Half-yearly Report
John Wood Group PLC
Interim results for the six months to 30 June 2007
Continuing strong progress
John Wood Group PLC ("Wood Group", the "Group") is a market leader in
engineering design, production enhancement and support, and industrial gas
turbine services for customers in the oil & gas and power generation industries
around the world. Wood Group businesses employ approximately 22,000 people in
46 countries.
Financial Highlights i
Revenue of $2,117.3m (2006: $1,572.1m) up 35%
EBITA of $144.6m (2006: $90.0m) up 61%
Operating profit of $137.4m (2006: $87.0m) up 58%
Profit before tax of $124.0m (2006: $75.6m) up 64%
Adjusted diluted earnings per ordinary share of 16.8 cents (2006: 10.2 cents)
up 65%
Diluted earnings per share of 15.7 cents (2006: 9.6 cents) up 64%
Declared interim dividend of 2.0 cents (2006: 1.5 cents) up 33%
Operating Highlights
Group
Strong energy markets
Significant financial and operating progress
continuing strong revenue growth
margin improvement in all divisions
10% increase in people to approximately 22,000 worldwide
successfully developing market leading positions
Engineering & Production Facilities:
Engineering
all major business areas showing good growth
wide range of upstream developments
strong demand for subsea engineering activities
pipeline engineering busy, particularly in the US
refinery capacity constraints generating requirements for debottlenecking and
upgrades
Production Facilities
high level of activity in the North Sea driven by subsea tiebacks, integrity
enhancements
continue to expand international activities; good growth in our maintenance
outsourcing contract in Trinidad and production support contracts in North &
West Africa
Well Support
good performance in all three businesses:
ESP strong market share in the US, progress in a number of international
markets, including Chad, Russia and Yemen
Pressure Control increasing manufacturing capacity around the world,
maintaining strong position in US markets, achieving good growth outside the
US, notably in Arabian Gulf and Australia
Gas Turbine Services
Continuing success in securing long term maintenance contracts; recent awards
from Air Liquide in the Netherlands, BASF in China, and New York Power
Authority
Winning power plant supply contracts in Ghana, Kuwait, Pakistan and the US
In their six month report, Sir Ian Wood, Chairman and Allister Langlands, Chief
Executive, Wood Group, say:
"In the continuing strong oil & gas market, we are extending our range of
products and services, and successfully extending our international presence.
We are growing our market position in the improving power industry and are
increasingly confident we will continue our performance improvement in this
sector. Overall, we expect the strong growth to continue and believe our
results for the year will be ahead of expectations."
Information:
Wood Group, 01224 851 000
Alan Semple
Nick Gilman
Carolyn Smith
Brunswick, 020 7404 5959
Patrick Handley
Nebat Sukker
Notes
For footnotes see page 12.
Interim Statement
Introduction
We are pleased to report continuing strong progress in 2007, following on from
our record 2006 performance. We are successfully developing our market leading
positions and extending our range of services in strong energy markets and we
believe our result for the year will be ahead of expectations.
Results
In the six months to June 2007, revenue increased by 35% to $2,117.3m (2006:
$1,572.1m) and EBITA increased by 61% to $144.6m (2006: $90.0m). This reflects
revenue growth in all divisions, with particular strength from our Engineering
activities within Engineering & Production Facilities and from Gas Turbine
Services. EBITA margins ("margins") increased in all areas with notable
increases in Engineering & Production Facilities, where they increased from
6.4% to 8.1%, and in Gas Turbine Services, where they increased from 5.3% to
6.1%.
Additional financial commentary is given in the Interim Financial Review.
Dividend
Reflecting confidence in our long term strategy and our focus on delivering
growth, we have declared an increase of 33% in the interim dividend to 2.0
cents (2006: 1.5 cents) which will be paid on 27th September 2007 to
shareholders on the register on 14th September 2007.
Markets
We anticipate continuing growth in demand for energy, driven by the expanding
global economies, particularly in the Asia Pacific region. Our clients'
investment decisions generally continue to be based on oil price assumptions
well below current levels and this would appear to confirm the potential longer
term nature of this upcycle, with continuing increases in exploration,
development and production spending in most regions throughout the world. On
the power side, there is an increase in the demand for power in North America
and continuing growth in the installed base of gas turbines around the world.
Significant geo-political uncertainty persists in some of the key oil & gas
provinces and we remain focused on carefully assessing risk and building in a
range of mitigating factors to ensure we can continue to service our customers
in these areas.
Strategy
Our strategy has four strands:
to deliver sustainable growth by balancing our earlier cycle field development
and later cycle production support activities. Whilst we are currently
particularly active in our development related Engineering activities, we are
investing in extending our services in production support, where we have opened
new offices in Qatar, Malaysia and Peru
to grow market leading positions in differentiated know-how and technology
to achieve performance contracts in long term relationships which add value to
our clients' operations
to extend our differentiated services and broaden our international presence in
areas where we can develop market-leading positions.
People
The attraction and retention of high quality people is critical to our growth
and future success, and we continue to maintain our focus in this area. In the
first six months we have increased our overall headcount by 10% to
approximately 22,000 people working in 46 countries around the world.
Divisional highlights
Engineering & Production Facilities
Revenue increased by 35% to $1,208.0m (2006: $895.7m) and EBITA 71% to $97.4m
(2006: $57.1m). There was strong revenue growth across the division, with the
fastest growth in our higher margin Engineering activities, which now represent
approximately 45% of the division's revenue, contributing to the increase in
the EBITA margin to 8.1% from 6.4%. In the period we have focused on
developing our hub and satellite model - with further progress in our hubs in
Houston, Aberdeen, London and Perth - together with several new initiatives to
expand in satellite locations where we can access highly skilled resources, for
example in Glasgow, and support local client needs, for example in Abu Dhabi
and Norway. Over the last 6 months we have increased our number of people from
12,700 to 14,000.
Engineering
We have been particularly active in Engineering in the period with all major
business areas showing good growth. The focus of oil & gas companies on
developing new sources of production has driven demand for our upstream
engineering capabilities, and we are active on a number of engineering,
procurement and construction management (EPCM) contracts. We are working on a
wide range of developments including Mallet, Shenzi, Mirage and Perdido in the
US; Valhall in the North Sea; Mangala in India; and Tombua-Landana and Nsiko
offshore West Africa. New subsea developments, deepwater tiebacks and subsea
trunklines have led to demand for our subsea engineering activities and we have
been active on Gorgon offshore Australia, and Block 31 offshore Angola. Demand
for our onshore pipeline engineering activities in the US is primarily driven
by the need to transport gas from "unconventional" gas developments in new
geographic areas. The desire to find routes to monetise gas and establish a
global gas market are leading to increased investment in midstream
developments, and we are installing our first LNG (Liquefied Natural Gas) Smart
® Air Vaporization Process, which has environmental and cost benefits, at the
LNG receiving terminal in Lake Charles, Louisiana. In downstream, capacity
constraints are continuing to generate requirements for refinery
debottlenecking and upgrades in the Americas and we have been active on
projects with Citgo, CCRL and Valero. We are also active on a range of
automation projects for clients, including a major refinery project in
Singapore.
Production Facilities
We continue to enjoy a high level of activity in the North Sea, driven by a
number of subsea tiebacks and our customers' ongoing focus on integrity
enhancements. Our projects include Shell's major integrity upgrades across
their North Sea assets, and Talisman's development plans for their recently
acquired Greater Fulmar assets. We have continued to expand our international
activities, with particular growth in our maintenance outsourcing contract for
BP in Trinidad and our engineering and construction support contracts for the
Sonatrach/BP/Statoil In Amenas and In Salah projects in Algeria. Production
Facilities revenues are now approximately 65% North Sea and 35% international,
with international content showing the fastest growth. We are also
successfully expanding our added value specialist services, and our DSI
subsidiary, for example, has secured the commissioning contract for the Shell
deepwater Perdido development in the Gulf of Mexico.
Well Support
Revenue increased by 19% to $416.4m (2006: $350.8m) and EBITA 21% to $41.9m
(2006: $34.7m). There was strong revenue growth across all of the businesses,
and our business outside the US now represents over 50% of the division's
revenue. The increase in the EBITA margin to 10.1% from 9.9% was driven by the
positive margin impact of increasing revenue, with the improvement partly held
back by the costs of adding new capacity to our operations. Over the last 6
months we have increased our number of people from 3,500 to 3,700.
Electric Submersible Pumps (ESPs)
ESPs maximise oil recovery from existing fields, and this is driving global
demand for our broad range of ESP equipment and service. Our ESP business has
a strong market share in the US with a wide range of clients. Internationally
we have made progress in a number of markets including Chad, Russia and Yemen.
We are focused on building our technology and know-how and are involved in
developments in the offshore market and in steam assisted gravity drainage
(SAGD) pumps, primarily for the Canadian oil sands market. We are also making
good progress in the surface pumping application market where our equipment is
used for a variety of applications.
Pressure Control
Our surface valve and wellhead equipment is used to control high pressures,
primarily for gas developments. High levels of drilling activity around the
world are leading to increased demand and we are increasing manufacturing
capacity in China, Mexico, Saudi Arabia and the US. We have maintained our
strong market share in the US, where we continue to extend our branch network
to maintain our high service levels, and we are making good progress
internationally.
Logging Services
Our production focused slickline operations and our development focused cased
hole electric wireline services both performed well. In order to meet the
demand from this market, we have continued to increase our capacity and opened
up bases in the Rockies and Barnett Shale.
Gas Turbine Services
Revenue increased by 58% to $478.2m (2006: $302.9m) and EBITA 83% to $29.2m
(2006: $16.0m). There was strong revenue growth across the division, with the
increase in the EBITA margin from 5.3% to 6.1% driven by our continuing focus
on higher margin areas and the strengthening power market. Over the last 6
months we have increased our number of people from 3,500 to 3,900.
Support for turbines in the oil & gas sector, used for power generation, gas
compression and transmission, represents around 35% of the division revenues.
The breadth of our offering and the link to our Production Facilities
capability are key areas of differentiation. We are investing to maintain and
enhance our differentiation and, in the period, further increased the range of
turbines for which we provide aftermarket services.
In the Power sector, global economic growth is driving increases in running
hours on installed equipment and there is a tightening of supply and demand for
power in certain markets. These factors are contributing to a clear
improvement in demand for our services, including the provision of fast track
power generation capacity.
Our focus on servicing higher technology turbines, our success in winning more
long term comprehensive maintenance contracts, and the growth of our activity
in operating and maintaining the broader power plant, are all contributing to
our improving performance. We have recently secured long term maintenance
contracts with Air Liquide in the Netherlands, BASF in China and New York Power
Authority.
The increasing demand for power and extended lead times for new equipment,
combined with our ability to deliver lower cost fast track solutions, is
leading to opportunities for us to provide the complete power plant and, in the
period, we have secured power plant supply contracts in Ghana, Kuwait, Pakistan
and the US.
Outlook
In the continuing strong oil & gas market, we are extending our range of
products and services, and successfully extending our international presence.
We are growing our market position in the improving power industry and are
increasingly confident we will continue our performance improvement in this
sector. Overall, we expect the strong growth to continue and believe our
results for the year will be ahead of expectations.
Sir Ian Wood, Chairman
Allister G Langlands, Chief Executive
27 August 2007
Interim Financial Review
Group income statement
The Group income statement for the six months to 30 June 2007 is summarised
below.
Interim Interim Increase
June June
2007 2006
$m $m
Revenue 2,117.3 1,572.1 35%
EBITA 144.6 90.0 61%
EBITA margin % 6.8% 5.7% 1.1% points
Operating profit 137.4 87.0 58%
Profit before tax 124.0 75.6 64%
Profit for the period 82.5 49.8 66%
Diluted EPS (cents) 15.7 9.6 64%
Adjusted diluted EPS (cents) 16.8 10.2 65%
In the six months to June 2007 revenue increased by 35% to $2,117.3m (2006:
$1,572.1m) and EBITA (1) increased by 61% to $144.6m (2006: $90.0m). This
reflects revenue growth in all divisions, with particular strength from our
Engineering activities within Engineering & Production Facilities and from Gas
Turbine Services. Activity levels were high across Engineering. In Gas
Turbine Services the increase includes good growth in our oil & gas related
activities, in part because the first half 2006 revenues were impacted by the
deferral of some overhauls, and healthy demand for our activities providing
power plant packages.
EBITA margins ("margins") overall increased from 5.7% at June 2006, to 6.8%
with growth in all areas. In Engineering & Production Facilities margins
increased from 6.4% at June 2006 to 8.1%, with underlying increases in both
Engineering and in Production Facilities, combined with the mix benefit of
faster growth in the relatively higher margin Engineering activities. In Well
Support margins increased from 9.9% at June 2006 to 10.1% with the improvement
being held back somewhat by a number of factors, including the revenue cost of
capacity additions. In Gas Turbine Services margins increased from 5.3% at
June 2006 to 6.1% reflecting higher volumes generally and the contribution from
providing power plant packages.
The amortisation charge of $7.2m included $2.4m for the non recurring
impairment of a small investment. The increase in the finance expense to
$13.4m (2006: $11.4m) was driven by an increase in the average interest rate in
the period along with a higher average debt balance. Interest cover (2) was 10.8
times (2006: 7.9 times). Profit before tax increased by 64% reflecting the
strong operating profit growth of 58% and the increase in finance expense of
18%. The tax charge for the period was $41.5m (2006: $25.8m) which represents
a tax rate of 33.5% (2006: 34.1%) measured against profit before tax.
Adjusted diluted earnings per ordinary share (3) for the period increased by 65%
to 16.8 cents (2006: 10.2 cents) and diluted earnings per share by 64% to 15.7
cents (2006: 9.6 cents).
Group cash flow
The Group cash flow statement for the six months to 30 June 2007 is summarised
below.
Interim Interim Full
Year
June June December
2007 2006 2006
$m $m $m
Opening net debt (257.9) (245.8) (245.8)
EBITA 144.6 90.0 215.1
Depreciation and other non cash items 43.1 28.8 63.6
Cash generated from operations pre working 187.7 118.8 278.7
capital
Working capital movements (75.7) (72.8) (53.6)
Cash generated from operations 112.0 46.0 225.1
Acquisitions (11.9) (49.7) (50.4)
Capex and intangible assets (52.8) (48.1) (86.3)
Disposal of subsidiaries - 7.3 7.3
Issue of shares/sale of trust shares 7.7 1.3 1.8
Tax (53.4) (26.2) (57.0)
Interest, dividends and other (37.6) (33.8) (52.6)
Increase in net debt (36.0) (103.2) (12.1)
Closing net debt (293.9) (349.0) (257.9)
Cash generated from operations before movements in working capital of $187.7m
increased by $68.9m or 58% driven by the 61% increase in EBITA for the six
months to June 2007. Working capital outflows of $75.7m compare to outflows of
$72.8m in the first half of 2006, and were principally driven by the increased
activity in the period. At June 2007, net working capital relative to
annualised revenue (4) was 14.1% which compares to 17.1% at June 2006 and 14.6%
at December 2006. This improved working capital ratio position reflects
continuing management focus on capital efficiency and to some extent advance
payments from certain customers.
Purchase of property plant and equipment ("capex") totalled $52.8m (2006:
$48.1m) and included the cost of increasing capacity in Well Support. There
were no acquisitions in the period but we are currently actively reviewing a
number of interesting opportunities. Deferred consideration payments related to
earn-out payments on acquisitions from previous years, and amounted to $11.9m
(2006:$4.2m).
Net debt increased by $36.0m from $257.9m at December 2006 to $293.9m at June
2007. The Group's gearing ratio (5) increased slightly from 32% at December 2006
to 33% at June 2007.
Net debt of $293.9m is primarily US dollar denominated in line with the
currency of the bulk of the Group's net assets. Long-term borrowings amounted
to $351.5m (2006: $423.5m), of which $224.0m (2006: $176.2m), or 64% (2006:
42%), was at a weighted average fixed rate of interest of 4.9% (2006: 4.9%).
ROCE (6) for the Group increased by 9% points to 27% (2006: 18%). The principal
driver of the improvement was the increase in Group EBITA margin.
Alan Semple
Group Finance Director
27 August 2007
Footnotes
1 EBITA represents operating profit of $137.4m (2006: $87.0m) before the
deduction of amortisation of other intangibles of $7.2m (2006: $3.0m) and is
provided as it is a key unit of measurement used by the Group in the management
of its business.
2 Interest cover is EBITA divided by net finance costs.
3 Adjusted diluted earnings per share is calculated by dividing earnings before
amortisation (net of tax) by the weighted average number of ordinary shares in
issue during the period, excluding shares held by the Group's employee share
ownership trusts and adjusted to assume conversion of all potentially dilutive
ordinary shares.
4 Net working capital to annualised revenue represents the total of
inventories, trade and other receivables, less trade and other payables divided
by total revenue. Where total revenue is for a six month period, it is
multiplied by two to provide an annualised equivalent.
5 Gearing is net debt divided by total shareholders' equity.
6 Return on Capital Employed ("ROCE") is calculated as Group EBITA, divided by
average equity plus average net debt, excluding discontinuing activities.
7 Unless stated otherwise, comparisons of financial performance are between the
6 month period to 30 June 2007 and the 6 month period to 30 June 2006.
Interim Financial Statements 2007
John Wood Group PLC
Group income statement for the six month period to 30 June 2007
Unaudited Unaudited Audited Full
Interim June Interim June Year
2007 2006 December 2006
Note $m $m $m
Revenue 2 2,117.3 1,572.1 3,468.8
Cost of sales (1,684.0) (1,258.8) (2,768.0)
Gross profit 433.3 313.3 700.8
Administrative expenses (295.9) (226.3) (493.3)
Operating profit 2 137.4 87.0 207.5
Finance income 2.8 2.2 5.3
Finance expense (16.2) (13.6) (29.2)
Profit before taxation 124.0 75.6 183.6
Taxation 5 (41.5) (25.8) (62.4)
Profit for the period 82.5 49.8 121.2
Attributable to:
Equity shareholders 81.2 49.2 120.5
Minority interest 1.3 0.6 0.7
82.5 49.8 121.2
Earnings per share
(expressed in cents per
share)
Basic 4 16.3 10.0 24.4
Diluted 4 15.7 9.6 23.4
All items dealt with in arriving at the profits stated above relate to
continuing operations.
Group statement of recognised income and expense for the six month period to 30
June 2007
Unaudited Unaudited Audited
Interim Interim Full Year
June June December
2007 2006 2006
$m $m $m
Profit for the period 82.5 49.8 121.2
Actuarial gains on retirement benefit - - 8.5
liabilities
Movement in deferred tax relating to - - (2.6)
retirement benefit liabilities
Cash flow hedges fair value gains 2.6 2.8 1.8
reported in income statement for the (0.9) (0.3) (1.0)
period
Tax on foreign exchange losses offset 0.3 - 3.2
in reserves
Exchange differences on retranslation 4.1 2.7 5.6
of foreign currency net assets
Total recognised income for the period 88.6 55.0 136.7
Total recognised income for the period
is attributable to:
Equity shareholders 87.3 54.4 136.0
Minority interest 1.3 0.6 0.7
88.6 55.0 136.7
Group balance sheet as at 30 June 2007
Unaudited Unaudited Audited Full
Interim Interim June Year December
June 2007 2006 2006
Note $m $m $m
Assets
Non-current assets
Goodwill and other 385.9 375.0 385.5
intangible assets
Property plant and equipment 260.5 232.4 247.9
Long term receivables 3.4 9.1 5.2
Financial assets - 4.5 4.4 2.6
derivative financial
instruments
Deferred tax assets 35.8 19.6 36.6
690.1 640.5 677.8
Current assets
Inventories 466.4 397.0 424.1
Trade and other receivables 972.6 757.0 792.5
Income tax receivable 17.4 10.4 8.7
Financial assets - 1.3 1.6 1.3
derivative financial
instruments
Gross assets held for resale 6 8.6 - -
Cash and cash equivalents 98.9 119.7 140.3
1,565.2 1,285.7 1,366.9
Liabilities
Current liabilities
Borrowings 41.3 45.2 41.5
Derivative financial 0.9 0.4 0.9
instruments
Trade and other payables 841.7 616.2 710.8
Income tax liabilities 34.5 18.3 37.7
Gross liabilities held for 6 5.2 - -
resale
923.6 680.1 790.9
Net current assets 641.6 605.6 576.0
Non-current liabilities
Borrowings 351.5 423.5 356.7
Derivative financial - - 0.1
instruments
Deferred tax liabilities 6.3 6.1 7.3
Retirement benefit 7 18.2 35.9 24.9
liabilities 9
Other non-current 30.1 31.7 31.2
liabilities
Provisions 31.8 15.6 23.6
437.9 512.8 443.8
Net assets 893.8 733.3 810.0
Shareholders' equity
Share capital 25.8 25.5 25.5
Share premium 302.3 294.2 294.1
Retained earnings 465.2 324.0 397.4
Other reserves 91.4 80.9 85.3
Total shareholders' equity 884.7 724.6 802.3
Minority interest 9.1 8.7 7.7
Total equity 893.8 733.3 810.0
Group cash flow statement for the six month period to 30 June 2007
Unaudited Unaudited Audited
Interim Interim Full Year
June 2007 June 2006 Dec 2006
Note $m $m $m
Cash generated from operations 8 112.0 46.0 225.1
Tax paid (53.4) (26.2) (57.0)
Net cash from operating activities 58.6 19.8 168.1
Cash flows from investing activities
Acquisitions (net of cash acquired) - (25.4) (26.0)
Acquisition of minority interests - (20.1) (20.2)
Deferred consideration payments (11.9) (4.2) (4.2)
Disposal of subsidiaries (net of cash - 7.3 7.3
disposed)
Purchase of property plant and (47.5) (44.5) (76.5)
equipment
Proceeds from sale of property plant 1.4 3.0 8.4
and equipment
Purchase of intangible assets (5.3) (3.6) (9.8)
Net cash used in investing activities (63.3) (87.5) (121.0)
Cash flows from financing activities
Proceeds from issue of ordinary 0.3 0.4 0.4
shares (net of expenses)
(Repayment of)/proceeds from bank (15.8) 59.3 (17.5)
loans
Disposal of shares in employee share 7.4 0.9 1.4
trusts
Interest received 2.8 2.2 4.5
Interest paid (15.7) (13.9) (29.4)
Dividends paid to shareholders 3 (17.6) (13.4) (20.8)
Dividends paid to minority interest - (0.4) (1.5)
Net cash (used in)/from financing (38.6) 35.1 (62.9)
activities
Effect of exchange rate changes on 1.9 2.4 6.2
cash and cash equivalents
Net decrease in cash and cash (41.4) (30.2) (9.6)
equivalents
Opening cash and cash equivalents 140.3 149.9 149.9
Closing cash and cash equivalents 98.9 119.7 140.3
Notes to the interim accounts for the six month period to 30 June 2007
1.Basis of Preparation
The interim report and accounts have been prepared on the basis of the
accounting policies set out in the Group's 2006 Annual Report and Accounts.
The interim accounts were approved by the Board of Directors on 27 August
2007. The results for the six months to 30 June 2007 and the comparative
results for six months to 30 June 2006 are unaudited. The comparative figures
for the year ended 31 December 2006 do not constitute the statutory financial
statements for that year. Those financial statements have been delivered to
the Registrar of Companies and include the auditor's report which was
unqualified and did not contain a statement either under Section 237(2) or
Section 237(3) of the Companies Act 1985.
2.Segmental reporting
Business segments
Revenue EBITDA (1)
Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full
30 June 30 June Year 30 June 30 June Year
2007 2006 2006 2007 2006 2006
$m $m $m $m $m $m
Engineering & Production Facilities 1,208.0 895.7 1,972.7 104.4 63.3 155.3
Well Support 416.4 350.8 739.1 54.0 43.7 93.9
Gas Turbine Services 478.2 302.9 713.7 37.9 24.0 54.1
Central costs (4) - - - (21.8) (17.4) (37.7)
Total excl discontinuing operations 2,102.6 1,549.4 3,425.5 174.5 113.6 265.6
Gas Turbine Services 14.7 22.7 43.3 (1.4) 0.5 0.9
discontinuing operations (2)
Total 2,117.3 1,572.1 3,468.8 173.1 114.1 266.5
EBITA (1) Opertating profit
Unaudited Unaudited Audited Unaudited Unaudited Audited
Interim Interim Full Interim Interim Full
30 June 30 June Year 30 June 30 June Year
2007 2006 2006 2007 2006 2006
$m $m $m $m $m $m
Engineering & Production Facilities 97.4 57.1 141.9 92.2 55.6 138.0
Well Support 41.9 34.7 73.6 41.8 34.7 73.5
Gas Turbine Services 29.2 16.0 38.0 27.4 14.7 34.7
Central costs (4) (22.1) (17.8) (38.4) (22.1) (17.9) (38.5)
Total excluding discontinuing operations 146.4 90.0 215.1 139.3 87.1 207.7
Gas Turbine Services (1.8) - - (1.9) (0.1) (0.2)
Total 144.6 90.0 215.1 137.4 87.0 207.5
Finance income 2.8 2.2 5.3
Finance expense (16.2) (13.6) (29.2)
Profit before taxation 124.0 75.6 183.6
Taxation (41.5) (25.8) (62.4)
Profit for the period 82.5 49.8 121.2
Notes
EBITDA represents operating profit before depreciation and amortisation. EBITA
represents EBITDA less depreciation. EBITA and EBITDA are provided as they are
units of measurement used by the Group in the management of its business.
The discontinuing operations relate to an Aero engine overhaul company which
the Group has decided to divest.
Revenue arising from sales between segments are not material.
Central costs include the costs of certain management personnel in both the UK
and the US, along with an element of Group infrastructure costs.
3. Dividends
Unaudited Unaudited Audited
Interim June Interim June Full Year
2007 2006 Dec 2006
$m $m $m
Dividends on equity shares
Final paid 17.6 13.4 13.4
Interim paid - - 7.4
Total dividends 17.6 13.4 20.8
After the balance sheet date, the directors declared an interim dividend of 2.0
cents per share which will be paid on 27 September 2007. The interim
financial report does not reflect this dividend payable, which will be
recognised in shareholders' equity as an appropriation of retained earnings in
the year ended 31 December 2007.
4. Earnings per share
Unaudited Interim Unaudited Interim Audited Full Year
June 2007 June 2006 December 2006
Earnings(1) No.of EPS(2) Earnings No.of EPS Earnings No.of EPS
($m) shares (cents) ($m) shares (cents) ($m) shares (cents)
millions millions millions
Basic 81.2 498.4 16.3 49.2 493.9 10.0 120.5 494.7 24.4
Effect of dilutive
ordinary shares - 18.9 (0.6) - 18.3 (0.4) - 19.4 (1.0)
Diluted 81.2 517.3 15.7 49.2 512.2 9.6 120.5 514.1 23.4
Amortisation,
net of tax 5.8 - 1.1 3.0 - 0.6 5.4 - 1.1
Adjusted diluted 87.0 517.3 16.8 52.2 512.2 10.2 125.9 514.1 24.5
Adjusted basic 87.0 498.4 17.5 52.2 493.9 10.6 125.9 494.7 25.4
The calculation of basic earnings per share is based on the earnings
attributable to equity shareholders divided by the weighted average number of
ordinary shares in issue during the period excluding shares held by the Group's
employee share ownership trusts. For the calculation of diluted EPS, the
weighted average number of ordinary shares in issue is adjusted to assume
conversion of all potentially dilutive ordinary shares. The Group has two
types of dilutive ordinary shares - share options granted to employees under
Employee Share Option Schemes and the Long Term Retention Plan; and shares
issuable under the Group's Long Term Incentive Scheme. Adjusted EPS is
disclosed to show the results excluding amortisation, net of tax.
(1) Earnings attributable to equity shareholders
(2) Earnings per share
5. Taxation
The taxation charge for the six months ended 30 June 2007 reflects an
anticipated rate of 33.5% on profit before taxation for the year ending 31
December 2007 (June 2006 : 34.1%).
6. Assets/liabilities held for resale
In July 2007, the Group disposed of its 55% share of Mustang Tampa Inc for a
consideration of $7.7m. This amount includes deferred consideration of $0.9m.
The assets and liabilities of Mustang Tampa have been reclassified as gross
assets and liabilities held for resale in the Group balance sheet at 30 June
2007.
7. Retirement benefit liability
No interim revaluation of the pension liability has been carried out at 30 June
2007 and accordingly there is no actuarial gain/loss in the statement of
recognised income and expense. The figures for gains and losses for the full
year together with the surplus/deficit at the year end will be presented in the
2007 Annual Report and Accounts. From 5 April 2007 benefits provided under the
scheme are based on Career Averaged Revalued Earnings ('CARE'). As part of
the CARE transition arrangements the Group made a £2.0m ($4.0m) contribution to
the scheme in April 2007. The move to CARE resulted in a reduction in scheme
liabilities of £1.65m ($3.3m).
8. Cash generated from operations
Unaudited Unaudited Audited
Interim Interim Full
June 2007 June 2006 Year
Dec 2006
$m $m $m
Reconciliation of operating profit to cash
generated from operations:
Operating profit 137.4 87.0 207.5
Adjustments for:
Depreciation 28.5 24.1 51.4
Gain on disposal of property plant and - (0.1) (1.4)
equipment
Amortisation 7.2 3.0 7.6
Share based charges 6.2 4.1 9.7
Increase in provisions 8.0 0.3 8.1
Changes in working capital (excluding effect of
acquisition and disposal of subsidiaries)
Increase in inventories (28.4) (19.9) (55.2)
Increase in receivables (172.2) (107.4) (125.6)
Increase in payables 124.9 54.5 127.2
Exchange differences 0.4 0.4 (4.2)
Cash generated from operations 112.0 46.0 225.1
9. Analysis of net debt
At 1 January Cash Exchange At 30 June 2007
2007 flow movements
$m $m $m $m
Cash and cash 140.3 (43.3) 1.9 98.9
equivalents
Short term (41.5) 2.8 (2.6) (41.3)
borrowings
Long term borrowings (356.7) 13.0 (7.8) (351.5)
Net debt (257.9) (27.5) (8.5) (293.9)
Independent review report to John Wood Group PLC for the six month period to 30
June 2007
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2007 which comprises the Group interim balance
sheet as at 30 June 2007 and the related Group interim statements of income,
cash flows and statement of recognised income and expense for the six months
then ended and related notes. We have read the other information contained in
the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the Financial Services Authority require that the accounting policies
and presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes,
and the reasons for them, are disclosed.
This interim report has been prepared in accordance with the basis set out in
Note 1.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial
data and, based thereon, assessing whether the disclosed accounting policies
have been applied. A review excludes audit procedures such as tests of controls
and verification of assets, liabilities and transactions. It is substantially
less in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company for the purpose of the Listing Rules of the Financial Services
Authority and for no other purpose. We do not, in producing this report, accept
or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2007.
PricewaterhouseCoopers LLP
Chartered Accountants
Aberdeen
27 August 2007
Notes:
(a) The maintenance and integrity of the John Wood Group PLC web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
John Wood Group PLC
Shareholder information
Payment of dividends
The Company declares its dividends in US dollars. As a result of the
shareholders being mainly UK based, dividends will be paid in sterling, but if
you would like to receive your dividend in dollars please contact the
Registrars at the address below. All shareholders will receive dividends in
sterling unless requested. If you are a UK based shareholder, the Company
encourages you to have your dividends paid through the BACS (Banker's Automated
Clearing Services) system. The benefit of the BACS payment method is that the
Registrars post the tax vouchers directly to the shareholders, whilst the
dividend is credited on the payment date to the shareholder's Bank or Building
Society account. Shareholders who have not yet arranged for their dividends to
be paid direct to their Bank or Building Society account and wish to benefit
from this service should contact the Registrars at the address below. Sterling
dividends will be translated at the closing mid-point spot rate on 14 September
2007 as published in the Financial Times on 15 September 2007.
Officers and advisers
Secretary and Registered Office
I Johnson
John Wood Group PLC
John Wood House
Greenwell Road
ABERDEEN
AB12 3AX
Tel: 01224 851000
Registrars
Lloyds TSB Registrars Scotland
PO Box 28448
Finance House
Orchard Brae
EDINBURGH
EH4 1WQ
Tel: 0870 601 5366
Stockbrokers
JPMorgan Cazenove Limited
Credit Suisse
Auditors
PricewaterhouseCoopers LLP
Chartered Accountants
Financial calendar
6 months ended Year ending
30 June 2007 31 December 2007
Results announced 28 August 2007 Early March 2008
Ex-dividend date 12 September 2007 May 2008
Dividend record date 14 September 2007 May 2008
Dividend payment date 27 September 2007 May 2008
Annual General Meeting - May 2008
The Group's Investor Relations website can be accessed at www.woodgroup.com.
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