Purposeful
Growth
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Our 2022 Annual Report – Purposeful
Growth – provides a snapshot of our
evolution in the first year of our 2022-2024
strategic cycle, as we expanded and stayed
true to our purpose of future-proofing
our cities and environment.
This annual report is an interactive PDF and is
designed to be viewed with Adobe Reader and an
Internet connection. The report can also be viewed
offline, but any external links will not be accessible.
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Chairman’s
Message
I am always pleased to report
on WSP’s annual performance,
and 2022 was another
milestone year as we continued
to grow in important areas
of our business.
In this first year of WSP’s
2022-2024 Global Strategic
Action Plan, our performance
exceeded expectations in many
ways and we have already made
significant progress towards
our strategic ambitions, while
recording our best organic
growth in net revenues of the
last decade - a sure sign of our
robust business model.
We benefit significantly from
our experienced leadership
team, who manages our
talented global workforce and
who plays a key role in terms
of consistency and continuity.
On behalf of the Board,
I would like to sincerely thank
our management and dedicated
employees for making WSP
such an exceptional company.
Platform for growth
Building on the strong
foundations of our diversified
platform is the key to our success
as we continue to grow with
purpose. In 2022, we carried
out a number of acquisitions,
including Wood’s Environment
& Infrastructure business, as
well as strategic additions in
the UK, the US, Australia and
Europe, growing our workforce
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by more than 7,000 professionals,
strengthening our leadership
in environmental consulting
and reinforcing our ability to
deliver future-proof work that
will yield a sustainable and
prosperous society.
To support these acquisitions,
we successfully completed an
equity financing for aggregate
gross proceeds of over
$920 million. To the Board, this
was a clear endorsement by our
top institutional shareholders
and the broader investment
community of our plans.
In addition to strengthening
our geographic presence and
service offer, we enhanced
our global client program and
people metrics despite a highly
dynamic job market. Talent
acquisition and retention, as
well as inclusion and diversity
continue to be key areas of focus
for management. As an industry
leader, we aim to hire, train and
retain people who can deliver
high-impact projects for our
clients and communities in
every corner of the world.
As WSP becomes more
complex and diverse,
management is focused on
leveraging the scale of our
global business. By uniting our
people under a strong brand
with a clear sense of purpose
and best in class project delivery
processes, we are creating
an environment in which
they can thrive, work on the
best projects and shape a
compelling career path.
Building on the strong foundations
of our diversified platform is the
key to our success as we continue
to grow with purpose.
As we build on our foundations,
our growth and diversification
underpin our strategic plan
whilst providing resilience to
better manage the complexities
and future of our expanding
business. Our Board is forever
mindful of these opportunities
and challenges.
Good governance
approach
Our talented people are key
success drivers, and their
efforts must be encouraged.
In this regard, good governance
is essential to support the
success and sustainability of
our organization as it fosters
best-in-class practices while
focusing on consistency and
long-term outcomes. It also
promotes a culture of sound
decision-making, accountability
and effective risk management.
Good governance begins in the
boardroom and extends to all
levels of the company.
The Board supports a positive
culture in which health & safety,
inclusion, diversity and ethics
receive equal emphasis alongside
other key operational matters.
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In embracing and promoting
sustainable change, we must
lead by example to inspire and
motivate our people in their
quest for excellence. That way,
we will achieve our goals
against a backdrop of respect
and integrity. These matters are
regularly discussed at Board
meetings and are incorporated
into our oversight of corporate
strategy and risk.
In keeping with our focus
on responsible stewardship,
ESG (Environmental, Social
and Governance) is core to
our business. This is another
recurring item on the Board’s
agenda, as we track progress on
our ESG commitments, including
our ambitious net zero and
GHG (greenhouse gas) reduction
targets. The Board believes
that by providing strong ESG
oversight, it can help to enhance
WSP’s reputation, better manage
its risks, and improve long-term
financial performance.
As our company grows in scale
and complexity, our stakeholders
expect increased transparency
and accountability. Equally, the
Board’s oversight of governance
and risk management continues
to rise in an effort to discharge
our duties in the best interest of
WSP and in a way that maintains
the trust of our stakeholders.
WSP in action
Navigating global challenges
requires experience, vigilance,
resilience and agility. Whilst
engaging these dynamics with
maturity, we will also stay true
to our entrepreneurial mindset
and culture – all drivers of
our success.
Backed by our leadership team,
we are well equipped to pursue
our strategic ambitions with a
view to becoming our industry’s
undisputed leader. We will support
this ambition by always striving
to provide the best professional
service to our clients as we engage
on many of the world’s largest
projects, including the ever-
present challenges to support the
mitigation of climate change.
I am proud and honoured to be
WSP’s chairman. Speaking on
behalf of the Board, I believe
WSP has the experience, vision
and leadership to deliver on our
ambitions. I am grateful to our
employees, clients, shareholders,
investors and other stakeholders
for placing their trust in us as
we strive to build a better world.
CHRIS COLE
CHAIRMAN OF THE BOARD
The Board supports a positive culture in which health
& safety, inclusion, diversity and ethics receive equal
emphasis alongside other key operational matters.
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President and
CEO’s Message
We celebrated a banner year
in 2022 and I am thrilled to
share the considerable progress
we have made in the first year
of our strategic cycle.
As we worked to achieve our
purpose of future-proofing
our cities and environment,
we completed several strategic
acquisitions and delivered on
our financial targets, including
record organic growth in our
net revenues.
Our 2022 achievements also
included reinforcing our ESG and
sustainability commitments,
onboarding an impressive number
of professionals, and elevating our
people and client experience.
Boosting our competitive
advantage
With a long-term vision to
become the undisputed leader in
our industry, and to double in size,
we continued to deliver on our
disciplined acquisition strategy
to expand into new markets,
gain competitive advantage
and acquire new skillsets.
With Wood’s Environment
& Infrastructure business, our
largest acquisition in 2022,
we added 6,000 professionals,
mainly in the US, Canada,
and the UK. By joining forces,
we increased our capabilities
and scale in our Earth and
Environment sector, while
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boosting our expertise
in the fast-growing ESG
services and water sector.
The acquisition of the Capita
REI and GL Hearn businesses
added 1,000 UK-based employees
to our workforce and expanded
our strategic advisory services.
Other acquisitions included
CFA, a climate and finance
consultancy in the US; Madrid-
based BOD, an architecture and
engineering firm; Greencap, an
environmental firm in Australia;
and Odeh Engineers, a structural
engineering firm in the US. In
addition to deepening our local
presence, these transactions
widened our client base and
increased our market share.
The integration processes are
well-underway, and we are
already seeing many wins and
seizing numerous opportunities
from these recent acquisitions.
Early in 2023, we completed two
additional acquisitions announced
in late 2022: BG Consulting
Engineers, one of Switzerland’s
leading engineering consulting
firms, which added 700 experts
in Switzerland and France;
and Australia-based enstruct,
a structural engineering firm.
Strengthening our
ESG commitments
Through our acquisitions,
we continued to significantly
grow our Earth & Environment
sector. With 23,000 experts in this
field, we are now positioned as
the world’s leading environmental
and sustainability consulting firm.
As we make the biggest
sustainability impact via our
clients' work, it is important for
us to lead by example, which
means making ambitious
commitments and setting out
a clear path to achieve them.
To reach our net zero targets, we
launched our Climate Transition
Plan, which sets out ways to
decarbonize our activities. We
are also proud to be among the
leading companies to have our
net zero target approved by the
Science-Based Target initiative.
Contributing to the global
conversation on climate action
and biodiversity, WSP's experts
joined world leaders and
industry professionals at
COP27 and COP15.
We also formalized our
commitment to protecting
biodiversity through our
inaugural Biodiversity Statement.
Drawing on this new set of
guiding principles, we aim
to engage with clients to
protect, restore and enhance
our ecosystems.
As we worked to achieve
our purpose of future-proofing
our cities and environment,
we completed several strategic
acquisitions and delivered on
our financial targets.
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In 2022, our efforts to
accelerate the green transition
gained industry recognition,
through numerous rankings
and ratings, including for our
leadership role in sustainability,
resilience, and climate change
transparency. A detailed update
of our environmental, social
and governance performance
will be included in our 2022
Global ESG Report, expected
to be released in May 2023.
Fostering employee
engagement
Our people drive everything
we do, and we are committed
to making extraordinary efforts
to provide our workforce with
a best-in-class, inclusive work
environment to deliver on
their full potential. To keep our
commitments to our clients,
we also recognize that talent
recruitment and retention are
essential to our success.
Our workforce has grown at
an impressive rate—we began
2022 with 55,300 people and
by the end of the year, we had
66,200 professionals working
under the WSP banner. In the
last few years, we have been
working towards building
a sense of belonging while
championing our culture
and guiding principles.
Knowing how our people
feel is important to us, so
we were pleased with the
participation and quality of
feedback we received in our
2022 global surveys, indicating
that employee engagement is
trending positively. Based
on this feedback, we aim to
continuously improve our
employees’ journey and create
an optimal workplace teeming
with the power of possibility.
To build an even stronger
workforce, and create an
optimal employee experience,
we will continue to emphasize
professional development,
internal promotions, and
succession planning to ensure
leadership continuity and
a strong legacy.
Our people drive everything we do,
and we are committed to making
extraordinary efforts to provide
our workforce with a best-in-class,
inclusive work environment to
deliver on their full potential.
As part of our 2022-2024 Global
Strategic Action Plan, we aim
to reach a 5% increase in the
number of promotions per year,
as well as a 5% year-over-year
increase in the representation
of women and underrepresented
groups1. In 2022, we exceeded
our annual promotion target
and are on track in terms of
increasing the representation of
women and underrepresented
groups in our workforce.
1 This includes business leaders and middle management.
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As we continue to build on
WSP’s strong foundations,
we will focus on integrating,
developing, and caring for our
people; leveraging our collective
expertise; optimizing our ways
of working; and enhancing
our working environment. In
so doing, we will preserve the
entrepreneurial spirit that has
always underpinned our culture,
growth, and success. Meanwhile,
our “non-negotiables”—health
& safety, inclusion & diversity,
and ethics & compliance—will
remain top priorities.
Enhancing our client
experience
It is rewarding for our people
to work with like-minded public
and private clients who share
our goal of moving towards
an inclusive, equitable and net
zero world. For that reason,
we strive to collaborate on
projects that reflect our core
beliefs and principles.
Since we aim to become the
undisputed leader in our
industry, we are committed to
elevating our client partnership
to a new level by fully embracing
our role as a trusted partner.
To ensure we are our clients'
number one choice, we continue
to focus and make headway on
our Global Client Program and
Client Feedback initiatives. In
2022, we grew our key accounts
and boosted client satisfaction.
As part of our 2022-2024 Global
Strategic Action Plan, we aim
for a 5% increase in our client
satisfaction rating each year.
Through our Future Ready®
innovation program, we are
leading a mindset shift towards
developing client solutions while
focusing on long-term resilience
and adaptability. With about
150,000 active projects in a variety
of sectors, we view each one
as an opportunity to contribute
to a low-carbon world and to
accelerate the green transition.
Delivering on our
financial ambitions
Thanks to our collective efforts in
2022, we delivered strong results
that exceeded our expectations,
including our highest organic
growth in net revenues in the last
decade, and a strong backlog level
with substantial order intake.
Revenues and net revenues1
reached $11.93 billion and
$8.96 billion respectively, up 16%
and 14% compared to 2021. At
$1.53 billion, our adjusted EBITDA2
surpassed expectations for the year,
and we recorded a 30 bps increase
in our adjusted EBITDA margin.2
Based on 2022 financial metrics,
we are well on track to reach our
2024 financial ambitions. I am
also pleased to report that we
have exceeded our SDG-Linked
Revenues3 targets, with an
estimated 59% of our revenues
earned from services that
contribute to the UN Sustainable
Development Goals.
During the year, we successfully
gained access to capital through
equity markets to support our
growth strategy and continued
to diversify our shareholder base.
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.
1
Refer to section 8.1, “Net revenues” of WSP’s
Management's Discussion and Analysis for the quarter
and year ended December 31, 2022 (“MD&A”) for a
reconciliation of net revenues to revenues.
2 Adjusted EBITDA is a non-IFRS financial measure
and adjusted EBITDA margin is a non-IFRS ratio,
both without standardized definitions under IFRS,
which may not be comparable to similar measures
or ratios used by other issuers. Refer to section 22,
“Glossary of segment reporting, non-IFRS and other
financial measures”, of WSP’s MD&A for explanations
of the composition and usefulness of this non-IFRS
financial measure and non-IFRS ratio. In 2022,
earnings before net financing expense and income
taxes was $749.1 million. Quantitative reconciliations
of the non-IFRS financial measure to the most directly
comparable IFRS measure are incorporated by
reference to sections 8.3, “Adjusted EBITDA” of WSP’s
MD&A. Adjusted EBITDA margin is defined as adjusted
EBITDA expressed as a percentage of net revenues.
3 We previously reported “Clean Revenues”, which were
defined as revenues earned from services that had
an environmental benefit and contributed to the UN
Sustainable Development Goals (SDGs). In line with
industry practice, we have broadened our definition
and enhanced our methodology to include revenues
earned from services that contribute to any of the
SDGs, and as a result, have renamed this metric
“SDG-Linked Revenues”.
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We are grateful for the support of
our strong institutional investors
who believe in our long-term
strategic vision and are equally
passionate about driving the
green transition, setting us up
on the right path for success.
Pursuing purpose-driven
growth
Looking back on 2022, I take pride
in our collective achievements,
as we reinforced the solid
foundation of our diversified
and resilient platform.
Despite the challenging
macroeconomic context, we
are well positioned to meet the
challenges we will face in 2023.
We are strengthened by a healthy
backlog reflecting the high
demand for our services,
and a dedicated workforce to
deliver on our client projects
around the globe. While we
remain disciplined, we can be
optimistic about our future
as we focus on profitable and
sustainable growth.
Upon this second year of our
strategic cycle, we will continue
our journey, by forging ahead
with an aligned strategy to
optimize our business and
leverage our scale and scope.
I would like to thank everyone
who supported us throughout
this eventful year. I wish to
express my appreciation to our
talent, who delivered successful
outcomes across the globe.
I am also grateful to our clients
for entrusting us with their
business, to our Board for
providing invaluable guidance
and to our shareholders for
subscribing to our vision.
I look forward to the year ahead
and am excited about what
we can achieve together.
ALEXANDRE L’HEUREUX
GLOBAL PRESIDENT AND
CHIEF EXECUTIVE OFFICER
In the second year of our strategic cycle, we will
continue our journey, by forging ahead with an
aligned strategy to optimize our business and
leverage our scale and scope.
2022 ANNUAL REPORT
2022
in Review
In the first year of our 2022-2024
strategic cycle, we forged ahead
with our disciplined acquisition
strategy, made solid progress
on our ESG commitments, and
gained industry recognition, while
delivering future-focused projects
to our clients and communities.
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FEBRUARY 1
WSP Recognized as Industry Mover
in Sustainability by S&P Global
WSP’s ongoing ESG efforts were recognized
in S&P’s 2022 Sustainability Yearbook and
through an Industry Mover Award.
MARCH 9
WSP releases its 2022-2024
Global Strategic Action Plan
The 2022-2024 strategy is designed to guide
the next phase of the WSP's evolution
while setting out a long-term vision and
an aspirational destination.
JUNE 2
WSP Acquires BOD in Spain
WSP acquired Madrid-based BOD Arquitectura
e Ingeniería, expanding its Property & Buildings
service offer and boosting its visibility
in Madrid and across Spain.
JUNE 29
WSP Listed in Best 50 Corporate Citizens
In recognition of its social and environmental
leadership, WSP was included in Corporate
Knights’ 2022 Best 50 Corporate Citizens in
Canada for the second consecutive year.
FEBRUARY 14
WSP Acquires Climate Finance Advisors
The acquisition of this Washington, DC-based
advisory firm specializing in climate-aligned
investments served to underscore WSP's
commitment to providing clients with
sustainable and resilient solutions.
MARCH 23
WSP Publishes its Inaugural TCFD Report
WSP published a standalone report on the
Task Force on Climate-related Financial
Disclosures (TCFD), highlighting how it
is embedding climate-related considerations
into its operations.
JUNE 16
WSP Publishes its Climate Transition Plan
Together with its 2021 Global ESG Report,
WSP published a Climate Transition Plan,
a crucial element of its journey to reducing
GHG emissions, setting out concrete
actions to achieve net zero across
its value chain by 2040.
2022 ANNUAL REPORT
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AUGUST 18
WSP Shines in ENR Rankings
WSP took the #1 spot in ENR Magazine’s List of
Top 225 International Design Firms for the second
year in a row. The firm also achieved leading
positions in Transportation, Buildings, Power,
Hazardous Waste, and Manufacturing.
SEPTEMBER 23
WSP acquires Capita REI and
GL Hearn businesses
Adding some 1,000 experts to our
workforce, this transaction reinforced our
service offer within the UK and expanded
our strategic advisory capabilities.
OCTOBER 26
WSP Receives Net-Zero Target Approval
WSP’s net-zero target was approved under
the Science Based Targets initiative’s new
Net-Zero Standard, positioning it to keep
driving sustainable growth as a core
part of its business.
DECEMBER 7
WSP Unveils its Biodiversity Statement
Ahead of its participation in COP15, the
UN Biodiversity Conference, WSP unveiled
its strong engagement to protect and
restore ecosystems through its biodiversity
statement and a $700,000 donation to the
Nature Conservancy of Canada.
DECEMBER 16
WSP Scores an “A” for
Transparency on Climate Change
Gaining recognition for its leadership in
corporate transparency and climate change
performance by the global environmental
non-profit CDP, WSP secured a place on the
organization’s annual “A List”.
AUGUST 1
WSP Acquires Greencap Holdings
WSP acquired Greencap Holdings Ltd.,
enhancing its expertise in the delivery of
environmental, health and safety, contaminated
land, and remediation services in Australia.
SEPTEMBER 21
WSP acquires the Environment
& Infrastructure Business
of John Wood Group PLC
With this transaction, WSP increased its
workforce by 6,000 people and expanded
its leadership in the fast-growing
environmental and water sectors.
OCTOBER 3
WSP Acquires Odeh Engineers
WSP acquired Odeh Engineers, a 40-person
structural engineering firm, strengthening
its structural engineering capabilities in
the buildings sector in the US Northeast.
DECEMBER 6
WSP Signs Agreement to Acquire
BG Consulting Engineers
WSP announced an agreement to acquire
BG Bonnard & Gardel Holding SA, one of
Switzerland’s leading engineering consulting
firms, with some 700 professionals based
primarily in Switzerland and France.
The acquisition of BG Consulting was completed on January 31, 2023.
DECEMBER 8
WSP Signs Agreement to Acquire
Australia-Based enstruct
WSP announced an agreement to acquire
enstruct, a 75-employee structural engineering
firm noted for designing and delivering quality
building projects throughout Australia.
The acquisition of enstruct was completed on January 31, 2023.
2022 ANNUAL REPORT
WSP
Today
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REVENUES BY
MARKET SECTOR
45%
Transportation
& Infrastructure
28%
Earth &
Environment
19%
Property &
Buildings
CLIENT CATEGORY
Public sector
Private sector
8%
Power & Energy,
Industry
51%
49%
Based on revenues for the year ended December 31, 2022.
For the year ended December 31, 2022.
2022 ANNUAL REPORT
WSP TODAY
EMPLOYEES
BY REGION
66,200
Employees Worldwide
11,800
CANADA
20,500
AMERICAS
US & LATAM
22,500
EMEIA
EUROPE,
MIDDLE EAST,
INDIA AND
AFRICA
11,400
APAC
ASIA PACIFIC
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NET REVENUES
BY REGION
Canada
Americas1
EMEIA2
APAC3
18%
36%
30%
16%
Countries where WSP is present
1 United States, Latin America and the Caribbean.
2 Europe (including United Kingdom & Ireland, Central
Europe, Nordics), Middle East, India, and Africa.
3 Asia, Australia, and New Zealand.
As of December 31, 2022.
2022 ANNUAL REPORT
Financial
Highlights
We are pleased to report solid financial
results ahead of Management’s expectations,
including record organic growth in net
revenues in the last decade and improved
EBITDA margin.
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1
Total of segments measure. Refer to section 8.1, “Net revenues” of WSP’s
Management's Discussion and Analysis for the quarter and year ended
December 31, 2022 (“MD&A”) for a reconciliation to revenues.
2 Non-IFRS financial measure or non-IFRS ratio without a standardized
definition under IFRS, which may not be comparable to similar measures
or ratios used by other issuers. Refer to section 22, “Glossary of segment
reporting, non-IFRS and other financial measures”, of WSP’s MD&A for
explanations of the composition and usefulness of this non-IFRS financial
measure and non-IFRS ratio. Quantitative reconciliations of the non-IFRS
financial measure to the most directly comparable IFRS measure are
incorporated by reference to sections 8.3, “Adjusted EBITDA” of WSP’s
MD&A. Adjusted EBITDA margin is defined as adjusted EBITDA expressed as a
percentage of net revenues.
3 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, net of billings in
excess of costs and anticipated profits into cash.
$11.93B
Revenues (CAD)
$8.96B
Net Revenues1 (CAD)
7.3%
Organic growth in Net
Revenues
$431.8M
Net Earnings attributable
to shareholders (CAD)
$3.59
Basic Net Earnings
Per Share attributable
to shareholders (CAD)
$1.53B
Adjusted EBITDA2 (CAD)
$749.1M
Earnings before net
financing expense and
income taxes (CAD)
17.1%
Adjusted EBITDA margin2
73
Days Sales Outstanding3
$13.0B
Backlog3 (CAD)
2022 ANNUAL REPORT
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2022-2024 GLOBAL STRATEGIC ACTION PLAN
Pursuing
our Bold
Ambitions
On March 9, 2022, we unveiled our
Global Strategic Action Plan, to guide
the next phase of our evolution.
One year later, we are well on-track
to achieve our 2024 objectives.
People and
Culture
Fostering our people’s
ingenuity.
Expertise
Leading through technical
excellence and innovation.
Clients
Elevating the standard
of client experience.
Operational
Excellence
Driving leading performance
and efficiency through
transformation.
2024 KEY ESG AMBITIONS
Our commitments to ESG are fundamental
and non-negotiable.
2022
Results
2022-2024
Targets
SDG-Linked Revenues1
ACHIEVED
>50%
Year-over-year increase in the
representation of women and
under-represented groups2
Integration of ESG criteria
as part of global leader
compensation
ON TRACK
5%
P EO P L E
ACHIEVED
100%
2
0
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2
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Decrease in absolute scope 1
and 2 (operations) and scope 3
(supply chain) GHG emissions
ON TRACK
40%
-
15%
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2024 KEY FINANCIAL AMBITIONS
Our ambition is to grow net revenues in excess of 30%,
adjusted EBITDA by 40% and adjusted net earnings
per share by 50% by the end of 2024.3
Net revenues (CAD)
Annual organic
net revenue growth
Adjusted EBITDA margin
Net debt to adjusted
EBITDA ratio
2022
Results
2022-2024
Targets
ON TRACK
$8.96B
ON TRACK
7.3%
ON TRACK
17.1%
ON TRACK
1.6X
>$10B
>5.0%
17.5-18.5%
1X-2X
HIGHLIGHTS FROM
OUR 4 PILLARS
66,200
professionals
Onboarded thousands
of professionals globally
and improved employee
engagement satisfaction.
6 acquisitions
Expanded into key sectors,
such as environment, water,
climate resilience and
structural design.
EXPERTISE
7.6% backlog
organic growth
Recorded a strong order
intake of projects with new
and existing clients.
C LIEN TS
30 bps margin
improvement
Improved adjusted EBITDA
margin.
O P E R AT I O N A L E XC E L L E N C E
1
We previously reported “Clean Revenues”, which were defined as revenues earned from services that had an
environmental benefit and contributed to the UN Sustainable Development Goals (SDGs). In line with industry
practice, we have broadened our definition and enhanced our methodology to include revenues earned from
services that contribute to any of the SDGs, and as a result, have renamed this metric “SDG-Linked Revenues".
2 This includes business leaders and middle management.
3 This is a forward looking statement.
For the year ended December 31, 2022.
2022 ANNUAL REPORT
Our Projects
Shaping the communities of tomorrow
through our innovative projects,
we view each one as an opportunity
to contribute to a low-carbon world
and to accelerate the green transition.
Here is a selection of our great projects
from around the world.
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© Werner Huthmacher
2022 ANNUAL REPORT
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The Atlantinsilta (Atlantic Bridge) project in Helsinki, Finland
demonstrates WSP’s capacity in bridge design. Overlooking the
Gulf of Finland, the new structure connects various transportation
routes and forms a spectacular landmark. The bridge also completes
a previously fragmented tramway network. In addition to two
different tram lines, the bridge now carries a heavy vehicle traffic
flow. Pedestrian and cycle lanes run along both sides of the structure.
WSP was responsible for the design elements, the seawalls and the
observation deck. The project combines our expertise in bridge,
foundation and lighting design, as well as landscape architecture.
Special care was taken to minimize impacts on the landscape.
Connecting communities
with design in mind
ATLANTIC BRIDGE,
HELSINKI, FINLAND
Atlantinsilta is the winner of the Bridge of the year Award in 2022.
The Champlain Hudson Power Express (CHPE) will be North America’s
largest underground high-voltage transmission project, delivering
clean renewable electricity from Quebec to New York City. Multiple
alternative energy sourcing and delivery opportunities are being
pursued by New York State to advance its decarbonization and
climate action objectives, with the CHPE foremost among them.
Tapping into Canadian
hydropower
CHAMPLAIN HUDSON POWER
EXPRESS TRANSMISSION LINE,
NEW YORK STATE, USA
In partnership with the developer,
WSP is providing owner’s engineer
and environmental compliance
services. This $6 billion project
is projected to decrease statewide
electricity costs by $17.3 billion over
30 years while creating $23.2 billion
in CO2 emission reduction benefits
and 1,400 new construction jobs.
2022 ANNUAL REPORT
Safeguarding our water supply
IQALUIT WATER CRISIS, NUNAVUT, CANADA
At the end of 2021, residents of the northern community of Iqaluit
detected the smell and taste of fuel in the municipal water supply. As
a result, an immediate “Do Not Consume” water advisory was issued.
Within a few days, members of WSP’s water team from Manitoba
arrived to assess the situation, identify the problem and resolve the
matter. Working with government and private-sector professionals,
the team managed to isolate the source and sever the contamination
pathway quickly. A novel state of the art online water quality
monitoring system was also put in place with the assistance of WSP.
WSP’s team was called into action once again a few months later,
this time focusing on a below-ground inspection of the water
tanks. During this inspection, it was revealed that there was
an inconsistency in the quality of the tank walls that had been
constructed. In one location, a tar-like substance used to seal
concrete had not been installed to manufacturer specifications.
A bypass system was implemented to provide water to
residents, while also establishing a remediation framework.
Our involvement to solve Iqaluit Water Emergency was
named ENR Global Best Project Award in 2022.
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Adapting to climate change
KARENS MINDE AKSEN PROJECT,
COPENHAGEN, DENMARK
The area around Karens Minde in Copenhagen's South Harbour
district is to be urbanized and climate-adapted as part of a single
project covering an area of approximately 37,000 square metres
and forming a 600-metre-long stretch of park, streets and urban
space. The project will be able to handle 15,000m3 stormwater.
This is a unique opportunity to rethink the city's urban space
and to create a framework for diversity, local initiatives
and events. This approach applies in particular to Karens
Minde, where climate adaptation is integrated with
other needs, including biodiversity conservation.
WSP is providing the overall technical advice, design
and quality assurance services, focusing on hydraulics,
linework, construction, traffic and mobility, electricity
and lighting, groundwater conditions, pumping
stations and other technical installations.
2022 ANNUAL REPORT
This project is a prime example
of global collaboration at its best.
WSP in Colombia has been working
closely with colleagues from the
UK and Canada to support the
construction of the first metro line
in Bogota, one of the world’s most
densely populated cities and home
to almost eight million people.
Metro Line 1 will accommodate
72,000 passengers per hour in
each direction, amounting to
1.05 million passengers per day.
As the lead civil and systems detailed
designer, WSP is responsible for
integrating designs and managing
the approval process, in addition to
supporting the client throughout the
three design phases and ensuring
that multiple environmental
and social goals are reached.
Developing an iconic hub
ONE ZA’ABEEL, DUBAI,
UNITED ARAB EMIRATES
© Metro de Bogotá
Increasing demand for public transport
METRO LINE 1 PROJECT, BOGOTA, COLOMBIA
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One Za’abeel is set to become Dubai’s next iconic building, consisting
of two towers connected by “The Link”—the world’s longest occupied
cantilevered building. Thanks to its central location, this mixed-
use sustainable development will be a hub for a variety
of residents and visitors.
The residential tower will stand 58 floors high, while the second
tower (68 floors) will house a luxury hotel, offices, branded
residential units and penthouses, and the Investment
Corporation of Dubai’s headquarters. WSP’s client,
Ithra Dubai, is targeting LEED Gold certification.
The development will emphasize energy
and water efficiency, indoor air quality,
thermal comfort and waste reduction,
reflecting Dubai’s aim to become one
of the world’s most sustainable cities.
2022 ANNUAL REPORT
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The Organic Resources Recovery Centre
Phase 2 (O·PARK2) ties in with Hong Kong’s
strategies to tackle food waste. Anaerobic
digestion, by which bacteria break down
organic matter in the absence of oxygen,
will be used to recycle food waste into
renewable energy such as biogas, which
can then be used to generate electricity.
Some 300 tonnes of waste will be processed
per day. This will also reduce the need to
dispose of waste at landfills and therefore
contribute to the efforts in reducing
greenhouse gas emissions. As the engineering
design consultant, WSP is providing an
array of services, including civil, structural,
geotechnical and traffic engineering;
architectural, landscape and building services
design; and building information modeling.
Tackling food waste
ORGANIC RESOURCES RECOVERY CENTRE
PHASE 2 (O·PARK2), HONG KONG
Concrete remains the standard go-to material for sewage treatment
projects worldwide. However, on-site concrete construction
involves more labour and time, not to mention considerable
carbon emissions. The teams involved in the Wolsingham Sewage
Treatment Works project came up with
a more innovative and more sustainable
approach: in a bold move, they decided
to fabricate everything needed for the
project off-site. This change of mindset
proved key to the project’s success.
By constructing various components
from steel, as well as other sustainable
materials, and assembling them off-
site, WSP was able to achieve a massive
reduction in the carbon typically
required for on-site concrete-based
work. This project won numerous
awards in 2022, such as Constructing
Excellence National Award – Innovation.
This work was initiated under Wood. WSP completed the acquisition
of Wood’s E&I business in 2022.
Challenging the status quo
WOLSINGHAM SEWAGE TREATMENT
WORKS, COUNTY DURHAM, UK
2022 ANNUAL REPORT
Delivering a megalab
ROSALIND FRANKLIN LABORATORY,
ROYAL LEAMINGTON SPA, UK
The Rosalind Franklin Laboratory—one of the world’s
largest diagnostic testing facilities—was a key part of the
government’s response to COVID-19 and represented
an investment in the UK’s scientific capabilities. Initially
focused on PCR test processing, the 225,000 sq. ft. megalab
was built in record time with innovation design solutions.
The goal was to deliver this project to a world-class
standard while minimizing its carbon footprint. Serving
as principal designer, WSP provided an array of specialized
services, including planning and BIM co-ordination.
The secret to successful delivery was the collaborative
framework within the cross-company multidisciplinary
team, backed by cutting-edge technologies.
A new standalone building – designed by Pritzker Prize – winning
architects Kazuyo Sejima and Ryue Nishizawa of SANAA – is the
centrepiece of the Sydney Modern Project, the most significant
cultural development to open in Sydney in nearly half a century.
The completion of the project creates a new art museum campus
comprising two buildings connected by a public art garden on
Gadigal Country overlooking Sydney Harbour.
WSP worked extensively with the project team during the design
phase to ensure the project achieved ecologically sustainable design
outcomes. It is the first public art museum in Australia to achieve
a 6-star Green Star design rating. It is also the largest government
and philanthropic arts partnership of its kind to be successfully
achieved in the country to date which creates a prominent new
destination for Aboriginal and Torres Strait Islander art.
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Embracing sustainable design
SYDNEY MODERN PROJECT,
SYDNEY, AUSTRALIA
2022 ANNUAL REPORT
Corporate
Governance
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BOARD OF DIRECTORS
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05
06
07
08
01
CHRISTOPHER COLE
CHAIRMAN
Member of the Governance, Ethics
and Compensation Committee
Director since 2012
Independent
Professional Non-Executive Director
02
PIERRE SHOIRY
VICE CHAIRMAN
Director since 2006
Independent
Professional Non-Executive Director
03
ALEXANDRE L’HEUREUX
PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WSP GLOBAL INC.
Director since 2016
Non-independent
04
LOUIS-PHILIPPE CARRIÈRE
CHAIR OF THE AUDIT COMMITTEE
Director since 2017
Independent
Professional Non-Executive Director
05
BIRGIT NØRGAARD
MEMBER OF THE GOVERNANCE,
ETHICS AND COMPENSATION
COMMITTEE
Director since 2013
Independent
Professional Non-Executive Director
06
LINDA SMITH-GALIPEAU
CHAIR OF THE GOVERNANCE, ETHICS
AND COMPENSATION COMMITTEE
Director since 2019
Independent
Professional Non-Executive Director
07
SUZANNE RANCOURT
MEMBER OF THE AUDIT COMMITTEE
Director since 2016
Independent
Professional Non-Executive Director
08
PAUL RAYMOND
MEMBER OF THE AUDIT COMMITTEE
Director since 2019
President and Chief Executive Officer,
Alithya
Independent
2022 ANNUAL REPORT
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GLOBAL
LEADERSHIP TEAM
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ALEXANDRE L’HEUREUX
PRESIDENT AND CHIEF
EXECUTIVE OFFICER
02 ALAIN MICHAUD
CHIEF FINANCIAL OFFICER
03 PHILIPPE FORTIER
CHIEF LEGAL OFFICER AND
CORPORATE SECRETARY
04 MEGAN VAN PELT
CHIEF HUMAN RESOURCES OFFICER
05 JULIANNA FOX
CHIEF ETHICS AND COMPLIANCE
OFFICER
06 CHADI HABIB
CHIEF TECHNOLOGY OFFICER AND
HEAD OF BUSINESS SOLUTIONS
07 GINO POULIN
CHIEF INFORMATION OFFICER
08 MARC RIVARD
GLOBAL SENIOR VICE PRESIDENT,
OPERATIONAL PERFORMANCE
09 ERIC PEISSEL
GLOBAL DIRECTOR, TRANSPORT
AND INFRASTRUCTURE
10 ANDRÉ-MARTIN BOUCHARD
GLOBAL DIRECTOR, EARTH
AND ENVIRONMENT
11
TOM SMITH
GLOBAL DIRECTOR, PROPERTY
AND BUILDINGS
12 KEVIN BEAUCHAMP
GLOBAL DIRECTOR, MINING
13 IAN BLAIR
MANAGING DIRECTOR,
NEW ZEALAND
14 LEWIS P. CORNELL
PRESIDENT AND CHIEF EXECUTIVE
OFFICER, USA
15 MARIE-CLAUDE DUMAS
PRESIDENT AND CHIEF EXECUTIVE
OFFICER, CANADA
16
IVY KONG
CHIEF EXECUTIVE OFFICER, ASIA
17 DEAN MCGRAIL
CHIEF EXECUTIVE OFFICER,
MIDDLE EAST
18 PETER MYERS
CHIEF EXECUTIVE OFFICER, LATIN
AMERICA AND THE CARIBBEAN
19 MARK NAYSMITH
CHIEF EXECUTIVE OFFICER,
UK, EUROPE, MIDDLE EAST
AND AFRICA
20 ANNA-LENA ÖBERG-HÖGSTA
CHIEF EXECUTIVE OFFICER,
NORDICS
21 GUY TEMPLETON
PRESIDENT AND CHIEF EXECUTIVE
OFFICER, ASIA PACIFIC
22 ERIC VAN DEN BROEK
CHIEF EXECUTIVE OFFICER,
CENTRAL EUROPE
2022 ANNUAL REPORT
Management’s
Discussion
and Analysis
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WSP Global Inc.
For the fourth quarter
and year ended
December 31, 2022
2022 ANNUAL REPORT
TABLE OF CONTENTS
M-2
1 MANAGEMENT’S DISCUSSION AND ANALYSIS ............................................................ M-3
2 NON-IFRS AND OTHER FINANCIAL MEASURES........................................................... M-3
3 CORPORATE OVERVIEW ........................................................................................................ M-4
4
FINANCIAL HIGHLIGHTS......................................................................................................... M-6
5 EXECUTIVE SUMMARY............................................................................................................ M-7
6 KEY EVENTS................................................................................................................................. M-8
7
8
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SEGMENT OPERATIONAL REVIEW..................................................................................... M-10
FINANCIAL REVIEW.................................................................................................................. M-15
LIQUIDITY ..................................................................................................................................... M-23
10 EIGHT QUARTER SUMMARY ................................................................................................. M-26
11 SELECTED ANNUAL INFORMATION .................................................................................. M-26
12 GOVERNANCE............................................................................................................................ M-27
13 CRITICAL ACCOUNTING ESTIMATES................................................................................. M-28
14 SIGNIFICANT ACCOUNTING POLICIES ............................................................................. M-28
15 FINANCIAL INSTRUMENTS.................................................................................................... M-29
16 RELATED PARTY TRANSACTIONS ...................................................................................... M-29
17 OFF-BALANCE SHEET AGREEMENTS ............................................................................... M-29
18 CONTRACTUAL OBLIGATIONS............................................................................................. M-29
19 FORWARD-LOOKING STATEMENTS.................................................................................. M-29
20 RISK FACTORS............................................................................................................................ M-31
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
2022
M-3
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 8, 2023, is intended to assist readers in understanding WSP Global Inc. (together with its
subsidiaries, 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, 2022. The Corporation’s audited consolidated financial statements for the year ended
December 31, 2022 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,
2022. 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 October 2, 2022 to December 31, 2022 and the comparative fourth
quarter results include the period from September 26, 2021 to December 31, 2021.
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 as issued by the IASB. 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-GAAP and Other Financial Measures Disclosure
(“Regulation 52-112”) prescribes disclosure requirements that apply to the following types of measures used by the
Corporation:
i. non-IFRS financial measures;
ii. non-IFRS ratios;
iii. total of segments measures;
iv. capital management measures; and
v.
supplemental financial 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
2022
M-4
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 and
Industry sectors. WSP's experts include advisors, engineers, environmental specialists, scientists, technicians, architects
and planners, in addition to other design and program management professionals. With approximately 66,200 talented
people globally, WSP is well 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
and support to successfully deliver projects, helping clients overcome challenges and respond to emerging areas
in new mobility, resiliency, decarbonization, social equity, digital project delivery and design.
Earth & Environment: The Corporation has specialists working with and advising governments and private-
sector clients on key aspects of earth sciences and environmental sustainability. WSP’s experts advise on matters
ranging from clean air, water and land, to biodiversity, green energy solutions, climate change and
Environmental, Social and Governance (“ESG”) issues. They provide specialized services to mining, oil and gas,
power, industrial and transportation clients, all of which operate in some of the most highly-regulated industries.
The Corporation delivers a broad range of advisory and operational services, including due diligence, permit
approvals, regulatory compliance, waste/hazardous materials management, geotechnical and mining
engineering, environmental/social impact assessments, feasibility and land remediation studies. 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, resource extraction and the environment. The
Corporation is able to support its clients through the entire project life-cycle, from design, permitting, planning
and operations, to decommissioning and asset remediation.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-5
•
•
•
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.
Power & Energy: The Corporation offers energy sector clients support for all kinds of projects, whether large-
scale power plants, clean energy investments like renewables, smaller on-site power generation and efficiency
programs, or energy transmission, storage, and distribution. WSP's experts can advise and collaborate on every
stage of a project, delivering full life-cycle solutions. From pre-feasibility studies and community engagement
through operation and decommissioning, our aim is to support the clients’ transition to cleaner, more efficient
and sustainable energy.
Industry: The Corporation works in almost every industrial and manufacturing sector including food and
beverage, pharmaceutical and biotechnology, aerospace, automotive, technology and chemicals. WSP's experts
support industrial clients through all stages of a facility’s life-cycle, including siting and licensing, engineering
and process design, and productivity analysis, in addition to engineering, procurement, and construction
management services during construction, operations, and maintenance support during the facility’s active life-
span, and decommissioning services at the end. We have a deep understanding of industrial and energy
processes, incorporating automation capabilities, climate change resilience, and ESG-driven metrics into our
projects.
In addition to these sectors, the Corporation offers the highly specialized strategic advisory services listed below:
•
Planning and Advisory Services: The Corporation works in almost every industrial and manufacturing sector
including food and beverage, pharmaceutical and biotechnology, aerospace, automotive, technology and
chemicals. WSP's experts support industrial clients through all stages of a facility’s life-cycle, including siting and
licensing, engineering and process design, and productivity analysis, in addition to engineering, procurement,
and construction management services during construction, operations, and maintenance support during the
facility’s active life-span, and decommissioning services at the end. We have a deep understanding of industrial
and energy processes, incorporating automation capabilities, climate change resilience, and ESG-driven metrics
into our projects.
• Management Services: The Corporation’s professionals help clients to assess and define their goals, as well as to
address the technical, environmental and commercial realities and challenges they face. WSP’s integrated service
offering also helps to forge strategic relationships with clients, who are supported throughout the project
planning, implementation and commissioning stages, including during emergencies. Focusing on cost, on-time
delivery, quality and safety, and applying best-in-class management processes and techniques, WSP can put
together the right team from around the world to execute projects of varying sizes and complexity.
•
Technology and Sustainability Services: The Corporation’s professionals work throughout the project life cycle
to offer innovative solutions with a strong focus on change management and executive engagement. Major
technological advancements are likely to improve the way we live, commute and travel, but they also shed new
light on how property and infrastructure owners need to adapt to and embrace change. WSP’s Technology
Services experts use digital solutions and software to enhance engineering, infrastructure, building and
environmental projects. In the face of challenges associated with population growth, resource demands and
constraints, not to mention extreme weather events that impact community resiliency and sustainability, the
Corporation remains committed to integrating sustainability principles during the planning, design and
management stages of all its projects.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-6
4 FINANCIAL HIGHLIGHTS
(in millions of dollars, except percentages, per share data, DSO and ratios) December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Fourth quarters ended
Years ended
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)
$3,560.8
$2,553.7
$185.3
$446.4
17.5 %
$120.0
$0.96
$209.3
$1.68
$607.4
$442.7
$2,891.0
$2,147.4
$185.2
$361.2
16.8 %
$126.7
$1.08
$171.7
$1.46
$513.2
$369.9
$11,932.9
$10,279.1
$8,957.2
$749.1
$1,530.2
17.1 %
$431.8
$3.59
$692.6
$5.75
$814.8
$309.0
$7,869.6
$724.6
$1,322.5
16.8 %
$473.6
$4.07
$592.9
$5.09
$1,060.1
$646.1
December 31, 2022 December 31, 2021
$13,006.5
73 days
1.6
$10,425.6
66 days
0.6
(1)
(2)
(3)
Total of segments measure. Refer to section 8.1, “Net revenues” for a reconciliation to revenues.
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.
(5)
(4) Management has amended its definition of adjusted net earnings, effective January 1, 2022, to exclude impairment charges on long-lived assets and
reversals thereof. The comparative period results did not require restatement to apply the current definition as no impairment of long-lived assets
was recorded in 2021. 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, net
of billings in excess of costs and anticipated profits, into cash.
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.
(6)
WSP Global Inc.
Management's Discussion and Analysis
2022
M-7
5 EXECUTIVE SUMMARY
In 2022, WSP delivered strong results ahead of Management's expectations, including the highest organic growth in net
revenues in the last decade and a 30 bps increase in adjusted EBITDA margin. Overall net revenues, adjusted EBITDA and
adjusted net earnings increased in 2022 by 14%, 16% and 17%, respectively.
Fourth quarter 2022 financial highlights
•
•
•
•
Revenues and net revenues for the quarter reached $3.56 billion and $2.55 billion, up 23.2% and 18.9%, respectively,
compared to Q4 2021. Net revenue organic growth of 4.8% in the quarter, despite four less billable days compared to
Q4 2021. Net revenue organic growth of approximately 9.5% when normalized for the same number of billable days.
Adjusted EBITDA in the quarter of $446.4 million, compared to $361.2 million in Q4 2021. Adjusted EBITDA margin for
the quarter increased to 17.5%, compared to 16.8% in Q4 2021.
Earnings before net financing expense and income taxes in the quarter of $185.3 million, up $0.1 million compared to
Q4 2021.
Adjusted net earnings for the quarter of $209.3 million, or $1.68 per share, up $37.6 million and $0.22, respectively,
compared to Q4 2021. The respective increases in these metrics are mainly attributable to higher adjusted EBITDA.
• Net earnings attributable to shareholders for the quarter of $120.0 million, or $0.96 per share, compared to
$126.7 million and $1.08 per share in Q4 2021. The decreases are mainly attributable to higher amortization and
depreciation, higher business acquisition and integration costs and ERP implementation costs, and higher net
financing expenses, partially offset by higher adjusted EBITDA.
•
•
The Corporation achieved its highest quarterly free cash flow, reaching $442.7 million.
Quarterly dividend declared of $0.375 per share, or $46.7 million, with a 31.1% Dividend Reinvestment Plan (“DRIP”)
participation.
Fiscal year 2022 financial highlights
•
•
•
•
•
•
Revenues and net revenues reached $11.93 billion and $8.96 billion, up 16.1% and 13.8%, respectively, compared to
2021. The increase in net revenue was principally due to acquisition growth of 8.2% and organic growth of 7.3%.
Organic growth was achieved across all reportable segments and net revenues exceeded the high end of
Management's outlook range for the year of $8.9 billion.
Backlog as at December 31, 2022 stood at $13.0 billion, representing 11.8 months of revenues, up 24.8% in the year. On
a constant currency basis, backlog grew organically by 7.6% in the year.
Adjusted EBITDA of $1.53 billion, up 15.7%, compared to $1.32 billion in 2021, reaching the high end of Management's
outlook range for the year.
Adjusted EBITDA margin increased to 17.1% in 2022, compared to 16.8% in 2021, an increase of 30 basis points, on
track with the Corporation's 2022-2024 strategic financial ambitions.
Earnings before net financing expense and income taxes in 2022 of $749.1 million, up 3.4% compared to 2021, mainly
due to higher adjusted EBITDA, partially offset by ERP implementation costs which ramped up in 2022, and higher
acquisition and integration costs, as well as amortization of intangible assets, due to recent acquisitions.
Adjusted net earnings in 2022 of $692.6 million, or $5.75 per share, up $99.7 million or $0.66 per share, compared to
2021. The respective increases of 16.8% and 13.0% in these metrics are mainly attributable to higher adjusted EBITDA.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-8
• Net earnings attributable to shareholders of $431.8 million in 2022, or $3.59 per share, down $41.8 million, or $0.48
per share, compared to 2021. The decrease was mainly due to higher net financing expenses, amortization and
depreciation, business acquisition and integration costs and ERP implementation costs, partially offset by higher
adjusted EBITDA.
•
•
•
DSO as at December 31, 2022 stood at 73 days, compared to 66 days as at December 31, 2021, in line with
Management's outlook target range of 70 to 75.
Free cash flow of $309.0 million for the year, primarily due to the expected normalization of our DSO levels in 2022,
the increased investment in the global ERP implementation, higher acquisition, integration and reorganization costs,
and higher income taxes paid mainly due to changes in tax regulations in the US which delays the deductibility of
certain expenses.
Cash inflows from operating activities of $814.8 million in the year ended December 31, 2022, compared to
$1,060.1 million in 2021. The decrease is attributable to same elements as free cash flow listed above.
• Net debt to adjusted EBITDA ratio stood at 1.6x, compared to 0.6x as at December 31, 2021. The increase is due to
issuance of long-term debt to finance recent acquisitions, while the trailing twelve-month adjusted EBITDA does not
yet include the full results of recently acquired businesses. Incorporating a full twelve months of adjusted EBITDA of
all acquired businesses, the net debt to adjusted EBITDA ratio would be 1.5x.
•
Full year dividend declared of $1.50 per share, or $181.8 million, with a cash payout of $100.8 million and 44.5%
Dividend Reinvestment Plan (“DRIP”) participation.
6 KEY EVENTS
The following are highlights from January 1, 2022 to March 8, 2023, the date of this MD&A for the year ended December 31,
2022.
2022-2024 Strategic Plan
In March 2022, the Corporation released its 2022-2024 Global Strategic Action Plan, entitled Future Ready®, which sets the
stage for the next three years of WSP’s evolution, while simultaneously delineating its ambitious long-term vision. The
2022-2024 Global Strategic Action Plan will set the course for the continued evolution of the Corporation’s foundational
pillars (People & Culture, Clients, Operational Excellence and Expertise) to support profitable growth, drive technical
excellence and innovation, and deliver exceptional value to our clients.
Acquisition of the Environment & Infrastructure business of John Wood Group plc
In September 2022, the Corporation acquired the Environment & Infrastructure business (“E&I”) of John Wood Group plc
(“Wood”), previously announced on June 1, 2022, for aggregate cash consideration of US$1.8 billion, subject to final
adjustments ($2.4 billion) (the “E&I Acquisition”). E&I provides engineering, remediation consulting, environmental
permitting, inspection & monitoring, and environmental management services to clients in the government, industrial,
infrastructure, oil & gas, power, water and mining industries. E&I operates in approximately 100 offices with
approximately 6,000 environmental consulting staff across more than 10 countries.
The E&I Acquisition was funded by a new fully committed US$1.8 billion term credit facility with various tenors of up to
5 years.
Future Ready® is a registered trademark of WSP Global Inc. in Canada, United States and New Zealand. WSP Future Ready (logo)® is a registered trademark
of WSP Global Inc. in Europe, Australia and in the United Kingdom.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-9
Other acquisitions
In June 2022, WSP acquired BOD Arquitectura e Ingeniería (“BOD”), a 45-employee architecture and engineering firm based
in Madrid, Spain. The addition of BOD will expand WSP’s Property & Buildings service offering, while boosting its visibility
in Madrid and across Spain.
In August 2022, WSP acquired Australian-based Greencap Holdings Ltd. (“Greencap”), a subsidiary of Wesfarmers Industrial
and Safety. Greencap's 250 professionals in Australia provide environmental, hazardous materials and risk management
solutions to its clients.
In September 2022, WSP acquired two UK-based businesses, Capita (Real Estate & Infrastructure) Ltd. (“Capita REI”) and GL
Hearn Ltd. (“GLH”), both part of the Capita plc group, for an aggregate cash consideration of £69.7 million, subject to final
adjustments ($112.4 million). Capita REI is a provider of specialist advisory, design, engineering, environmental and project
management services, while GLH specialises in commercial real estate and planning advice to developers, investors and
occupiers. Together, both businesses added around 1,000 UK-based employees to WSP’s workforce.
Subsequent to the end of the year, in January 2023, WSP acquired BG Bonnard & Gardel Holding SA (“BG”), one of
Switzerland’s leading engineering consulting firms, with a strong presence in France, as well as a minor presence in
Portugal and Italy. With approximately 700 professionals, BG offers consulting, engineering, and project management
services in the infrastructure, building, water, environment, and energy sectors.
Subsequent to the end of the year, in January 2023, WSP acquired enstruct, a 75-employee structural engineering firm with
offices in Sydney, Melbourne, and Brisbane, noted for designing and delivering quality building projects throughout
Australia.
These acquisitions were financed using WSP's available cash and credit facilities.
Equity Financings
On August 16, 2022, the Corporation completed a bought deal public offering (the “Offering”) of common shares of the
Corporation (the “Offering Common Shares”) and a private placement (the "Concurrent Private Placement") of common
shares of the Corporation (the “Private Placement Common Shares”) for aggregate gross proceeds of $920.2 million.
The Corporation issued from treasury 3,031,400 Offering Common Shares, including 395,400 Offering Common Shares
issued as a result of the exercise of the over-allotment option at a price of $151.75 per Offering Common Share for
aggregate gross proceeds of $460.0 million.
In addition, the Corporation issued 3,032,550 Private Placement Common Shares at a price of $151.75 per Private
Placement Common Share by way of the Concurrent Private Placement with GIC Pte. Ltd. ("GIC"), Caisse de dépôt et
placement du Québec ("CDPQ") and a subsidiary of Canada Pension Plan Investment Board ("CPP Investments") for
aggregate gross proceeds of $460.2 million, which includes 395,550 Private Placement Common Shares issued pursuant to
the exercise in full of the additional subscription options. Following the Concurrent Private Placement, CDPQ beneficially
owned, or exercised control or direction over, directly or indirectly, an aggregate of 22,483,722 common shares of the
Corporation, representing 18.1% of the issued and outstanding common shares, and CPP Investments beneficially owned,
or exercised control or direction over, directly or indirectly, an aggregate of 18,217,889 common shares of the Corporation,
representing 14.7% of the issued and outstanding common shares.
The Corporation used the proceeds from the equity financings to reimburse a portion of the E&I Acquisition financing.
Leadership and Board announcements
In July 2022, Chadi Habib joined WSP as Global Chief Technology Officer and Head of Business Solutions. Mr. Habib is a
senior technology and business transformation executive with over 25 years of international experience.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-10
Subsequent to the end of the year, in February 2023, Sandy Vassiadis joined WSP as Global Chief Communications Officer.
Ms. Vassiadis is a seasoned communications executive specializing in public affairs, brand recognition and corporate social
responsibility. In her new role, she will oversee WSP’s corporate communications, digital experience, brand, and
marketing functions.
Subject to his election at WSP’s 2023 shareholders meeting to be held on May 11, 2023, Mr. Macky Tall will be joining WSP’s
Board of Directors. Mr. Tall is a Partner and Chair of Carlyle's Global Infrastructure Group. He will bring to the Board
extensive management, financial and industry experience.
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)
Fourth quarters ended
Years ended
December 31,
2022
December 31,
2021
Variance
December 31,
2022
December 31,
2021
Variance
Net revenues
Organic growth
Acquisition growth
$438.4
$360.6
Adjusted EBITDA by segment
Adjusted EBITDA margin by segment
$91.9
21.0 %
$76.6
21.2 %
As at
Backlog
Organic backlog growth in the year
Approximate number of employees
bps: basis points
Net revenues
21.6 %
3.4 %
18.2 %
20.0 %
(20) bps
$1,585.2
$1,304.5
$347.9
21.9 %
$272.0
20.9 %
21.5 %
8.7 %
12.8 %
27.9 %
100 bps
December 31,
2022
December 31,
2021
Variance
$2,304.8
$1,817.3
11,800
9,500
26.8 %
(0.8) %
24.2 %
In the quarter ended December 31, 2022, net revenues in Canada were $438.4 million, an increase of $77.8 million, or 21.6%,
compared to the same quarter in 2021. Organic growth and acquisition growth were 3.4 % and 18.2 %, respectively.
Acquisition growth is due to the E&I Acquisition completed in September 2022.
In the year ended December 31, 2022, net revenues in Canada were $1.59 billion, an increase of $280.7 million, or 21.5%,
compared to 2021. Organic growth and acquisition growth were 8.7% and 12.8%, respectively. Acquisition growth is due to
the acquisition of Golder Associates (“Golder” and the “Golder Acquisition”) completed in April 2021 and the E&I
Acquisition completed in September 2022.
Strong demand resulted in net revenue organic growth in the quarter and year ended December 31, 2022, while recent
acquisitions resulted in a more diversified platform. Net revenue organic growth for the fourth quarter would be
approximately 10.0% if normalized for the same number of billable days.
In 2022, the Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for
89% of net revenues and public sector clients accounted for 29% of net revenues.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-11
Backlog
In 2022, backlog in Canada increased due to the acquisition of E&I. The pipeline of opportunities remains strong, despite
organic contraction in backlog in the year, and recent wins are expected to positively impact backlog in coming quarters.
Adjusted EBITDA margin
For the quarter ended December 31, 2022, adjusted EBITDA margin in Canada remained stable. For the year ended
December 31, 2022, adjusted EBITDA margin in Canada increased mainly due to improved project performance, stronger
productivity and the favourable impact of a change order signed in the first quarter of 2022.
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,
2022
December 31,
2021
Variance
December 31,
2022
December 31,
2021
Variance
$986.1
$763.3
$211.1
21.4 %
$148.3
19.4 %
29.2 %
0.9 %
20.9 %
7.4 %
42.3 %
200 bps
$3,256.4
$2,709.2
$644.7
19.8 %
$533.1
19.7 %
20.2 %
5.4 %
11.2 %
3.6 %
20.9 %
10 bps
December 31,
2022
December 31,
2021
Variance
$6,315.3
$4,536.5
20,500
16,000
39.2 %
10.6 %
28.1 %
*
**
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 and acquisition growth.
bps: basis points
Net revenues
In the quarter ended December 31, 2022, net revenues in the Americas reportable segment were $986.1 million, an increase
of $222.8 million, or 29.2%, compared to the same quarter in 2021. Organic growth and acquisition growth were 0.9% and
20.9%, respectively, both on a constant currency basis. Net revenue organic growth for the quarter would be
approximately 5.5% if normalized for the same number of billable days.
In the year ended December 31, 2022, net revenues in the Americas reportable segment stood at $3.26 billion, an increase
of $547.2 million, or 20.2%, compared to 2021. Organic growth and acquisition growth were 5.4% and 11.2%, respectively,
both on a constant currency basis.
In the fourth quarter of 2022, our US operations had three less billable days than the corresponding period in 2021. Net
revenue organic growth normalized for the same number of billable days would be approximately 4.7%. In the year ended
December 31, 2022, organic growth is attributable to both the US and Latin American operations.
Acquisition growth in the quarter stems from the acquisition of E&I in September 2022. Acquisition growth in the year also
includes the acquisitions of Golder in April 2021, tk1sc in January 2021, Earth Consulting Group in February 2021, Knight
Partners in June 2021 and Englekirk Structural Engineers in October 2021.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-12
In addition, in both the quarter and in the year, the Americas segment benefitted from positive impacts of foreign
exchange, principally due to the depreciation of the Canadian dollar against the US dollar.
In 2022, the Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for
96% of net revenues and public sector clients accounted for 57% of net revenues.
Backlog
Backlog for the Americas segment increased in 2022, mainly due to the E&I Acquisition and organic growth of 10.6%.
Backlog organic growth is mainly attributable to our US operations.
Adjusted EBITDA margin
In the quarter ended December 31, 2022, adjusted EBITDA margin for the Americas segment increased 200 bps, as
compared to the corresponding period in 2021, mainly due to changes in estimates related to recoverability of investment
tax credits, as well as stronger productivity and improved project performance as compared to Q4 2021. In the year ended
December 31, 2022, adjusted EBITDA margin remained stable, as the increase in performance was partially offset by
realized losses on foreign exchange hedges as compared to gains in 2021. Excluding the impact of foreign exchange hedges,
the adjusted EBITDA margin increase would have been 80 bps higher in the year, due to the same items as detailed above
for the fourth quarter.
EMEIA
(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,
2022
December 31,
2021
Variance
December 31,
2022
December 31,
2021
Variance
$738.5
$658.1
$105.5
14.3 %
$92.3
14.0 %
12.2 %
8.8 %
9.3 %
(5.9) %
14.3 %
30 bps
$2,651.1
$2,528.4
$390.0
14.7 %
$370.3
14.6 %
4.9 %
7.4 %
4.7 %
(7.2) %
5.3 %
10 bps
December 31,
2022
December 31,
2021
Variance
$2,852.8
$2,442.5
22,500
20,100
16.8 %
16.4 %
11.9 %
*
**
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 and acquisition growth.
bps: basis points
Net revenues
In the quarter ended December 31, 2022, net revenues in the EMEIA reportable segment were $738.5 million, an increase of
$80.4 million, or 12.2%, compared to Q4 2021. Organic growth and acquisition growth of 8.8% and 9.3 %, respectively, both
on a constant currency basis, were partially offset by negative impacts of foreign exchange. Net revenue organic growth
for the quarter would be approximately 10.4% if normalized for the same number of billable days.
In the year ended December 31, 2022, net revenues in the EMEIA operating segment stood at $2.65 billion, an increase of
$122.7 million, or 4.9%, compared to 2021. Organic growth and acquisition growth of 7.4% and 4.7%, respectively, both on a
constant currency basis, were partially offset by negative impacts of foreign exchange.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-13
In the quarter and year ended December 31, 2022, organic growth was led by the a strong performance in the UK. The
negative impacts of foreign exchange in the quarter and year are principally due to the appreciation of the Canadian dollar
against the pound sterling and the Swedish krona.
Acquisition growth in the quarter stems from the acquisitions of E&I, Capita REI and GLH, all completed in September 2022.
Acquisition growth in the year also includes the acquisitions of Golder and b+p baurealisation, both completed in April
2021, as well as BOD Arquitectura e Ingeniería completed in June 2022.
In 2022, the Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for
91% of net revenues and public sector clients accounted for 52% of net revenues.
Backlog
Backlog for the EMEIA reportable segment increased mainly due to organic growth of 16.4% in the year, as compared to
December 31, 2021.
Adjusted EBITDA margin
In the quarter and year ended December 31, 2022, adjusted EBITDA margin for the EMEIA segment increased 30 bps and
10 bps, respectively, as compared to the corresponding periods in 2021. The positive impact of realized gains on foreign
exchange hedges as compared to the corresponding periods, combined with good performance in most countries in the
reportable segment, were partially offset by lower performance in Central Europe.
APAC
(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,
2022
December 31,
2021
Variance
December 31,
2022
December 31,
2021
Variance
$390.7
$365.4
$69.7
17.8 %
$72.3
19.8 %
6.9 %
7.2 %
2.2 %
(2.5) %
(3.6) %
(200) bps
$1,464.5
$1,327.5
$267.1
18.2 %
$246.3
18.6 %
10.3 %
10.0 %
4.1 %
(3.8) %
8.4 %
(40) bps
December 31,
2022
December 31,
2021
Variance
$1,533.6
$1,629.3
11,400
9,700
(5.9) %
(4.6) %
17.5 %
*
**
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 and acquisition growth.
bps: basis points
Net revenues
In the quarter ended December 31, 2022, net revenues in the APAC reportable segment were $390.7 million, an increase of
$25.3 million, or 6.9%, when compared to the same quarter in 2021. Organic growth and acquisition growth of 7.2% and
2.2%, respectively, both on a constant currency basis, were partially offset by negative impacts of foreign exchange. Net
revenue organic growth for the quarter would be approximately 15.7% if normalized for the same number of billable days.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-14
In the year ended December 31, 2022, net revenues in the APAC reportable segment stood at $1.46 billion, an increase of
$137.0 million, or 10.3%, when compared to 2021. Organic growth and acquisition growth of 10.0% and 4.1%, respectively,
both on a constant currency basis, were partially offset by negative impacts of foreign exchange.
The organic growth in the quarter and year was driven mainly by strong market conditions across the region. 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 Australian dollar and the New Zealand dollar.
Acquisition growth in the quarter stems from the acquisitions of Greencap in August 2022. Acquisition growth in the year
also includes the Golder Acquisition completed in April 2021.
In 2022, the Transportation & Infrastructure, Earth & Environment and Property & Buildings market sectors accounted for
96% of net revenues and public sector clients accounted for 54% of net revenues.
Backlog
Backlog for the APAC segment contracted organically by 4.6%, when compared to December 31, 2021. Backlog growth in
Australia was partially offset by contraction in Asia mainly due to COVID-19 lockdowns in mainland China, as well as
contraction in New Zealand. The pipeline of opportunities in Australia and New Zealand remains strong and recent wins
are expected to positively impact backlog in these countries in coming quarters.
Adjusted EBITDA margin
In the quarter and year ended December 31, 2022, adjusted EBITDA margin for the APAC reportable segment decreased
200 bps and 40 bps, respectively.
In 2022, results in Australia in both the quarter and the year, were affected by lower project performance. In New Zealand,
margins in Q4 2022 have normalized, as timing of variation orders realized in Q4 2021 favourably impacted results in the
comparable period. Adjusted EBITDA margin in Asia has decreased for both the quarter and full year, mainly due to more
stringent COVID-19 lockdown measures.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-15
8 FINANCIAL REVIEW
(in millions of dollars, except number of shares and per share data)
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Fourth quarters ended
Years ended
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
Impairment of long-lived assets
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
$3,560.8
$1,889.3
$1,007.1
$229.0
$77.6
$73.1
$30.6
$5.1
$49.7
$19.4
$1.0
($6.4)
$185.3
$27.3
$158.0
$37.6
$120.4
$120.0
$0.4
$0.96
$0.96
$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
$126.7
$0.1
$1.08
$1.07
$11,932.9
$10,279.1
$6,679.9
$2,975.7
$794.0
$288.5
$173.4
$114.6
$21.6
$115.5
$49.9
($5.3)
($24.0)
$749.1
$161.6
$587.5
$152.8
$434.7
$431.8
$2.9
$3.59
$3.58
$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
$4.07
$4.05
Basic weighted average number of shares
Diluted weighted average number of shares
124,426,229
124,730,705
117,661,970
118,082,536
120,400,365
120,709,390
116,479,695
116,901,686
8.1 NET REVENUES
(in millions of dollars, except percentages)
Canada
Americas
EMEIA
APAC
Total
Fourth quarters of 2022 vs 2021
Net revenues - 2022
Net revenues - 2021
Net change %
Organic growth*
Acquisition growth*
Foreign currency exchange impact**
Net change %
$438.4
$360.6
21.6 %
3.4 %
18.2 %
— %
21.6 %
$986.1
$763.3
29.2 %
0.9 %
20.9 %
7.4 %
29.2 %
$738.5
$658.1
12.2 %
8.8 %
9.3 %
(5.9)%
12.2 %
$390.7
$365.4
$2,553.7
$2,147.4
6.9 %
18.9 %
7.2 %
2.2 %
(2.5)%
6.9 %
4.8 %
13.7 %
0.4 %
18.9 %
*
**
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 and acquisition growth.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-16
(in millions of dollars, except percentages and number of employees)
Canada
Americas
EMEIA
APAC
Total
Fiscal years 2022 vs 2021
Net revenues - 2022
Net revenues - 2021
Net change %
Organic growth*
Acquisition growth*
Foreign currency exchange impact**
Net change %
Approximate number of employees - December 31, 2022
Approximate number of employees - December 31, 2021
Net change %
$1,585.2
$1,304.5
$3,256.4
$2,709.2
$2,651.1
$2,528.4
$1,464.5
$1,327.5
$8,957.2
$7,869.6
21.5 %
20.2 %
4.9 %
10.3 %
13.8 %
8.7 %
12.8 %
— %
21.5 %
11,800
9,500
24.2 %
5.4 %
11.2 %
3.6 %
20.2 %
20,500
16,000
28.1 %
7.4 %
4.7 %
(7.2)%
4.9 %
As at
22,500
20,100
11.9 %
10.0 %
4.1 %
(3.8)%
10.3 %
11,400
9,700
17.5 %
7.3 %
8.2 %
(1.7)%
13.8 %
66,200
55,300
19.7 %
*
**
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 and acquisition growth.
During the fourth quarter of 2022, the Corporation achieved net revenues of $2.55 billion, up 18.9% compared to the fourth
quarter of 2021. The increase was driven by the acquisition of E&I in September 2022, as well as organic growth of 4.8%,
despite four less billable days compared to Q4 2021. Net revenue organic growth would be approximately 9.5% if
normalized for the same number of billable days. Organic growth spanned all reportable segments, led by the UK and
Australia. Organic and acquisition growth in EMEIA and APAC segments were partially offset by negative impacts of
foreign exchange.
In the year ended December 31, 2022, net revenues increased 13.8% compared to 2021, exceeding the high end of
Management's outlook range for the year of $8.9 billion. The increase was principally due to acquisition growth of 8.2%
and organic growth of 7.3%. Organic growth was achieved across all reportable segments, and most pronounced in the US,
the UK, Canada and Australia. The Golder Acquisition and E&I Acquisition were the main contributors to the acquisition
growth. Organic and acquisition growth in EMEIA and APAC segments was partially offset by negative impacts of foreign
exchange.
In 2022, the number of employees increased by approximately 10,900. The increase in the number of employees is mainly
attributable to 7,600 employees from recently acquired businesses, as well as recruitment to support organic growth of our
business across all segments.
Refer to section 7, “Segment operational review” for further analysis of net revenues by segment.
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
Years ended
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
$3,560.8
$1,007.1
$2,553.7
$2,891.0
$743.6
$2,147.4
$11,932.9
$10,279.1
$2,975.7
$8,957.2
$2,409.5
$7,869.6
(1) Total of segments measure. Refer to section 22, “Glossary of segment reporting, non-IFRS and other financial measures”.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-17
8.2 BACKLOG
(in millions of dollars)
Backlog, as at December 31, 2021
Revenues
Organic order intake
Net order intake through business acquisition
Foreign exchange movement
Backlog, as at December 31, 2022
Organic backlog growth in the year
Canada
$1,817.3
Americas
$4,536.5
EMEIA
$2,442.5
APAC
$1,629.3
Total
$10,425.6
$(2,151.2)
$(4,826.4)
$(3,207.8)
$(1,747.5)
$(11,932.9)
$2,136.3
$497.6
$4.8
$2,304.8
(0.8)%
$5,305.9
$1,088.0
$211.3
$6,315.3
$3,592.1
$158.4
$(132.4)
$2,852.8
$1,675.1
$18.0
$(41.3)
$12,709.4
$1,762.0
$42.4
$1,533.6
$13,006.5
10.6 %
16.4 %
(4.6)%
7.6 %
As at December 31, 2022, backlog stood at $13.0 billion, representing 11.8 months of revenues(1), an increase of 24.8% as
compared to December 31, 2021. Organically and on a constant currency basis, backlog grew by 7.6% compared to backlog
as at December 31, 2021. Throughout 2022, we continued to see positive momentum in all reportable segments with a
substantial order intake amounting to $12.7 billion.
This strong level of backlog, coupled with the increases in the number of employees worldwide, sets the Corporation in a
favourable position. In Canada and APAC, the pipeline of opportunities remains strong and recent wins are expected to
positively impact backlog in coming quarters.
(1)
Based on revenues for the trailing twelve-month period, incorporating a full twelve months of revenues for all acquisitions.
8.3 ADJUSTED EBITDA
Fourth quarter ended December 31, 2022
(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)
$438.4
$91.9
21.0%
$986.1
$211.1
21.4%
EMEIA
$738.5
$105.5
14.3%
APAC
$390.7
$69.7
17.8%
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%
Total
$2,553.7
$478.2
18.7%
$31.8
$446.4
Total
$2,147.4
$389.5
18.1%
$28.3
$361.2
(1)
(2)
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.
Non-IFRS financial measure.
WSP Global Inc.
Management's Discussion and Analysis
2022
(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)
(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)
Year ended December 31, 2022
Canada
$1,585.2
$347.9
21.9%
Americas
$3,256.4
$644.7
19.8%
EMEIA
$2,651.1
$390.0
14.7%
APAC
$1,464.5
$267.1
18.2%
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%
APAC
$1,327.5
$246.3
18.6%
M-18
Total
$8,957.2
$1,649.7
18.4%
$119.5
$1,530.2
Total
$7,869.6
$1,421.7
18.1%
$99.2
$1,322.5
(1)
(2)
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.
Non-IFRS financial measure.
Total adjusted EBITDA by segment and total adjusted EBITDA margin by segment stood at $478.2 million and 18.7%,
respectively, for the fourth quarter ended December 31, 2022, compared to $389.5 million and 18.1%, respectively, for the
corresponding period in 2021. Adjusted EBITDA margin by segment increased mainly due to the US operations, partially
offset by lower adjusted EBITDA margin in the APAC segment.
For the year ended December 31, 2022, total adjusted EBITDA by segment and total adjusted EBITDA margin by segment
stood at $1.65 billion and 18.4%, respectively, compared to $1.42 billion and 18.1%, respectively, in 2021. Adjusted EBITDA
margin by segment increased due to strong performance in Canada, partially offset by lower adjusted EBITDA margin in
APAC.
The variance explanations by segment are described in section 7, “Segment operational review”.
Head office corporate costs for the fourth quarter and year ended December 31, 2022 stood at $31.8 million and
$119.5 million, respectively, higher than the comparable periods in 2021 mainly due to the long-term incentive plans and
recent acquisitions. Head office corporate costs exceeded Management's outlook range for the year of $95.0 million to
$110.0 million, largely due to recent acquisitions.
WSP Global Inc.
Management's Discussion and Analysis
2022
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:
Fourth quarters ended
Years ended
(in millions of dollars)
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
M-19
Earnings before net financing expense and income taxes
$185.3
$185.2
Acquisition, integration and reorganization costs
ERP implementation costs
Depreciation of right-of-use assets
Amortization of intangible assets
Depreciation of property and equipment
Impairment of long-lived assets
Share of depreciation and taxes of associates
Interest income
Adjusted EBITDA*
* Non-IFRS financial measure.
$49.7
$19.4
$77.6
$73.1
$30.6
$5.1
$3.2
$2.4
$23.6
$6.8
$65.5
$46.8
$29.8
$—
$2.1
$1.4
$749.1
$115.5
$49.9
$288.5
$173.4
$114.6
$21.6
$11.8
$5.8
$724.6
$60.8
$6.8
$265.8
$139.1
$113.6
$—
$9.4
$2.4
$446.4
$361.2
$1,530.2
$1,322.5
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)
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Fourth quarters ended
Years ended
Net revenues
Personnel costs
Other operational costs
Exchange 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
Impairment of long-lived assets
Acquisition, integration and reorganization costs and ERP
implementation costs
Share of depreciation and taxes of associates
Deduct: Interest income
Earnings before net financing expense and income taxes
Net financing expense
Income tax expense
Net earnings
100.0 %
74.0 %
9.0 %
(0.1)%
(0.4)%
17.5 %
3.0 %
1.2 %
2.9 %
0.2 %
2.7 %
0.1 %
0.1 %
7.3 %
1.1 %
1.5 %
4.7 %
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 %
74.5 %
8.9 %
(0.1)%
(0.4)%
17.1 %
3.2 %
1.3 %
1.9 %
0.2 %
1.9 %
0.1 %
0.1 %
8.4 %
1.8 %
1.7 %
4.9 %
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 %
WSP Global Inc.
Management's Discussion and Analysis
2022
M-20
In the fourth quarter of 2022, adjusted EBITDA margin increased to 17.5%, compared to 16.8% in the fourth quarter of 2021.
For the year, the adjusted EBITDA margin increased to 17.1%, compared to 16.8% in 2021. The increases are due to lower
other operating costs, mainly due to lower discretionary spending, partially offset by higher travel costs. In both periods,
the adjusted EBITDA was negatively impacted by overall lower foreign exchange gains than in the comparable periods.
In the fourth quarter ended December 31, 2022, earnings before net financing expense and income taxes remained stable,
but decreased as a percentage of net revenues, mainly due to ERP implementation costs which ramped up in 2022, and
higher acquisition and integration costs, as well as amortization of intangible assets, due to recent acquisitions. In the year
ended December 31, 2022, earnings before net financing expense and income taxes increased, but decreased as a
percentage of net revenues, as higher adjusted EBITDA was offset by higher acquisition and integration costs due to recent
acquisitions and ERP implementation costs, as well as charges against certain leased assets related to office consolidations
as part of our real estate strategy.
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 ended December 31, 2022, the increases in personnel costs as a percentage of net revenues, as compared to
the corresponding periods in 2021, stemmed mainly from inflationary pressures on salaries.
For the year ended December 31, 2022, personnel costs were largely stable as a percentage of net revenues, as compared to
2021.
During the quarter and year ended December 31, 2022, the Corporation recorded $2.1 million and $6.8 million of
government subsidies, recognized in personnel costs ($0.9 million and $14.4 million, respectively, during the comparable
periods in 2021).
Other operational costs
Other operational costs include fixed costs such as, but not limited to, non-recoverable client service costs, technology
costs, professional indemnity insurance costs and office space related costs (mainly utilities and maintenance costs).
Other operational costs for the quarter ended December 31, 2022, as a percentage of net revenues, were lower than the
comparable period in 2021, mainly due to lower discretionary spending, partially offset by higher travel costs.
Other operational costs for the year ended December 31, 2022, as a percentage of net revenues, were lower than in 2021, in
part due to certain synergies realized related to businesses acquired in 2021, mainly Golder, partially offset by higher
travel costs.
Exchange gains and losses and interest income
In the quarter and year ended December 31, 2022, operational foreign exchange resulted in losses of $1.0 million and gains
of $5.3 million, respectively, as compared to gains of $3.8 million and $18.6 million in the corresponding periods in 2021.
These variances are mainly attributable to the US dollar.
In both periods, lower foreign exchange gains were partially offset by higher interest income of $2.4 million and
$5.8 million, respectively, compared to $1.4 million and $2.4 million, respectively, in the corresponding periods in 2021.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-21
Depreciation, amortization and impairment of long-lived assets
Depreciation of intangible assets increased in the quarter ended December 31, 2022, mainly due to a higher level of
intangible assets from recently acquired businesses.
Depreciation of right-of-use assets, as a percentage of net revenues, decreased slightly in the quarter and year ended
December 31, 2022 when compared to the corresponding periods in 2021, 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.
In 2022, the Corporation recorded charges against certain leased assets in the context of on-going reorganizations as part
of our real estate strategy following recent acquisitions to reduce our footprint, realize synergies and improve the cost
structure of the combined business.
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 $49.7 million in the fourth quarter of 2022
and $115.5 million in the year ended December 31, 2022. The increases in the quarter and in the year are mainly due to
higher business acquisition and integration costs in 2022, related to the Golder Acquisition, the E&I Acquisition and other
recently completed and previously-contemplated acquisitions. Acquisition, integration and reorganization costs exceeded
Management's outlook range for the year of $50.0 million to $60.0 million, largely due to a higher volume of transactions.
In the quarter and year ended December 31, 2022, the Corporation incurred ERP implementation costs of $19.4 million and
$49.9 million, respectively, higher than $6.8 million in both corresponding periods in 2021, due to the ramp up in the
design and implementation of the Corporation's global cloud-based ERP solution. ERP implementation costs were within
Management's outlook range for the year of $45.0 million to $55.0 million.
8.5 FINANCING EXPENSES
Net financing expenses for the fourth quarter and year ended December 31, 2022 were higher than the comparable periods
in 2021. In the quarter and year, the increases were mainly attributable to higher interest on long-term debt following the
acquisition of E&I as well as recent increases in interest rates. In the year, the variance is also attributable to non-cash
losses in value of investments related to a US employee deferred compensation plan compared to gains in 2021, as well as
higher losses from derivative financial instruments in 2022 than in 2021.
8.6 INCOME TAXES
In the fourth quarter of 2022, income tax expense of $37.6 million was recorded on earnings before income taxes of
$158.0 million, representing an effective income tax rate of 23.8%.
For the year ended December 31, 2022, income tax expense of $152.8 million was recorded on earnings before income taxes
of $587.5 million representing an effective income tax rate of 26.0%, in line with Management's outlook range of 25% to
29%.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-22
8.7 NET EARNINGS
In the fourth quarter of 2022, the Corporation’s net earnings attributable to shareholders decreased to $120.0 million, or
$0.96 per share on a diluted basis, compared to $126.7 million, or $1.07 per share on a diluted basis for the comparable
period in 2021. The decrease is mainly attributable to higher amortization and depreciation, higher business acquisition
and integration costs and ERP implementation costs, and higher net financing expenses, partially offset by higher adjusted
EBITDA.
For the year ended December 31, 2022, the Corporation’s net earnings attributable to shareholders were $431.8 million, or
$3.59 per share, compared to $473.6 million, or $4.07 per share in 2021. The decrease is mainly due to higher net financing
expenses, amortization and depreciation, business acquisition and integration costs and ERP implementation costs,
partially offset by higher adjusted EBITDA.
8.8 ADJUSTED NET EARNINGS
Management has amended its definition of adjusted net earnings, effective January 1, 2022, to exclude impairment charges
on long-lived assets and reversals thereof. The amendment was made in the context of on-going and planned
reorganizations as part of our real estate strategy following recent and planned acquisitions in order to realize synergies
and improve the cost structure of the combined business. The comparative period results did not require restatement to
apply the current definition as no impairment of long-lived assets was recorded in 2021.
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) as well
as other charges directly or indirectly related to acquisitions. 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 $209.3 million, or $1.68 per share, in the fourth quarter of 2022, compared to $171.7 million,
or $1.46 per share, in Q4 2021. In the year ended December 31, 2022, adjusted net earnings stood at $692.6 million, or $5.75
per share, compared to $592.9 million, or $5.09 per share, in 2021. The increases in these metrics are mainly attributable to
higher adjusted EBITDA.
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)
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
Fourth quarters ended
Years ended
Net earnings attributable to shareholders
$120.0
$126.7
Amortization of intangible assets related to acquisitions
Impairment of long-lived assets
Acquisition, integration and reorganization costs
ERP implementation costs
Losses (gains) on investments in securities related to deferred
compensation obligations
Unrealized 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.
$49.3
$5.1
$49.7
$19.4
$(5.0)
$(3.5)
$(25.7)
$209.3
$1.68
$32.1
$—
$23.6
$6.8
$(4.0)
$(1.7)
$(11.8)
$171.7
$1.46
$431.8
$112.6
$21.6
$115.5
$49.9
$22.1
$20.1
$(81.0)
$692.6
$5.75
$473.6
$95.1
$—
$60.8
$6.8
$(14.0)
$7.7
$(37.1)
$592.9
$5.09
WSP Global Inc.
Management's Discussion and Analysis
2022
M-23
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
Years ended
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
$607.4
$(450.0)
$(87.0)
$4.7
$75.1
$(23.7)
$(72.8)
$513.2
$(138.3)
$(76.1)
$(4.6)
$294.2
$(20.1)
$(60.6)
$814.8
$1,420.7
$1,060.1
$790.2
$(2,682.7)
$(1,344.9)
$11.9
$(435.3)
$(90.1)
$(164.5)
$(13.8)
$491.6
$(80.6)
$(110.8)
* 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, 2022, compared to 2021 is mainly
attributable to the expected normalization of our DSO levels in 2022, the increased investment in the global ERP
implementation, higher acquisition, integration and reorganization costs, and higher income taxes paid mainly due to
changes in tax regulations in the US which delays the deductibility of certain expenses. In addition, organic growth in
revenues in 2022 resulted in an increased investment in working capital.
Free cash flow
In the fourth quarter ended December 31, 2022, the Corporation achieved its highest quarterly free cash flow, reaching
$442.7 million.
Free cash flow for the year ended December 31, 2022 was $309.0 million, compared to $646.1 million in 2021. Free cash
flows represent 0.7 times the net earnings attributable to shareholders. Lower free cash flow in 2022 was mainly
attributable to the decrease in cash flows from operating activities, as well as increases in net capital expenditures and
lease payments to support growth.
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
Years ended
December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
$607.4
$(91.9)
$(72.8)
$442.7
$513.2
$(82.7)
$(60.6)
$369.9
$814.8
$(341.3)
$(164.5)
$309.0
$1,060.1
$(303.2)
$(110.8)
$646.1
* Capital expenditures pertaining to property and equipment and intangible assets, net of proceeds from disposal and lease incentives received.
** Non-IFRS financial measure.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-24
9.2 FINANCING ACTIVITIES
In the fourth quarter ended December 31, 2022, cash outflows from financing activities of $450.0 million were mainly due
to net repayments of borrowings under credit facilities and lease payments.
In the year ended December 31, 2022, cash inflows from financing activities of $1,420.7 million were mainly due to net
proceeds of borrowings under credit facilities and the issuance of common shares.
9.3 INVESTING ACTIVITIES
In the fourth quarter ended December 31, 2022, cash outflows used for investing activities related mainly to net capital
expenditures and business acquisitions.
In the year ended December 31, 2022, cash outflows used for investing activities related mainly to business acquisitions.
Net capital expenditures in 2022 of $164.5 million were within Management's outlook range of $160 million to
$180 million.
9.4 NET DEBT TO ADJUSTED EBITDA RATIO
As at December 31, 2022, the Corporation’s statement of financial position remained strong, with a net debt position of
$2,458.9 million and a net debt to adjusted EBITDA ratio of 1.6x, within the Corporation's target ratio range of 1.0x to 2.0x.
The increase in the net debt to adjusted EBITDA ratio is due to issuance of long-term debt used to finance the E&I
Acquisition, while the trailing twelve-month adjusted EBITDA does not yet include the full results of recently acquired
businesses. Incorporating a full twelve months of adjusted EBITDA of all acquired businesses, the net debt to adjusted
EBITDA ratio would be 1.5x.
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
As at
December 31, 2022 December 31, 2021
$495.6
$1,857.4
$168.1
$2,521.1
$927.4
$1,442.9
$182.4
$2,552.7
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.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-25
9.6 CREDIT FACILITIES
The Corporation has in place, as at December 31, 2022, three credit facilities:
•
•
•
a credit facility with a syndicate of financial institutions providing for a maximum amount of US$1.5 billion with
maturities up to April 2027, comprised of a US$1.5-billion revolver in two tranches;
a US$750-million fully-committed bank financing in the form of term loans with maturities up to April 2025; and
a US$1.0-billion fully-committed credit facility in the form of term loans, described in the following paragraph.
The US$1.5-billion credit facility is available for general corporate purposes and for financing business acquisitions.
In August 2022, the Corporation entered into a fully-committed US$1.8-billion term credit facility with various tenors of up
to 5 years, which was fully drawn to finance the E&I Acquisition which closed in September 2022. Also in September 2022,
the Corporation repaid a portion of the indebtedness under that credit facility, such that the maximum amount of the
credit facility became US$1.0 billion. As at December 31, 2022, the US$1.0-billion credit facility was fully drawn.
Under these credit facilities, the Corporation is required, among other conditions, to respect certain covenants calculated
on a consolidated basis. The financial 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, 2022.
9.7 DIVIDENDS
On November 9, 2022, the Corporation declared a quarterly dividend of $0.375 per common share to holders of common
shares on record as of December 30, 2022, which was paid on January 16, 2023. The total amount of the dividend for the
fourth quarter of 2022 was $46.7 million, paid subsequent to the end of the year.
Following the payment of the dividends declared on November 9, 2021, March 9, 2022, May 11, 2022 and August 8, 2022,
$89.2 million was reinvested in 584,457 common shares under the DRIP during the year ended December 31, 2022.
Subsequent to the end of the year, holders of 38,716,764 common shares, representing 31.1% of all outstanding shares as at
December 30, 2022, elected to participate in the DRIP. As a result, on January 16, 2023, $14.5 million of the fourth quarter
dividend declared on November 9, 2022 was reinvested in common shares of the Corporation. The net cash outflow on
January 16, 2023 for the fourth quarter dividend payment was $32.2 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.
9.8 STOCK OPTIONS
As at March 7, 2023, 837,889 stock options were outstanding at exercise prices ranging from $41.69 to $180.65.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-26
10 EIGHT QUARTER SUMMARY
(in millions of dollars, except per share data)
Results of operations
Revenues
Net revenues
Adjusted EBITDA*
2022
2021
Fiscal
year
2022
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Fourth quarter
ended
December 31
Third quarter
ended October 1
Second quarter
ended July 2
First quarter
ended April 2
Fourth quarter
ended
December 31
Third quarter
ended
September 25
Second quarter
ended June 26
First quarter
ended March 27
$11,932.9
$3,560.8
$2,896.1
$2,764.2
$2,711.8
$2,891.0
$2,650.2
$2,633.1
$2,104.8
$8,957.2
$2,553.7
$2,193.9
$2,109.6
$2,100.0
$2,147.4
$2,026.6
$2,028.8
$1,666.8
$1,530.2
$446.4
$407.0
$352.2
$324.6
$361.2
$377.7
$342.6
$241.0
Net earnings attributable to shareholders
$431.8
$120.0
$127.5
Basic net earnings per share**
Diluted net earnings per share**
$3.59
$3.58
$0.96
$0.96
$1.05
$1.05
$89.3
$0.76
$0.75
$95.0
$0.81
$0.80
$126.7
$139.0
$120.0
$1.08
$1.07
$1.18
$1.18
$1.03
$1.02
$87.9
$0.77
$0.77
Backlog
Dividends
$13,006.5 $13,253.8 $11,448.8 $11,021.4
$10,425.6 $10,032.4
$9,632.4
$8,430.9
Dividends declared
$181.8
$46.7
$46.6
$44.3
$44.2
$44.2
$44.1
$44.0
$42.7
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.
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.
2022
2021
2020
$11,932.9
$8,957.2
$431.8
$3.59
$3.58
2022
$14,841.7
$3,637.9
$1.50
$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
In 2021, revenues and net revenues increased 16.8% and 14.7%, respectively, compared to 2020, mainly due to net revenue
acquisition growth of 15.3%, as well as net revenue organic growth of 3.3%, led by Canada and the UK. The Golder
Acquisition was the principal contributor to the net revenue acquisition growth in 2021. In 2022, revenues and net
WSP Global Inc.
Management's Discussion and Analysis
2022
M-27
revenues increased 16.1% and 13.8%, respectively, compared to 2021. The increase in net revenue was principally due to
acquisition growth of 8.2% and organic growth of 7.3%. Organic growth was achieved across all reportable segments, and
most pronounced in the US, the UK, Canada and Australia. Net revenues exceeded the high end of Management's outlook
range for the year of $8.9 billion.
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. Net earnings attributable to shareholders and net earnings per share
attributable to shareholders decreased from 2021 to 2022 mainly due to higher net financing expenses, amortization and
depreciation, business acquisition and integration costs and ERP implementation costs, partially offset by higher adjusted
EBITDA.
From December 31, 2020 to December 31, 2021 and from December 31, 2021 to December 31, 2022 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, 2022.
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, 2022.
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 E&I, which was acquired on September 21, 2022, 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, 2022 presents summary financial information with respect to E&I.
There were no changes in the Corporation’s ICFR that occurred during the period beginning on October 2, 2022 and ended
on December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Corporation’s ICFR.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-28
The Corporation regularly monitors and assesses 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.
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, 2022, 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, 2022.
14 SIGNIFICANT ACCOUNTING POLICIES
CHANGES IN ACCOUNTING POLICY EFFECTIVE IN 2022
The following amendments to existing standards were adopted by the Corporation on January 1, 2022 and had no impact
on the Corporation’s consolidated financial statements.
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.
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, 2022, for further details.
WSP Global Inc.
Management's Discussion and Analysis
2022
M-29
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, 2022 for a
description of the Corporation's hedging activities.
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, 2022, 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,
2022.
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, 2022:
(in millions of dollars)
Long-term debt
Lease liabilities
2023
$345.6
$325.4
2024
$707.0
$265.5
2025 and
thereafter
$2,359.3
$707.7
Total
$3,411.9
$1,298.6
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 (collectively, “forward-looking statements”). Such statements relate to
future events or future performance and reflect the expectations of Management regarding, without limitation, the
WSP Global Inc.
Management's Discussion and Analysis
2022
M-30
growth, results of operations, performance and business prospects and opportunities of the Corporation, the achievement
of its 2022-2024 Global Strategic Action, or the trends affecting 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.
More specifically, this MD&A contains the following forward-looking statements: our expectations and other statements
relating to the achievement of, or tracking towards, our 2022-2024 Global Strategic Action Plan; the impact of positive wins
on our backlog and the state of our backlog in various reportable segments; our belief that our cash flows from operating
activities, combined with our available short-term capital resources, will enable us to support our continued growth
strategy, working capital requirements and planned capital expenditures; our expected level of dividend declaration and
payment on the Corporation’s common shares. 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
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; 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 current or
expected 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, social and health and safety risks; 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” : “Health and Safety Risks and Hazards”; “Non-Compliance with Laws or Regulations”;
“Information Technology and Information Security”; “Availability and Retention of Qualified Professional Staff”;
“Adequate Utilization of Workforce”; “Global Operations”; “Competition in the Industry”; “Professional Services
Contracts”; “Economic Environment”; “Geopolitical Risks”; “Working with Government Agencies”; “Challenges Associated
with Size”; “Growth by Acquisitions”; “Acquisition Integration and Management”; “Challenges associated with disease
outbreaks, including COVID-19”; “Controls and Disclosure”; “Current or Future Legal Proceedings”; “Reputation”;
“Increasing Requirements and Stakeholder Expectations Regarding Environment, Social and Governance “ESG” matters”;
“Climate Change and related Physical and Transition Risks”; “Ecological and Social Impacts of Projects”; “Work Stoppage
and Labour Disputes”; “Joint Arrangements”; “Reliance on Suppliers and Subconsultants”; “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”; as well as other risks
detailed from time to time in reports filed by the Corporation with securities regulators or securities commissions or other
WSP Global Inc.
Management's Discussion and Analysis
2022
M-31
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. Actual results and events may be
significantly different from what we currently expect because of the risks associated with our business, industry and global
economy and of the assumptions made in relation to these risks. As such, there can be no assurance that actual results will
be consistent with forward-looking statements. Except to the extent required by applicable law, the Corporation assumes
no obligation to publicly update or revise forward-looking statements made in this MD&A or otherwise, whether as a
result of new information, future events or otherwise. The forward-looking statements contained in this MD&A describe
the Corporation’s expectations as of the date of this MD&A and, accordingly, are subject to change after such date. The
forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement. 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. Readers should not place undue reliance on forward-looking statements.
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
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, services and activities to be performed on work sites can put employees,
subconsultants and others in challenging or remote locations which may increase the risk to health and safety from
hazards related to heavy mobile equipment, working at height, energy sources, working near water and ground stability.
On some project sites, the Corporation may be responsible for safety and, accordingly, it has an obligation to implement
effective safety procedures. Through recent acquisitions in the Earth and Environment sector, the Corporation has
increased its exposure to health and safety risks on project sites primarily due to the nature of services rendered in this
sector which often include activities to be performed directly on project sites. 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.
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 inadequate 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
WSP Global Inc.
Management's Discussion and Analysis
2022
M-32
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 events against which it cannot insure
or against which it may elect not to insure for various reasons.
The Corporation operates in 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 strives to protect, support and promote the wellbeing of its people through workplace
practices and wellbeing programs. Failure to meet those goals may lead to deteriorating work-life balance, reduction in
productivity, decline in workforce mental and physical health, increase in absenteeism, voluntary turnover, 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, social and governance matters 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. In particular, the regulatory landscape surrounding environmental, social and governance matters is
evolving at a rapid pace in multiple jurisdictions and there is a significant degree of uncertainty regarding the scope of
future requirements. As a result, we may be required to rapidly adapt data collection and assurance processes, with the
risk that information will not be available to the Corporation to respond to the relevant requirements in a timely manner.
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. 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. For additional information on compliance risks associated with working with
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Management's Discussion and Analysis
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government bodies, entities and agencies, see “Working with Government Agencies”. 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.
Furthermore, a portion of the Corporation’s professional services business is generated directly or indirectly as a result of
laws and regulations. Changes in such laws or 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 and materially adversely impact the
Corporation’s business, financial condition and results 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 privacy rights and
personal information. The global data protection landscape continues to evolve, and the Corporation is required to
navigate distinct obligations and compliance risks in various countries and regions it operates in. The impact and cost of
ensuring compliance and protecting the data and privacy rights of individuals in line with the specifics of each applicable
legislation continues to grow each year. Failing to protect privacy rights 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), the California Consumer Privacy Act (CCPA) as amended
by the California Privacy Rights Act, Brazil’s General Personal Data Protection law and other emerging global privacy laws,
could result in the Corporation being subject to significant regulatory penalties, legal liability and remediation costs and
negatively impact its reputation.
Information Technology and Information Security
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, confidential 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 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, and there can be no assurance that our efforts will prevent all threats to
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Management's Discussion and Analysis
2022
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our systems. The Corporation may be required to allocate increasingly significant resources, and additional security
measures, to protect against the cyber threats referenced above.
Compliance with information security standards such as NIST, DFAR and ISO27001, among others, 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 material risks or losses.
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
and protection of 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 Corporation’s employees are provided with systems and infrastructure that facilitate secure remote working,
including from their place of residence, public spaces and sites owned or managed by third parties and clients. However,
these locations may not have the same level of physical security controls as the Corporation’s offices which could increase
the risk of a physical security event, such as device theft, which may disrupt operations.
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.
Availability and Retention of Qualified Professional Staff
There is strong competition for qualified technical and management personnel in the sectors in which the Corporation
operates. The Corporation’s success depends in part on its continued ability to attract and retain qualified and skilled
engineers, scientists, planners, technical experts and other professional staff and to establish and execute an effective
succession plan. Over the years, a significant shortage of engineers and other professionals serving our industry has
developed in some markets which resulted in continued upward pressure on professional compensation packages and has
resulted in high turnover rates, adding pressure on employee retention. Competition in the industry today largely
involves the competition for talent. Considering longer term trends in the industry including demographics, scarcity of
talent relative to demand and the pace of technological advances, the Corporation expects this risk to remain significant to
its business. 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 may 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.
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Management's Discussion and Analysis
2022
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When the Corporation fails to retain key personnel or when such personnel retire or otherwise depart the Corporation, the
roles and responsibilities of such employees need to be filled, which requires 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 enough 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. Among other things, the Corporation has set in its 2022-2024 Global Strategic Action Plan a target of
5% year-over-year increase in the representation of women and under-represented groups. Failure to meet our goals of
fostering an inclusive, equitable, diverse and non-discriminatory culture, including our targets of increasing
representation of women and under-represented groups, could impact our workforce development goals, our retention
efforts, our ability to achieve our business objectives, our reputation and adversely affect our business and future success.
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:
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its ability to transition employees from completed projects to new assignments and to hire and integrate timely
new employees, including those coming from newly acquired entities;
its ability to forecast demand for its services and thereby maintain an appropriate headcount in each of its
geographies;
Its ability to adequately plan succession to ensure leadership roles, critical positions and technical capabilities are
properly maintained, developed and timely prepared to carry on the Corporation business objectives and its
future growth;
its ability to manage attrition;
its need to devote time and resources to training, business development, professional development, and other
non-chargeable activities;
its ability to match the skill sets of its employees to the needs of the marketplace; and
its ability to adapt its organizational structure to support and meet the needs of its clients while optimizing its
resources to meet its margin objectives.
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 operations are global, which subjects the Corporation to a variety of risks, including:
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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;
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 laws, regulations and policies affecting the markets for the Corporation’s
services, including applicable international sanctions;
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Management's Discussion and Analysis
2022
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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 or increase in the future;
• multiple and possibly overlapping tax structures;
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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.
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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 may allocate substantially more financial or marketing resources to
particular competitive bidding processes and/or benefit from greater financial flexibility than the Corporation in certain
markets or they may be willing to take greater risks or accept terms and conditions that the Corporation may not deem to
be acceptable. Other competitors are smaller and may be 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.
In addition, competitive pressures may result in the Corporation being successful in a lesser number of competitive bids
than budgeted for, which if material, could result in a negative impact on its profitability.
All of 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, cost-plus contracts with ceilings and time and
material contracts with fixed rates. 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, cost-plus contracts with ceilings and time and material contracts with fixed rates are established in
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Management's Discussion and Analysis
2022
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part on partial or incomplete designs, cost and scheduling estimates that are based on a number of assumptions, including
those about future economic conditions (including inflation and interest rates), commodity and other materials pricing
(including construction costs) 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.
Increasing the volume of fixed-price contracts, cost-plus contracts with ceilings or time and material contracts with fixed
rates and/or increasing the 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 sometimes partners with construction delivery professionals on engineering, procurement
and construction (“EPC”) projects. In such cases, the Corporation may be required to assume not only design risks, but also
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 (including legal proceedings) 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 legal proceedings, which can be costly and detrimental to 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, including making any pricing adjustment difficult in a
highly inflationary environment, that could lead to lower margins and adversely affect the profitability of the
Corporation’s projects.
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. Also,
there is a growing risk of recessions or other economic downturns. 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. Any of these conditions may impact demand for
the Corporation’s services by public and private entities or impact our cost of doing business. 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.
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Management's Discussion and Analysis
2022
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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 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 and may also bear inflation risk in relation to cost-plus contracts with ceilings or
contracts on a time and material basis where hourly rates are fixed. 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. The impact of inflation could also subject the Corporation to significant cost pressure,
including increasing costs of borrowing, or lead to a decrease in the liquidity of capital markets.
Geopolitical Risks
The Corporation is exposed to various geopolitical risks as it operates across the world in an increasingly interconnected
global economy. The Corporation has a geographically dispersed client base which it serves with local presence and
through a network of operations located around the globe. Escalating conflicts and unrest can affect particular regions and
may also have severe repercussions in other parts of the world. As such, the Corporation may be adversely affected by
deteriorating uncertainties arising from political, economic, military or social conditions emerging from domestic or
international conflicts and crisis.
The potential impacts on the Corporation depend on the extent and depth of geopolitical conflicts as they materialize and
may include consequences such as delays or cancellation of contracts, changes in regulatory practices, impact to tariffs
and taxes, restrictions to global mobility, productivity slowdowns, low workforce morale, inability to deliver projects in
the affected region and deterioration of local and global economies.
In particular, the armed conflict between Ukraine and Russia has accelerated a global energy crisis as a result of Western
sanctions imposed against Russia. Although the impacts are felt across the world, the European Union, and more
particularly the Nordics region, are significantly affected by this ongoing conflict. The conflict between Ukraine and
Russia has adversely impacted the price of fuel and energy and has impacted mobility of people and goods across the
European Union. Consequently, major logistical issues have caused shortages of certain materials in the construction
industry which has forced certain of our projects to be postponed or cancelled. The Corporation has suffered limited
impacts so far and continues to monitor this conflict closely and adjust its operations and practices to minimize potential
impacts. However, should the Ukraine-Russia conflict persist for a significant period of time, the Corporation may be
adversely affected by deteriorating impacts on its employees, operations and business.
The volatile, uncertain and unpredictable nature of external factors related to geopolitical risks cannot be easily managed.
The Corporation has established a systematic process to assess and monitor regional conditions and has defined
appropriate policies and controls to engage in work that aligns with its risk tolerance levels. However, these conditions
may change through time and potentially render these controls ineffective. If the Corporation does not successfully and
timely adjust to these factors or implement appropriate mitigations, its workforce, business and results of operations may
be materially adversely impacted.
Working 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, concerns regarding deficits, inflation and a recession), economic crisis, changing political priorities,
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Management's Discussion and Analysis
2022
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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:
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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 over a defined period, 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.
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.
In addition, 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 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, financial condition and results of operations.
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Management's Discussion and Analysis
2022
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Challenges Associated with Size
In recent years, the Corporation has significantly increased in size and, as at December 31, 2022, had approximately 66,200
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 goals. 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 at all, or from occurring within the time periods
forecasted 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.
Although we seek to complete a thorough due diligence process in connection with any acquisition or related transaction
we pursue, there remains a level of risk regarding the accuracy and completeness of the information provided to the
Corporation or our ability to discover or accurately quantify certain liabilities, deficiencies, contingencies or other
obstacles to a successful integration which could have a material adverse effect on the Corporation’s business, financial
condition or future prospects. While we strive to obtain adequate indemnification rights from the sellers of acquired
businesses and/or insurance that could mitigate certain of these risks, such rights may be difficult to enforce, the losses
may exceed any dedicated escrow funds or holdbacks and the indemnitors may not have the ability to financially support
the indemnity, or the insurance coverage may be unavailable or insufficient to cover all losses.
In addition, it may prove increasingly challenging to identify attractive targets for acquisitions, and such firms may not be
available on terms and conditions, including pricing, that are acceptable to us, which may negatively impact our ability to
successfully pursue our growth strategy. Existing cash balances and cash flow from operations, together with borrowing
capacity under our credit facilities, may be insufficient to make acquisitions. Future acquisitions may require us to obtain
additional equity or debt financing, which may not be available on attractive terms, or at all.
Further, the Corporation may enter into new markets or take on new activities as a result of its acquisitions. This carries
the risk 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 or inefficiently mitigate the risks associated with
these new markets or activities.
Consummation of acquisitions may be subject to the satisfaction of customary closing conditions. One or more of these
conditions may not be fulfilled and, accordingly, the transaction may not be consummated or may be significantly delayed.
If the transaction is not consummated, we will have incurred costs, often substantial, without realizing the expected
benefits of the acquisition. To the extent the market price of our shares reflects a market assumption that the transaction
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Management's Discussion and Analysis
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will be consummated or will be consummated within a particular timeframe, the market price of our shares may decline.
The announcement of the transaction or its pendency can cause uncertainty among clients and employees about the effect
of the transaction which could have an adverse effect on the Corporation’s ability to maintain existing business
relationships or retain key employees. The pursuit of the transaction will also require management attention and use of
internal resources that would otherwise be focused on general business operations. Any of the foregoing, or other risks
arising in connection with a failure or delay in consummating a transaction, including the diversion of management
attention or loss of other opportunities during the pendency of the transaction, could have a material adverse effect on
our business, financial condition and results of operations.
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. There is no assurance that the Corporation will be able to successfully
integrate its acquisitions. 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. Cultural differences, including but not limited to differences in corporate cultures, may also
present barriers to the successful integration of businesses acquired by the Corporation. Among other things, 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.
While in transition, information technology and financial management systems integration of acquired firms may expose
us to information security, cyber security risks, and gaps in internal controls.
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.
Each year, the Corporation incurs acquisition and integration costs which may be material. Such costs are difficult to
estimate accurately and may exceed estimates. The Corporation may also fail to accurately forecast the financial impact of
an acquisition, including tax and accounting charges. Accordingly, the benefits from an acquisition may be offset by
unexpected costs incurred in integrating the businesses, which could cause our revenue assumptions to be inaccurate.
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. There can be no assurance that we will be able to respond adequately or quickly
enough to the changing demands that material expansion will impose on management, team members and existing
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Management's Discussion and Analysis
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infrastructure, and changes to our operating structure may result in increased costs or inefficiencies that we cannot
anticipate. Any of these difficulties could adversely impact our business performance and results of operations.
Challenges associated with disease outbreaks, including COVID-19
Disease outbreaks, including epidemics, pandemics or similar widespread public health concerns, can cause serious
demand, supply and operational challenges that may negatively impact the Corporation's business, financial performance
and financial position. These public health concerns pose the risk that our employees, clients, subconsultants and other
business partners may be prevented from, or restricted in, conducting business activities for an indefinite period,
including due to the transmission of the disease or to emergency measures or restrictions that may be requested or
mandated by governmental authorities. The likelihood and magnitude of such impacts or the occurrence of any such
disease outbreak are inherently difficult to predict and will depend on many factors beyond the Corporation’s control and
knowledge.
In particular, the COVID-19 pandemic has created significant volatility, uncertainty and economic disruption since it was
declared a global pandemic in 2020. Although global economic recovery from the effects of the COVID-19 pandemic is
progressing and the necessity for containment efforts implemented by international, federal, state and local public health
and other governmental authorities to fight the spread of the disease have significantly diminished or, in most cases, been
eliminated, the pandemic has caused and may continue to cause material disruptions to businesses and to equity and
capital markets globally, and could continue to have an adverse impact on global economic conditions, which could
materially adversely affect our business. Further, the possibility of new variants or mutations of the virus could cause
governmental authorities or companies to strengthen or reintroduce emergency measures and restrictions which could
lead to disruption in the future and materially adversely affect our business. The extent to which the COVID-19 pandemic
impacts our future business, including our operations and the market for our securities, will depend on future
developments, which are highly uncertain and cannot be predicted at this time.
Controls and Disclosure
Inherent limitations to the Corporation’s internal or disclosure controls could result in a material misstatement of
financial information or other metrics disclosed by the Corporation, 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 are 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 information. Inadequate internal or disclosure controls may also have a material adverse
impact on the assets, liabilities, revenues, expenses, and reputation of the Corporation.
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.
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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 (including health and safety), 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 negatively impact the
Corporation’s relationship with its investors and potential investors, all of which could materially and adversely affect 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.
Increasing Requirements and Stakeholder Expectations Regarding Environmental,
Social and Governance (“ESG”) Matters
The Corporation and its clients are facing increasing ESG risk management and reporting expectations driven by
stakeholders including clients, investors, employees and communities as well as by an increasing number of regulatory
requirements globally. These expectations and obligations are expected to continue to evolve in the near future.
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Management's Discussion and Analysis
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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, protect the health, safety and wellbeing of its
workforce, and assess its impacts on biodiversity, among other ESG commitments.
The achievement of these goals and objectives is subject to 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, or fails to manage, measure or report on its progress in relation to such
ESG targets in a balanced manner, this could have financial, reputational, legal and regulatory 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. In addition, the Corporation offers advisory services in relation to
setting ESG targets and reporting on frameworks and as such, is subject to increased scrutiny of its corporate ESG
disclosures. Failure by the Corporation to reach its ESG targets could potentially lead to downgrades in its ratings and loss
of clients, partners or internal talent which could influence investor behaviour and negatively affect our reputation, all of
which would have an adverse effect on our business, results of operations and financial condition.
Climate Change and related Physical and Transition Risks
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 increasing heatwaves, sea level rise, extreme weather events, storm-related flooding or extended
drought, or other acute or chronic changes to the climate could disrupt its clients’ projects, its project delivery, or the
health and safety of its employees. The effects of climate change and extreme weather events on the Corporation’s clients
have the potential to cause negative impacts on the Corporation, including work stoppages, project delays, financial losses
and additional costs to resume operations, including increased insurance costs or loss of coverage, legal liability and
reputational losses.
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 at the same time.
However, the health and wellbeing of our employees may be impacted if there are significant, region-wide events such as
heatwaves or extreme weather, regardless of where employees are working, which may impact project delivery. The
Corporation conducts 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. Therefore, extreme weather events could also 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.
In addition to physical risks, climate change poses transitional risks to the Corporation such as market and technology
shifts, which could result in decreased demand for some of the Corporation's services. Furthermore, policy changes made
by governments in response to climate concerns could increase the costs or impact the viability of projects for some
clients, or alternatively increase demand for some of our services. It is currently difficult to predict the outcome of
climate-related proposals and their impact on the Corporation and its clients.
Ecological and Social Impacts of Projects
WSP works in industries including energy, mining, water, transportation and infrastructure, where related projects may
impact the environment or local or Indigenous/Aboriginal communities or take place in regions subject to geopolitical
tensions or with elevated human rights concerns. The impacts of our clients’ projects may include a reduction in
biodiversity, deforestation, water pollution, displacement of local populations, otherwise disrupt communities or lead to
the loss of territories claimed by certain groups. Beyond abiding by all applicable laws and regulations, the Corporation’s
clients must gain social acceptance for their 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
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Management's Discussion and Analysis
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changes, or even cancellation of projects, which could adversely impact the Corporation’s business, financial condition, or
its reputation.
Work Stoppage and Labour Disputes
As at December 31, 2022, employees predominantly in the Nordics, Brazil and Continental Europe, representing less
than 11% of the Corporation’s total employees and the vast majority of the Corporation’s unionized employees, were
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. There is an inherent risk that on-going or future negotiations relating to
collective bargaining agreements or union representation may not be favourable to the Corporation. From time to time,
the Corporation has also experienced attempts to unionize the Corporation’s non-unionized employees. Such efforts
can often disrupt or delay work and present risk of labour unrest.
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 or whereby the work to be delivered to our client is
integrated with our contract partners, the Corporation could be liable for both its own obligations and those of its partners
which could have an adverse impact on its financial condition and results of operations. 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 have to replace the
subconsultant to complete the subcontracted deliverables and the Corporation’s ability to fulfill its obligations may be
jeopardized. This may result in additional costs to the Corporation which could 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 or to meet the Corporation’s expectations set out in its Business Partners Code of Conduct could have an
adverse effect on the Corporation’s business, reputation, prospects, financial condition and results of operations.
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
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Management's Discussion and Analysis
2022
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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 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
The Corporation’s technology and intellectual property provide, in certain instances, a competitive advantage. Where
appropriate, the Corporation seeks to protect its technology and intellectual property, including trademarks, patents,
copyright, and industrial designs, by relying on registration, licensing, security controls and other available mechanisms,
as well as by implementing the proper legal contractual arrangement and non-disclosure agreements. Trade secrets are
generally difficult to protect. Our employees and contractors are subject to confidentiality obligations, but this protection
may be inadequate to deter or prevent misappropriation of our confidential information and/or infringement of our
intellectual property. If the Corporation is not able to fully protect its intellectual property rights or detect unauthorized
use of same or otherwise take appropriate steps to enforce its rights, they could be invalidated, circumvented, challenged
or become obsolete which could adversely impact the Corporation’s capacity to differentiate itself from its competitors.
Litigation to determine the scope of intellectual property rights, even if ultimately successful, could be costly and could
divert management’s attention away from other aspects of our business.
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 which could lead to claims and litigation and resulting liabilities, loss of
contracts or other consequences that could have a material adverse impact on our business, financial condition and results
of operations. 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.
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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.
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
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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 or may have to lower the dividends it
declares and pays 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. A breach of any covenant
or our inability to comply with the required financial ratios could result in a default under our credit facilities and limit
our ability to do further borrowing.
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.
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, 2022, the Corporation had $6.79 billion of goodwill, representing
46% of its total assets of $14.84 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
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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.
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. Nonetheless, 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.
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. 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
WSP Global Inc.
Management's Discussion and Analysis
2022
M-50
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.
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, 2022 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, 2022, the Corporation had 124,453,717 common shares outstanding. As at March 7, 2023, the Corporation had
124,548,081 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 on long-lived assets and reversals thereof, share of income tax expense
and depreciation of associates and joint ventures, acquisition, integration and reorganization costs and ERP
implementation costs. Adjusted EBITDA margin is defined as adjusted EBITDA expressed as a percentage of net revenues.
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
WSP Global Inc.
Management's Discussion and Analysis
2022
M-51
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, 2022, to exclude impairment charges
on long-lived assets and reversals thereof. The amendment was made in the context of on-going and planned
reorganizations as part of our real estate strategy following recent and planned acquisitions in order to realize synergies
and improve the cost structure of the combined business. The comparative period results did not require restatement to
apply the current definition as no impairment of long-lived assets was recorded in 2021.
Adjusted net earnings is defined as net earnings attributable to shareholders excluding:
•
•
•
•
•
•
•
amortization of intangible assets related to acquisitions;
impairment charges on long-lived assets and reversals thereof;
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, amortization of intangible assets related to acquisitions
and impairment charges on long-lived assets and reversals thereof 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. In addition,
reorganization of the business in line with our real estate strategy and realization of synergies following acquisitions may
lead to impairment or abandonment of certain assets in order to improve the Corporation's overall cost structure.
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 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
WSP Global Inc.
Management's Discussion and Analysis
2022
M-52
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, net of billings in excess of costs and anticipated profits, into cash. 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
2022
Consolidated
Financial
Statements
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N
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D
A
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D
F
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A
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F-1
2
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WSP Global Inc.
For the year ended
December 31, 2022
2022 ANNUAL REPORT
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, 2022 and 2021, 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, 2022 and 2021;
the consolidated statements of comprehensive income for the years ended December 31, 2022
and 2021;
the consolidated statements of financial position as at December 31, 2022 and 2021;
the consolidated statements of changes in equity for the years ended December 31, 2022 and 2021;
the consolidated statements of cash flows for the years ended December 31, 2022 and 2021; 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
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, 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, 2022. 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 matter
How our audit addressed the key audit matter
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, 2022,
approximately 77% of the Corporation’s total
revenues of $11,932.9 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
periodic 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.
● Tested, on a sample basis, the costs incurred
to supporting evidence.
How our audit addressed the key audit matter
● Compared the original total estimated costs to
the total costs incurred for contracts completed
during the year.
Our approach to addressing the matter included the
following procedures, among others:
● Tested how management measured the
preliminary fair value of the customer
relationships, which included the following:
– 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 revenue
and margins attributable to the customer
relationships (in excess of backlog) and
rates of attrition, by considering the current
performance of the acquired business, as
well as economic and industry data.
– Professionals with specialized skill and
knowledge in the field of valuation assisted
in evaluating the appropriateness of the
valuation method and models used, as well
as the reasonableness of certain key
assumptions such as discount rates.
Key audit matter
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.
Preliminary valuation of customer relationships
acquired in the Environment & Infrastructure
business of John Wood Group plc business
combination
Refer to note 4 – Critical accounting estimates and
judgments, note 5 – Business acquisitions to the
consolidated financial statements
On September 21, 2022, the Corporation closed the
acquisition of the Environment & Infrastructure
business of John Wood Group plc for a total
purchase consideration subject to final adjustments
of $2.4 billion.
The preliminary fair value of the identifiable assets
acquired included $652.2 million in intangible
assets of which a significant portion 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 (models)
to value customer relationships acquired.
Management’s key estimates and assumptions in
applying this methodology included forecasted
revenue and margins attributable to the customer
relationships (in excess of backlog), rates of
attrition and discount rates.
As of December 31, 2022, the assessment of the
fair values of the intangible assets is preliminary.
Key audit matter
How our audit addressed the key audit matter
We considered this a key audit matter due to the
significant judgment applied by management in
measuring the preliminary 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
skill 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 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.
Montréal, Quebec
March 8, 2023
1 CPA auditor, public accountancy permit No. A113048
/s/PricewaterhouseCoopers LLP1
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions of Canadian dollars, except number of shares and per share data)
F-8
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)
Impairment of long-lived assets (note 18 and 20)
Acquisition, integration and reorganization costs (note 10)
ERP implementation costs (note 10)
Exchange 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
2022
$
2021
$
11,932.9
10,279.1
6,679.9
2,975.7
794.0
288.5
173.4
114.6
21.6
115.5
49.9
(5.3)
(24.0)
749.1
161.6
587.5
152.8
434.7
431.8
2.9
434.7
3.59
3.58
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
Basic weighted average number of shares
Diluted weighted average number of shares
120,400,365
120,709,390
116,479,695
116,901,686
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions of Canadian dollars)
F-9
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
Gain on financial instruments designated as a cash flow hedge
Income tax (expense) recovery on items that may be reclassified subsequently
to net earnings
Items that will not be reclassified to net earnings
Actuarial gain (loss) on pension schemes
Exchange differences on pension schemes
Income tax recovery (expense) 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.
2022
$
2021
$
434.7
474.1
179.8
(130.5)
37.0
(9.8)
36.1
(0.1)
(8.3)
538.9
536.0
2.9
538.9
(124.9)
1.5
—
2.3
(4.3)
1.8
2.4
352.9
352.4
0.5
352.9
WSP Global Inc.
Consolidated Financial Statements
2022
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
F-10
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
2022
$
495.6
2,625.8
1,626.2
138.9
108.2
39.5
5,034.2
978.9
1,102.6
398.9
6,792.2
351.3
183.6
9,807.5
14,841.7
2,736.4
973.1
260.4
152.2
46.7
273.0
173.4
4,615.2
2,781.1
856.8
288.9
162.3
128.3
4,217.4
8,832.6
6,006.0
3.1
6,009.1
14,841.7
Approved by the Board of Directors
(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
2022
WSP GLOBAL INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions of Canadian dollars)
F-11
Attributable to Shareholders of WSP Global Inc.
Share
capital
$
Contributed
surplus
$
Retained
earnings
$
Accumulated
other
comprehensive
income (loss)
$
Non-
controlling
interests
$
Total
$
Total
equity
$
3,801.2
208.3
709.5
(54.5) 4,664.5
0.7
4,665.2
—
—
—
—
—
—
445.9
446.1
89.2
2.0
—
—
—
—
—
—
—
—
—
—
—
(0.4)
4.5
431.8
—
—
—
—
431.8
—
—
—
—
—
—
(181.8)
—
431.8
2.9
434.7
27.7
27.7
—
27.7
176.0
(126.7)
27.2
104.2
176.0
(126.7)
27.2
536.0
—
—
—
—
—
—
445.9
446.1
89.2
1.6
4.5
(181.8)
—
—
—
2.9
—
—
—
—
—
—
176.0
(126.7)
27.2
538.9
445.9
446.1
89.2
1.6
4.5
(181.8)
—
983.2
4,784.4
—
4.1
212.4
—
(181.8)
959.5
—
—
49.7
—
805.5
6,006.0
(0.5)
(0.5)
3.1
(0.5)
805.0
6,009.1
Balance - January 1, 2022
Comprehensive income
Net earnings
Actuarial gain on pension schemes,
net of tax
Currency translation adjustments,
net of tax
Net investment hedge, net of tax
Cash flow hedge, net of tax
Total comprehensive income
Common shares issued via bought
deal public offering (note 26)
Common shares issued via 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
Balance - December 31, 2022
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
2022
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
$
3,394.2
207.3
412.2
66.7
4,080.4
1.0
4,081.4
—
473.6
0.5
474.1
—
—
—
—
—
300.6
92.6
13.8
—
—
—
—
—
—
—
—
—
—
(2.5)
3.5
473.6
—
—
—
473.6
—
—
—
—
—
—
(174.9)
—
(0.1)
(0.1)
(123.3)
2.2
(121.2)
(123.3)
2.2
352.4
300.6
92.6
11.3
3.5
(174.9)
—
—
—
—
—
—
—
—
—
0.5
—
—
—
—
—
(0.1)
(123.3)
2.2
352.9
300.6
92.6
11.3
3.5
(174.9)
—
(0.8)
(0.8)
—
407.0
3,801.2
—
1.0
208.3
(1.4)
(176.3)
709.5
—
—
(1.4)
231.7
(54.5) 4,664.5
—
(0.8)
0.7
(1.4)
230.9
4,665.2
Balance - January 1, 2021
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 to non-controlling
interests
Purchase of non-controlling
interests
Balance - December 31, 2021
The accompanying notes are an integral part of these consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
2022
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
Issuance of long-term debt related to business acquisitions (note 13)
Repayment of long-term debt following business acquisitions (note 13)
Net repayment of other long-term debt
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
Issuance of senior unsecured notes (note 25)
Dividends paid to non-controlling interests
Cash inflows 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
Dividends received from associates
Net cash received on a loan to an associate
Proceeds from sale of investment in an associate
Decrease (increase) in investments in securities
Net proceeds from disposal of businesses
Proceeds from disposal of property and equipment
Repurchase of non-controlling interest
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
2022
F-13
2021
$
474.1
436.6
79.5
171.0
(134.0)
32.9
1,060.1
1,200.7
(262.7)
(523.9)
308.5
(303.2)
(80.6)
(47.8)
500.0
(0.8)
790.2
(1,244.9)
(100.7)
(20.5)
14.4
0.3
4.6
(7.1)
—
10.4
(1.4)
(1,344.9)
(13.8)
491.6
434.7
926.3
2022
$
434.7
535.6
161.6
152.8
(185.2)
(284.7)
814.8
2,309.3
(1,025.8)
(235.2)
883.5
(341.3)
(90.1)
(79.2)
—
(0.5)
1,420.7
(2,556.7)
(130.9)
(35.6)
22.0
1.2
1.2
11.5
2.6
2.0
—
(2,682.7)
11.9
(435.3)
926.3
491.0
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures are in millions of Canadian dollars, unless otherwise stated)
NOTES
1
2
3
4
5
BASIS OF PRESENTATION ........................................................................................................
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ........................................................
ACCOUNTING POLICY DEVELOPMENTS ................................................................................
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS ....................................................
BUSINESS ACQUISITIONS .........................................................................................................
6 OPERATING SEGMENTS ............................................................................................................
7
8
9
REVENUES ...................................................................................................................................
LONG-TERM INCENTIVE PLANS ("LTIPS") ..............................................................................
PENSIONS SCHEMES .................................................................................................................
10
ACQUISITION, INTEGRATION AND REORGANIZATION COSTS AND ERP
IMPLEMENTATION COSTS.........................................................................................................
11 GOVERNMENT GRANTS.............................................................................................................
12 NET FINANCING EXPENSE ........................................................................................................
13
INCOME TAXES ...........................................................................................................................
14 FINANCIAL INSTRUMENTS ........................................................................................................
15 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 ..........................................................................................................
32 SUBSEQUENT EVENTS ..............................................................................................................
WSP Global Inc.
Consolidated Financial Statements
2022
F-14
F-15
F-15
F-26
F-27
F-29
F-35
F-37
F-38
F-40
F-43
F-44
F-44
F-45
F-48
F-51
F-52
F-53
F-54
F-55
F-56
F-57
F-59
F-60
F-60
F-61
F-62
F-63
F-64
F-65
F-66
F-67
F-67
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-15
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, Earth & Environment,
Property & Buildings, Power & Energy and Industry market 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, Montréal, 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 8, 2023.
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-16
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.
2022
2021
Entity
WSP USA Inc.
WSP Canada Inc.
WSP UK Ltd
WSP Australia Pty Ltd
WSP Sverige AB
Golder Associates Ltd
WSP New Zealand Ltd
Golder Associates USA Inc
JOINT ARRANGEMENTS
Country of
incorporation
US
Canada
UK
Australia
Sweden
Canada
New Zealand
US
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.
Country of
incorporation
US
Canada
UK
Australia
Sweden
Canada
New Zealand
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-17
Assets and liabilities of entities with functional currencies other than the Canadian dollar are translated at the period-end
exchange rates, and the results of their operations are translated at average exchange rates 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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-18
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, Earth &
Environment, Property & Buildings, 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.
ERP IMPLEMENTATION COSTS
The Corporation has a long-term project to design and implement a global cloud-based ERP solution with broad capabilities.
Customization and configuration costs in a cloud computing arrangement that do not meet the definition of an asset or a
lease, along with implementation costs, are expensed as incurred and reported as ERP implementation costs.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-19
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.
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
Trade receivables, other receivables, amounts due from joint ventures and associates
Investments in securities
Derivative financial instruments
Amortized cost
Amortized cost
FVTPL
FVTPL
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-20
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-21
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.
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-22
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. 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.
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-23
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 inflows (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 and is tested for impairment on an annual basis or more frequently if events or circumstances
indicate that it may 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.
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
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-24
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 directors and key employees 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.
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-25
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 end of the reporting period.
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-26
3 ACCOUNTING POLICY DEVELOPMENTS
NEW ACCOUNTING STANDARDS EFFECTIVE IN 2022
The following amendment to existing standards was adopted by the Corporation on January 1, 2022 and had no impact on
the Corporation’s consolidated financial statements.
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.
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, 2024, with
earlier application permitted. The Corporation is assessing the potential impact of this amendment.
ACCOUNTING POLICIES AND ESTIMATES
In February 2021, the IASB issued narrow-scope amendments to IAS 1 - Presentation of Financial Statements, IFRS Practice
Statement 2 - Making Materiality Judgements and IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors. The
amendments will require the disclosure of material, rather than significant, accounting policy information, define
accounting estimates and clarify the distinction between changes in accounting policies from changes in accounting
estimates. The amendments are effective for the Corporation's annual reporting period beginning on January 1, 2023, with
earlier application permitted. The Corporation has concluded its current accounting policies and disclosures are in line with
the amended standards and therefore these amendments will have no impact on its consolidated financial statements.
INCOME TAXES
In May 2021, the IASB issued targeted amendments to IAS 12 - Income Taxes, which narrows the scope exemption when
recognizing deferred taxes. In specified circumstances, entities are exempt from recognizing deferred income taxes when
they recognize assets or liabilities for the first time. The amendments clarify that the exemption does not apply to
transactions where both assets and liabilities are recognized (and give rise to equal and offsetting temporary differences)
such as leases and decommissioning obligations and that entities are required to recognize deferred income taxes on such
transactions. The amendments are effective for the Corporation's annual reporting period beginning on January 1, 2023,
with earlier application permitted. The Corporation has concluded its current accounting policies are in line with the
amended standard and therefore this amendment will have no impact on its consolidated financial statements.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-27
LONG-TERM DEBT COVENANTS
In October 2022, the IASB issued amendments to IAS 1 - Presentation of Financial Statements, which specify that for long-term
debt with covenants to be complied with after the reporting date, such covenants do not affect the classification of debt as
current or non-current at the reporting date, but do require disclosures in the notes to the financial statements. The
amendments are effective for the Corporation's annual reporting period beginning on January 1, 2024, with earlier
application permitted. The Corporation has concluded its current accounting 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.
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 periodic 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 $7,848.1 million of total assets on the
consolidated statement of financial position as at December 31, 2022 ($5,241.2 million as at December 31, 2021). 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 the useful lives of identifiable intangible assets. 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.
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-28
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 multiple 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.
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-29
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, 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.
2022 TRANSACTIONS
ENVIRONMENT & INFRASTRUCTURE BUSINESS OF JOHN WOOD GROUP plc
On September 21, 2022, the Corporation closed the acquisition of the Environment & Infrastructure business (“E&I”) of John
Wood Group plc (“Wood”) for aggregate cash consideration of US$1.8 billion, subject to final adjustments ($2.4 billion)
(the “E&I Acquisition”). E&I provides engineering, remediation consulting, environmental permitting, inspection &
monitoring, and environmental management services to clients in the government, industrial, infrastructure, oil & gas,
power, water and mining industries. E&I operates in approximately 100 offices with approximately 6,000 environmental
consulting staff across more than 10 countries.
The E&I Acquisition and other related transaction costs were funded by a new fully committed US$1.8-billion term credit
facility with various tenors of up to 5 years in length, as described in note 25, Long-term debt.
As at December 31, 2022, the Corporation has not yet completed its fair value assessment of all the assets acquired and the
liabilities assumed. The most significant aspects remaining to be finalized relate to the valuation of right-of-use assets and
lease liabilities, trade receivables, contract assets and liabilities, and intangible assets. Consequently, certain fair value
adjustments related to the E&I Acquisition are included in goodwill in the preliminary fair value assessment, and may affect
the final valuation of any assets acquired and liabilities assumed.
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
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)
Prepaid expenses
Right-of-use assets (note 18)
Property and equipment (note 20)
Software (note 19)
Intangible assets (note 19)
Income taxes receivable
Deferred income tax assets (note 13)
Liabilities
Accounts payable and accrued liabilities
Billings in excess of costs and anticipated profits (note 16)
Income taxes payable
Lease liabilities (note 18)
Provisions (note 24)
Retirement benefit obligations (note 9)
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
F-30
Preliminary
$
22.2
255.4
125.7
1.3
72.8
16.1
1.1
652.2
0.3
18.8
(173.6)
(70.7)
(10.5)
(82.9)
(169.6)
(3.5)
(20.0)
635.1
1,789.9
2,425.0
(22.2)
(5.4)
2,397.4
Preliminary goodwill is attributable to the workforce of the acquired business and the synergies expected to arise with the
Corporation after the acquisition. The majority of the goodwill recognized as at December 31, 2022 is expected to be
deductible for income tax purposes. Intangible assets are mainly attributable to customer relationships and contract
backlogs. Management applied the excess earnings method using discounted cash flow models to value customer
relationships and backlogs 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.
The trade receivables acquired had a preliminary fair value of $197.6 million and gross contractual amount of $225.7 million.
The acquired E&I business contributed revenues of $443.9 million and net earnings of $34.1 million from September 21, 2022
to December 31, 2022. Considering the nature of the acquisition, the available financial information does not allow for the
accurate disclosure of pro forma revenues and net earnings, had the Corporation concluded these acquisitions at the
beginning of its fiscal year.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-31
OTHER ACQUISITIONS IN 2022
In 2022, the Corporation concluded several other individually immaterial acquisitions. In February, 2022, WSP acquired
Climate Finance Advisors (CFA), a US-based climate and finance consultancy. In June 2022, WSP acquired BOD Arquitectura e
Ingeniería (“BOD”), a 45-employee architecture and engineering firm based in Madrid, Spain. In August 2022, WSP acquired
Australian-based Greencap Holdings Ltd. (“Greencap”), a 250-employee subsidiary of Wesfarmers Industrial and Safety. In
September 2022, WSP acquired two UK-based businesses, Capita (Real Estate & Infrastructure) Ltd. (“Capita REI”) and GL
Hearn Ltd. (“GLH”), both part of the Capita plc group, for an aggregate cash consideration of £69.7 million, subject to final
adjustments ($112.4 million), adding around 1,000 UK-based employees. In October 2022, WSP acquired Odeh Engineers, a US-
based 40-person structural engineering firm.
These acquisitions were financed using WSP's available cash and credit facilities.
These acquisitions were not individually material, therefore the Corporation has chosen to disclose the required information
in aggregate.
Recognized amounts of identifiable assets acquired and liabilities assumed
Assets
Preliminary
$
Cash
Trade receivables and other receivables
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 (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)
Income taxes payable
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
2022
18.0
29.1
4.9
15.2
4.3
3.6
0.7
21.3
0.8
(26.1)
(1.1)
(1.3)
(4.3)
(1.1)
(0.6)
(4.9)
58.5
95.5
154.0
(18.0)
(11.5)
124.5
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-32
Goodwill is attributable to the workforce of the acquired businesses and the synergies expected to arise with the Corporation
after the acquisitions. Approximately $23 million of the goodwill recognized as at December 31, 2022 is expected to be
deductible for income tax purposes.
The trade receivables acquired had a fair value of $29.1 million and gross contractual amount of $29.7 million.
The acquired businesses contributed revenues of $72.8 million and net earnings of $4.8 million from their respective
acquisition dates to December 31, 2022.
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.
As at December 31, 2021, the Corporation had not yet completed its fair value assessment of all assets acquired and liabilities
assumed in connection with the Golder Acquisition. In the quarter ended April 2, 2022, the Corporation completed its fair
value assessment of all assets acquired and liabilities assumed related to this acquisition. The final determination of the fair
values required some adjustments to the preliminary assessments as shown below. The Corporation did not restate the
consolidated statement of financial position as at December 31, 2021 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, 2021, and as such, they were accounted for in the consolidated statement of earnings for the
quarter ended April 2, 2022.
The table below presents management's preliminary assessment of the fair values of the assets acquired and the liabilities
assumed as well as the final determination of the fair values made within 12 months of the acquisition date.
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
Recognized amounts of identifiable assets acquired and liabilities assumed
Assets
Preliminary Adjustments
$
$
Cash and cash equivalents
Trade receivables and other receivables
Income taxes receivable
Cost and anticipated profits in excess of billings
Prepaid expenses
Right-of-use assets
Property and equipment (note 20)
Software (note 19)
Intangible assets (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
Lease liabilities
Long-term debt
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
—
—
—
(10.5)
—
57.7
—
—
—
(0.3)
—
0.8
—
(53.9)
—
5.0
(2.0)
1.2
(2.0)
2.0
—
—
—
—
—
F-33
Final
$
115.4
220.1
5.9
112.3
13.2
218.0
70.3
3.0
357.6
1.7
4.5
(219.6)
(52.9)
(256.8)
(240.9)
(40.7)
(12.4)
(60.0)
238.7
1,012.8
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, 2022 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.
OTHER 2021 TRANSACTIONS
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
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-34
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 preliminary assessment of the fair values of the assets acquired and the liabilities
assumed as at December 31, 2021, any adjustments recognized during the subsequent measurement periods and the final
determinations of the fair values as at December 31, 2022.
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, 2021 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, 2021, and as such, they were accounted for in the
consolidated statement of earnings for the year ended December 31, 2022.
These acquisitions were not individually material, therefore the Corporation has chosen to disclose the required information
in aggregate.
Recognized amounts of identifiable assets acquired and liabilities assumed
Assets
Preliminary Adjustments
$
$
Final
$
Cash
Trade receivables and other receivables
Costs and anticipated profits in excess of billings
Prepaid expenses
Right-of-use assets (note 18)
Property and equipment and intangible assets
Software
Deferred income tax assets
Other financial assets
Liabilities
Accounts payable and accrued liabilities
Billings in excess of costs and anticipated profits
Lease liabilities (note 18)
Long-term debt
Provisions
Other current and non-current liabilities
Deferred income tax liabilities
Fair value of identifiable assets and liabilities assumed
Goodwill
Total purchase consideration
Cash acquired
Consideration payable
Net cash disbursements
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
—
(1.9)
3.8
—
8.4
—
—
—
—
3.2
(1.2)
(8.4)
—
(3.2)
(1.1)
(0.4)
2.8
2.4
—
9.7
12.1
9.3
44.5
7.1
—
24.3
4.5
0.6
1.3
3.7
(32.4)
(2.5)
(26.7)
(6.3)
(8.0)
—
(3.0)
16.4
127.7
144.1
(9.3)
(24.5)
110.3
Goodwill is attributable to the workforce of the acquired businesses and the synergies expected to arise with the Corporation
after the acquisitions. $56.6 million of the goodwill recognized as at December 31, 2022 is expected to be deductible for
income tax purposes.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-35
The trade receivables acquired had a fair value of $42.9 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.
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 and Ireland, Nordic European 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, ERP implementation 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 financing expenses, depreciation, amortization,
impairment 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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-36
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
Impairment of long-lived assets
Acquisition, integration and reorganization costs
ERP implementation costs
Net financing expenses, excluding interest income
Share of depreciation, financing expenses and
taxes of associates and joint ventures
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
ERP implementation costs
Net financing expenses, excluding interest income
Share of depreciation, financing expenses and
taxes of associates and joint ventures
Earnings before income taxes
Canada
$
2,151.2
(566.0)
1,585.2
Americas
$
4,826.4
(1,570.0)
3,256.4
EMEIA
$
3,207.8
(556.7)
2,651.1
APAC
$
1,747.5
(283.0)
1,464.5
347.9
644.7
390.0
267.1
Canada
$
1,690.3
(385.8)
1,304.5
Americas
$
3,955.7
(1,246.5)
2,709.2
EMEIA
$
3,070.2
(541.8)
2,528.4
APAC
$
1,562.9
(235.4)
1,327.5
272.0
533.1
370.3
246.3
2022
Total
$
11,932.9
(2,975.7)
8,957.2
1,649.7
(119.5)
(576.5)
(21.6)
(115.5)
(49.9)
(167.4)
(11.8)
587.5
2021
Total
$
10,279.1
(2,409.5)
7,869.6
1,421.7
(99.2)
(518.5)
(60.8)
(6.8)
(81.9)
(9.4)
645.1
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-37
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
Australia
Sweden
Other
2022
$
4,503.1
2,151.2
1,299.6
970.1
660.8
2,348.1
11,932.9
2021
$
3,697.2
1,690.3
1,165.6
820.7
733.0
2,172.3
10,279.1
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
2022
$
4,610.7
2,306.1
653.8
1,702.0
9,272.6
2021
$
2,526.9
1,866.2
529.0
1,615.2
6,537.3
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
Industry
Client category
Public sector
Private sector
Canada
$
Americas
$
585.1
1,016.1
335.7
118.8
95.5
2,151.2
607.5
1,543.7
2,151.2
2,470.1
1,466.2
520.9
360.7
8.5
4,826.4
2,847.6
1,978.8
4,826.4
EMEIA
$
1,449.6
479.2
996.3
205.6
77.1
3,207.8
1,677.3
1,530.5
3,207.8
APAC
$
885.0
353.9
441.9
51.8
14.9
1,747.5
961.7
785.8
1,747.5
2022
Total
$
5,389.8
3,315.4
2,294.8
736.9
196.0
11,932.9
6,094.1
5,838.8
11,932.9
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
Market sector
Transportation & Infrastructure
Earth & Environment(1)
Property & Buildings
Power & Energy
Industry
Client category
Public sector
Private sector
Canada
$
Americas
$
540.4
780.0
294.1
55.6
20.2
1,690.3
587.8
1,102.5
1,690.3
2,185.8
1,224.0
419.3
117.0
9.6
3,955.7
2,537.0
1,418.7
3,955.7
EMEIA
$
1,440.2
390.2
982.2
184.0
73.6
3,070.2
1,696.8
1,373.4
3,070.2
APAC
$
723.5
339.4
444.7
48.9
6.4
1,562.9
851.5
711.4
1,562.9
F-38
2021
Total
$
4,889.9
2,733.6
2,140.3
405.5
109.8
10,279.1
5,673.1
4,606.0
10,279.1
(1)
As at January 1, 2022, the Resources market sector was combined with the Earth & Environment market sector. The disaggregated revenues for the
year ended December 31, 2021 have been restated to align to the new presentation.
In 2022, 77% of the revenues were generated from cost-plus contracts with ceilings and fixed-price contracts and 23% from
cost-plus contracts without stated ceilings (72% and 28%, respectively, in 2021).
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
Exercise price range of stock options exercised during the year ended December 31
Stock options outstanding as at December 31
Vested stock options outstanding as at December 31
Exercise price range of stock options outstanding as at December 31
22,295
$41.69 to $121.18
706,602
572,511
$41.69 to $180.65
217,774
$35.12 to $121.18
614,972
349,230
$41.69 to $134.28
2022
2021
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-39
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, 2022 and 2021, 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
2022
22%
0.80%
1.85%
5.7
$41.43
2021
22%
1.17%-1.24%
0.95%-1.5%
6.2
$23.62
During the year ended December 31, 2022, the Corporation recorded stock-based compensation expense of $4.5 million
($3.5 million in 2021) 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 are 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 the
expense is recorded 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 Corporation’s
expected performance and other factors, as applicable, are recorded as an expense or recovery.
The Corporation recorded an expense of $39.1 million during 2022 ($97.1 million in 2021) related to the PSUs, RSUs and DSUs
in personnel costs. As at December 31, 2022, there were 748,344 PSUs, RSUs and DSUs outstanding and the cumulative
obligation liability stood at $119.9 million (810,230 and $145.1 million, respectively, as at December 31, 2021). The intrinsic
value of the liability for all share unit plans for which the participants' right to cash had vested as at December 31, 2022 was
$83.9 million ($97.7 million as at December 31, 2021).
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 these
instruments 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
and financing expense. In 2022, the mark-to-market loss recorded in net earnings amounted to $20.6 million ($41.6 million
gain in 2021). As at December 31, 2022, the Corporation had derivatives outstanding for 780,000 of its common shares
(710,000 as at December 31, 2021).
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-40
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
2022
$
2.4
13.6
161.2
177.2
2021
$
9.0
12.8
155.0
176.8
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 17, Other financial
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-41
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
2022
2021
1.90% to 3.50%
5.00 %
2.80% to 3.15%
2.15% to 3.30%
1.80 %
3.05% to 3.45%
87.9
90.2
4.00 %
1.90 %
87.0
89.0
87.9
90.1
1.90 %
2.25 %
87.0
89.0
4.95% to 5.10%
1.45% to 2.15%
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
$
14.9
30.7
48.8
90.3
2022
%
8
17
26
49
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
$
66.5
48.3
85.9
64.5
2022
$
184.7
(183.0)
1.7
(32.0)
(132.0)
(162.3)
2021
%
25
18
33
24
2021
$
265.2
(277.4)
(12.2)
(53.6)
(147.1)
(212.9)
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(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
2022
$
2.4
(1.0)
1.4
8.3
(4.8)
3.5
Changes in the present value of the defined benefit obligation are as follows for the years ended December 31:
2022
$
478.1
3.5
2.4
(1.0)
0.1
(25.3)
8.3
(129.8)
4.2
6.5
347.0
2022
$
265.2
4.8
0.1
13.6
(11.1)
(89.5)
1.6
184.7
Present value of obligation – beginning balance
Present value of obligation – acquisitions
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
WSP Global Inc.
Consolidated Financial Statements
2022
F-42
2021
$
9.0
—
9.0
6.4
(4.0)
2.4
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
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(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
2022
$
184.7
(347.0)
(162.3)
F-43
2021
$
265.2
(478.1)
(212.9)
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, 2022 to changes in principal
assumptions is shown below:
Assumption
Change in basis points / years
Discount rate
Inflation rate(1)
Mortality(1)
(1) Impact on pension deficit of defined benefit plans in UK and Sweden only.
- 10 bps
+ 10 bps
+ 1 year
Increase in pension deficit
$
3.4
1.2
6.9
The combined employee and employer contributions to be paid in the year ending December 31, 2023, pertaining to the
Corporation’s defined benefit pension schemes in the UK, are expected to be approximately $8.4 million.
10 ACQUISITION, INTEGRATION AND
REORGANIZATION COSTS AND ERP
IMPLEMENTATION COSTS
Acquisition, integration and reorganization costs consist of the following for the years ended December 31:
Business acquisition costs
Business integration costs
Restructuring and severance costs stemming from adjustments to cost structures
Gains on disposal of non-core assets
2022
$
39.8
70.9
6.0
(1.2)
115.5
2021
$
11.8
33.9
20.9
(5.8)
60.8
Included in acquisition, integration and reorganization costs in 2022 are employee benefit costs of $16.2 million
($20.3 million in 2021). Other than employee benefit costs, costs relate mainly to legal and professional fees and early
contract termination costs.
Included in ERP implementation costs in 2022 are employee benefit costs of $13.8 million ($1.1 million in 2021). Other than
employee benefit costs, costs relate mainly to professional fees.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-44
11 GOVERNMENT GRANTS
In 2022, the Corporation recorded $6.8 million of government subsidies, recognized in personnel costs ($14.4 million in 2021).
There are no unfulfilled conditions or contingencies attached to these grants as at December 31, 2022.
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 losses on derivative financial instruments
Other interest and bank charges
Loss (gain) on investments in securities
Interest income
2022
$
68.4
37.4
3.5
2.3
20.1
13.6
22.1
(5.8)
161.6
2021
$
32.7
40.6
2.4
5.2
7.7
7.3
(14.0)
(2.4)
79.5
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
13 INCOME TAXES
The components of the income tax expense for the years ended December 31, 2022 and 2021 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
2022
$
313.8
(2.5)
311.3
(161.1)
(2.0)
4.6
(158.5)
152.8
F-45
2021
$
193.9
12.4
206.3
(28.7)
0.1
(6.7)
(35.3)
171.0
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 2022 and in 2021 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
$
587.5
155.7
(17.2)
6.3
7.7
2.1
(2.0)
0.2
152.8
2022
%
26.5 %
(2.9)%
1.1 %
1.3 %
0.4 %
(0.4)%
— %
26.0 %
$
645.1
171.0
(16.5)
2.6
8.0
5.7
0.1
0.1
171.0
2021
%
26.5 %
(2.5)%
0.4 %
1.2 %
0.9 %
— %
— %
26.5 %
In 2022 and 2021, 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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(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-46
2022
Credited Charged to
(charged)
other
to
statement
January 1 of earnings
$
As at
$
compre- Credited
hensive directly
income to equity acquisitions differences
$
As at
Business Exchange December
31
$
$
$
$
Deferred income tax assets
Deductible provisions upon
settlement
Tax loss carry forwards
Pension schemes
Deferred issuance-related costs
Property and equipment
Leases
Research and development
expenses
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
219.3
24.2
45.3
7.4
19.9
22.3
4.5
25.8
368.7
(93.5)
(19.0)
(15.2)
(126.3)
(48.8)
(302.8)
65.9
(24.3)
(1.8)
3.2
(1.3)
(0.1)
(10.6)
154.6
13.1
132.8
(9.9)
0.5
(7.6)
30.1
12.6
25.7
158.5
—
—
(8.3)
—
—
—
—
—
(8.3)
—
—
—
—
(9.8)
(9.8)
(18.1)
—
—
—
8.1
—
—
—
—
8.1
—
—
—
—
—
—
8.1
11.8
0.6
0.9
—
0.5
15.4
—
14.7
43.9
(4.0)
—
(0.5)
(44.7)
(0.2)
(49.4)
(5.5)
6.9
(0.1)
1.7
(0.1)
(0.6)
0.7
6.0
2.0
16.5
4.2
(0.4)
(1.1)
(4.0)
(1.1)
(2.4)
14.1
213.7
22.9
42.8
14.1
19.7
27.8
165.1
55.6
561.7
(103.2)
(18.9)
(24.4)
(144.9)
(47.3)
(338.7)
223.0
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-47
2021
Credited Credited to
(charged)
other
to
statement
January 1 of earnings
$
As at
$
$
compre- Credited
hensive directly
income to equity acquisitions differences
$
As at
Exchange December
31
$
Business
$
$
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
4.7
—
—
—
3.4
—
—
—
3.4
—
—
—
—
—
—
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
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
2022
$
351.3
(128.3)
223.0
2021
$
165.1
(99.2)
65.9
As at December 31, 2022, the Corporation had recognized deferred income tax assets of $22.9 million ($24.2 million as at
December 31, 2021) 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, 2022, the Corporation had $159.3 million ($143.4 million as at December 31, 2021) of unrecognized
deferred income tax assets. Of these, a portion relates to tax loss carry forwards of $367.2 million, of which $49.5 million
expire between 2023 and 2039 and the remainder of which having no expiry ($324.1 million and $52.1 million, respectively,
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-48
as at December 31, 2021) and a portion relates to gross temporary differences with no expiry of $60.7 million ($65.2 million as
at December 31, 2021). Additionally, $45.3 million of unrecognized deferred income tax assets relate to tax credits that expire
between 2023 and 2032 ($40.4 million as at December 31, 2021). The Corporation considers the recovery of those
unrecognized deferred income tax assets as not probable.
As at December 31, 2022, a deferred income tax liability relating to $851.0 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 ($685.6 million as at
December 31, 2021). 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, 2022, the fair
value of the senior unsecured notes, which is based on unadjusted quote prices (Level 1), was $439.5 million ($498.5 million as
at December 31, 2021).
As at December 31, 2022 and 2021, 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, 2022 and 2021.
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 $4,855.0 million as at December 31, 2022 ($4,136.2 million as at December 31, 2021).
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-49
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, 2022, the Corporation recognized a net recovery of
$9.3 million of previously recognized allowance for expected credit loss (net credit losses of $20.4 million in 2021).
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, 2022, the net fair market value
loss of these forward contracts and options amounted to $17.4 million, and a loss of $13.5 million was recorded in net
earnings in 2022. The largest hedged currency outstanding as at December 31, 2022 represents a nominal amount of
$688.6 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, 2022 amounted to $23.6 million and the change in fair value was recorded in other
comprehensive income.
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, 2022 amounted to $26.9 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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-50
derivative financial instruments is recorded in personnel costs and financing expense as an offset of the revalutation of the
LTIP liability. As at December 31, 2022, the Corporation had hedges outstanding for 780,000 of its common shares, with total
fair value loss of $6.9 million (for 710,000 shares, with a gain of $41.2 million as at December 31, 2021). In 2022, mark-to-
market variations on LTIP hedging instruments recorded in net earnings were a loss of $20.6 million (a gain of $41.6 million
in 2021).
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
$
18.2
453.3
Pound
sterling
$
7.5
54.5
Australian
dollar
$
3.7
39.8
US Dollar
$
16.6
247.4
Pound
sterling
$
6.5
34.5
Australian
Dollar
$
3.6
40.8
2022
Swedish
krona
$
1.9
16.5
2021
Swedish
krona
$
2.4
20.0
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-51
The tables below presents the contractual maturities of financial liabilities as at December 31, 2022 and 2021. The amounts
disclosed are contractual undiscounted cash flows.
Accounts payable and accrued liabilities
Dividends payable to shareholders
Lease liabilities
Long-term debt
Accounts payable and accrued liabilities
Dividends payable to shareholders
Lease liabilities
Long-term debt
Carrying C
amount
$
2,736.4
46.7
1,129.8
2,954.5
6,867.4
ontractual
cash flows
$
2,736.4
46.7
1,298.6
3,411.9
7,493.6
Less than
a year 1 an
$
2,736.4
46.7
325.4
345.6
3,454.1
Between
d 2 years
$
—
—
265.5
707.0
972.5
Carrying C
amount
$
2,217.3
44.2
1,020.3
1,776.7
5,058.5
ontractual
cash flows
$
2,217.3
44.2
1,249.9
1,853.3
5,364.7
Less than
a year 1 an
$
2,217.3
44.2
294.1
326.2
2,881.8
Between
d 2 years
$
—
—
237.5
180.1
417.6
2022
More than
2 years
$
—
—
707.7
2,359.3
3,067.0
2021
More than
2 years
$
—
—
718.3
1,347.0
2,065.3
As at December 31, 2022, the Corporation had amounts available under the credit facility of $1,857.4 million ($1,442.9 million
in 2021), net of outstanding letters of credit of $141.8 million ($75.7 million in 2021). The Corporation's cash and cash
equivalents, net of bank overdraft, as at December 31, 2022 was $491.0 million ($926.3 million in 2021).
15 TRADE AND OTHER RECEIVABLES
As at December 31
Net trade receivables
Other receivables
Derivative financial instruments
Amounts due from joint ventures and associates
2022
$
2,232.6
351.7
33.3
8.2
2,625.8
2021
$
1,615.2
250.2
46.1
5.3
1,916.8
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-52
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
2022
$
847.7
732.0
286.4
122.0
168.9
233.2
2,390.2
(157.6)
2,232.6
2021
$
629.9
454.0
227.4
106.1
109.2
262.2
1,788.8
(173.6)
1,615.2
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 represented more than 10% of revenues. During the year ended December 31, 2022, the Corporation
recognized a net recovery of $9.3 million of previously recognized allowance for expected credit loss (net credit losses of
$20.4 million in 2021).
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
$
1,156.4
2022
Billings in
excess of costs
and anticipated
profits
$
(751.1)
Costs and
anticipated
profits in excess
of billings
$
950.5
2021
Billings in
excess of costs
and anticipated
profits
$
(708.5)
—
—
9,523.9
(9,224.2)
123.9
46.2
1,626.2
(2,536.6)
2,409.0
—
—
(73.0)
(21.4)
(973.1)
—
—
9,081.3
(8,973.4)
124.5
(26.5)
1,156.4
(1,205.5)
1,197.8
—
—
(54.5)
19.6
(751.1)
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-53
In the year ended December 31, 2022, revenue recognized that was included in contract liability as at January 1, 2022
amounted to $738.7 million ($512.1 million in 2021). In the year ended December 31, 2022, revenue recognized from
performance obligations satisfied or partially satisfied in previous years amounted to $22.4 million ($37.6 million in 2021).
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 $11.1 billion as of
December 31, 2022 ($8.7 billion as at December 31, 2021). 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, 2022 will unwind over the following
12 months.
17 OTHER FINANCIAL ASSETS
As at December 31
Investments in securities
Other
2022
$
107.4
0.8
108.2
2021
$
135.6
6.1
141.7
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 $107.0 million ($123.9 million in 2021), 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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-54
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
Impairment
Utilization of lease inducement
allowances
Exchange differences
Balance - End of year
For the year ended
December 31, 2022
Total
$
861.5
Equipment
$
31.1
Real estate
$
831.4
For the year ended
December 31, 2021
Total
$
894.3
Equipment
$
62.9
Real estate
$
830.4
125.7
144.0
95.5
(270.9)
(17.1)
15.3
12.8
935.7
17.5
12.9
(1.5)
(17.6)
—
—
0.8
43.2
143.2
156.9
94.0
(288.5)
(17.1)
15.3
13.6
978.9
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
(13.8)
(265.8)
—
14.1
(24.0)
861.5
In 2022, the Corporation recorded impairment charges against certain real estate right-of-use assets, in the context of on-
going reorganizations as part of the real estate strategy following recent acquisitions in order to reduce the Corporation's
footprint, realize synergies and improve the cost structure of the combined business.
LEASE LIABILITIES
For the year ended
December 31, 2022
Real estate Equipment
$
26.3
$
994.0
Total Real estate Equipment
$
55.3
$
1,020.3
$
963.1
For the year ended
December 31, 2021
Total
$
1,018.4
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
130.5
144.0
92.5
36.4
(323.5)
16.0
1,089.9
255.3
834.6
19.0
12.9
149.5
156.9
220.8
55.7
8.3
16.9
229.1
72.6
(2.3)
90.2
32.8
(41.8)
(9.0)
1.0
(17.8)
0.8
39.9
17.7
22.2
37.4
(341.3)
16.8
1,129.8
273.0
856.8
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
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(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, 2021
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
Additions
Additions through business acquisitions (note 5)
Amortization for the year
Exchange differences
Balance as at December 31, 2022
Balance as at December 31, 2022
Cost
Accumulated amortization
Net value
Software
$
Contract
backlogs
$
Customer
relation-
ships
$
Trade
names
$
192.7
(124.6)
68.1
46.3
3.6
(44.9)
(2.1)
71.0
218.2
(147.2)
71.0
35.6
1.8
(60.8)
(0.9)
46.7
217.9
(171.2)
46.7
129.4
(101.7)
27.7
—
46.0
(39.5)
(0.9)
33.3
171.9
(138.6)
33.3
—
208.0
(33.1)
2.4
210.6
266.6
(56.0)
210.6
255.7
(125.7)
130.0
—
269.5
(49.4)
(4.4)
345.7
486.2
(140.5)
345.7
—
465.5
(72.5)
15.0
753.7
972.5
(218.8)
753.7
49.7
—
49.7
—
57.1
(5.3)
(1.6)
99.9
105.2
(5.3)
99.9
—
—
(7.0)
(1.3)
91.6
104.2
(12.6)
91.6
F-55
Total
$
627.5
(352.0)
275.5
46.3
376.2
(139.1)
(9.0)
549.9
981.5
(431.6)
549.9
35.6
675.3
(173.4)
15.2
1,102.6
1,561.2
(458.6)
1,102.6
The carrying amount of intangible assets assessed as having an indefinite useful life, which consists of the WSP trade name,
is $46.7 million as at December 31, 2022 ($48.8 million in December 31, 2021).
The Corporation performed its annual impairment test for the WSP trade name as at October 1, 2022 and September 25, 2021
in accordance with its policy described in note 2, Summary of significant accounting policies. As a result, no impairment for
the WSP trade name was recorded.
In 2022, the Corporation acquired intangible assets amounting to $710.9 million ($422.5 million in 2021), all of which are
subject to amortization.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-56
20 PROPERTY AND EQUIPMENT
Balance as at January 1, 2021
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, 2021
Balance as at December 31, 2021
Cost
Accumulated depreciation
Net value
Additions
Additions through business acquisitions (note 5)
Disposals
Depreciation
Impairment
Exchange differences
Balance as at December 31, 2022
Balance as at December 31, 2022
Cost
Accumulated depreciation
Net value
Freehold
land and
buildings
$
Leasehold
improve-
ments
$
Furniture
and
equipment
$
Computer
equipment
$
29.2
(6.3)
22.9
0.2
3.5
(1.4)
(0.9)
(0.9)
23.4
30.8
(7.4)
23.4
0.1
0.4
—
(1.0)
(4.5)
1.1
19.5
26.2
(6.7)
19.5
261.9
(153.9)
108.0
18.7
34.5
(0.3)
(29.9)
(1.1)
129.9
285.3
(155.4)
129.9
23.4
3.6
(0.1)
(29.8)
—
4.6
131.6
299.6
(168.0)
131.6
296.5
(209.9)
86.6
21.6
27.6
(2.0)
(33.3)
(3.5)
97.0
303.5
(206.5)
97.0
29.6
15.3
(0.8)
(29.3)
—
(1.5)
110.3
340.3
(230.0)
110.3
277.9
(180.5)
97.4
60.2
9.2
(0.7)
(49.5)
(3.3)
113.3
304.6
(191.3)
113.3
77.8
0.4
(0.7)
(54.5)
—
1.2
137.5
363.6
(226.1)
137.5
Total
$
865.5
(550.6)
314.9
100.7
74.8
(4.4)
(113.6)
(8.8)
363.6
924.2
(560.6)
363.6
130.9
19.7
(1.6)
(114.6)
(4.5)
5.4
398.9
1,029.7
(630.8)
398.9
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-57
21 GOODWILL
Balance – As at January 1
Goodwill resulting from business acquisitions
Measurement period adjustments (note 5)
Exchange differences
Balance – As at December 31
December 31, 2022 December 31, 2021
$
$
4,762.3
1,885.4
4.8
139.7
6,792.2
3,731.9
1,135.7
(14.4)
(90.9)
4,762.3
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
UK
Nordic Europe
Australia
New Zealand
Central Europe
Asia
Latin America
Middle East
2022
$
3,563.6
1,654.7
417.7
345.6
283.1
185.4
127.9
85.6
73.6
55.0
6,792.2
2021
$
1,984.1
1,335.4
318.7
363.6
271.8
186.8
117.5
80.0
53.0
51.4
4,762.3
IMPAIRMENT TEST OF LONG-LIVED ASSETS
The Corporation performed its annual impairment test for goodwill and other indefinite-lived intangible assets as at
October 1, 2022 and September 25, 2021 in accordance with its policy described in note 2, Summary of significant accounting
policies. The key assumptions used to determine the fair value of each CGUs for the most recently completed impairment
calculations for 2022 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 2022 and 2021, 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
each CGUs, an income approach using the discounted cash flow methodology was utilized. The inputs used in the discounted
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-58
cash 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 2022 were the following:
USA
Canada
Nordic Europe
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-59
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.
A 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
2022
$
87.8
32.4
57.0
6.4
183.6
2021
$
89.1
28.9
82.8
6.4
207.2
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-60
23 ACCOUNTS PAYABLE AND ACCRUED
LIABILITIES
As at December 31
Trade payables
Employee benefits payable
Accrued expenses and other payables
Sales taxes payable
Derivative financial instruments
Amounts due to joint ventures and associates
24 PROVISIONS
Balance as at January 1, 2022
Additions through business acquisitions
Additional provision recognized
Utilized or reversed
Exchange differences
Balance as at December 31, 2022
Current portion
Non-current portion
2022
$
1,038.8
952.2
587.0
121.3
33.3
3.8
2,736.4
Claims
provisions
$
Other
provisions
$
226.7
92.9
29.6
(38.4)
0.5
311.3
80.0
231.3
87.0
75.5
45.3
(80.4)
2.4
129.8
72.2
57.6
2021
$
765.7
875.0
465.5
100.1
10.3
0.7
2,217.3
Total
$
313.7
168.4
74.9
(118.8)
2.9
441.1
152.2
288.9
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
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-61
25 LONG-TERM DEBT
As at
Borrowings under credit facilities
Senior unsecured notes
Bank overdraft
Other financial liabilities
Current portion
Non-current portion
CREDIT FACILITIES
December 31, 2022 December 31, 2021
$
$
2,401.3
500.0
4.6
48.6
2,954.5
173.4
2,781.1
1,202.3
500.0
1.1
73.3
1,776.7
297.4
1,479.3
WSP has in place a US$1.5-billion credit facility with a syndicate of financial institutions comprised of:
- a senior unsecured revolving credit facility to a maximum amount of US$500.0 million with a maturity date of
April 13, 2025; and
- a senior unsecured revolving credit facility to a maximum amount of US$1,000.0 million with a maturity date of
April 13, 2027.
The amount available under the US$1.5-billion credit facility was $1,857.4 million (US$1,371.8 million) as at December 31,
2022.
WSP has in place a US$750-million credit facility. As at December 31, 2022 this committed credit facility has been fully drawn
in the form of term loans with various maturity dates up to April 2025.
In August 2022, the Corporation entered into a fully-committed US$1.8-billion term credit facility with various tenors of up
to 5 years, which was fully drawn to finance the E&I Acquisition which closed in September 2022. Also in September 2022, the
Corporation repaid a portion of the indebtedness under that credit facility, such that the maximum amount of the credit
facility became US$1.0 billion. As at December 31, 2022, the US$1.0-billion credit facility was fully drawn.
The US$1.5-billion credit facility bears interest at Canadian prime rate, US-based rate, Bankers’ acceptances rate or Term
SOFR (Secured Overnight Financing Rate) 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$1.5-billion, the US$750-million and the $1.0-billion credit facilities, 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, 2022 and December 31, 2021. Borrowings under these credit facilities were entirely denominated in
US dollars as at December 31, 2022 and December 31, 2021.
Under the US$1.5-billion credit facility and other facilities, as at December 31, 2022, the Corporation may issue irrevocable
letters of credit up to $954.2 million ($938.7 million under a US$1,400-million facility and other facilities as at
December 31, 2021). As at December 31, 2022, the Corporation issued irrevocable letters of credit totaling $559.5 million
($471.6 million as at December 31, 2021).
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-62
As at December 31, 2022, the Corporation had available other operating lines of credit amounting to $181.3 million
($183.5 million in 2021), of which $168.1 million were unused at year end ($182.4 million in 2021).
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.
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.
INTEREST-RATE HEDGING
The corporation uses a combination of interest swaps and fixed rate debt to hedge its exposure to interest rate fluctuations.
As at December 31, 2022, 32% of the Corporation's long-term debt is fixed either through the usage of interest rate swaps
and/or fixed rate debt.
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, 2021
Shares issued related to private placements
Shares issued under the Dividend Reinvestment Plan (DRIP)
Shares issued upon exercise of stock options
Costs related to public bought deals and private placements of previous periods
Balance as at December 31, 2021
Shares issued related to bought deal public offering
Shares issued related to private placements
Shares issued under the DRIP (note 28)
Shares issued upon exercise of stock options
Balance as at December 31, 2022
Number
Common shares
$
113,534,451
3,333,898
696,892
217,774
—
117,783,015
3,031,400
3,032,550
584,457
22,295
124,453,717
3,394.2
300.8
92.6
13.8
(0.2)
3,801.2
445.9
446.1
89.2
2.0
4,784.4
2022 Equity Financing
On August 16, 2022, the Corporation completed a bought deal public offering (the “Offering”) of common shares of the
Corporation (the “Offering Common Shares”) and a private placement (the "Concurrent Private Placement") of common
shares of the Corporation (the “Private Placement Common Shares”) for aggregate gross proceeds of $920.2 million.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-63
The Corporation issued from treasury 3,031,400 Offering Common Shares, including 395,400 Offering Common Shares issued
as a result of the exercise of the over-allotment option at a price of $151.75 per Offering Common Share for aggregate gross
proceeds of $460.0 million.
In addition, the Corporation issued 3,032,550 Private Placement Common Shares at a price of $151.75 per Private Placement
Common Share by way of the Concurrent Private Placement with GIC Pte. Ltd. ("GIC"), Caisse de dépôt et placement du
Québec ("CDPQ") and a subsidiary of Canada Pension Plan Investment Board ("CPP Investments") for aggregate gross
proceeds of $460.2 million, which includes 395,550 Private Placement Common Shares issued pursuant to the exercise in full
of the additional subscription options.
2021 Equity Financing
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 $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.
Preferred Shares
As at December 31, 2022, no preferred shares were issued.
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
2022
$
2,401.3
500.0
6,006.0
3.1
8,910.4
(491.0)
8,419.4
2021
$
1,202.3
500.0
4,664.5
0.7
6,367.5
(926.3)
5,441.2
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-64
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 (note 29)
Net debt
For the years ended December 31
Adjusted EBITDA
Net debt to adjusted EBITDA ratio
(1)
Including current portion.
2022
2,954.5
(495.6)
2,458.9
2022
1,530.2
1.6
2021
1,776.7
(927.4)
849.3
2021
1,322.5
0.6
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.
28 DIVIDENDS
In 2022, the Corporation declared dividends of $181.8 million or $1.50 per share ($174.9 million or $1.50 per share in 2021).
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 9, 2021, March 9, 2022, May 11, 2022 and August 8, 2022,
$89.2 million was reinvested in 584,457 common shares under the DRIP during the year ended December 31, 2022. Shares
issued under the DRIP in 2022 and 2021 applied a 2% discount of the applicable average market price.
Subsequent to the end of the year, on January 16, 2023, $14.5 million of the fourth quarter dividend declared on November 9,
2022 was reinvested in 88,319 additional common shares under the DRIP.
Subsequent to the end of the year, on March 8, 2023, the Board of Directors of the Corporation declared a quarterly dividend
of $0.375 per common share of the Corporation, payable on or about April 15, 2023, to shareholders of record as at the close
of business on March 31, 2023. The final aggregate amount of the dividend payment will depend on the number of issued and
outstanding common shares at the close of business on March 31, 2023, and has not been recognized as a liability as at
December 31, 2022.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-65
29 STATEMENTS OF CASH FLOWS
CASH AND CASH EQUIVALENTS, NET OF BANK OVERDRAFT
As at
Cash on hand and with banks
Less: Bank overdraft (note 25)
Cash and cash equivalents, net of bank overdraft
December 31, 2022 December 31, 2021
$
$
495.6
(4.6)
491.0
927.4
(1.1)
926.3
In 2022, cash disbursed related to acquisitions made prior to January 1, 2022 amounted to $34.8 million ($10.6 million in 2021,
related to acquisitions made prior to January 1, 2021).
ADJUSTMENTS
For the years ended December 31
Depreciation, amortization and impairment of long-lived assets
Share of income of associates and joint ventures, net of tax
Cash contribution to defined benefit pension schemes
Defined benefit pension scheme expense
Foreign exchange and non-cash movements
Gains on disposal of property and equipment
Gains on disposal of non-core assets
Other
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
WSP Global Inc.
Consolidated Financial Statements
2022
2022
$
598.1
(24.0)
(13.6)
1.4
17.1
—
(1.2)
(42.2)
535.6
2022
$
(291.9)
(299.7)
179.2
127.7
(284.7)
2021
$
518.5
(19.5)
(12.8)
9.0
(17.1)
(5.8)
(5.6)
(30.1)
436.6
2021
$
(142.1)
(107.8)
275.2
7.6
32.9
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Long-term debt
$
Lease liabilities
$
Dividends
payable to
shareholders
$
Balance as at January 1, 2021
Changes from financing cash flows
Addition through business acquisitions and
measurement period adjustments
New leases, renewals, modifications
Net repayment of bank overdraft
Foreign exchange rate adjustments
Other non-cash changes
Balance as at December 31, 2021
Changes from financing cash flows
Addition through business acquisitions and
measurement period adjustments
New leases, renewals, modifications
Net repayment of bank overdraft
Foreign exchange rate adjustments
Other non-cash changes
Balance as at December 31, 2022
574.2
914.1
273.9
—
(1.3)
(1.9)
17.7
1,776.7
1,048.3
8.3
—
3.5
96.1
21.6
2,954.5
1,018.4
(262.6)
229.1
63.6
—
(28.2)
—
1,020.3
(303.9)
149.5
247.1
—
16.8
—
1,129.8
42.5
(80.6)
—
—
—
—
82.3
44.2
(90.1)
—
—
—
—
92.6
46.7
F-66
Total
$
1,635.1
570.9
503.0
63.6
(1.3)
(30.1)
100.0
2,841.2
654.3
157.8
247.1
3.5
112.9
114.2
4,131.0
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
2022
$
25.6
8.9
34.5
2021
$
21.3
41.9
63.2
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.
WSP Global Inc.
Consolidated Financial Statements
2022
WSP GLOBAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(Tabular figures in millions of Canadian dollars, except the number of shares and per share data and when otherwise stated)
F-67
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,
2022 amounted to $311.3 million ($226.7 million as at December 31, 2021). 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. The Corporation is of the view that LB has a strong defense to offer on both the legal aspects of the litigation and the
factual underpinnings in this complex and rarely litigated statute. The Corporation intends to vigorously defend this matter
and has filed Preliminary motions to dismiss. It is too early to predict the outcome of this suit.
32 SUBSEQUENT EVENTS
Subsequent to the end of the year, in January 2023, WSP acquired BG Bonnard & Gardel Holding SA (“BG”), an engineering
consulting firm located in Switzerland and France, with a minor presence in Portugal and Italy. With approximately 700
professionals, BG offers consulting, engineering, and project management services in the infrastructure, building, water,
environment, and energy sectors.
Subsequent to the end of the year, in January 2023, WSP acquired enstruct, a 75-employee structural engineering firm in
Australia.
These acquisitions were financed using WSP's available cash and credit facilities.
WSP Global Inc.
Consolidated Financial Statements
2022
As one of the world’s leading professional
services firms, WSP exists to future-proof
our cities and environment. We provide
strategic advisory, engineering, and design
services to clients in the transportation,
infrastructure, environment, building,
energy, water, and mining sectors. Our
66,000 trusted professionals are united by
the common purpose of creating positive,
long-lasting impacts on the communities
we serve through a culture of innovation,
integrity, and inclusion. Sustainability and
science permeate our work. In 2022, WSP
derived more than half of its $11.9 B (CAD)
revenues from services that support the
UN Sustainable Development Goals. The
Corporation’s shares are listed on the
Toronto Stock Exchange (TSX:WSP).
Caution Regarding Forward-Looking Statements
This Annual Report contains forward-looking statements
that reflect our expectations regarding our future growth,
results of operations, performance, business prospects
and opportunities, and the achievement of our targets or
ambitions under our 2022-2024 Global Strategic Action,
including financial and ESG ambitions. Forward-looking
statements are based on a number of assumptions and
are subject to inherent risks and uncertainties. Refer to
sections 19 “forward-looking statements” and 20 “risk
factors” of our Management’s Discussion and Analysis
for the fourth quarter and year ended December 31, 2022
included in this Annual Report for a discussion of such risks
and uncertainties and the material factors and assumptions
related to the statements set forth in this Annual Report.
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, 2022.
wsp.com
WSP Global Inc.
1600 Boulevard René-Lévesque West
11th Floor, Montréal, Quebec
Canada H3H 1P9