recoverable costs can vary significantly from contract to contract and are not indicative of the performance of the
professional consulting services business. Refer to section 8.1, “Net revenues”, for reconciliations of revenues to net
revenues.
Adjusted EBITDA and adjusted EBITDA margin
Adjusted EBITDA is defined as earnings before net financing expense (except interest income), income tax expense,
depreciation, amortization, impairment charges and reversals thereof, share of income tax expense and depreciation of
associates, acquisition, integration and reorganization costs and ERP implementation costs. Adjusted EBITDA margin is
defined as adjusted EBITDA expressed as a percentage of net revenues.
WSP Global Inc.
Management's Discussion and Analysis
2021
M-51
Adjusted EBITDA is a non-IFRS financial measures. Adjusted EBITDA margin is a non-IFRS ratio. These measures have no
standardized definitions under IFRS, and, accordingly, these measures may not be comparable to similar measures used by
other issuers.
Management analyzes the Corporation’s financial performance in relation to adjusted EBITDA as it believes this metric
allows comparability of operating results from one period to another. These measures exclude the effects of items that
primarily reflect the impact of long-term investment and financing decisions, rather than the results of day-to-day
operations. Refer to section 8.3, “Adjusted EBITDA”, for reconciliations of earnings before net financing expense and
income taxes to adjusted EBITDA.
Adjusted EBITDA by segment and adjusted EBITDA margin by segment
Adjusted EBITDA by segment is defined as adjusted EBITDA excluding head office corporate costs. Head office corporate
costs are expenses and salaries related to centralized functions, such as head office finance, human resources and
technology teams, which are not allocated to reportable segments. Adjusted EBITDA margin by segment is defined as
adjusted EBITDA before head office corporate costs expressed as a percentage of net revenues.
These are segment reporting and total of segments measures without standardized definitions within IFRS. Other issuers
may define adjusted EBITDA by segment differently and, accordingly, this measure may not be comparable to similar
measures used by other issuers.
These metrics provide Management with comparability from one reportable segment to another. Refer to section 8.3,
“Adjusted EBITDA”, for reconciliations of adjusted EBITDA to adjusted EBITDA by segment and of earnings before net
financing expense and income taxes to adjusted EBITDA.
Adjusted net earnings and adjusted net earnings per share
Management has amended its definition of adjusted net earnings, effective January 1, 2021, to exclude amortization of
intangible assets related to acquisitions. The amendment was made in the context of the Golder Acquisition completed on
April 7, 2021. The comparative period results have been restated to apply the current definition.
Adjusted net earnings is defined as net earnings attributable to shareholders excluding:
•
•
•
•
•
•
amortization of intangible assets related to acquisitions;
acquisition, integration and reorganization costs;
ERP implementation costs
gains or losses on investments in securities related to deferred compensation obligations, included in other
financial assets;
unrealized gains or losses on derivative financial instruments; and
the income tax effects related to the above-mentioned items.
Adjusted net earnings per share is calculated using the basic weighted average number of shares.
Adjusted net earnings is a non-IFRS financial measure and adjusted net earnings per share is a non-IFRS ratio. These
measures have no standardized definitions under IFRS, and, accordingly, these measures may not be comparable to similar
measures used by other issuers.
The exclusion of acquisition, integration and reorganization costs and amortization of intangible assets related to
acquisitions provides a comparative measure of the Corporation’s performance in a context of significant business
combinations, in which the Corporation may incur significant acquisition, integration and reorganization costs and as a
result of which the Corporation's amortization expense may increase due to recognition of intangible assets which would
not normally be recognized outside of a business combination. Management also excludes ERP implementation costs as
such costs are not representative of the operating activities of the business. In addition, this non-IFRS financial measure is
adjusted for certain non-cash items related to market volatility, which are inherently unpredictable. In the US, the
Corporation maintains a deferred compensation plan under which a portion of employees’ compensation is deferred and
invested in financial assets held in a trust, included in other financial assets in the Corporation's statement of financial
position. These financial assets held in a trust are for the ultimate benefit of the employees but are available to the
WSP Global Inc.
Management's Discussion and Analysis
2021
M-52
Corporation’s creditors in the event of insolvency and are therefore not considered actuarial gains and losses recorded
through other comprehensive income, and instead are recorded in financing expense. Finally, unrealized gains or losses on
derivative financial instruments relate to future transactions and therefore are not comparable when included in the
current period results.
Management believes these items should be excluded in understanding the underlying operational financial performance
achieved by the Corporation. Refer to section 8.8, “Adjusted net earnings”, for reconciliations of net earnings attributable
to shareholders to adjusted net earnings.
Backlog
Backlog represents future revenues stemming from existing signed contracts to be completed. Backlog is a supplementary
financial measure without a standardized definition within IFRS. Backlog is different from the IFRS definition of unfulfilled
performance obligations, as backlog also includes cost-plus contracts without stated ceilings, and cost-plus contracts with
ceilings and fixed-price contracts on which work has not yet commenced. Other issuers may define a similar measure
differently and, accordingly, this measure may not be comparable to similar measures used by other issuers.
Free cash flow
Free cash flow (or outflow) is defined as cash flows from operating activities, plus discretionary cash generated by the
Corporation from other activities (if any), less lease payments and net capital expenditures.
Free cash flow is a non-IFRS financial measure without a standardized definition within IFRS. Other issuers may define a
similar measure differently and, accordingly, this measure may not be comparable to similar measures used by other
issuers.
Free cash flow provides a consistent and comparable measure of discretionary cash generated by, and available to, the
Corporation to service debt, meet other payment obligations and make strategic investments. Refer to section 9.1,
“Operating activities and free cash flow”, for reconciliations of free cash flow to cash flows from operating activities.
Days sales outstanding (“DSO”)
DSO represents the average number of days to convert the Corporation's trade receivables (net of sales taxes) and costs
and anticipated profits in excess of billings into cash, net of billings in excess of costs and anticipated profits. DSO is a
supplementary financial measure without a standardized definition within IFRS. Other issuers may define a similar
measure differently and, accordingly, this measure may not be comparable to similar measures used by other issuers.
Net debt to adjusted EBITDA ratio
Net debt to adjusted EBITDA ratio is a capital management measure. Net debt is defined as long-term debt, including
current portions but excluding lease liabilities, and net of cash. The Corporation uses this ratio as a measure of financial
leverage and it is calculated using the trailing twelve-month adjusted EBITDA.
WSP Global Inc.
Management's Discussion and Analysis
2021
WSP Global Inc.
Consolidated
Financial
Statements
For year ended December 31, 2021
CONSOLIDATED FINANCIAL STATEMENTS
F-1
2021 ANNUAL REPORT
ABOUT US
As one of the world’s leading professional services firms, WSP
provides strategic advisory, engineering and design services to
clients in the Transportation & Infrastructure, Earth & Environment,
Property & Buildings, Power & Energy, Resources, and Industry
sectors. WSP's global experts include advisors, engineers,
environmental specialists, scientists, technicians, architects and
planners, in addition to other design and program management
professionals. Our talented people are well positioned to deliver
successful and sustainable projects, wherever our clients need us.
HEAD OFFICE
WSP GLOBAL INC.
1600 RENE-LEVESQUE BLVD WEST, 11th FLOOR
MONTREAL, QC H3H 1P9
CANADA
wsp.com
Independent auditor’s report
To the Shareholders of WSP Global Inc.
Our opinion
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects,
the financial position of WSP Global Inc. and its subsidiaries (together, the Corporation) as at
December 31, 2021 and 2020, and its financial performance and its cash flows for the years then ended in
accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IFRS).
What we have audited
The Corporation’s consolidated financial statements comprise:
the consolidated statements of earnings for the years ended December 31, 2021 and 2020;
the consolidated statements of comprehensive income for the years ended December 31, 2021
and 2020;
the consolidated statements of financial position as at December 31, 2021 and 2020;
the consolidated statements of changes in equity for the years ended December 31, 2021 and 2020;
the consolidated statements of cash flows for the years ended December 31, 2021 and 2020; and
the notes to the consolidated financial statements, which include significant accounting policies and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Corporation in accordance with the ethical requirements that are relevant to
our audit of the consolidated financial statements in Canada. We have fulfilled our other ethical
responsibilities in accordance with these requirements.
PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l.
1250 René-Lévesque Boulevard West, Suite 2500, Montréal, Quebec, Canada H3B 4Y1
T: +1 514 205 5000, F: +1 514 876 1502
“PwC” refers to PricewaterhouseCoopers LLP/s.r.l./s.e.n.c.r.l., an Ontario limited liability partnership.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements for the year ended December 31, 2021. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters
How our audit addressed the key audit matters
Revenue recognition – Estimated costs on cost-
plus contracts with ceilings and fixed-price
contracts
Refer to note 2 – Summary of significant
accounting policies, note 4 – Critical accounting
estimates and judgments and note 7 – Revenues to
the consolidated financial statements.
The Corporation typically recognizes revenues over
time, using an input measure, as it fulfills its
performance obligations in line with contracted
terms. For the year ended December 31, 2021,
approximately 72% of the Corporation’s total
revenues of $10,279.1 million were generated from
cost-plus contracts with ceilings and fixed-price
contracts. For these contracts, revenues are
recognized progressively based on a percentage-
of-completion method, whereby the percentage of
revenues earned to date is estimated using an
input measure, usually as the ratio of contract costs
incurred to date to total estimated costs.
Recognition of revenues and costs and anticipated
profits in excess of billings involves estimates of
costs required to complete the project. On a
monthly basis, management reviews the costs
incurred to date and the estimated costs to
complete for each project to determine whether the
amount recognized as costs and anticipated profits
in excess of billings is an accurate estimate of the
amount that the Corporation has earned on its
projects.
Our approach to addressing the matter included the
following procedures, among others:
Tested, for certain segments, the effectiveness
of controls over the determination of estimated
costs.
Tested how management determined the
estimated costs for a sample of contracts,
which included the evaluation of the
reasonableness of the costs to complete the
project, as follows:
‒ Obtained and read contract agreements,
and change orders, when applicable, to
understand contract scope and key terms;
‒ Evaluated the timely identification of
circumstances that may warrant a
modification to the total estimated costs
including, but not limited to, contracts
subject to claims and contract
modifications;
‒
Interviewed operational personnel of the
Corporation to evaluate progress to date,
the estimate of costs to be incurred, and
factors impacting the amount of time and
cost to complete the project;
‒ Compared the original margin expected on
the contract to the actual margin; and
‒ Compared the costs incurred and the
estimated costs to complete to the original
total estimated costs.
Key audit matters
How our audit addressed the key audit matters
We considered this a key audit matter due to the
significant judgments made by management when
developing the estimated costs required to
complete the projects, which led to significant
auditor judgments and audit effort in performing
procedures to evaluate the total estimated costs,
including the assessment of management’s
judgments about its ability to determine the
estimated costs required to complete the project.
Tested, on a sample basis, the costs incurred to
supporting evidence.
Compared the original total estimated costs to
the total costs incurred for contracts completed
during the year.
Valuation of customer relationships acquired in
the Golder Associates business combination
Our approach to addressing the matter included the
following procedures, among others:
Refer to note 4 – Critical accounting estimates and
judgments, note 5 – Business acquisitions to the
consolidated financial statements
Tested how management measured the fair
value of the customer relationships, which
included the following:
On April 7, 2021, the Corporation acquired 100% of
the voting shares of Enterra Holdings Ltd., the
holding company of Golder Associates (“Golder”).
The transaction included purchase consideration
totalling $1,251.5 million. The fair value of the
identifiable assets acquired included $357.6 million
in intangible assets, which primarily relate to
customer relationships. Management uses key
estimates and assumptions in measuring the fair
value of the intangible assets acquired.
Management applied the excess earnings method
using discounted cash flow models to value
customer relationships acquired. Management’s
key estimates and assumptions in applying this
methodology included forecasted revenues and
margins attributable to the customer relationships,
rates of attrition and discount rates.
‒ Read the purchase agreement.
‒ Tested the underlying data used by
management in the models.
‒ Evaluated the reasonableness of key
assumptions and estimates used by
management related to forecasted
revenues and margins attributable to the
customer relationships and rates of attrition,
by considering the past performance of the
acquired business, as well as economic
and industry data.
‒ Professionals with specialized skills and
knowledge in the field of valuation assisted
in evaluating the appropriateness of the
valuation method and models used, as well
as certain key assumptions such as
discount rates.
Key audit matters
How our audit addressed the key audit matters
We considered this a key audit matter due to the
significant judgment applied by management in
measuring the fair value of the customer
relationships, including the development of key
estimates and assumptions. This, in turn, led to a
high degree of auditor judgment, subjectivity and
effort in performing procedures and evaluating
audit evidence relating to the key estimates and
assumptions used by management. The audit effort
involved the use of professionals with specialized
skills and knowledge in the field of valuation.
Other information
Management is responsible for the other information. The other information comprises the Management’s
Discussion and Analysis, which we obtained prior to the date of this auditor’s report, and the information,
other than the consolidated financial statements and our auditor’s report thereon, included in the annual
report, which is expected to be made available to us after that date.
Our opinion on the consolidated financial statements does not cover the other information and we do not
and will not express an opinion or any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. When we read the information, other
than the consolidated financial statements and our auditor’s report thereon, included in the annual report,
if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance.
Responsibilities of management and those charged with governance for the
consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with IFRS, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the
Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless management either intends to liquidate
the Corporation or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Corporation’s financial reporting
process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Corporation to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Corporation to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Michael Trudeau.
/s/PricewaterhouseCoopers LLP1
Montréal, Quebec
March 9, 2022
1 CPA auditor, CA, public accountancy permit No. A113048
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions of Canadian dollars, except number of shares and per share data)
F-9
Revenues (note 7)
Personnel costs (note 11)
Subconsultants and direct costs
Other operational costs
Depreciation of right-of-use assets (note 18)
Amortization of intangible assets (note 19)
Depreciation of property and equipment (note 20)
Acquisition, integration and reorganization costs (note 10)
ERP implementation costs (note 3)
Exchange loss (gain)
Share of income of associates and joint ventures, net of tax
Earnings before net financing expense and income taxes
Net financing expense (note 12)
Earnings before income taxes
Income tax expense (note 13)
Net earnings
Net earnings attributable to:
Shareholders of WSP Global Inc.
Non-controlling interests
Basic net earnings per share attributable to shareholders
Diluted net earnings per share attributable to shareholders
2021
$
2020
$
10,279.1
8,803.9
5,851.2
2,409.5
745.8
265.8
139.1
113.6
60.8
6.8
(18.6)
(19.5)
724.6
79.5
645.1
171.0
474.1
473.6
0.5
474.1
4.07
4.05
5,221.8
1,944.8
606.1
268.3
104.7
103.3
103.4
—
10.3
(18.2)
459.4
73.5
385.9
108.5
277.4
276.0
1.4
277.4
2.51
2.50
Basic weighted average number of shares
Diluted weighted average number of shares
116,479,695
116,901,686
110,020,798
110,263,100
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian dollars)
F-10
Net earnings
Other comprehensive income (loss)
Items that may be reclassified subsequently to net earnings
Currency translation adjustments
Translation adjustments on financial instruments designated as a
net investment hedge
Income tax recovery
Items that will not be reclassified to net earnings
Actuarial loss on pension schemes
Exchange differences on pension schemes
Income tax recovery on pension schemes
Total comprehensive income for the year
Comprehensive income attributable to:
Shareholders of WSP Global Inc.
Non-controlling interests
The accompanying notes are an integral part of these consolidated financial statements.
2021
$
2020
$
474.1
277.4
(124.9)
25.8
1.5
2.3
(4.3)
1.8
2.4
352.9
352.4
0.5
352.9
(6.2)
1.1
(30.4)
(1.0)
6.8
273.5
272.1
1.4
273.5
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in millions of Canadian dollars)
As at December 31
Assets
Current assets
Cash and cash equivalents (note 29)
Trade receivables and other receivables (note 15)
Cost and anticipated profits in excess of billings (note 16)
Prepaid expenses
Other financial assets (note 17)
Income taxes receivable
Non-current assets
Right-of-use assets (note 18)
Intangible assets (note 19)
Property and equipment (note 20)
Goodwill (note 21)
Deferred income tax assets (note 13)
Other assets (note 22)
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities (note 23)
Billings in excess of costs and anticipated profits (note 16)
Income taxes payable
Provisions (note 24)
Dividends payable to shareholders (note 28)
Current portion of lease liabilities (note 18)
Current portion of long-term debt (note 25)
Non-current liabilities
Long-term debt (note 25)
Lease liabilities (note 18)
Provisions (note 24)
Retirement benefit obligations (note 9)
Deferred income tax liabilities (note 13)
Total liabilities
Equity
Equity attributable to shareholders of WSP Global Inc.
Non-controlling interests
Total equity
Total liabilities and equity
Approved by the Board of Directors
F-11
2020
$
437.1
1,598.8
950.5
168.7
118.1
27.5
3,300.7
894.3
275.5
314.9
3,731.9
169.2
150.9
5,536.7
8,837.4
1,718.2
708.5
119.1
71.4
42.5
233.1
296.9
3,189.7
277.3
785.3
180.9
232.4
90.4
1,566.3
4,756.0
4,080.4
1.0
4,081.4
8,837.4
2021
$
927.4
1,916.8
1,156.4
169.6
141.7
28.9
4,340.8
861.5
549.9
363.6
4,762.3
165.1
207.2
6,909.6
11,250.4
2,217.3
751.1
149.8
77.5
44.2
254.2
297.4
3,791.5
1,479.3
766.1
236.2
212.9
99.2
2,793.7
6,585.2
4,664.5
0.7
4,665.2
11,250.4
(signed) Alexandre L'Heureux
Director
(signed) Louis-Philippe Carrière
Director
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions of Canadian dollars)
F-12
Attributable to Shareholders of WSP Global Inc.
Share
capital
$
Contributed
surplus
$
Retained
earnings
$
Accumulated
other
comprehensive
income (loss)
$
Non-
controlling
interests
$
Total
$
Total
equity
$
Balance - January 1, 2021
3,394.2
207.3
412.2
66.7 4,080.4
1.0 4,081.4
Comprehensive income
Net earnings
Actuarial loss on pension schemes,
net of tax
Currency translation adjustments,
net of tax
Net investment hedge, net of tax
Total comprehensive income
Common shares issued via public
offerings and private placements
(note 26)
Common shares issued under the
DRIP (note 26)
Exercise of stock options (note 26)
Stock-based compensation expense
Declared dividends to shareholders
of WSP Global Inc.
Dividends paid to non-controlling
interests
Purchase of non-controlling
interests
—
—
—
—
—
—
—
—
—
—
473.6
—
473.6
0.5
474.1
—
—
—
(0.1)
(0.1)
(123.3)
(123.3)
2.2
2.2
—
—
—
(0.1)
(123.3)
2.2
473.6
(121.2)
352.4
0.5
352.9
300.6
—
—
92.6
13.8
—
—
—
—
—
(2.5)
3.5
—
—
—
—
—
—
(174.9)
—
(1.4)
—
—
—
—
—
—
—
300.6
92.6
11.3
3.5
(174.9)
—
—
—
—
—
300.6
92.6
11.3
3.5
(174.9)
—
(0.8)
(0.8)
(1.4)
—
(1.4)
Balance - December 31, 2021
407.0
3,801.2
1.0
208.3
(176.3)
709.5
—
231.7
(54.5) 4,664.5
(0.8)
230.9
0.7 4,665.2
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions of Canadian dollars)
F-13
Attributable to Shareholders of WSP Global Inc.
Share
capital
$
Contributed
surplus
$
Retained
earnings
$
Accumulated
other
comprehensive
income
$
Non-
controlling
interests
$
Total
$
Total
equity
$
Balance - January 1, 2020
2,752.2
204.6
303.4
70.6 3,330.8
1.1 3,331.9
Comprehensive income
Net earnings
Actuarial loss on pension schemes,
net of tax
Currency translation adjustments,
net of tax
Net investment hedge, net of tax
Total comprehensive income
Common shares issued via public
offerings and private placements
Common shares issued under the DRIP
(note 26)
Exercise of stock options (note 26)
Stock-based compensation expense
Declared dividends to shareholders
of WSP Global Inc.
Dividends to non-controlling
interests
Disposal of a business with non-
controlling interests
—
—
—
—
—
—
—
—
276.0
—
276.0
1.4
277.4
—
—
—
(24.6)
(24.6)
26.9
(6.2)
26.9
(6.2)
—
—
—
(24.6)
26.9
(6.2)
—
—
276.0
(3.9)
272.1
1.4
273.5
563.2
76.1
2.7
—
—
—
—
—
—
(0.5)
3.2
—
—
—
—
—
—
—
(167.2)
—
—
—
—
—
—
—
—
—
563.2
76.1
2.2
3.2
(167.2)
—
—
—
—
—
563.2
76.1
2.2
3.2
(167.2)
—
—
(0.6)
(0.6)
(0.9)
(0.9)
Balance - December 31, 2020
3,394.2
207.3
412.2
66.7 4,080.4
1.0 4,081.4
642.0
2.7
(167.2)
—
477.5
(1.5)
476.0
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of Canadian dollars)
Operating activities
Net earnings
Adjustments (note 29)
Net financing expense (note 12)
Income tax expense (note 13)
Income taxes paid
Change in non-cash working capital items (note 29)
Cash inflows from operating activities
Financing activities
Net proceeds (repayment) of borrowings under credit facilities
Issuance of senior unsecured notes (note 25)
Repayment of long-term debt following a business acquisition
Issuance of common shares, net of issuance costs (note 26)
Lease payments (note 18)
Dividends paid to shareholders of WSP Global Inc.
Net financing expenses paid, excluding interest on lease liabilities
Dividends paid to a non-controlling interest
Cash inflows (outflows) from financing activities
Investing activities
Net disbursements related to business acquisitions (note 5)
Additions to property and equipment, excluding business acquisitions
Additions to identifiable intangible assets, excluding business acquisitions
Proceeds from disposal of property and equipment
Increase in investments in securities
Dividends received from associates
Proceeds from sale of investment in an associate
Net proceeds from disposal of businesses
Repurchase of non-controlling interest
Net cash received on a loan from associate
Cash outflows from investing activities
Effect of exchange rate change on cash and cash equivalents
Change in net cash and cash equivalents
Cash and cash equivalents, net of bank overdraft - beginning of the year
Cash and cash equivalents, net of bank overdraft - end of the year (note 29)
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
F-14
2020
$
277.4
416.7
73.5
108.5
(104.5)
353.5
2021
$
474.1
436.6
79.5
171.0
(134.0)
32.9
1,060.1
1,125.1
649.1
500.0
(235.0)
308.5
(303.2)
(80.6)
(47.8)
(0.8)
790.2
(1,244.9)
(100.7)
(20.5)
10.4
(7.1)
14.4
4.6
—
(1.4)
0.3
(857.1)
—
—
550.8
(301.3)
(88.3)
(49.8)
(0.6)
(746.3)
(124.4)
(72.1)
(21.0)
4.6
—
19.4
—
8.2
—
—
(1,344.9)
(185.3)
(13.8)
491.6
434.7
926.3
3.9
197.4
237.3
434.7
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures are in millions of Canadian dollars, unless otherwise stated)
NOTES
F-15
1
2
3
4
5
6
7
8
9
BASIS OF PRESENTATION ........................................................................................................
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ........................................................
ACCOUNTING POLICY DEVELOPMENTS ................................................................................
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS ....................................................
BUSINESS ACQUISITIONS .........................................................................................................
OPERATING SEGMENTS ............................................................................................................
REVENUES ...................................................................................................................................
LONG-TERM INCENTIVE PLANS ("LTIPS") ..............................................................................
PENSIONS SCHEMES .................................................................................................................
10 ACQUISITION, INTEGRATION AND REORGANIZATION COSTS ............................................
11
GOVERNMENT GRANTS.............................................................................................................
12 NET FINANCING EXPENSE ........................................................................................................
13
14
15
INCOME TAXES ...........................................................................................................................
FINANCIAL INSTRUMENTS ........................................................................................................
TRADE AND OTHER RECEIVABLES .........................................................................................
16 CONTRACT BALANCES .............................................................................................................
17 OTHER FINANCIAL ASSETS ......................................................................................................
18 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES ..................................................................
19
INTANGIBLE ASSETS ..................................................................................................................
20 PROPERTY AND EQUIPMENT ..................................................................................................
21 GOODWILL ...................................................................................................................................
22 OTHER ASSETS ............................................................................................................................
23 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ...............................................................
24 PROVISIONS ................................................................................................................................
25
LONG-TERM DEBT ......................................................................................................................
26 SHARE CAPITAL ..........................................................................................................................
27 CAPITAL MANAGEMENT ...........................................................................................................
28 DIVIDENDS ...................................................................................................................................
29 STATEMENTS OF CASH FLOWS ...............................................................................................
30 RELATED PARTY TRANSACTIONS ...........................................................................................
31 CONTINGENT LIABILITIES .........................................................................................................
F-16
F-16
F-27
F-28
F-30
F-34
F-36
F-37
F-39
F-42
F-42
F-43
F-43
F-47
F-50
F-51
F-52
F-53
F-54
F-55
F-56
F-58
F-59
F-59
F-60
F-61
F-62
F-63
F-63
F-65
F-65
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-16
1 BASIS OF PRESENTATION
WSP Global Inc. (together with its subsidiaries, the “Corporation” or “WSP”) is a professional services consulting firm which
provides technical expertise and strategic advice to clients in the Transportation & Infrastructure, Property & Buildings,
Earth & Environment, Power & Energy, Resources (including mining and oil and gas) and Industry sectors. The Corporation
also offers highly specialized services in project and program delivery and advisory services. The address of its main
registered office is 1600 René-Lévesque Blvd. West, Montreal, Quebec, Canada.
The common shares of the Corporation are listed under the trading symbol “WSP” on the Toronto Stock Exchange (“TSX”).
STATEMENT OF COMPLIANCE
These consolidated financial statements have been prepared in compliance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board (“IASB”). These financial statements were prepared on a
going concern basis, on a historical cost basis, except for certain financial assets and liabilities (including investments in
securities and derivative instruments), liabilities for share unit plans, and contingent consideration, which are measured at
fair value, and defined benefit liabilities, which are measured as the net total of the present value of the defined benefit
obligations minus the fair value of plan assets.
These financial statements were approved by the Corporation’s Board of Directors on March 9, 2022.
2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements, unless otherwise stated in note 3, Accounting policy developments.
CONSOLIDATION, JOINT ARRANGEMENTS AND ASSOCIATES
These consolidated financial statements include the accounts of the Corporation and its subsidiaries.
Non-controlling interests represent equity interests in subsidiaries owned by outside parties. The share of net assets of
subsidiaries attributable to non-controlling interests is disclosed as a component of equity. Their share of net earnings and
comprehensive income is recognized directly in equity. Changes in the parent Corporation’s ownership interest in
subsidiaries that do not result in a loss of control are accounted for as equity transactions.
SUBSIDIARIES
Subsidiaries are all entities over which the Corporation has control. The Corporation controls an entity when the
Corporation is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
obtained by the Corporation. They are deconsolidated from the date that control ceases.
Intercompany transactions, balances and unrealized gains and losses on transactions between the Corporation's companies
are eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform to the Corporation’s
accounting policies.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-17
The table below lists the Corporation's most significant subsidiaries for each fiscal year ended December 31, based on
revenues. The Corporation held 100% of the interest in all the subsidiaries listed below.
2021
2020
Entity
WSP USA Inc.
WSP Canada Inc.
WSP UK Ltd
WSP Australia Pty Ltd
WSP Sverige AB
Golder Associates Ltd
WSP New Zealand Ltd
WSP USA Solutions Inc.
JOINT ARRANGEMENTS
Country of
incorporation
US
Canada
UK
Australia
Sweden
Canada
New Zealand
US
Entity
WSP USA Inc.
WSP UK Ltd
WSP Sverige AB
WSP Canada Inc.
WSP Australia Pty Ltd
WSP New Zealand Ltd
WSP USA Buildings Inc.
WSP USA Solutions Inc.
Country of
incorporation
US
UK
Sweden
Canada
Australia
New Zealand
US
US
Joint arrangements are classified as either joint operations or joint ventures. The determination of whether an arrangement
is a joint operation or joint venture is based on the rights and obligations arising from the contractual obligations between
the parties to the arrangement. Joint arrangements that provide the Corporation with the rights to the individual assets and
obligations arising from the arrangement are classified as joint operations and joint arrangements that provide the
Corporation with rights to the net assets of the arrangement are classified as joint ventures.
The interests in joint operations are recognized by the Corporation by recording its share of the assets, liabilities, revenues,
costs and cash flows using the most recent financial statements of these joint operations.
The interests in joint ventures are accounted for using the equity method and included in other assets in the statements of
financial position. The carrying amount of investments in joint ventures is tested for impairment as described below under
the caption “Impairment of long-lived assets”.
ASSOCIATES
Associates are all entities over which the Corporation has significant influence but not control or joint control. Investments
in associates are accounted for using the equity method and included in other assets in the statements of financial position.
The carrying amount of investments in associates is tested for impairment as described below under the caption
“Impairment of long-lived assets”.
FOREIGN CURRENCY
The consolidated financial statements are presented in Canadian dollars, which is the Corporation’s functional currency.
Items included in the financial statements of each of the Corporation’s subsidiaries are measured using the currency of the
primary economic environment in which the entity operates (i.e. the functional currency). Foreign currency transactions are
translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets
and liabilities not denominated in the functional currency of an entity are recognized in net earnings, except when deferred
in other comprehensive income as qualifying for net investment hedges. Foreign exchange gains and losses that relate to
borrowings and cash are disclosed within finance expenses.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-18
Assets and liabilities of entities with functional currencies other than the Canadian dollar are translated at the period-end
rates of exchange, and the results of their operations are translated at average rates of exchange for the period. The resulting
changes are recognized in accumulated other comprehensive income in equity as currency translation adjustments.
SEGMENT REPORTING
Segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is responsible for allocating resources and assessing the performance of the reportable
segments and has been identified as the global leadership team (“GLT”). The Corporation is managed through four reportable
segments: Canada, Americas (USA and Latin America), EMEIA (Europe, Middle East, India and Africa) and APAC (Asia Pacific –
comprising Asia, Australia and New Zealand).
REVENUE RECOGNITION
The Corporation derives revenues from the delivery of engineering services. If the Corporation has recognized revenues, but
not issued an invoice, then the entitlement to consideration is recognized as a contract asset presented as costs and
anticipated profits in excess of billings on the Corporation’s consolidated statement of financial position. The contract asset
is transferred to trade receivables when the invoice is issued indicating that the entitlement to payment has become
unconditional. If payments are received, or invoices are issued to a customer, prior to the rendering of services, the
Corporation recognizes a contract liability under the caption billings in excess of costs and anticipated profits on the
Corporation’s consolidated statement of financial position. The contract liability is transferred to revenues once related
services have been rendered.
Revenues are measured based on the consideration specified in a contract with a customer. The Corporation typically
recognizes revenues over time, using an input measure, as it fulfills its performance obligations in line with contracted
terms.
A performance obligation is a promise in the contract to transfer a distinct good or service to the customer. A contract’s
transaction price is allocated to each distinct performance obligation and recognized as revenues when, or as, the
performance obligations are satisfied. Most of the Corporation’s contracts have a single performance obligation as the
promise to transfer individual goods or services is not separately identifiable from other promises in the contracts and,
therefore, not distinct. Any modifications or variations to contracts in progress are assessed to determine if they fall under
the scope of the existing contract performance obligation or form part of a new performance obligation.
The Corporation's revenues are derived mainly from three types of contracts, which are described below, and the
Corporation disaggregates its revenues by market sector and client category, as described below.
Revenues (and profits) from cost-plus contracts with ceilings and from fixed-price contracts are recognized progressively
based on a percentage-of-completion method, whereby the percentage of revenues earned to date is estimated using an
input measure, usually as the ratio of contract costs incurred to date to total estimated costs.
Revenues (and profits) from cost-plus contracts without stated ceilings are recognized when costs are incurred and are
calculated based on billing rates for the services performed.
Certain costs incurred by the Corporation for subconsultants and other expenses are recoverable directly from customers
and are billed to them. These charges are included in revenues and costs (under the caption subconsultants and direct costs)
when the Corporation controls the goods or services before they are transferred to the customer. The value of goods and
services purchased by the Corporation when acting as a purchasing agent for a customer are not recorded as revenues and
costs.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-19
The effects of revisions to estimated revenues and costs, including the impact from any modifications or variations to
contracts in progress, are recorded when they represent enforceable rights of the Corporation and amounts can be
reasonably estimated. These revisions can occur at any time and could be significant. Where total estimated contract costs
exceed total estimated contract revenues, the expected loss is recognized as an expense immediately via a provision for
losses to completion, irrespective of the stage of completion and based on a best estimate of forecast results including, where
appropriate, rights to additional income or compensation (e.g. award or incentive fees).
The Corporation's main market sectors, as disclosed in note 7, Revenues, are: Transportation & Infrastructure, Property &
Buildings, Earth & Environment, Resources (including mining, oil and gas), Power & Energy and Industry.
The Corporation's main client categories are public and private sector clients. Revenues generated from contracts where the
end user of services provided is identified to be a public sector entity are classified as public sector revenues. Entities
controlled by any branch of government are considered public sector entities. Revenues generated from contracts where the
end user of services provided is not identified as a public sector entity are classified as private sector revenues.
Revenues are shown net of value-added tax and after eliminating sales within the Corporation.
PERSONNEL COSTS
Personnel costs include various payroll costs relating to the delivery of consulting services and projects and administrative
salaries, such as finance, information technologies, human resources and communications.
SUBCONSULTANTS AND DIRECT COSTS
Subconsultants and direct costs include subconsultant costs and other direct costs incurred to deliver consulting services
and that are recoverable directly from clients.
OTHER OPERATIONAL COSTS
Other operational costs include but are not limited to fixed costs, such as non-recoverable client services costs, technology
costs, professional services costs and insurance.
ACQUISITION, INTEGRATION AND REORGANIZATION COSTS
Acquisition, integration and reorganization costs include, among others, the following costs, if and when incurred:
•
•
•
•
•
•
Transaction costs related to business acquisitions, successful or not;
Costs of integrating newly acquired businesses following the date of acquisition;
Gains or losses on disposals of non-core assets;
Outsourcing program costs pertaining mainly to redundancy and transition costs resulting from the outsourcing of
the Corporation's infrastructure or other functions;
Restructuring costs; and
Severance costs stemming from adjustments to cost structures.
The above list may be adjusted, from time to time, when it is deemed appropriate to highlight other items under this caption
to assist users in understanding the financial performance of the Corporation.
LEASE ACCOUNTING
The Corporation leases various office premises and equipment under lease agreements. Lease terms are negotiated on an
individual basis, contain a wide range of terms and conditions and usually can be renewed at market rates.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-20
The majority of leases are recognized as right-of-use assets, with a corresponding liability at the date at which the leased
asset is available for use by the Corporation. Lease payments are allocated between the liability and finance cost. The finance
cost is charged to the statement of earnings over the lease period using the effective interest rate method. The right-of-use
asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Lease extension and
termination options are included in the lease term only when it is reasonably certain that the Corporation will exercise the
option.
Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of
the following lease payments:
•
•
•
•
•
fixed payments (including in-substance fixed payments and fixed payments for any extension options included in
the lease term), less any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the Corporation under residual value guarantees;
the exercise price of a purchase option if the Corporation is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the Corporation exercising that option.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives received;
any initial direct costs; and
any obligations to incur restoration costs.
The lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the relevant incremental borrowing rate.
Payments associated with short-term leases and leases of low-value assets are recognized on a straight-line basis as an
expense in the Corporation’s statement of earnings. Short-term leases have a lease term of twelve months or less. Low-value
asset leases comprise mostly computer equipment and small items of office furniture.
FINANCIAL INSTRUMENTS
CLASSIFICATION AND MEASUREMENT
Financial assets and financial liabilities are initially recognized at fair value, and their subsequent measurements are
dependent on their classification. Financial assets are classified and measured at amortized cost or fair value through profit
or loss (“FVTPL”) based on how the Corporation manages the financial instruments and the contractual cash flow
characteristics of the financial asset.
The table below summarizes the classification and measurement of the Corporation’s financial instruments:
Financial assets
Cash, cash equivalents and restricted cash
Amortized cost
Trade receivables, other receivables, amounts due from joint ventures and associates
Amortized cost
Investments in securities
Derivative financial instruments
FVTPL
FVTPL
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-21
Financial liabilities
Accounts payables and accrued liabilities
Dividends payable to shareholders
Borrowings under credit facility and bank overdrafts
Consideration payable related to business acquisitions
Derivative financial instruments
Amortized cost
Amortized cost
Amortized cost
Amortized cost or FVTPL
FVTPL
Financial assets and liabilities classified as amortized cost are subsequently measured using the effective interest rate
method less any impairment loss.
Changes in fair value are recorded in net financing expenses in the statement of earnings.
Financial liabilities are derecognized when the obligation specified in the contract is discharged, canceled or expired.
EXPECTED CREDIT LOSSES
The Corporation applies the simplified approach to measuring expected credit losses for all trade receivables and contract
assets (costs and anticipated profits in excess of billings). Therefore, the Corporation does not track changes in credit risk,
but instead recognizes a loss allowance at an amount equal to the lifetime expected credit losses at each reporting date. The
factors that the Corporation considers to classify trade receivables as credit-impaired are as follows: the customer is in
bankruptcy or under administration, payments are in dispute, or payments are past due.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk
characteristics. The contract assets, which are costs and anticipated profits in excess of billings, have substantially all the
same risk characteristics as the trade receivables for the same types of contracts. The Corporation has therefore concluded
that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.
The Corporation considers a financial asset in default when contractual payments are between 0-60 days past due, depending
on the various economic and asset-specific factors, or if it becomes probable that a customer will enter bankruptcy. A
financial or contract asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
DEFERRED FINANCING FEES
Deferred financing fees are capitalized and amortized over the expected life of the credit facility agreement.
DETERMINATION OF FAIR VALUE
The fair value of a financial instrument is the amount of consideration that would be agreed to be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date. Subsequent to
initial recognition, the fair values of financial instruments that are quoted in active markets are based on closing prices for
financial assets and financial liabilities. When independent prices are not available, fair values are determined by using
valuation techniques that refer to observable market inputs and minimizing the use of unobservable inputs.
OFFSETTING FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position when
there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or
realize the asset and settle the liability simultaneously.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-22
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently
re‑measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is
designated as a hedging instrument, and if so, the nature of the item being hedged. The Corporation designates certain
derivatives as either:
(a) hedges of the fair value of recognized assets and liabilities or a firm commitment (fair value hedge);
(b) hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction
(cash flow hedge); or
(c) hedges of a net investment in a foreign operation (net investment hedge).
The Corporation documents at the inception of the transaction the relationship between hedging instruments and hedged
items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Corporation
also documents its assessment, both at hedge inception and on an on-going basis, of whether the derivatives that are used in
hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in net earnings
together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
Cash flow hedge
The effective portion of the change in the fair value of the derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in
net earnings.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss.
However, when a forecasted transaction that is hedged results in the recognition of a non-financial asset, the gains and
losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the
asset.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is
ultimately recognized in net earnings. When a forecasted transaction is no longer expected to occur, the cumulative gain or
loss that was reported in equity is immediately transferred to net earnings.
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in other
comprehensive income. The gain or loss relating to the ineffective portion is recognized in net earnings.
Gains and losses accumulated in equity are transferred to net earnings if a foreign operation is disposed of, partially or in its
entirety.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-23
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand and with banks and short-term deposits with a maturity of three months
or less at the date of acquisition, which are subject to an insignificant risk of changes in value. For the purposes of the cash
flow statement, cash and cash equivalents are net of bank overdraft.
TRADE RECEIVABLES
Trade receivables are amounts due from customers for the rendering of services in the ordinary course of business. Trade
receivables are classified as current assets if payment is due within one year or less. Trade receivables are recognized initially
at fair value and subsequently measured at amortized cost, less allowance for expected credit losses.
INVESTMENTS IN SECURITIES
Investments in securities are accounted for at fair value with unrealized gains or losses recognized in net earnings.
Investments in securities are included in other financial assets.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at historical cost less accumulated depreciation and accumulated impairment losses.
Historical cost includes expenditures that are directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated
with the item will flow to the Corporation and the cost of the item can be measured reliably. All other repairs and
maintenance costs are charged to net earnings during the period in which they are incurred.
Land is not depreciated. Depreciation on other assets is calculated using the methods described below to allocate their cost to
their residual values over their estimated useful lives. The estimated useful lives, residual values and depreciation methods
are reviewed at each reporting period, with the effect of any changes in estimates accounted for on a prospective basis.
The following table summarizes the depreciation methods, rates and periods used:
Category
Method
Rate or period
Buildings
Leasehold improvements
Furniture and equipment
Computer equipment
Straight-line or declining balance
Straight-line
Straight-line or declining balance
Straight-line or declining balance
25 to 50 years or 2% to 4%
Shorter of lease term or useful life
3 to 10 years
3 to 8 years
The gain or loss arising on the disposal or retirement of an item of property and equipment is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognized in net earnings within other operational
costs.
INTANGIBLE ASSETS
Intangible assets consist of software, customer relationships, contract backlogs and trade names. Intangible assets acquired
in business acquisitions are recognized separately from goodwill and are initially recognized at their fair value as at the
acquisition date. Intangible assets are carried at cost less accumulated amortization and accumulated impairment losses.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-24
Software, contract backlogs, customer relationships and certain trade names are considered intangible assets with finite
useful lives. Based on the strength, long history and expected future use, certain trade names are indefinite-lived intangible
assets. The useful life of intangible assets that are not being amortized is reviewed each reporting period to determine
whether events and circumstances continue to support an indefinite useful life assessment. If not, the change in the
assessment from indefinite to finite will be accounted for as a change in accounting estimate.
Intangible assets are amortized on a straight-line basis over the following periods:
Category
Software
Contract backlogs
Customer relationships
Finite-lived trade names
Period
3 to 7 years
1 to 9 years
2 to 14 years
3 to 8 years
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets with finite useful lives are reviewed for impairment when events or circumstances indicate that the
carrying amount may not be recoverable. Indefinite-lived assets are not subject to amortization but are tested for
impairment on an annual basis as at the first day of the Corporation's fourth quarter, or more frequently if events or
circumstances indicate that the carrying value may not be recoverable. Impairment exists when the recoverable amount of
an asset is less than its carrying value. The recoverable amount is the higher of the asset’s fair value less costs to sell
("FVLCS") and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (a cash-generating unit or “CGU”). The amount of impairment loss, if any, is the excess
of the carrying value over its recoverable amount. Assets other than goodwill that have suffered impairment are reviewed
for indicators of possible reversal of the impairment at each reporting date.
GOODWILL
Goodwill represents the excess of the consideration transferred for the acquired businesses over the estimated fair value at
the acquisition date of net identifiable assets acquired. Goodwill is not subject to amortization and is carried at cost less
accumulated impairment loss but is tested for impairment on an annual basis or more frequently if events or circumstances
indicate that it might be impaired.
For the purpose of impairment testing, goodwill is allocated to each CGU or group of CGUs expected to benefit from the
synergies of the combination. CGUs to which goodwill has been allocated are tested for impairment annually as at the first
day of the Corporation's fourth quarter, or more frequently if events or circumstances indicate that the carrying value may
not be recoverable. If the higher of the CGU's FVLCS or value in use is less than its carrying amount, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU
pro rata on the basis of the carrying amount of each asset. An impairment loss recognized for goodwill cannot be reversed in
a subsequent period.
TRADE PAYABLES
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Trade
payables are classified as current liabilities if payment is due within one year or less. Trade payables are recognized initially
at fair value and subsequently measured at amortized cost.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-25
PROVISIONS
Provisions represent liabilities of the Corporation for which the amount or timing is uncertain. Provisions are recognized
when the Corporation has a present legal or constructive obligation as a result of past events, it is probable that an outflow
of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized
for future operating losses. When the Corporation expects some or all of a provision to be reimbursed, for example, under an
insurance contract, and when the reimbursement is virtually certain, the expected reimbursement is recognized as a
separate asset. The expense relating to any provision is presented in the consolidated statements of earnings, net of any
reimbursement receivable recognized. Provisions are measured at the present value of the expected expenditures to settle
the obligation, including legal fees, using a discount rate that reflects current market assessments of the time value of money
and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.
LONG-TERM INCENTIVE PLANS (“LTIPs”)
The Corporation has in place LTIPs for key management personnel under which stock options, cash-settled performance
share units (“PSUs”), cash-settled deferred share units ("DSUs") and cash-settled restricted share units ("RSUs") have been
and can be issued. Stock options, PSUs and RSUs vest over time in accordance with the terms of the grant. DSUs vest when
granted. The cash-settled LTIP instruments (PSUs, DSUs and RSUs) are measured at fair value based on the Corporation's
share price at the end of each reporting period and recorded in current and non-current liabilities, over the vesting period.
Stock options are valued at fair value using a Black-Scholes pricing model at grant date and recorded in contributed surplus
over the vesting period.
INCOME TAXES
Income taxes are recognized in net earnings except to the extent related to a business combination, or items recognized in
other comprehensive income or directly in equity.
Current tax expense is the expected tax payable or receivable on taxable income or loss for the period, calculated using tax
rates and laws that were enacted or substantively enacted for the reporting period. It may also include adjustments for prior
periods.
The Corporation follows the liability method when accounting for income taxes. Under this method, deferred income tax
assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between
the financial statement carrying values of existing assets and liabilities and their respective tax bases. This approach also
requires the recording of deferred income tax assets related to operating losses and tax credit carry forwards. Deferred
income tax assets and liabilities are measured using enacted or substantively enacted income tax rates applicable when
temporary differences and carry forwards are expected to be recovered or settled. Deferred income taxes are not recognized
for the initial recognition of goodwill, the initial recognition of assets or liabilities that affects neither accounting nor taxable
profit or loss, and temporary differences related to investments in subsidiaries and joint ventures where the Corporation
controls the reversal of the temporary difference and reversal is not expected in the foreseeable future.
Deferred income tax assets for unused tax loss carry forwards and deductible temporary differences are only recognized
when it is probable that there will be future taxable profits against which the assets can be utilized. Deferred income tax
assets are reviewed at each reporting period and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Deferred income tax assets and liabilities are classified as non-current. They are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and they relate to income taxes levied by the same taxation
authority on either the same taxable entity or different entities where there is an intention to settle the balance on a net
basis.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-26
As tax legislation is complex and subject to interpretation, in determining current and deferred income taxes, the
Corporation takes into account the impact of uncertain tax positions and whether additional taxes and penalties may be due.
The Corporation values uncertain income tax positions based on the probability of whether tax authorities with full
knowledge of all relevant information will accept the Corporation's tax treatments. This assessment, based on judgment,
requires estimates and assumptions considering facts and circumstances existing as at the reporting period. Estimates are
reviewed each reporting period and updated, based on new information available.
GOVERNMENT GRANTS AND INVESTMENT TAX CREDITS (ITCs)
Government grants and ITCs are recognized where there is reasonable assurance that the grant or ITCs will be received and
all attached conditions will be complied with.
Government grants intended to compensate an expense item are recognized in net earnings on a systematic basis over the
periods that the related costs are expensed.
ITCs are subject to examination and approval by regulating authorities, and, therefore, the amounts granted may differ from
those recorded. ITCs determined to be earned by the Corporation are recorded as a reduction of the operating expenses
incurred.
PENSION SCHEMES
The Corporation maintains a number of defined contribution schemes and contributions are charged to net earnings in the
period in which they are due.
In addition, the Corporation operates defined benefit schemes which require contributions to be made to separately
administered funds. The cost of providing benefits under defined benefit schemes is determined separately for each scheme
using the projected unit credit actuarial valuation method. Current service costs, past service costs, curtailment costs and
settlement costs along with interest costs which are based on a notional charge based on scheme liabilities during the year,
less expected returns on scheme assets, are charged to net earnings. Actuarial gains and losses are fully recognized in equity
through other comprehensive income as they arise. The consolidated statement of financial position reflects the schemes’
surplus or deficit as at the consolidated statement of financial position date.
SHARE CAPITAL
Issuance costs directly attributable to the issuance of shares are recognized as a deduction from equity, net of income tax
effects.
DIVIDENDS
Dividends on common shares of WSP Global Inc. are recognized in the Corporation’s consolidated financial statements in the
period in which the dividends are declared.
EARNINGS PER SHARE
Basic earnings per share are determined using the weighted average number of shares outstanding during the period.
Diluted earnings per share are determined using the weighted average number of shares outstanding during the period, plus
the effects of dilutive potential shares outstanding during the period. The calculation of diluted earnings per share follows
the treasury stock method.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-27
3 ACCOUNTING POLICY DEVELOPMENTS
NEW ACCOUNTING STANDARDS EFFECTIVE IN 2021
The following amendments to existing standards were adopted by the Corporation on January 1, 2021 and had no material
impacts on the Corporation’s consolidated financial statements.
CONFIGURATION OR CUSTOMIZATION COSTS IN A CLOUD COMPUTING ARRANGEMENT
(IAS 38 INTANGIBLE ASSETS)
In April 2021, the IFRS Interpretations Committee ("IFRIC") finalized its agenda decision Configuration or Customization Costs in
a Cloud Computing Arrangement (IAS 38 Intangible Assets), which clarified customers' accounting for configuration or
customization costs related to cloud computing arrangements. As set out in the IFRIC agenda decision, costs incurred in
configuring or customizing software in a cloud computing arrangement can only be recognized as intangible assets if the
activities create an intangible asset that the entity controls and the intangible asset meets the recognition criteria.
Management finalized its assessment of the impact of this agenda decision and concluded that costs related to the cloud-
based ERP system recently initiated by the Corporation does not meet the criteria for capitalization and accordingly, these
costs, along with other implementation costs, are expensed as incurred.
INTEREST RATE BENCHMARK REFORM - PHASE 2
In August 2020, the IASB issued Phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 to address issues that arise
from the implementation of the interest rate benchmark reforms, including the replacement of one benchmark with an
alternative one. The Phase 2 amendments require an entity to prospectively cease to apply the Phase 1 reliefs to a non
contractually specified risk component at the earlier of when changes are made to the non contractually specified risk
component, or when the hedging relationship is discontinued. No end date was provided in the Phase 1 amendments for risk
components. The Phase 2 amendments provide additional temporary reliefs from applying specific IAS 39 and IFRS 9 hedge
accounting requirements to hedging relationships directly affected by IBOR reform.
RECENT STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET
EFFECTIVE AND NOT APPLIED
CLASSIFICATION OF LIABILITIES AS CURRENT OR NON-CURRENT
In January 2020, IASB issued a narrow-scope amendment to IAS 1 - Presentation of Financial Statements, which clarifies that the
classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting
period. Classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a
liability or events after the reporting date. The amendment also clarifies what IAS 1 means when it refers to the ‘settlement’
of a liability. The amendment is effective for the Corporation's annual reporting period beginning on January 1, 2023, with
earlier application permitted. The Corporation is assessing the potential impact of this amendment.
ONEROUS CONTRACTS – COST OF FULFILLING A CONTRACT
In May 2020, the IASB issued Onerous Contracts - Cost of Fulfilling a Contract, which includes amendments to IAS 37 - Provisions,
Contingent Liabilities and Contingent Assets. The amendments specify which costs a company should include as the cost of
fulfilling a contract when assessing whether a contract is onerous. The 'cost of fulfilling' a contract comprises the 'costs that
relate directly to the contract'. Costs that relate directly to a contract can either be incremental costs of fulfilling that
contract or an allocation of other costs that relate directly to fulfilling contracts. The amendments are effective for the
Corporation's annual reporting period beginning on January 1, 2022. The Corporation has concluded its current accounting
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-28
policies are in line with the amended standard and therefore this amendment will have no impact on its consolidated
financial statements.
4 CRITICAL ACCOUNTING ESTIMATES
AND JUDGMENTS
The preparation of the financial statements requires Management to make judgments, assumptions and estimates in
applying the Corporation's accounting policies. The estimates and judgments that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Estimates and assumptions are continually evaluated and are based on historical trends and other factors, including
expectations of future events that are likely to materialize under reasonable circumstances. Actual results will differ from
estimates used, and such differences could be material.
In 2021, governments worldwide continued to revise guidance and restrictions related to the COVID-19 pandemic. Many
measures enacted in 2020 and 2021 to combat the spread of the novel strain of coronavirus have caused material disruption
to businesses, resulting in an economic slowdown in certain regions and industries. Management's estimates and judgments
considered the uncertainties and economic implications of the COVID-19 pandemic on the Corporation's business, financial
performance and financial position. However, despite Management's efforts to estimate the economic implications of the
current health crisis, the uncertainty surrounding the COVID-19 pandemic could generate, in future reporting periods, a
significant risk of material adjustment to the carrying amounts of the following: revenue recognition, including estimated
losses on revenue-generating contracts, goodwill and other long-lived asset impairment, leases, deferred income tax assets
and litigation and claims. At the date of publication of these consolidated financial statements, it is not possible to reliably
estimate the length and severity of these developments and their potential impact on the Corporation's financial results,
conditions and cash flows.
REVENUE RECOGNITION
The Corporation values its costs and anticipated profits in excess of billings based on the time and materials charged into
each project and estimated future costs and total revenues. Recognition of revenues and contract assets involves estimates of
costs required to complete the project. On a monthly basis, Management reviews the costs incurred to date and the
estimated costs to complete for each project to determine whether the amount recognized as contract assets is an accurate
estimate of the amount that the Corporation has earned on its projects. Where the review determines that the value of costs
and anticipated profits in excess of billings exceed the amount that has been earned, adjustments are made to the contract
assets. Changes in the estimate of costs required to complete projects could lead to reversals of revenues.
IDENTIFIABLE INTANGIBLE ASSETS AND GOODWILL
Identifiable intangible assets and goodwill, excluding software, represented $5,241.2 million of total assets on the
consolidated statement of financial position as at December 31, 2021 ($3,939.3 million as at December 31, 2020). These assets
arise out of business combinations and the Corporation applies the acquisition method of accounting to these transactions.
Management uses significant estimates and assumptions in measuring the fair value of the assets acquired and the liabilities
assumed and estimating their useful lives. Significant estimates include expected cash flows, economic risk and weighted
average cost of capital.
Intangible assets related to business combinations and recognized separately from goodwill are initially recognized at their
fair value at the acquisition date and are mostly amortized with determined finite lives. Management uses judgment to
identify indefinite-lived intangible assets. If actual useful lives are shorter than estimated, the Corporation may be required
to accelerate amortization or recognize an impairment charge.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-29
For the purposes of assessing impairment, Management exercises judgment to identify independent cash inflows to
determine CGUs. The fair value of CGUs are determined using significant estimates including the applicable discount rate and
the expected future cash flows. The inputs used in the discounted cash flows model are Level 3 inputs (inputs not based on
observable market data). Management applies judgment to identify indicators of possible impairment or reversal of
impairment at each reporting date.
LEGAL CLAIMS PROVISIONS
In the normal course of business the Corporation faces legal proceedings for work carried out on projects. The Corporation
has professional liability insurance (subject to certain self retention thresholds) in order to manage risks related to such
proceedings. Management uses judgment to assess the potential outcomes of claims and estimates the claims provisions,
based on advice and information provided by its legal advisors and on its own past experience in the settlement of similar
proceedings. Claims provisions include litigation costs and also take into account indemnities. Final settlements could have a
material effect on the financial position or operating results of the Corporation.
RETIREMENT BENEFIT OBLIGATIONS
The present value of obligations is calculated on an actuarial basis which depends on a number of assumptions relating to the
future. These assumptions include discount rates, inflation rates and life expectancy. The key assumptions are assessed
regularly according to market conditions and data available to Management. Additional details and sensitivity analyses are
given in note 9, Pension schemes.
INCOME TAX PROVISION
The Corporation is subject to income tax laws and regulations in several jurisdictions. There are many transactions and
calculations for which the ultimate tax determination is uncertain. The Corporation recognizes liabilities for anticipated tax
audit issues on the basis of amounts expected to be paid to the tax authorities. Where the final tax outcome of these matters
is different from the amounts that were initially provisioned, such differences will impact the current and deferred income
tax assets and liabilities in the period in which such determination is made. Management periodically evaluates positions
taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
DEFERRED INCOME TAX ASSETS
Management exercises judgment in the assessment of the probability of future taxable income, to estimate the extent to
which deferred income tax assets can be realized. Estimates are based on the Corporation’s most recent approved budget
forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax
loss or credit. The tax rules and tax planning strategies in the numerous jurisdictions in which the Corporation operates are
carefully taken into consideration. Management uses judgment to assess specific facts and circumstances to evaluate legal,
economic or other uncertainties.
GOVERNMENT ASSISTANCE AND ITCs
The Corporation benefits from certain government assistance programs in the different jurisdictions where it operates,
including scientific research and experimental development tax credit programs. In preparing claims, judgment is required
in interpreting the regulations related to these programs, determining if the operations of the Corporation qualify and
identifying quantifying eligible expenses. These claims are subject to examination and audit by local tax authorities, who
may disagree with interpretations made by the Corporation. Management estimates the amounts receivable under these
programs. Final settlements following examinations and audits could be different from amounts recorded and could have a
material effect on the financial position or operating results of the Corporation.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-30
LEASES
The Corporation uses judgment to establish the lease term based on the conditions of the lease and whether it is reasonably
certain that it will exercise any extension or termination options. When the implicit interest rate of a lease is not readily
available, the Corporation is required to use its incremental borrowing rate (“IBR”), which is generally the case. The
determination of the IBR requires the use of various assumptions. The Corporation uses judgment to determine if a lease
modification which increases the scope of a lease should be accounted as a separate lease. Such determination requires the
use of judgment to determine if the increase in lease payments is commensurate to the change in scope.
The Corporation applies estimates to assesses whether a right-of-use asset is impaired, particularly when it expects to vacate
an office space, including the ability to sublease the assets or surrender the lease and recover its costs. The Corporation
examines its lease conditions as well as local market conditions and estimates its recoverability potential for each vacated
premise.
5 BUSINESS ACQUISITIONS
Acquisitions are accounted for using the acquisition method, and the operating results are included in the consolidated
financial statements from the date of acquisition. If the initial accounting for a business combination is incomplete by the
end of the reporting period in which the combination occurs, the Corporation will report provisional amounts for the items
for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, and
additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed
at the acquisition date that, if known, would have affected the amounts recognized at that date.
The measurement period is the period from the date of acquisition to the date the Corporation obtains complete information
about facts and circumstances that existed as of the acquisition date, up to a maximum of one year.
2021 TRANSACTIONS
GOLDER ASSOCIATES
On April 7, 2021, WSP closed the acquisition of 100% of the voting shares of Enterra Holdings Ltd., the holding company of
Golder Associates (“Golder” and the “Golder Acquisition”). Golder is a global consulting firm with approximately 7,000
employees and 60 years of experience in providing earth sciences and environmental consulting services. The transaction
included purchase consideration totalling $1,251.5 million and repayment of long-term debt of $235.0 million, as detailed
below. The resulting aggregate cash outflow in connection with the Golder Acquisition was $1.5 billion (US$1.2 billion).
The Golder Acquisition and other related transaction costs were financed using the proceeds from the Corporation's
previously closed $310.0 million private placements of subscription receipts with GIC Pte. Ltd. (“GIC”) and British Columbia
Investment Management Corporation (“BCI”), and new bank financing term loans entered into on January 29, 2021. More
details of the private placements and bank financing are disclosed in note 26, Share capital and note 25, Long-term debt.
The Corporation has not yet completed its fair value assessment of all assets acquired and liabilities assumed in connection
with the Golder Acquisition. The most significant aspects remaining to be finalized relate to the valuation of right-of-use
assets and lease liabilities and claims provisions. Consequently, the table below presents Management's preliminary
assessment of the fair values of the assets acquired and the liabilities assumed. The final determination of the fair values will
be made within 12 months of the acquisition date. Accordingly, the following values are subject to change and such changes
may be material.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-31
Intangible assets identified relate primarily to customer relationships. Management applied the excess earnings method
using discounted cash flow models to value customer relationships acquired. Management's significant estimates and
assumptions in applying this methodology included forecast revenues and margins attributable to the customer
relationships (in excess of backlog), rates of attrition and discount rates.
Preliminary
Recognized amounts of identifiable assets acquired and liabilities assumed
Assets
Cash and cash equivalents
Trade receivables and other receivables
Income taxes receivable
Cost and anticipated profits in excess of billings (note 16)
Prepaid expenses
Right-of-use assets (note 18)
Property and equipment (note 20)
Software (note 19)
Intangible assets related to acquisitions (note 19)
Deferred income tax assets (note 13)
Other financial and non-financial assets
Liabilities
Accounts payable and accrued liabilities
Billings in excess of costs and anticipated profits (note 16)
Lease liabilities (note 18)
Long-term debt (note 29)
Provisions (note 24)
Income taxes payable
Deferred income tax liabilities (note 13)
Fair value of identifiable assets and liabilities assumed
Goodwill (note 21)
Total purchase consideration
Repayment of long-term debt
Cash and cash equivalents acquired
Net cash disbursements
$
115.4
220.1
5.9
122.8
13.2
160.3
70.3
3.0
357.6
2.0
4.5
(220.4)
(52.9)
(202.9)
(240.9)
(45.7)
(10.4)
(61.2)
240.7
1,010.8
1,251.5
235.0
1,486.5
(115.4)
1,371.1
Goodwill is attributable to the workforce of the acquired business and the synergies expected to arise with the Corporation
after the acquisition. None of the goodwill recognized as at December 31, 2021 is expected to be deductible for income tax
purposes.
The trade receivables acquired had a fair value of $184.0 million and gross contractual amount of $195.2 million.
The acquired business contributed revenues of $1,169.4 million and net earnings of $50.9 million from April 7, 2021 to
December 31, 2021.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-32
OTHER ACQUISITIONS IN 2021
In 2021, the Corporation concluded several other individually immaterial acquisitions. In January 2021, WSP acquired tk1sc, a
240-employee mechanical, electrical and plumbing engineering firm based in California, US. In February 2021, WSP acquired
Earth Consulting Group, Inc., a 90-employee US-based environmental and engineering consulting firm. In April 2021, WSP
acquired b+p baurealisation, a 100-employee engineering and consulting firm based in Zurich, Switzerland. In June 2021, WSP
acquired Knight Partners, LLC, a 150-employee engineering and consulting firm based in Chicago, US. In October 2021, WSP
acquired Englekirk Structural Engineers, a 90-employee consulting firm based in California, US. These acquisitions were
financed using WSP's available cash and credit facilities.
The table below presents Management's assessments of the fair values of the assets acquired and the liabilities assumed as at
December 31, 2021, including any adjustments recognized during the subsequent measurement periods. For certain
acquisitions, the final determinations of the fair values has been completed as at December 31, 2021, while for others, the
final assessments of the fair values will be completed after the values of the assets and liabilities have been definitively
determined. Accordingly, the following values are subject to change and such changes may be material.
These acquisitions were not individually material, therefore the Corporation has chosen to disclose the required information
in aggregate.
Preliminary
Recognized amounts of identifiable assets acquired and liabilities assumed
Assets
Cash
Trade receivables and other receivables
Cost and anticipated profits in excess of billings (note 16)
Right-of-use assets (note 18)
Property and equipment (note 20)
Software (note 19)
Deferred income tax assets (note 13)
Other financial assets
Liabilities
Accounts payable and accrued liabilities
Billings in excess of costs and anticipated profits (note 16)
Lease liabilities (note 18)
Long-term debt (note 29)
Provisions (note 24)
Deferred income tax liabilities (note 13)
Fair value of identifiable assets and liabilities assumed
Goodwill (note 21)
Total purchase consideration
Cash acquired
Consideration payable
Net cash disbursements
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
$
9.3
46.4
3.3
15.9
4.5
0.6
1.3
3.7
(35.6)
(1.3)
(18.3)
(6.3)
(4.8)
(1.9)
16.8
124.9
141.7
(9.3)
(34.2)
98.2
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-33
Goodwill is attributable to the workforce of the acquired businesses and the synergies expected to arise with the Corporation
after the acquisitions. $47.6 million of the goodwill recognized as at December 31, 2021 is expected to be deductible for
income tax purposes.
The trade receivables acquired had a fair value of $44.8 million and gross contractual amount of $48.7 million.
The acquired businesses contributed revenues of $188.1 million and net earnings of $31.7 million from their respective
acquisition dates to December 31, 2021.
2020 TRANSACTIONS
In 2020, the Corporation concluded a few individually immaterial acquisitions. In January 2020, WSP acquired LT
Environmental Inc., a 140-employee environmental consulting firm based in Colorado, US. In December 2020, WSP acquired
kW Mission Critical Engineering, a 175-employee engineering firm based in New York State, US, serving the data center
market. These acquisitions were financed using WSP's available cash and credit facilities.
The table below presents Management's preliminary assessment of the fair values of the assets acquired and the liabilities
assumed as at December 31, 2020, any adjustments recognized during the subsequent measurement periods and the final
determinations of the fair values as at December 31, 2021.
The final determination of the fair values required some adjustments to the preliminary assessments as shown below. The
Corporation has not restated the consolidated statement of financial position as at December 31, 2020 as the adjustments
were deemed not material. The Corporation also determined that the net impact on the net earnings as a result of these
adjustments was not material for the year ended December 31, 2020, and as such, they were accounted for in the
consolidated statement of earnings for the year ended December 31, 2021.
These acquisitions were not individually material, therefore the Corporation has chosen to disclose the required information
in aggregate.
Preliminary
Adjustments
Fair value of identifiable assets and liabilities assumed
Goodwill
Total purchase consideration
Cash acquired
Consideration payable
Net cash disbursements
$
15.0
132.0
147.0
(9.4)
(28.0)
109.6
$
14.4
(14.4)
Final
$
29.4
117.6
—
147.0
(0.4)
7.5
7.1
(9.8)
(20.5)
116.7
Goodwill is attributable to the workforce of the acquired businesses and the synergies expected to arise with the Corporation
after the acquisitions. $82.3 million of the goodwill recognized is expected to be deductible for income tax purposes.
The trade receivables acquired had a fair value of $34.6 million and gross contractual amount of $34.3 million.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-34
6 OPERATING SEGMENTS
SEGMENTED INFORMATION
The Corporation manages its business by geographic region. The Corporation's operating segments represent countries, or
groups of countries, in which it operates. The Corporation has four reportable segments: Canada, Americas (USA and Latin
America), EMEIA (Europe, Middle East, India and Africa) and APAC (Asia Pacific, comprising Asia, Australia and New Zealand).
Management has applied the following judgments to aggregate certain operating segments:
•
•
•
Americas - The operating segments of USA and Latin America are in the same geographic region of the Americas and
have been aggregated as the Latin America operating segment does not meet any of the quantitative thresholds to
be reported separately.
EMEIA - The operating segments of UK, Nordic countries and Central European countries have been aggregated as
these segments have similar products and services, the same types of customers and operate in similar economies.
The Middle East, India and Africa operating segments have also been aggregated in EMEIA as they do not meet any
of the quantitative thresholds to be reported separately.
APAC - The operating segments of Australia and New Zealand have been aggregated as these segments have similar
products and services, the same types of customers and operate in similar economies. The Asia operating segment
has also been aggregated in APAC as it does not meet any of the quantitative thresholds to be reported separately
and it is part of the same geographic region.
The Corporation's global leadership team ("GLT") assesses the performance of the reportable segments based on net
revenues and adjusted EBITDA by segment. Adjusted EBITDA by segment excludes items such as business acquisition,
integration and reorganization costs, and head office corporate costs, which are not considered when assessing the
underlying financial performance of the reportable segments. Head office corporate costs are expenses and salaries related
to centralized functions, such as global finance, legal, human resources and technology teams, which are not allocated to
segments. This measure also excludes the effects of financial expenses, depreciation, amortization and income taxes.
Sales between segments are carried out on terms equivalent to arm's length transactions and are eliminated upon
consolidation.
The net revenues reported to the GLT are derived from revenues net of subconsultant and direct costs, which are measured
in a similar manner as in the consolidated statements of earnings, and exclude intersegmental net revenues.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-35
The tables below present the Corporation’s operations based on reportable segments, for the years ended December 31:
Revenues
Less: Subconsultants and direct costs
Net revenues
Adjusted EBITDA by segment
Head office corporate costs
Depreciation and amortization
Acquisition, integration and reorganization costs
ERP implementation costs (note 3)
Net financing expenses, excluding interest income
Share of depreciation and taxes of associates
Earnings before income taxes
Revenues
Less: Subconsultants and direct costs
Net revenues
Adjusted EBITDA by segment
Head office corporate costs
Depreciation and amortization
Acquisition, integration and reorganization costs
Net financing expenses, excluding interest income
Share of depreciation and taxes of associates
Earnings before income taxes
Canada
$
Americas
$
1,690.3
3,955.7
(385.8)
(1,246.5)
1,304.5
2,709.2
EMEIA
$
3,070.2
(541.8)
2,528.4
APAC
$
2021
Total
$
1,562.9
10,279.1
(235.4)
(2,409.5)
1,327.5
7,869.6
272.0
533.1
370.3
246.3
1,421.7
(99.2)
(518.5)
(60.8)
(6.8)
(81.9)
(9.4)
645.1
2020
Total
$
APAC
$
1,334.0
8,803.9
(178.2)
(1,944.8)
1,155.8
6,859.1
Canada
$
Americas
$
1,141.7
(189.6)
952.1
3,448.4
(1,075.6)
2,372.8
EMEIA
$
2,879.8
(501.4)
2,378.4
183.2
436.2
316.9
202.7
1,139.0
(85.3)
(476.3)
(103.4)
(78.7)
(9.4)
385.9
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-36
GEOGRAPHIC INFORMATION
The Corporation's revenues are allocated to geographic regions based on the country of operation, as follows, for the years
ended December 31:
US
Canada
UK
Sweden
Australia
Other
2021
$
3,697.2
1,690.3
1,165.6
733.0
820.7
2,172.3
10,279.1
2020
$
3,284.1
1,141.7
1,116.1
710.4
642.2
1,909.4
8,803.9
Right-of-use assets, property and equipment, goodwill and intangible assets are allocated in the following countries, as at
December 31:
US
Canada
UK
Other
2021
$
2,526.9
1,866.2
529.0
1,615.2
6,537.3
2020
$
2,025.9
1,185.6
459.7
1,545.4
5,216.6
7 REVENUES
The tables below present the Corporation’s disaggregated revenues by market sector and client category, for the years ended
December 31:
Market sector
Transportation & Infrastructure
Earth & Environment
Property & Buildings
Power & Energy
Resources
Industry
Client category
Public sector
Private sector
Canada
$
Americas
$
540.4
681.5
294.1
55.6
98.5
20.2
2,185.8
1,025.9
419.3
117.0
198.1
9.6
EMEIA
$
1,440.2
379.1
982.2
184.0
11.1
73.6
APAC
$
723.5
274.0
444.7
48.9
65.4
6.4
2021
Total
$
4,889.9
2,360.5
2,140.3
405.5
373.1
109.8
1,690.3
3,955.7
3,070.2
1,562.9
10,279.1
587.8
1,102.5
1,690.3
2,537.0
1,418.7
3,955.7
1,696.8
1,373.4
3,070.2
851.5
711.4
5,673.1
4,606.0
1,562.9
10,279.1
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-37
2020
Total
$
4,878.2
1,182.9
1,930.4
358.0
325.4
129.0
Canada
Americas
EMEIA
$
499.2
217.8
275.7
44.6
59.6
44.8
$
$
2,237.6
1,434.6
593.2
294.7
95.8
217.1
10.0
264.1
933.9
175.4
3.0
68.8
APAC
$
706.8
107.8
426.1
42.2
45.7
5.4
1,141.7
3,448.4
2,879.8
1,334.0
8,803.9
462.9
678.8
2,530.2
918.2
1,141.7
3,448.4
1,689.4
1,190.4
2,879.8
758.0
576.0
1,334.0
5,440.5
3,363.4
8,803.9
Market sector
Transportation & Infrastructure
Earth & Environment
Property & Buildings
Power & Energy
Resources
Industry
Client category
Public sector
Private sector
In 2021, 72% of the revenues were generated from cost-plus contracts with ceilings and fixed-price contracts and 28% from
cost-plus contracts without stated ceilings (70% and 30%, respectively, in 2020).
8 LONG-TERM INCENTIVE PLANS ("LTIPs")
The Corporation maintains a long-term incentive plan for certain employees under which stock options can be issued. The
Corporations also maintains long-term incentive plans for certain employees under which cash-settled performance share
units (“PSUs”), cash-settled deferred share units ("DSUs") and cash-settled restricted share units ("RSUs") can be issued.
STOCK OPTIONS
Options granted under the stock option plan, to officers and employees, may be exercised during a period not exceeding ten
years from the grant date. Options vest, at latest, three years after the grant date. Any unexercised options expire at the
earlier of one month after the date a beneficiary ceases to be an employee or the expiration date of the stock option.
Number of stock options exercised during the year ended December 31
2021
217,774
Exercise price range of stock options exercised during the year ended December 31
$35.12 to $121.18
Stock options outstanding as at December 31
Vested stock options outstanding as at December 31
614,972
349,230
Exercise price range of stock options outstanding as at December 31
$41.69 to $134.28
2020
46,414
$35.45 to $57.98
705,971
459,515
$35.12 to $70.71
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-38
The fair value of stock options at grant date was measured using the Black-Scholes option pricing model. The historical share
price of the Corporation’s common shares is used to estimate expected volatility, and government bond rates are used to
estimate the risk-free interest rate. For options granted during the years ended December 31, 2021 and 2020, the following
table illustrates the inputs used in the measurement of the grant date fair values of the stock options:
Expected stock price volatility
Dividend
Risk-free interest rate
Expected option life
Fair value – weighted average of options issued
2021
22 %
1.17%-1.24%
0.95%-1.5%
6.2
$23.62
2020
24 %
2.64%
1.12%
10
$16.07
During the year ended December 31, 2021, the Corporation recorded stock-based compensation expense of $3.5 million
($3.2 million in 2020) in personnel costs.
PSUs, RSUs and DSUs
The PSUs are settled in cash and vest after three years if the Corporation meets certain performance targets. The RSUs are
settled in cash and vest after three years. The DSUs are settled in cash and vest immediately when granted but their
settlement is deferred until employment with the Corporation is terminated for any reason other than for cause.
The compensation expense and corresponding liability for these awards is measured using the market value of the
Corporation's share price, the Corporation's expected performance vis-a-vis targets, and other factors, as applicable, and is
recorded as an expense over the vesting period for PSUs and RSUs and as granted for DSUs.
At the end of each financial reporting period, changes in the Corporation’s payment obligation due to changes in the market
value of the Corporation's common shares on the TSX, or changes in the number of units based on the expected
Corporation’s performance and other factors, as applicable, are recorded as an expense or recovery.
The Corporation recorded an expense of $97.1 million during 2021 ($63.4 million in 2020) related to the PSUs, RSUs and DSUs
in personnel costs. As at December 31, 2021, there were 810,230 PSUs, RSUs and DSUs outstanding and the cumulative
obligation liability stood at $145.1 million (947,237 and $92.8 million, respectively, as at December 31, 2020). The intrinsic
value of the liability for all share unit plans for which the participants' right to cash had vested as at December 31, 2021 was
$97.7 million ($54.9 million as at December 31, 2020).
The Corporation enters into derivative financial instruments with Canadian financial institutions to limit the Corporation's
exposure to the variability of LTIP-based units caused by fluctuations in its common share price. The value of the derivative
financial instruments fluctuates in accordance with the movement of the Corporation's common share price and are
classified as FVTPL. As such, they are measured at fair value on the consolidated statement of financial position and the
mark-to-market gain or loss pertaining to derivative financial instruments is recorded in personnel costs. In 2021, the mark-
to-market gain recorded in personnel costs amounted to $41.2 million ($30.4 million in 2020). As at December 31, 2021, the
Corporation had derivatives outstanding for 710,000 of its common shares.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-39
9 PENSIONS SCHEMES
Pension costs included in personnel costs consist of the following for the years ended December 31:
Current service cost of defined benefit pension schemes
Employer contributions to defined benefit pension schemes
Employer contributions to defined contribution pension schemes
2021
$
9.0
12.8
155.0
176.8
2020
$
9.7
13.1
127.4
150.2
The Corporation operates both defined contribution and defined benefit pension schemes. Defined contributions are charged
to net earnings as incurred.
In the UK, there are six separate defined benefit schemes, all of which are closed to new members. The assets of the schemes
are held separately from those of the Corporation in independently administered funds.
In Sweden, a portion of a multi-employer and collectively-bargained defined benefit plan is recognized on the Corporation’s
consolidated statement of financial position as a defined benefit plan. Accrual of service costs under this arrangement ceased
in 2008 when the Corporation began insuring new accruals with an insurance company. This portion of the plan accounted
for as a defined benefit plan relates to the historical accruals prior to 2008, which are unfunded.
The benefits within the collectively-bargained plan in Sweden which are insured with an insurance company are considered
a multi-employer plan. Since the insurance company is not able to specify the portion of their insurance assets which are set
aside to meet each and every individual employers’ share of pension obligation, it is treated as a defined contribution scheme
in the Corporation's consolidated financial statements.
In the US, the Corporation maintains a deferred compensation plan under which a portion of employees’ compensation is
deferred and invested in financial assets held in a trust (included in financial assets as disclosed in note 22, Other assets). The
financial assets held in a trust are for the ultimate benefit of the employees but are available to the Corporation’s creditors in
the event of insolvency.
For funded and unfunded defined benefit plans, any deficit of the fair value of plan assets over the present value of the
defined benefit obligation is recognized as a liability in the consolidated statement of financial position. Actuarial gains and
losses are recognized in full as they arise in other comprehensive income. These gains and losses reflect changes in actuarial
assumptions, and differences between actuarial assumptions and what has actually occurred.
The actuarial costs charged to the consolidated statements of earnings in respect of defined benefit plans may consist of
current service cost, net interest on defined benefit liability (asset), past service costs and costs of curtailments.
The liabilities of the Corporation arising from defined benefit obligations and their related current service cost are
determined using the projected unit credit method. Valuations are performed annually. Actuarial advice is provided by both
external consultants and actuaries. The actuarial assumptions used to calculate the benefit obligations vary according to the
economic conditions of the country in which the plan is located and are set out below.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-40
The main assumptions used to calculate the liabilities related to defined benefit obligations and their related current service
cost were as follows as at and for the years ended December 31:
UK
Rate of increase in pension payments
Discount rate
Inflation assumption
Life expectancy at age 65 (for member currently aged 65)
– Men
– Women
Sweden
Discount rate
Inflation assumption
Life expectancy at age 65 (for member currently aged 65)
– Men
– Women
US
Discount rate
2021
2020
2.15% to 3.30%
1.80 %
3.05% to 3.45%
2.00% to 2.85%
1.50 %
2.45% to 2.95%
87.9
90.1
1.90 %
2.25 %
87.0
89.0
87.9
90.1
1.20 %
1.50 %
87.0
89.0
1.45% to 2.15%
0.65% to 1.40%
The fair values by major categories of plan assets pertaining to the UK defined benefits pension schemes were as follows, as
at December 31:
Equities
Bonds
Liability-driven investments
Other
$
66.5
48.3
85.9
64.5
2021
%
25
18
33
24
Amounts recognized in the statements of financial position are as follows, as at December 31:
Fair value of plan assets (UK)
Present value of funded obligations (UK)
Deficit (UK)
Present value of unfunded obligations (Sweden)
Present value of unfunded obligations (US)
Pension liability
$
59.4
52.1
75.2
75.0
2021
$
265.2
(277.4)
(12.2)
(53.6)
(147.1)
(212.9)
2020
%
23
20
29
28
2020
$
261.7
(296.1)
(34.4)
(59.4)
(138.6)
(232.4)
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
Amounts recognized in the consolidated net earnings were as follows, for the years ended December 31:
Current service cost
Past service cost
Total service costs
Interest expense
Expected return on plan assets
Net financing expense on pension liabilities
2021
$
9.0
—
9.0
6.4
(4.0)
2.4
Changes in the present value of the defined benefit obligation are as follows for the years ended December 31:
Present value of obligation – beginning balance
Current service cost
Past service cost
Contributions from scheme members
Benefits paid
Interest expenses
Actuarial losses - changes in assumptions
Actuarial losses - changes in experience adjustments
Exchange differences
Present value of obligation – ending balance
Changes in the fair value of plan assets are as follows, as at December 31:
Fair value of plan assets – beginning balance
Expected return on plan assets
Contributions from scheme members
Contributions from employer
Benefits paid
Actuarial gain (experience)
Exchange differences
Fair value of plan assets – ending balance
2021
$
494.1
9.0
—
0.1
(24.5)
6.4
4.2
0.4
(11.6)
478.1
2021
$
261.7
4.0
0.1
12.8
(9.2)
0.3
(4.5)
265.2
F-41
2020
$
9.7
0.9
10.6
8.7
(4.7)
4.0
2020
$
438.0
9.7
0.9
0.2
(24.8)
8.7
43.8
10.7
6.9
494.1
2020
$
224.6
4.7
0.2
13.1
(8.4)
24.1
3.4
261.7
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
Net retirement obligations deficit summary, as at December 31:
Fair value of scheme assets
Present value of scheme liabilities
Deficit
2021
$
265.2
(478.1)
(212.9)
F-42
2020
$
261.7
(494.1)
(232.4)
The Corporation’s defined benefit plans expose it to interest risk, inflation risk, longevity risk, currency risk and market
investment risk. Sensitivity analysis of the overall pension deficit as at December 31, 2021 to changes in principal
assumptions is shown below:
Assumption
Discount rate
Inflation rate(1)
Mortality(1)
Change in basis points / years
Increase in pension deficit
- 10 bps
+ 10 bps
+ 1 year
$
6.2
2.3
14.9
(1) Impact on pension deficit of defined benefit plans in UK and Sweden only.
The combined employee and employer contributions to be paid in the year ending December 31, 2022, pertaining to the
Corporation’s defined benefit pension schemes in the UK, are expected to be approximately $11.5 million.
10 ACQUISITION, INTEGRATION AND
REORGANIZATION COSTS
Business acquisition costs
Business integration costs
Restructuring and severance costs stemming from adjustments to cost structures
Gains on disposal of non-core assets
2021
$
11.8
33.9
20.9
(5.8)
60.8
2020
$
18.0
20.8
70.5
(5.9)
103.4
Included in acquisition, integration and reorganization costs in 2021 are employee benefit costs of $20.3 million
($60.6 million in 2020). Other than employee benefit costs, costs relate mainly to legal and professional fees and early
contract termination costs.
11 GOVERNMENT GRANTS
In 2021, the Corporation recorded $14.4 million of government subsidies, recognized in personnel costs ($53.0 million in
2020). There are no unfulfilled conditions or contingencies attached to these grants as at December 31, 2021.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
12 NET FINANCING EXPENSE
Interest expense related to credit facilities and senior unsecured notes
Interest expense on lease liabilities
Net financing expense on pension obligations
Exchange loss on assets and liabilities denominated in foreign currencies
Unrealized (gain) loss on derivative financial instruments
Other interest and bank charges
Gain on investments in securities
Interest income
2021
$
32.7
40.6
2.4
5.2
7.7
7.3
(14.0)
(2.4)
79.5
13 INCOME TAXES
The components of the income tax expense for the years ended December 31, 2021 and 2020 were as follows:
Current income tax expense
Current income tax expense on earnings for the year
Adjustments in respect of prior years
Deferred income tax recovery
Origination and reversal of temporary differences
Impact of changes in substantively enacted income tax rates
Adjustments in respect of prior years
Income tax expense
2021
$
193.9
12.4
206.3
(28.7)
0.1
(6.7)
(35.3)
171.0
F-43
2020
$
35.4
45.9
4.0
8.1
(11.5)
12.6
(15.8)
(5.2)
73.5
2020
$
145.9
(35.0)
110.9
(37.2)
(3.2)
38.0
(2.4)
108.5
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-44
The reconciliation of the difference between the income tax expense using the combined Canadian federal and provincial
statutory income tax rate of 26.5% in 2021 (26.5% in 2020) and the actual effective income tax rate is as follows for the years
ended December 31:
Earnings before income taxes
Income tax expense at the combined Canadian federal
and provincial statutory income tax rate
Changes resulting from:
Foreign income tax rate differences
Non-deductible expenses, net of non-taxable income
Net unrecognized income tax benefits
Adjustments in respect of prior years
Effect of change in income tax rates
Other items
$
645.1
171.0
(16.5)
2.6
8.0
5.7
0.1
0.1
2021
%
26.5
(2.5)
0.4
1.2
0.9
—
—
$
385.9
102.3
(12.8)
3.6
15.7
3.0
(3.2)
(0.1)
171.0
26.5
108.5
2020
%
26.5
(3.3)
0.9
4.1
0.8
(0.8)
(0.1)
28.1
In 2021 and 2020, net unrecognized income tax benefits represented the impact of unrecognized current and prior years
income tax benefits related mostly to foreign subsidiaries where recovery is not considered probable, partly offset by the
recognition of previously unrecognized deferred income tax assets related to certain subsidiaries that generated profits in
the current year.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
The significant components of deferred income tax assets and liabilities were as follows, as at December 31:
F-45
2021
Credited
(charged)
to
statement
of earnings
Credited to
other
compre-
hensive
income
Charged
directly
to equity
Business
acquisitions
Exchange
differences
As at
December
31
As at
January 1
Deferred income tax assets
Deductible provisions upon
settlement
Tax loss carry forwards
Pension schemes
Deferred issuance-related costs
Property and equipment
Leases
Other temporary differences
Deferred income tax liabilities
Costs and anticipated profits in
excess of billings
Holdbacks
Property and equipment
Intangible assets and goodwill
Other temporary differences
$
$
$
$
$
$
$
171.2
30.0
46.8
5.4
19.9
9.6
27.0
309.9
(105.4)
(9.6)
(17.3)
(50.8)
(48.0)
(231.1)
78.8
25.0
(7.3)
(2.8)
(1.4)
(1.1)
1.4
(0.8)
13.0
5.6
(4.3)
9.7
12.5
(1.2)
22.3
35.3
—
—
2.4
—
—
—
0.7
3.1
—
—
—
—
1.6
1.6
—
—
—
3.4
—
—
—
3.4
—
—
—
—
—
—
4.7
3.4
27.6
2.7
—
—
1.5
11.5
3.5
46.8
(1.5)
(5.1)
(7.7)
(89.2)
(1.9)
(105.4)
(58.6)
(4.5)
(1.2)
(1.1)
—
(0.4)
(0.2)
(0.1)
(7.5)
7.8
—
0.1
1.2
0.7
9.8
2.3
219.3
24.2
45.3
7.4
19.9
22.3
30.3
368.7
(93.5)
(19.0)
(15.2)
(126.3)
(48.8)
(302.8)
65.9
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-46
2020
Credited
(charged)
to
statement
of earnings
Credited to
other
compre-
hensive
income
Charged
directly
to equity
As at
January 1
Business
acquisitions
Exchange
differences
As at
December
31
$
$
$
$
$
$
$
147.2
22.2
43.7
0.3
15.9
13.9
35.6
278.8
(95.2)
(7.1)
(10.2)
(69.8)
(41.9)
(224.2)
54.6
16.0
(0.4)
(4.0)
—
3.7
(4.5)
(8.5)
2.3
(2.5)
(1.2)
(7.7)
18.4
(6.9)
0.1
2.4
—
—
6.8
—
—
—
—
6.8
—
—
—
—
1.1
1.1
—
7.5
—
5.1
—
—
—
12.6
—
—
—
—
—
—
7.9
12.6
2.1
—
—
—
—
—
0.1
2.2
0.2
(1.4)
—
0.9
(0.2)
(0.5)
1.7
5.9
0.7
0.3
—
0.3
0.2
(0.2)
7.2
171.2
30.0
46.8
5.4
19.9
9.6
27.0
309.9
(7.9)
(105.4)
0.1
0.6
(0.3)
(0.1)
(7.6)
(0.4)
(9.6)
(17.3)
(50.8)
(48.0)
(231.1)
78.8
Deferred income tax assets
Deductible provisions upon
settlement
Tax loss carry forwards
Pension Plan
Deferred issuance-related costs
Property and equipment
Leases
Other temporary differences
Deferred income tax liabilities
Costs and anticipated profits in
excess of billings
Holdbacks
Property and equipment
Intangible assets and goodwill
Other temporary differences
The deferred income taxes are presented as follows on the consolidated statements of financial position, as at December 31:
Deferred income tax assets
Deferred income tax liabilities
2021
$
165.1
(99.2)
65.9
2020
$
169.2
(90.4)
78.8
As at December 31, 2021, the Corporation had recognized deferred income tax assets of $24.2 million ($30.0 million as at
December 31, 2020) related to tax losses of the current and prior years. The deferred income tax assets are recognized, as the
Corporation believes it is probable that taxable profits will be available in the future against which the tax loss carry
forwards can be utilized.
As at December 31, 2021, the Corporation had $143.4 million ($133.3 million as at December 31, 2020) of unrecognized
deferred income tax assets. Of these, a portion relates to tax loss carry forwards of $324.1 million, of which $52.1 million
expire between 2022 and 2041 and the remainder of which having no expiry ($288.3 million and $36.2 million, respectively,
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-47
as at December 31, 2020) and a portion relates to gross temporary differences with no expiry of $65.2 million ($64.6 million as
at December 31, 2020). Additionally, $40.4 million of unrecognized deferred income tax assets relate to tax credits that expire
between 2027 and 2031 ($38.6 million as at December 31, 2020). The Corporation considers the recovery of those
unrecognized deferred income tax assets as not probable.
As at December 31, 2021, a deferred income tax liability relating to $685.6 million of taxable temporary differences associated
with the undistributed earnings of subsidiaries, has not been recognized as the Corporation controls the timing of the
reversal of these temporary differences and does not expect they will reverse in the foreseeable future ($684.3 million as at
December 31, 2020). Upon distribution of these earnings in the form of dividends or otherwise, the Corporation may be
subject to corporate or withholding income taxes.
14 FINANCIAL INSTRUMENTS
FAIR VALUE
Cash, trade and other receivables, accounts payable, dividends payable to shareholders, bank overdrafts, long-term debt
related to credit facilities and other financial liabilities are financial instruments whose fair values approximate their
carrying values due to their short-term maturity, variable interest rates or current market rates for instruments with fixed
rates.
The fair value hierarchy under which the Corporation’s financial instruments are valued is as follows:
•
•
•
Level 1 includes unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 includes inputs other than quoted prices included in Level 1 that are observable for the assets or liability,
either directly or indirectly;
Level 3 includes inputs for the assets or liability that are not based on observable market data.
The Corporation's senior unsecured notes are financial liabilities carried at amortized costs. As at December 31, 2021, the fair
value of the senior unsecured notes, which is based on unadjusted quote prices (Level 1), was $498.5 million.
As at December 31, 2021 and 2020, fair values of other financial assets and hedges of the Corporation's common shares are
determined under Level 1. Fair values of foreign currency risk based financial instruments, notably foreign currency forward
contracts and cross currency swap agreements, are determined under Level 2.
FINANCIAL RISK MANAGEMENT
The Corporation is exposed to credit risk, foreign currency risk, interest rate risk and liquidity risk. The following analyses
provide a portrait of those risks as at December 31, 2021 and 2020.
CREDIT RISK
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss.
Financial instruments which potentially subject the Corporation to significant credit risk consist principally of cash, trade
receivables, other receivables, derivative financial instruments, investments in securities and amounts due from joint
ventures and associates. Costs and anticipated profits in excess of billings are also evaluated for credit risk using the same
model. The Corporation’s maximum amount of credit risk exposure is limited to the carrying amount of these financial
instruments and contract assets, which is $4,136.2 million as at December 31, 2021 ($3,102.7 million as at December 31, 2020).
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-48
The Corporation’s cash is held with investment-grade financial institutions. Therefore, the Corporation considers the risk of
non-performance on these instruments to be minimal.
The Corporation’s credit risk is principally attributable to its trade receivables and costs and anticipated profits in excess of
billings. The amounts disclosed in the consolidated statements of financial position are net of an allowance for expected
credit losses, estimated by Management and based, in part, on the age of the specific receivable balance and the current and
expected collection trends. Generally, the Corporation does not require collateral or other security from customers for trade
accounts receivable; however, credit is extended following an evaluation of creditworthiness. In addition, the Corporation
performs ongoing credit reviews of all its customers and establishes an allowance for expected credit losses when the
likelihood of collecting the account has significantly diminished. The Corporation believes that the credit risk of trade
accounts receivable is limited. During the year ended December 31, 2021 credit losses amounted to $20.4 million
($42.4 million in 2020).
The Corporation mitigates its credit risk by providing services to diverse clients in various market sectors, countries and
sectors of the economy.
FOREIGN CURRENCY RISK
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in foreign exchange rates.
The Corporation operates internationally and is exposed to currency risks arising from its operating activities denominated
in US dollars, pounds sterling, Swedish krona, Australian dollars, euros, New Zealand dollars, and other currencies as well as
from its net assets in foreign operations. These risks are partially offset by purchases and operating expenses incurred in
these currencies.
The Corporation has investments in foreign operations, whose net assets are exposed to foreign currency risk. This risk is
partly offset through borrowings denominated in the relevant foreign currency. The exchange gains or losses on the net
equity investment of these operations are reflected in the accumulated other comprehensive income account in
shareholders’ equity, as part of the currency translation adjustment.
The Corporation entered into foreign currency forward contracts and options to hedge the variability in the foreign
currency exchange rates of certain currencies against the Canadian dollar. As at December 31, 2021, the net fair market value
gain of these forward contracts and options amounted to $2.7 million, and a gain of $9.6 million was recorded in net earnings
in 2021. The largest hedged currency outstanding as at December 31, 2021 represents a nominal amount of $254 million US
dollars.
The Corporation also entered into interest rate swaps for a nominal amount of $325.0 million US dollars to hedge the
variability in interest rates of its US-dollar denominated debt. The fair market value gain of these interest rate swap
agreements as at December 31, 2021 amounted to $2.0 million and the change in fair value was recorded in other
comprehensive income.
In 2021, the Corporation entered into cross-currency interest rate swaps for a nominal amount of $500.0 million Canadian
dollars to hedge the variability in the USD/CAD currency risk of the Corporation’s net investment in foreign entities having
the USD as their functional currency. The fair market value loss of these cross-currency interest rate swaps agreements as at
December 31, 2021 amounted to $10.3 million and the change in fair value was recorded in other comprehensive income.
The Corporation enters into derivative financial instruments with Canadian financial institutions to limit the Corporation's
exposure to the variability of cash-settled long-term incentive plan (“LTIP”) share unit compensation plans caused by
fluctuations in its common share price. The value of the derivative financial instruments fluctuates in accordance with the
movement of the Corporation's common share price and are classified as fair value through profit or loss. As such, they are
measured at fair value on the consolidated statement of financial position and the mark-to-market gain or loss pertaining to
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-49
derivative financial instruments is recorded in personnel costs. As at December 31, 2021, the Corporation had hedges
outstanding for 710,000 of its common shares, with total fair value of $41.2 million. In 2021, $41.6 million of mark-to-market
gains on LTIP hedging instruments were recorded in personnel costs, which partially offset compensation expense related to
the LTIP.
Taking into account the amounts denominated in foreign currencies and presuming that all of the other variables remain
unchanged, a fluctuation in exchange rates would have an impact on the Corporation’s net earnings and equity.
Management believes that a 10% change in exchange rates could be reasonably possible. The table below summarizes the
impacts on net earnings and other comprehensive income of a 10% weakening or strengthening in exchange rates against
the Canadian dollar, for the years ended December 31:
Net earnings
Other comprehensive income
Net earnings
Other comprehensive income
INTEREST RISK
US dollar
Swedish
krona
Pound
sterling
$
16.6
195.2
$
2.4
143.2
$
6.5
19.7
US Dollar
Swedish
krona
Pound
sterling
2021
Australian
dollar
$
3.6
44.3
2020
Australian
Dollar
$
12.8
140.3
$
3.4
122.0
$
2.6
18.9
$
3.3
16.4
Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market interest rates. The Corporation’s exposure to the risk of changes in market interest rates relates primarily to its
long-term debt and other non-current financial liabilities with floating interest rates. This risk is partially offset by cash held
at variable rates.
A 100-base point change in interest rates would not have a material impact on the Corporation’s net earnings.
LIQUIDITY RISK
Liquidity risk is the risk that the Corporation will encounter difficulties in meeting its obligations as they fall due.
A centralized treasury function ensures that the Corporation maintains funding flexibility by assessing future cash flow
expectations and by maintaining sufficient headroom on its committed borrowing facilities. Borrowing limits, cash
restrictions and compliance with debt covenants are also taken into account.
The Corporation watches for liquidity risks arising from financial instruments on an ongoing basis. Management monitors
the liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom
on its undrawn committed borrowing facilities at all times. WSP has access to committed lines of credit with banks, as
described in note 25, Long-term debt.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-50
The tables below presents the contractual maturities of financial liabilities as at December 31, 2021 and 2020. The amounts
disclosed are contractual undiscounted cash flows.
Carrying
amount
Contractual
cash flows
Less than
a year
Between
1 and 2 years
Accounts payable and accrued liabilities
2,217.3
2,217.3
2,217.3
$
$
$
Dividends payable to shareholders
Lease liabilities
Long-term debt
44.2
1,020.3
1,776.7
5,058.5
44.2
1,249.9
1,853.3
5,364.7
44.2
294.1
326.2
2,881.8
$
—
—
237.5
180.1
417.6
Carrying
amount
Contractual
cash flows
Less than
a year
Between
1 and 2 years
Accounts payable and accrued liabilities
1,718.2
1,718.2
1,718.2
$
$
$
Dividends payable to shareholders
Lease liabilities
Long-term debt
42.5
42.5
1,018.4
1,161.4
574.2
585.0
42.5
261.8
304.8
3,353.3
3,507.1
2,327.3
$
—
—
220.1
260.9
481.0
2021
More than
2 years
$
—
—
718.3
1,347.0
2,065.3
2020
More than
2 years
$
—
—
679.5
19.3
698.8
As at December 31, 2021, the Corporation had amounts available under the credit facility of $1,442.9 million ($1,453.1 million
in 2020), net of outstanding letters of credit of $75.7 million ($77.4 million in 2020). The Corporation's cash and cash
equivalents, net of bank overdraft, as at December 31, 2021 was $926.3 million ($434.7 million in 2020).
15 TRADE AND OTHER RECEIVABLES
As at December 31
Net trade receivables
Other receivables
Derivative financial instruments
Amounts due from joint ventures and associates
2021
$
1,615.2
250.2
46.1
5.3
1,916.8
2020
$
1,311.2
240.9
41.4
5.3
1,598.8
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-51
In applying the simplified approach to measuring expected credit losses, the Corporation does not track changes in credit
risk and therefore does not assign credit risk rating grades to trade receivables. The Corporation does track the aging of
gross trade receivables past due, which was as follows:
As at December 31
Current
Past due 0-30 days
Past due 31-60 days
Past due 61-90 days
Past due 91-180 days
Past due over 180 days
Trade receivables
Allowance for expected credit loss
Net trade receivables
2021
$
629.9
454.0
227.4
106.1
109.2
262.2
1,788.8
(173.6)
1,615.2
2020
$
470.2
385.5
188.3
85.8
110.4
245.0
1,485.2
(174.0)
1,311.2
The Corporation is exposed to credit risk with respect to its trade receivables and maintains provisions for potential credit
losses. Potential for such losses is mitigated because customer creditworthiness is evaluated before credit is extended and no
single customer represents more than 10% of revenues. During the year ended December 31, 2021, credit losses amounted to
$20.4 million ($42.4 million in 2020).
16 CONTRACT BALANCES
Changes in costs and anticipated profits in excess of billings (contract assets) and in billings in excess of costs and anticipated
profits (contract liabilities) are as follows:
Costs and
anticipated
profits in excess
of billings
$
2021
Billings in
excess of costs
and anticipated
profits
$
Costs and
anticipated
profits in excess
of billings
$
2020
Billings in
excess of costs
and anticipated
profits
$
950.5
(708.5)
995.7
(629.0)
—
—
(1,205.5)
1,197.8
—
—
(1,577.6)
1,500.6
9,081.3
(8,973.4)
124.5
(26.5)
1,156.4
—
—
(54.5)
19.6
(751.1)
7,303.3
(7,340.3)
(13.6)
5.4
950.5
—
—
(1.9)
(0.6)
(708.5)
Balance - As at January 1
Increases due to cash received or amounts invoiced
prior to rendering of services
Transfers to revenues once related services have
been deemed rendered
Additions to contract assets through revenues
recognition
Transfers from costs and anticipated profits in
excess of billings to trade receivables
Changes due to business acquisitions and disposals
(note 5)
Effect of exchange rate changes
Balance - As at December 31
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-52
In the year ended December 31, 2021, revenue recognized that was included in contract liability as at January 1, 2021
amounted to $512.1 million ($567.5 million in 2020). In the year ended December 31, 2021, revenue recognized from
performance obligations satisfied or partially satisfied in previous years amounted to $37.6 million ($30.7 million in 2020).
Unfulfilled performance obligations, representing the Corporation's remaining contractual obligations related to signed
cost-plus contracts with ceilings and fixed-price contracts on which work has commenced, amounted to $8,682.5 million as
of December 31, 2021 ($7,326.8 million as at December 31, 2020). Cost-plus contracts without stated ceilings have been
excluded as the full amount of the contracted work cannot be definitively assessed.
Timing of contract execution is subject to many factors outside of the Corporation's control. Project scope changes, client-
driven time lines and customers' project financing are just a few examples of such factors. The Corporation estimates that
approximately 60% of the unfulfilled performance obligations as at December 31, 2021 will unwind over the following
12 months.
17 OTHER FINANCIAL ASSETS
As at December 31
Investments in securities
Other
2021
$
135.6
6.1
141.7
2020
$
116.3
1.8
118.1
Investments in securities include investments in a multitude of mutual funds, based on employees’ investment elections,
with respect to the deferred compensation obligations of the Corporation in the US as disclosed in note 9, Pension schemes.
The fair value of these investments is $123.9 million ($115.5 million in 2020), determined by the market price of the funds at
the reporting date, which are Level 1 inputs (unadjusted quoted prices in active markets for identical assets).
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-53
18 RIGHT-OF-USE ASSETS AND LEASE
LIABILITIES
RIGHT-OF-USE ASSETS
Balance - Beginning of year
Additions through business acquisitions
and measurement period adjustments
Additions
Lease renewals, reassessments and
modifications
Depreciation expense
Utilization of lease inducement
allowances
Exchange differences
Balance - End of year
LEASE LIABILITIES
Balance - Beginning of year
Additions through business acquisitions
and measurement period adjustments
Additions
Lease renewals, reassessments and
modifications
Interest expense on lease liabilities
(note 12)
Payments
Exchange differences
Balance - End of year
Current portion of lease liabilities
Non-current portion of lease liabilities
For the year period ended
December 31, 2021
For the year period ended
December 31, 2020
Real estate Equipment
Total Real estate Equipment
$
$
$
$
$
Total
$
831.4
62.9
894.3
866.8
46.6
913.4
176.2
55.7
30.3
(254.0)
14.1
(23.3)
830.4
7.9
16.9
(44.1)
(11.8)
—
(0.7)
31.1
184.1
72.6
26.0
101.1
(13.8)
(265.8)
51.4
(246.4)
14.1
(24.0)
861.5
17.1
15.4
831.4
—
41.3
(3.6)
(21.9)
—
0.5
62.9
26.0
142.4
47.8
(268.3)
17.1
15.9
894.3
For the year period ended
December 31, 2021
For the year period ended
December 31, 2020
Real estate Equipment
Total Real estate Equipment
$
$
$
$
$
Total
$
963.1
55.3
1,018.4
1,007.9
42.7
1,050.6
220.8
55.7
8.3
16.9
229.1
72.6
26.0
101.1
—
39.2
26.0
140.3
32.8
(41.8)
(9.0)
45.3
(3.6)
41.7
39.7
(290.3)
(27.8)
994.0
241.3
752.7
0.9
(12.9)
(0.4)
26.3
12.9
13.4
40.6
(303.2)
(28.2)
1,020.3
254.2
766.1
43.8
(276.0)
15.0
963.1
210.6
752.5
2.1
45.9
(25.3)
(301.3)
0.2
55.3
22.5
32.8
15.2
1,018.4
233.1
785.3
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
19 INTANGIBLE ASSETS
Balance as at January 1, 2020
Cost
Accumulated amortization
Net value
Additions
Additions through business acquisitions (note 5)
Amortization for the year
Exchange differences
Balance as at December 31, 2020
Balance as at December 31, 2020
Cost
Accumulated amortization
Net value
Additions
Additions through business acquisitions (note 5)
Amortization for the year
Exchange differences
Balance as at December 31, 2021
Balance as at December 31, 2021
Cost
Accumulated amortization
Net value
Contract
backlogs
Customer
relation-
ships
$
$
Trade
names
$
Software
$
187.7
(114.4)
73.3
20.5
1.2
(28.5)
1.6
68.1
192.7
(124.6)
68.1
46.3
3.6
(44.9)
(2.1)
71.0
218.2
(147.2)
71.0
225.7
(160.8)
64.9
0.5
—
(38.0)
0.3
27.7
129.4
(101.7)
27.7
—
46.0
(39.5)
(0.9)
33.3
171.9
(138.6)
33.3
327.5
(164.5)
163.0
—
—
(33.1)
0.1
130.0
255.7
(125.7)
130.0
—
269.5
(49.4)
(4.4)
345.7
486.2
(140.5)
345.7
79.9
(25.7)
54.2
—
—
(5.1)
0.6
49.7
49.7
—
49.7
—
57.1
(5.3)
(1.6)
99.9
105.2
(5.3)
99.9
F-54
Total
$
820.8
(465.4)
355.4
21.0
1.2
(104.7)
2.6
275.5
627.5
(352.0)
275.5
46.3
376.2
(139.1)
(9.0)
549.9
981.5
(431.6)
549.9
The carrying amount of intangible assets assessed as having an indefinite useful life, which consists of the WSP trade name,
is $48.8 million as at December 31, 2021 ($49.7 million in December 31, 2020).
The Corporation performed its annual impairment test for the WSP trade name as at September 25, 2021 and September 26,
2020 in accordance with its policy described in note 2. As a result, no impairment for the WSP trade name was recorded.
In 2021, the Corporation acquired intangible assets amounting to $422.5 million ($22.2 million in 2020), all of which are
subject to amortization.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
20 PROPERTY AND EQUIPMENT
Balance as at January 1, 2020
Cost
Accumulated depreciation
Net value
Additions
Additions through business acquisitions (note 5)
Disposals, including through business disposals
Depreciation for the year
Exchange differences
Balance as at December 31, 2020
Balance as at December 31, 2020
Cost
Accumulated depreciation
Net value
Additions
Additions through business acquisitions (note 5)
Disposals
Depreciation
Exchange differences
Balance as at December 31, 2021
Balance as at December 31, 2021
Cost
Accumulated depreciation
Net value
Freehold
land and
buildings
Leasehold
improve-
ments
Furniture
and
equipment
Computer
equipment
$
$
$
$
31.6
(6.4)
25.2
0.1
—
(1.6)
(0.9)
0.1
22.9
29.2
(6.3)
22.9
0.2
3.5
(1.4)
(0.9)
(0.9)
23.4
30.8
(7.4)
23.4
247.1
(122.0)
125.1
8.9
1.0
(0.1)
(26.8)
(0.1)
108.0
261.9
(153.9)
108.0
18.7
34.5
(0.3)
(29.9)
(1.1)
129.9
279.6
(179.0)
100.6
19.4
1.6
(5.2)
(31.1)
1.3
86.6
296.5
(209.9)
86.6
21.6
27.6
(2.0)
(33.3)
(3.5)
97.0
247.4
(150.6)
96.8
43.7
—
(0.6)
(44.5)
2.0
97.4
277.9
(180.5)
97.4
60.2
9.2
(0.7)
(49.5)
(3.3)
113.3
285.3
(155.4)
129.9
303.5
(206.5)
97.0
304.6
(191.3)
113.3
F-55
Total
$
805.7
(458.0)
347.7
72.1
2.6
(7.5)
(103.3)
3.3
314.9
865.5
(550.6)
314.9
100.7
74.8
(4.4)
(113.6)
(8.8)
363.6
924.2
(560.6)
363.6
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-56
21 GOODWILL
Balance – As at January 1
Goodwill resulting from business acquisitions (note 5)
Measurement period adjustments
Disposals
Exchange differences
Balance – As at December 31
December 31, 2021
December 31, 2020
$
3,731.9
1,135.7
(14.4)
—
(90.9)
4,762.3
$
3,568.8
132.0
10.3
(13.3)
34.1
3,731.9
Goodwill is allocated to the Corporation’s CGUs. The carrying value of goodwill by CGU is identified in the table below:
As at December 31
Goodwill allocated to CGUs
USA
Canada
Nordics
UK
New Zealand
Australia
Central Europe
Asia
Latin America
Middle East
2021
$
1,984.1
1,335.4
363.6
318.7
186.8
271.8
117.5
80.0
53.0
51.4
2020
$
1,560.4
880.3
378.7
325.6
197.8
111.4
96.8
69.6
62.0
49.3
4,762.3
3,731.9
IMPAIRMENT TEST OF LONG-LIVED ASSETS
The Corporation performed its annual impairment test for goodwill and other indefinite-lived intangible assets as at
September 25, 2021 and September 26, 2020 in accordance with its policy described in note 2, Summary of significant
accounting policies. The key assumptions used to determine the fair value for the different CGUs for the most recently
completed impairment calculations for 2021 are discussed below. The Corporation has not identified any indicators of
impairment at any other date and as such has not completed an additional impairment calculation. In 2021 and 2020, the fair
value of each CGU exceeded its carrying value and no goodwill impairment was identified.
VALUATION TECHNIQUE
FAIR VALUE LESS COSTS TO SELL ("FVLCS")
The recoverable amount of each CGU has been determined based on the FVLCS. Fair value measurement is a market-based
measurement rather than an entity-specific measurement. The fair value of a CGU must be measured using the assumptions
that market participants would use rather than those related specifically to the Corporation. In determining the FVLCS of the
CGUs, an income approach using the discounted cash flow methodology was utilized. The inputs used in the discounted cash
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-57
flows model are Level 3 inputs (inputs not based on observable market data). In addition, the market approach was employed
in assessing the reasonableness of the conclusions reached.
INCOME APPROACH
Management has determined that the discounted cash flow (“DCF”) technique provides the best assessment of what each
CGU could be exchanged for in an arm’s length transaction. Fair value is represented by the present value of expected future
cash flows of the business together with the terminal value of the business at the end of the forecast period. The DCF
technique was applied on an enterprise-value basis, where the after-tax cash flows prior to interest expense are discounted
using a weighted average cost of capital (“WACC”). This approach requires assumptions regarding revenue growth rates,
adjusted EBITDA and adjusted EBITDA margins, level of working capital, capital expenditures, tax rates and discount rates.
MARKET APPROACH
It is assumed under the market approach that the value of a Corporation reflects the price at which comparable companies in
the same industry are purchased under similar circumstances. A comparison of a CGU to similar companies in the same
industry whose financial information is publicly available may provide a reasonable basis to estimate fair value. Fair value
under this approach is calculated based on an adjusted EBITDA multiple compared to the average median multiple based on
publicly available information for comparable companies and transaction prices.
SIGNIFICANT ASSUMPTIONS USED IN DETERMINING THE FVLCS
The discount rates and terminal growth rates applied to CGUs in 2021 were the following:
USA
Canada
Nordics
UK
New Zealand
Australia
Asia
Latin America
Central Europe
Middle East
Discount rate
7.50 %
8.25 %
8.00 %
8.25 %
8.25 %
7.50 %
10.25 %
10.00 %
10.50 %
11.00 %
Terminal
growth rate
2.0 %
2.0 %
2.0 %
2.0 %
2.0 %
2.0 %
2.0 %
2.0 %
2.0 %
2.0 %
CASH FLOW PROJECTIONS
The cash flow projections are based on the financial forecast approved by Management and the Board of Directors. These
projections use assumptions that reflect the Corporation’s most likely planned course of action, given Management’s
judgment of the most probable set of economic conditions, adjusted to reflect the expectations of a market participant.
Adjusted EBITDA is based on budgeted values in the first year of the five-year projection period (“projection period”), with
increases over the projection period using an estimated revenue growth rate and anticipated EBITDA efficiency
improvements. The revenue growth rates applied following the first year's projections ranged from 2.0% to 5.0%.
Management considered past experience, economic trends as well as industry and market trends in assessing reasonableness
of financial projections used.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-58
DISCOUNT RATE
The discount rate reflects the current market assessment of the risk specific to comparable companies. The discount rate was
based on the weighted average cost of equity and cost of debt for comparable companies within the industry. The discount
rate represents the after-tax WACC. Determining the WACC requires analyzing the cost of equity and debt separately, and
takes into account a risk premium that is based on the applicable CGU.
TERMINAL GROWTH RATE
Growth rates used to extrapolate the Corporation’s projection were determined using published industry growth rates in
combination with inflation assumptions and the input of each CGU’s management group based on historical trend analysis
and future expectations of growth.
COSTS TO SELL
The costs to sell for each CGU have been estimated at approximately 0.75% of the CGU’s enterprise value. The costs to sell
reflect the incremental costs, excluding finance costs and income taxes, which would be directly attributable to the disposal
of the CGU, including legal and direct incremental costs incurred in preparing the CGU for sale.
SENSITIVITY TO CHANGES IN ASSUMPTIONS
The following analyses are presented in isolation from one another, i.e. all other estimates left unchanged:
A 5% decrease, evenly distributed over future periods, in the expected future net cash inflows would not have resulted in an
impairment of goodwill in any CGU.
An increase of 50 basis points in the discount rates used to perform the impairment tests would not have resulted in an
impairment of goodwill in any CGU.
An decrease of 25 basis points in the terminal growth rates used to perform the impairment tests would not have resulted in
an impairment of goodwill in any CGU.
22 OTHER ASSETS
As at December 31
Investments in associates
Investments in joint ventures
Receivables from insurance companies
Other
2021
$
89.1
28.9
82.8
6.4
207.2
2020
$
85.3
27.8
36.9
0.9
150.9
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-59
23 ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
As at December 31
Trade payables
Employee benefits payable
Accrued expenses and other payables
Sale taxes payable
Derivative financial instruments
Amounts due to joint ventures and associates
24 PROVISIONS
Balance as at January 1, 2021
Additions through business acquisitions
Additional provision recognized
Utilized or reversed
Exchange differences
Balance as at December 31, 2021
Current portion
Non-current portion
2021
$
765.7
875.0
465.5
100.1
10.3
0.7
2020
$
509.1
773.3
307.6
123.7
4.0
0.5
2,217.3
1,718.2
Claims
provisions
$
188.9
32.2
73.0
(61.6)
(5.8)
226.7
56.9
169.8
Other
provisions
$
63.4
18.6
17.4
(11.2)
(1.2)
87.0
20.6
66.4
Total
$
252.3
50.8
90.4
(72.8)
(7.0)
313.7
77.5
236.2
Some of the claims provisioned qualify under the Corporation's insurance coverage for reimbursement and as such
receivables from insurance companies are recorded for certain claims in other receivables (note 15) for current claims and in
other assets (note 22) for long-term claims.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-60
25 LONG-TERM DEBT
As at
December 31, 2021
December 31, 2020
Borrowings under credit facilities
Senior unsecured notes
Bank overdraft
Other financial liabilities
Current portion
Non-current portion
CREDIT FACILITIES
$
1,202.3
500.0
1.1
73.3
1,776.7
297.4
1,479.3
$
510.2
—
2.4
61.6
574.2
296.9
277.3
WSP has in place a US$1,400-million credit facility with a syndicate of financial institutions comprised of:
- a senior unsecured non-revolving term loan of US$200.0 million expiring on December 18, 2022; and
- a senior unsecured revolving credit facility to a maximum amount of US$1,200.0 million with a maturity date of
December 31, 2025.
The amount available under the US$1,400-million credit facility was $1,442.9 million as at December 31, 2021.
On January 29, 2021, the Corporation entered into a credit facility for US$960 million of fully committed bank financing with
up to a 4-year tenor. This US$960-million committed bank financing facility was drawn in the form of term loans with
various maturity dates up to April 2025, to finance a portion of the purchase price of the Golder Acquisition which closed on
April 7, 2021. In April 2021, the Corporation repaid a portion of the indebtedness, such that the maximum amount of the
credit facility became US$750 million. As at December 31, 2021, this US$750 million credit facility was fully drawn.
The US$1,400-million credit facility bears interest at Canadian prime rate, US-based rate, Bankers’ acceptances rate and
LIBOR plus an applicable margin of up to 2.25% that will vary depending on the type of advances. The Corporation pays a
commitment fee on the available unused credit facility.
Under the US$1,400-million credit facility and the US$750-million credit facility, the Corporation is required, among other
conditions, to respect certain covenants on a consolidated basis. The main covenants are in regard to its consolidated funded
debt to consolidated adjusted EBITDA and the interest coverage ratios. Management reviews compliance with these
covenants on a quarterly basis in conjunction with filing requirements under its credit facilities. All covenants have been
met as at December 31, 2021 and December 31, 2020. Borrowings under these credit facilities were entirely denominated in
US dollars as at December 31, 2021 and December 31, 2020.
Under the US$1,400-million credit facility and other facilities, as at December 31, 2021, the Corporation may issue irrevocable
letters of credit up to $938.7 million ($870.7 million under a US$1,600-million facility and other facilities as at
December 31, 2020). As at December 31, 2021, the Corporation issued irrevocable letters of credit totaling $471.6 million
($428.2 million as at December 31, 2020).
As at December 31, 2021, the Corporation had available other operating lines of credit amounting to $183.5 million
($130.5 million in 2020), of which $182.4 million were unused at year end ($128.1 million in 2020).
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-61
SENIOR UNSECURED NOTES
On April 19, 2021, WSP issued senior unsecured notes at par for aggregate gross proceeds of $500 million, due April 19, 2028
(the “Notes”).
The Notes bear interest at a fixed rate of 2.408% per annum, payable semiannually until maturity on the 19th day of April and
October in each year beginning on October 19, 2021. In April 2021, the Corporation used the net proceeds of the offering to
repay existing indebtedness.
The Notes are senior unsecured obligations of WSP, ranked pari passu with all other unsecured and unsubordinated
indebtedness of WSP, issued pursuant to a Trust Indenture, as supplemented by a first supplemental indenture, each dated
April 19, 2021.
26 SHARE CAPITAL
AUTHORIZED
An unlimited number of common shares without par value, voting and participating.
An unlimited number of preferred shares without par value, participating, issuable in series.
ISSUED AND PAID
Balance as at January 1, 2020
Shares issued related to public bought deals and private placements
Shares issued under the Dividend Reinvestment Plan (DRIP)
Shares issued upon exercise of stock options
Balance as at December 31, 2020
Shares issued related to private placements
Shares issued under the DRIP (note 28)
Shares issued upon exercise of stock options
Costs related to public bought deals and private placements of previous periods
Number
105,932,842
6,659,200
895,995
46,414
113,534,451
3,333,898
696,892
217,774
—
Common shares
$
2,752.2
563.2
76.1
2.7
3,394.2
300.8
92.6
13.8
(0.2)
Balance as at December 31, 2021
117,783,015
3,801.2
On January 14, 2021, the Corporation closed a private placement subscription receipt financing. The Corporation issued an
aggregate of 3,333,898 subscription receipts (the “Subscription Receipts”) from treasury at a price of $92.98 per Subscription
Receipt by way of a private placement to each of GIC and BCI, for aggregate gross proceeds of approximately $310.0 million.
Upon completion of the Golder Acquisition on April 7, 2021, each of GIC and BCI received one common share of WSP for each
Subscription Receipt held, plus an amount per common share equal to any dividend payable by WSP on the common shares
between the date of issuance of the Subscription Receipts and the closing of the Golder Acquisition.
As at December 31, 2021, no preferred shares were issued.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-62
27 CAPITAL MANAGEMENT
The Corporation’s primary objectives when managing capital structure are as follows:
• maintain financial flexibility in order to meet financial obligations, to provide dividends, to execute growth plan
and to continue growth through business acquisitions;
• manage the Corporation’s activities in a responsible way in order to provide an adequate return for its shareholders;
and
comply with financial covenants required under the credit facilities.
•
For capital management, the Corporation has defined its capital as the combination of borrowings under credit facilities,
shareholders’ equity and non‑controlling interest, net of cash (net of bank overdraft).
As at December 31
Borrowings under credit facilities
Senior unsecured notes
Equity attributable to shareholders of WSP Global Inc.
Non-controlling interests
Less: Cash and cash equivalents, net of bank overdraft
2021
$
1,202.3
500.0
4,664.5
0.7
6,367.5
(926.3)
5,441.2
2020
$
510.2
—
4,080.4
1.0
4,591.6
(434.7)
4,156.9
The Corporation’s financing strategy is to maintain a flexible structure consistent with the objectives stated above, to
respond adequately to changes in economic conditions and to allow growth organically and through business acquisitions.
The Corporation monitors its capital structure using the consolidated net debt to consolidated adjusted EBITDA ratio. This
ratio is used to determine what the maximum debt level could be.
As at December 31
Long-term debt(1)
Less: Cash and cash equivalents
Net debt
For the years ended December 31
Adjusted EBITDA
Net debt to adjusted EBITDA ratio
(1)
Including current portion.
2021
1,776.7
(927.4)
849.3
2021
1,322.5
2020
574.2
(437.1)
137.1
2020
1,053.7
0.6
0.1
In order to maintain and adjust its capital structure, the Corporation may issue new shares in the market, contract bank
loans and negotiate new credit facilities.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-63
28 DIVIDENDS
In 2021, the Corporation declared dividends of $174.9 million or $1.50 per share ($167.2 million or $1.50 per share in 2020).
DIVIDEND REINVESTMENT PLAN (DRIP)
Under the DRIP, the holders of common shares may elect to have cash dividends reinvested into additional common shares.
The shares to be delivered can be purchased on the open market or issued from treasury at the discretion of Management.
The shares issued from treasury can be issued at a discount of up to 5.0% of the applicable average market price.
Following the payment of dividends declared on November 4, 2020, February 24, 2021, May 12, 2021 and August 10, 2021,
$92.6 million was reinvested in 696,892 common shares under the DRIP during the year ended December 31, 2021. Shares
issued under the DRIP in 2021 and 2020 applied a 2% discount of the applicable average market price.
Subsequent to the end of the year, on January 17, 2022, $22.8 million of the fourth quarter dividend was reinvested in 133,471
additional common shares under the DRIP.
29 STATEMENTS OF CASH FLOWS
CASH AND CASH EQUIVALENTS, NET OF BANK OVERDRAFT
As at December 31
Cash on hand and with banks
Less: Bank overdraft (note 25)
Cash and cash equivalents, net of bank overdraft
2021
$
927.4
(1.1)
926.3
2020
$
437.1
(2.4)
434.7
In 2021, cash disbursed related to acquisitions made prior to January 1, 2021 amounted to $10.6 million ($14.2 million in 2020,
related to acquisitions made prior to January 1, 2020).
ADJUSTMENTS
For the years ended December 31
Depreciation and amortization
Share of income of associates and joint ventures, net of tax
Defined benefit pension scheme expense
Cash contribution to defined benefit pension schemes
Foreign exchange and non-cash movements
Gains on sale of property and equipment
Gains on disposal of non-core assets
Other
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
2021
$
518.5
(19.5)
9.0
(12.8)
(17.1)
(5.8)
(5.6)
(30.1)
436.6
2020
$
476.3
(18.2)
10.6
(13.1)
(11.3)
(1.1)
(5.9)
(20.6)
416.7
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
CHANGE IN NON-CASH WORKING CAPITAL ITEMS
For the years ended December 31
Decrease (increase) in:
Trade, prepaid and other receivables
Costs and anticipated profits in excess of billings
Increase (decrease) in:
Accounts payable and accrued liabilities
Billings in excess of costs and anticipated profits
2021
$
(142.1)
(107.8)
275.2
7.6
32.9
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Balance as at January 1, 2020
Changes from financing cash flows
Addition through business acquisitions
New leases, renewals, modifications
Net repayment of bank overdraft
Foreign exchange rate adjustments
Other non-cash changes
Balance as at December 31, 2020
Changes from financing cash flows
Addition through business acquisitions
New leases, renewals, modifications
Net repayment of bank overdraft
Foreign exchange rate adjustments
Other non-cash changes
Long-term debt
Lease liabilities
$
$
1,399.7
(857.1)
13.9
—
(15.9)
5.3
28.3
574.2
914.1
273.9
—
(1.3)
(1.9)
17.7
1,050.6
(255.4)
26.0
182.0
—
15.2
—
1,018.4
(262.6)
229.1
63.6
—
(28.2)
—
Balance as at December 31, 2021
1,776.7
1,020.3
Dividends
payable to
shareholders
$
39.7
(88.3)
—
—
—
—
91.1
42.5
(80.6)
—
—
—
—
82.3
44.2
F-64
2020
$
141.0
37.0
98.5
77.0
353.5
Total
$
2,490.0
(1,200.8)
39.9
182.0
(15.9)
20.5
119.4
1,635.1
570.9
503.0
63.6
(1.3)
(30.1)
100.0
2,841.2
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-65
30 RELATED PARTY TRANSACTIONS
KEY MANAGEMENT PERSONNEL
Key management includes the Board of Directors, the President and Chief Executive Officer and the members of the GLT. The
following table shows the compensation paid or payable to key management included in personnel costs for the years ended
December 31:
Short-term employee benefits
Share-based awards
2021
$
21.3
41.9
63.2
2020
$
15.5
37.2
52.7
JOINT VENTURES AND ASSOCIATES
The Corporation related parties include its joint ventures and associates. Refer to note 15, Trade and other receivables, and
note 23, Accounts payables and accrued liabilities, for balances receivable and payable from and to these entities.
31 CONTINGENT LIABILITIES
LEGAL PROCEEDINGS
The Corporation currently faces legal proceedings for services performed in the normal course of its business. The
Corporation defends such proceedings and adopts appropriate risk management measures to resolve and prevent such
proceedings. Furthermore, the Corporation secures general and professional liability insurance in order to manage the risks
related to such proceedings. Based on advice and information provided by its legal advisors and on its experience in the
resolution of similar proceedings, Management believes that the Corporation has accounted for sufficient provisions in that
regard and that the final outcome should not exceed the insurance coverage significantly or should not have a material
effect on the financial position or operating results of the Corporation. The claims provision recognized as at December 31,
2021 amounted to $226.7 million ($188.9 million as at December 31, 2020). The movements in this provision are described in
note 24, Provisions.
REGULATORY INVESTIGATION AND ACTION
As a government contractor, the Corporation may be subject to laws and regulations that are more restrictive than those
applicable to non-government contractors. Government scrutiny of contractors’ compliance with those laws and regulations
through audits and investigations is inherent in government contracting, and, from time to time, Management receives
inquiries and similar demands related to the Corporation's ongoing business with government entities. Violations could
result in civil or criminal liabilities as well as suspension or debarment from eligibility for awards of new government
contracts or option renewals.
On December 27, 2019, over 100 plaintiffs filed suit in the US District Court for Washington, DC against a number of US
government contractors, including The Louis Berger Group Inc. and Louis Berger International Inc. (collectively, “LB”),
which the Corporation acquired in December 2018, alleging that between 2009 and 2017 they had violated the Anti-Terrorism
Act. While this lawsuit is in its preliminary stage, the Corporation believes that LB has a strong defense to offer and it intends
to vigorously defend the allegations.
WSP Global Inc.
Consolidated Financial Statements
Annual Report - 2021
As one of the world’s leading professional
services firms, WSP provides strategic advisory,
engineering and design services to clients in
the Transportation & Infrastructure, Earth &
Environment, Property & Buildings, Power &
Energy, Resources, and Industry sectors. WSP’s
global experts include advisors, engineers,
environmental specialists, scientists, technicians,
architects and planners, in addition to other
design and program management professionals.
Our talented people are well positioned to deliver
successful and sustainable projects, wherever our
clients need us.
This Annual Report contains forward-looking statements that reflect our expectations
regarding our future growth, results of operations, performance and business prospects
and opportunities. Forward-looking statements are subject to a number of risks and
uncertainties. Actual events or results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including, but not limited to,
those set forth elsewhere in this Annual Report and listed under the heading “Risk Factors”
in the Management’s Discussion and Analysis for the year ended December 31, 2020. The
discussion of the Corporation's financial position and results of operations contained in
this Annual Report should be read in conjunction with the financial statements for the year
ended December 31, 2021.
WSP Global Inc.
1600 René Lévesque Blvd. West
11th Floor, Montreal, Quebec
Canada H3H 1P9